Investments that stand the test of time

Transcription

1 ANNUAL REPORT FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2018 Investments that stand the test of time FORWARD Your Investments

2 FINANCIAL STATEMENTS FOR THE FINANCIAL YAER ENDED 31 AUGUST 2018

3 CONTENTS PAGE(S) MEMBERS LETTER 1 SHARIAH ADVISER S REPORT 2 STATEMENT BY PRS PROVIDER 3 TRUSTEE S REPORT 4 INDEPENDENT AUDITORS REPORT 5-8 PRS PROVIDER S REPORT 9-18 Fund Objective and Policy Performance Data Market Review Fund Performance Portfolio Structure Market Outlook Investment Strategy Members Statistics Soft Commissions and Rebates STATEMENT OF COMPREHENSIVE INCOME 19 STATEMENT OF FINANCIAL POSITION 20 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO MEMBERS 21 STATEMENT OF CASH FLOWS 22 NOTES TO THE FINANCIAL STATEMENTS DIRECTORY 43

4 MEMBERS LETTER Dear Valued Members, Thank you for your continued support and for the confidence that you have placed in us. We are pleased to share that CIMB-Principal Asset Management Berhad ( CIMB-Principal ) Malaysia has achieved RM52.60 billion in Asset under Management ( AUM ) as at June Our AUM for Private Retirement Scheme ( PRS ) business stands at RM million as at June We continue to achieve prestigious recognitions from The Edge Thomson Reuters Lipper Fund Awards 2018 as follows: Best Fund Over 5 Years, Equity Global - Malaysia : CIMB-Principal Global Titans Fund Best Fund Over 5 Years, Equity Asia Pacific ex Japan - Malaysia : CIMB-Principal Asian Equity Fund Best Fund Over 5 Years, Equity Asia Pacific ex Japan - Malaysia : CIMB Islamic Asia Pacific Equity Fund Best Fund Over 5 Years, Equity Malaysia Diversified - Malaysia : CIMB-Principal Equity Growth & Income Fund Best Fund Over 5 Years, Mixed Asset MYR Bal - Malaysia : CIMB-Principal Income Plus Balanced Fund Best Fund Over 3 Years, Equity Global - Malaysia : CIMB-Principal Global Titans Fund In addition, we received recognition from Fundsupermart.com for Fund House of the Year award and Recommended Unit Trust 2018/2019 awards for the following funds: CIMB-Principal Global Titans Fund CIMB-Principal Asia Pacific Dynamic Income Fund CIMB Islamic Asia Pacific Equity Fund CIMB-Principal Greater China Equity Fund CIMB-Principal PRS Plus Conservative CIMB-Principal PRS Plus Growth We are delighted to share our latest win at The Asset Triple A Private Banking, Wealth Management, Investment and Exchange-Traded Fund ( ETF ) Awards 2018, where we have been recognized as the Best Wealth Manager in Malaysia. These prestigious awards are a celebration of the trust that you have placed in us and testament to our capability in bringing potential value to your financial goals and needs. We look forward to serving you for many years to come. Thank you. Yours faithfully, for CIMB-Principal Asset Management Berhad Munirah Khairuddin Chief Executive Officer 1

5 SHARIAH ADVISER S REPORT TO THE MEMBERS OF CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY We have acted as the Shariah Adviser of CIMB Islamic PRS Plus Asia Pacific Ex Japan Equity (the Fund ) for the financial year ended 31 August Our responsibility is to ensure that the procedures and processes employed by CIMB-Principal Asset Management Berhad (the "PRS Provider") are in accordance with Shariah and Shariah Investment Guidelines. In our opinion, the Manager has managed and administered the Fund in accordance with the Shariah Investment Guidelines of the Fund and complied with applicable guidelines, rulings or decisions issued by the Securities Commission Malaysia pertaining to Shariah matters for the financial year ended 31 August In addition, we confirm that the investment portfolio of the Fund comprises securities which have been classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission Malaysia and, where applicable the Shariah Advisory Council of Bank Negara Malaysia. For investments other than the abovementioned, we have reviewed the same and are of the opinion that these investments were in accordance with the Shariah Investment Guidelines of the Fund. This report is made solely to the unit holders of the Fund, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report and we shall not be liable for any errors or non-disclosure on the part of the PRS Provider. For and on behalf of Shariah Adviser CIMB Islamic Bank Berhad ASHRAF GOMMA ALI Director/Regional Head, Shariah& Governance/Designated Person Responsible for Shariah Advisory Kuala Lumpur 17 October

6 STATEMENT BY THE PRS PROVIDER TO THE MEMBERS OF CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY We, being the Directors of CIMB-Principal Asset Management Berhad (the PRS Provider ), do hereby state that, in the opinion of the PRS Provider, the accompanying audited financial statements set out on pages 19 to 42 are drawn up in accordance with the provisions of the Deeds and give a true and fair view of the financial position of the Fund as at 31 August 2018 and of its financial performance, changes in net assets attributable to members and cash flows for the financial year then ended in accordance with the provisions of the Malaysian Financial Reporting Standards ( MFRS ) and International Financial Reporting Standards ( IFRS ). For and on behalf of the PRS Provider CIMB-Principal Asset Management Berhad (Company No.: K) MUNIRAH KHAIRUDDIN Chief Executive Officer/Executive Director ALEJANDRO ECHEGORRI Executive Director Kuala Lumpur 17 October

7 TRUSTEE S REPORT TO THE MEMBERS OF CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY We have acted as Trustee for CIMB Islamic PRS Plus Asia Pacific Ex Japan Equity (the Fund ) for the financial year ended 31 August To the best of our knowledge, for the financial year under review, CIMB-Principal Asset Management Berhad (the PRS Provider ) has operated and managed the Fund in accordance with the following:- (a) (b) (c) limitations imposed on the investment powers of the PRS Provider under the Deed(s), the Securities Commission s Guidelines on Private Retirement Schemes, the Capital Markets and Services Act 2007 and other applicable laws; valuation and pricing for the Fund is carried out in accordance with the Deed(s) of the Fund and any regulatory requirements; and creation and cancellation of units for the Fund are carried out in accordance with the Deed(s) of the Fund and any regulatory requirement. For Deutsche Trustees Malaysia Berhad Soon Lai Ching Senior Manager, Trustee Operations Ng Hon Leong Head, Trustee Operations Kuala Lumpur 17 October

8 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY REPORT ON THE FINANCIAL STATEMENTS Our opinion CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY In our opinion, the financial statements of CIMB Islamic PRS Plus Asia Pacific Ex Japan Equity (the Fund ) give a true and fair view of the financial position of the Fund as at 31 August 2018, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. What we have audited We have audited the financial statements of the Fund, which comprise the statement of financial position as at 31 August 2018, and the statement of comprehensive income, statement of changes in net assets attributable to members and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 19 to 42. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and other ethical responsibilities We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ( By-Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. 5

9 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY (CONTINUED) REPORT ON THE FINANCIAL STATEMENTS (CONTINUED) Information other than the financial statements and auditors report thereon The PRS Provider of the Fund is responsible for the other information. The other information comprises PRS Provider s report but does not include the financial statements of the Fund and our auditors report thereon. Our opinion on the financial statements of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Fund or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the PRS Provider for the financial statements The PRS Provider of the Fund is responsible for the preparation of the financial statements of the Fund that give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The PRS Provider is also responsible for such internal control as the PRS Provider determines is necessary to enable the preparation of financial statements of the Fund that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Fund, the PRS Provider is responsible for assessing the Fund s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the PRS Provider either intends to liquidate the Fund or has no realistic alternative but to do so. 6

10 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY (CONTINUED) REPORT ON THE FINANCIAL STATEMENTS (CONTINUED) Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (a) (b) (c) (d) (e) Identify and assess the risks of material misstatement of the financial statements of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the PRS Provider. Conclude on the appropriateness of the PRS Provider s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the Fund, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 7

11 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY (CONTINUED) REPORT ON THE FINANCIAL STATEMENTS (CONTINUED) Auditors responsibilities for the audit of the financial statements (continued) We communicate with the PRS Provider regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. OTHER MATTERS This report is made solely to the members of the Fund and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS PLT LLP LCA & AF 1146 Chartered Accountants Kuala Lumpur 17 October

12 PRS PROVIDER S REPORT FUND OBJECTIVE AND POLICY What is the investment objective of the Fund? The Fund seeks to provide capital growth over the long-term by investing in a target fund with investments in the emerging and developed markets of Asia Pacific ex Japan region that comply with the Shariah principles. Has the Fund achieved its objective? For the financial year under review, the Fund underperformed its benchmark as described under the Fund Performance section. Nevertheless, the Fund's objective of providing capital growth over the long-term is still in place. What are the Fund investment policy and principal investment strategy? The Fund will invest at least 95% of its Net Asset Value ( NAV ) in the CIMB Islamic Asia Pacific Equity Fund ( Target Fund ), a Malaysian domiciled fund established on 2 June 2006, which invests in Shariah-compliant equities listed on the stock exchanges in the emerging and developed markets of Asia Pacific ex Japan. The Fund will also maintain up to a maximum of 5% of its NAV in liquid assets. Information on the Target Fund Management Company: CIMB-Principal Asset Management Berhad Regulatory Authority: Securities Commission Malaysia ( SC ) Fund category/type Feeder Fund - Equity (Shariah) When was the Fund launched? 12 November 2012 What was the size of the Fund as at 31 August 2018? RM87.58 million ( million units) What is the Fund s benchmark? Dow Jones Islamic Market ( DJIM ) Asia Pacific ex-japan ( APxJpn ) Index Note: The risk profile of the Fund is not the same as the risk profile of the benchmark. What is the Fund distribution policy? The Fund is not expected to pay any distribution. 9

13 PERFORMANCE DATA Details of portfolio composition of the Fund for the last three financial years are as follows: % % % Shariah-compliant collective investment scheme Cash and other net assets Performance details of the Fund for the last three audited financial years are as follows: NAV (RM Million) - Class A Class C Class X Units in circulation (Million) - Class A Class C Class X NAV per unit (RM) - Class A Class C Class X Highest NAV per unit (RM) - Class A Class C Class X Lowest NAV per unit (RM) - Class A Class C Class X Total return (%) - Class A (2.35) Class C (2.36) Class X (2.35) Capital growth (%) - Class A (2.35) Class C (2.36) Class X (2.35) Income distribution (%) - Class A Class C Class X Management Expense Ratio ( MER ) (%) ^ Portfolio Turnover Ratio ( PTR ) (times) # ^ The Fund's MER decreased from 0.18% to 0.13% mainly due to the increase in average NAV compared to previous financial period. # The Fund s PTR increased from 0.30 times to 0.39 times mainly attributable to investment activities from the unit creations and rebalancing of the Fund 10

14 PERFORMANCE DATA (CONTINUED) CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY % % % % % Annual total return - Class A (2.35) Class C (2.36) Class X (2.35) (Launch date: 12 November 2012) Past performance is not necessarily indicative of future performance and that unit prices and investment returns may go down, as well as up. All performance figures for the financial year have been extracted from Lipper. MARKET REVIEW (1 SEPTEMBER 2017 TO 31 AUGUST 2018) The Morgan Stanley Capital International ( MSCI ) All Country ( MSCI AC ) APxJpn Islamic Index posted a gain of 1.89% in US Dollar ( USD ) term closing at 1, points over the financial year under review. In Malaysian Ringgit ( MYR ) term, the Index fell by 1.77% MSCI AC APxJpn Islamic Index underperformed Developed Markets ( DM ) by 2.0% and fell for the first time in the last 9 months. September 2017 was marked by higher US bond yields, a recovering USD, and consequently weaker Emerging Market ( EM ) currencies and declining metals prices. The sectors and markets that significantly outperformed in September 2017 were Hong Kong consumer discretionary, China consumer staples, China real estate, Korea Information Technology ( IT ), China consumer discretionary, Philippines, Thailand and Korea. The market rebounded sharply in October 2018 with MSCI AC APxJpn Islamic Index gained 4.0%, outperforming MSCI World by 2%. Emerging Asia was the best performing region in EM. Absolute returns were positive for all APxJpn markets except Malaysia. The 19 th National Congress of the Communist Party of China was held on 18 October 2017 to 25 October 2017 in Beijing, with the new leadership team announced. The Indian government announced a bold plan to recapitalize stateowned banks. China and South Korea agree to mend ties after the Terminal High Altitude Area Defense ( THAAD ) feud. The European Central Bank ( ECB ) announced it would extend quantitative easing by nine months, to September 2017, at a reduced pace of EUR30 billion per month. The US special prosecutor announced a guilty plea by a Trump campaign official who admitted to soliciting Russian help in the presidential campaign. In November 2017, Asian equities fell by 3% from their 52-week high on 23 November This sell-off was triggered by aggressive profit-taking in the tech sector and a rotation into value/laggard sectors such as financials, globally. The Organization of the Petroleum Exporting Countries ( OPEC )/ No Oil Producing and Exporting Cartels ( NOPEC ) announced a nine-month extension to its production-cutting deal. Initial German coalition talks failed, with a Grand Coalition deal now more likely. President Trump nominated Fed Governor Powell to take over as chair of the Federal Open Market Committee ( FOMC ), replacing Yellen. Moody s upgraded the Government of India s local and foreign currency issuer ratings to Baa2. MSCI AC APxJpn Islamic Index gained by 3.0% in December, outperforming MSCI World Index by 2.0%. Absolute returns were positive for all APxJpn Markets. December was marked by tax cuts in the US, Fed hikes, strong European growth indicators, ECB extending Quantitative Easing ( QE ) to September MSCI AC APxJpn Islamic Index gained by 7.0% in January 2018, the best monthly return since March 2016, outperforming MSCI World 1.0%. Absolute returns were positive for all APxJpn markets. Key drivers of the rally were positive revisions to global growth, lack of USD strength (post US tax reform), and increasing commodities prices. China s December 2017 activity data came broadly in line with expectations. The 10 th General Election ( G10 ) Economic Surprise index was near its post high and the euro hit 1.24 points, a three-year high. 11

15 MARKET REVIEW (1 SEPTEMBER 2017 TO 31 AUGUST 2018) (CONTINUED) Oil emerged as the top-performing commodity during the month, with West Texas Intermediate ( WTI ) gaining 7.1%. Strong demand, OPEC production cuts and consistent inventory drawdowns are supporting oil prices. However, markets turned as the MSCI AC APxJpn Islamic Index fell by 5.0% in February This was the worst monthly return since February 2016, underperforming MSCI World 1.5%. Absolute returns were negative for all APxJpn markets except Thailand. MSCI APxJ fell 10% from its 52-week high at the end of January This sell-off was triggered by a systematic correction in US, the surge in US 10-year bond yields, rising expectations of the US Federal Reserve (the Fed ) tightening, and higher fiscal deficit risk in US. The Volatility ( VIX ) index surged to 37 on 5 February 2018, the highest level since August In March 2018, US trade tariffs tremors were felt across Asian equities. MSCI AC APxJpn Islamic Index declined by 2.4%. Absolute returns were negative for all APxJpn sectors except utilities. Key negative drivers were the slowdown concerns in global growth, with the European Economic Sentiment Indicator ( ESI ) dropping below zero, preliminary global Purchasing Managers' Index ( PMI ) s for March 2018 falling more than a point, and the risk of a trade war between the US and China. Towards the beginning of the month, US President Trump imposed tariffs on steel and aluminum imports, which led to a correction in early March The sell-off in late March 2018 accelerated due to concerns over US-China trade tensions, in the wake of the Trump administration s announced tariffs on Chinese goods. Even though a fully fledged trade war between the US and China is highly unlikely, continuing tension and probability of escalation would be clearly negative for equities, especially those sectors/stocks with material US deficit/sales exposure. Indonesia, the Philippines, and Australia were the worst-performing markets in March MSCI AC APxJpn Islamic Index rose 1.0% in April 2018 after two months of negative return led by developed Asia, India and Korea. EM Asia was the best performing region in EM. Absolute returns were positive for all APxJpn sectors except Information Technology ( IT ). All Global Industry Classification Standard ( GICS ) sectors and markets except Singapore delivered negative returns over the last three months. VIX index declined further to c16 level. Volatility subsided but concerns over US-China trade tension, rising US bond yields, Russian sanctions, US tech sector facing regulatory headwinds, reduced earnings visibility of EM IT and late cycle debate kept bulls in check. MSCI APxJpn declined by 1.0% in May 2018, dragged down by the Association of Southeast Asian Nations ( ASEAN ), Korea, and India. EM Asia was the best performing region in emerging markets. Absolute returns were negative for all APxJpn countries except China and Australia. Key factors that depressed investor sentiment were the de-synchronization of global growth (US strong/europe softer), USD strength, higher oil prices, the protracted nature of trade renegotiation, and now political developments in Italy adding pressure to European peripheral bonds MSCI AC APxJpn Islamic Index declined 4.0% in June 2018, dragged by ASEAN, Korea and China. Absolute returns were negative for all APxJpn countries except Australia. In contrast to the first five months of the year where EM Asia supported broad EM returns, it has now been the worstperforming region over the month. Investor risk tolerance has been pulled down by growing risk of a trade war, hawkish the Fed statement and poor China economic data alongside a significant slide in the Chinese Yuan ( CNY ). In July 2018, MSCI AC APxJpn Islamic Index rose 1% underperforming MSCI AC World (+3.0%) by 2.0%. Strong performance in the ASEAN, Indian and Taiwanese markets was offset by a pullback in Korean and Chinese markets. Within the EM, EM Asia was the worst performing region, while Latin America ( LatAm ) and Europe, Middle East and Africa ( EMEA ) were up 9.1% and 4.2% respectively. Improving sentiment on US fundamentals and leadership, a benign EU-US trade deal and strong corporate earnings was weighted down by escalation in trade tensions, slower growth in China and significant yuan depreciation 12

16 MARKET REVIEW (1 SEPTEMBER 2017 TO 31 AUGUST 2018) (CONTINUED) MSCI AC APxJpn Islamic Index fell by 1.5% in August 2018, underperforming MSCI AC World Index (+0.6%) by 2%. Modest positive performance in Philippines, Thailand, Korean and Indian markets was offset by a strong pullback in Chinese and Australian markets. Within the EM, EM Asia was the best performing region, while LatAm and EMEA were down 8.8% and 7.8% respectively. Despite upbeat US economic data and strong corporate earnings season, markets remained range-bound as investor sentiment was weighted down by escalation in trade tensions, sharp selloff in Turkish assets and EM currency Index weakness. FUND PERFORMANCE 1 year to years to Class A Class C Class X Class A Class C Class X % % % % % % Income Capital (2.35) (2.36) (2.35) Total Return (2.35) (2.36) (2.35) Benchmark Average Total Return (2.35) (2.36) (2.35) years to Since inception to Class A Class C Class X Class A Class C Class X % % % % % % Income Capital Total Return Benchmark Average Total Return For the 1-year period, Class C decreased by 2.36% while both Class A and Class X decreased by 2.35%. In the meantime, the benchmark appreciated by 2.22% over the same reporting year. The underperformance of the Fund relative to its benchmark was due to stock selection in the Target Fund. The slight variation in the performance of Class C versus Class X and Class A was due to different timing of units created for each class. 13

17 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 FUND PERFORMANCE (CONTINUED) 1 year to CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY 8.00% 6.00% Class A, C and X* Benchmark 4.00% 2.00% 0.00% -2.00% -4.00% -6.00% 3 years to % 40.00% 30.00% Class A, C and X* Benchmark 20.00% 10.00% 0.00% % % 14

18 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Aug-18 FUND PERFORMANCE (CONTINUED) 5 years to CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY 90.00% 80.00% 70.00% 60.00% Class A, C and X* Benchmark 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Since inception to % 80.00% Class A, C and X* Benchmark 60.00% 40.00% 20.00% 0.00% % * Performance of Class A, Class C and Class X are almost the same. Slight variation was due to different timing of units created for each of the class. 15

19 FUND PERFORMANCE (CONTINUED) Changes in NAV CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY CLASS A Changes % NAV (RM Million) > NAV/Unit (RM) (2.35) CLASS C Changes % NAV (RM Million) > NAV/Unit (RM) (2.36) CLASS X Changes % NAV (RM Million) NAV/Unit (RM) (2.35) The Fund recorded positive net inflow from unit creations over the financial year under review for all the three classes - Class A, Class C and Class X. The total NAV of Class A rose from RM28.44 million to RM60.78 million, or by %, over the 1- year period. Meanwhile, the total NAV of Class C and Class X grew by % and 56.52% respectively. For the 1-year period, the Fund ranked 13 th in Quartile 3 under the Equity Asia Pacific Ex Japan Islamic category in the Lipper rankings. Performance data represents the combined income and capital return as a result of holding units in the Fund for the specified length of time, based on NAV to NAV price. The performance data assumes that all earnings from the Fund are reinvested and are net of management and trustee fees. Past performance is not reflective of future performance and income distributions are not guaranteed. Unit prices and income distributions, if any, may fall and rise. All performance figures for the financial year have been extracted from Lipper. PORTFOLIO STRUCTURE Asset allocation (% of NAV) Shariah-compliant collective investment scheme Cash and other net assets TOTAL The Fund was fully invested during the financial year under review. A minimal level of liquid assets was maintained primarily for redemption purposes. 16

20 MARKET OUTLOOK* We expect Asian equities to be range-bound as markets assess growth prospects amidst an escalating trade conflict and confidence in EM recalibrated from events in Turkey and Argentina. The divergence in economic growth between US and the rest of the world especially China would be keenly watched as it will have implications on various major asset classes - currencies, bonds and equities. The re-introduction of counter-cyclical factor by the People's Bank of China ( PBOC ) for the CNY in mid-august 2018 was welcome in this respect. Investors would be watching the CNY and Exchange rates ( FX ) reserves as the economy tackles narrowing interest rate differentials with the US, slowing credit creation, moderating consumption growth and high debt levels. * This market outlook does not constitute an offer, invitation, commitment, advice or recommendation to make a purchase of any investment. The information given in this article represents the views of CIMB-Principal or based on data obtained from sources believed to be reliable by CIMB-Principal. Whilst every care has been taken in preparing this, CIMB-Principal makes no guarantee, representation or warranty and is under no circumstances liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this market outlook. INVESTMENT STRATEGY As this is a Feeder Fund category under the PRS, the Fund will continue to remain fully invested in the Target Fund with minimal cash kept for liquidity purposes. MEMBERS STATISTICS AS AT 31 AUGUST 2018 CLASS A Size of unit holdings (units) No. of members No. of units held (million) % of units held 5,000 and below 11, ,001-10,000 1, ,001-50, , , ,001 and above Total 13, CLASS C Size of unit holdings (units) No. of members No. of units held (million) % of units held 5,000 and below 1, ,001-10, ,001-50, , , ,001 and above Total 1,

21 MEMBERS STATISTICS AS AT 31 AUGUST 2018 (CONTINUED) CLASS X CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY Size of unit holdings (units) No. of members No. of units held (million) % of units held 5,000 and below 2, ,001-10, ,001-50, , , ,001 and above Total 2, SOFT COMMISSIONS AND REBATES CIMB-Principal Asset Management Berhad (the PRS Provider ) and the Trustee (including their officers) will not retain any form of rebate or soft commission from, or otherwise share in any commission with, any broker in consideration for directing dealings in the investments of the Funds unless the soft commission received is retained in the form of goods and services such as financial wire services and stock quotations system incidental to investment management of the Funds. All dealings with brokers are executed on best available terms. During the financial year under review, the PRS Provider and the Trustee did not receive any rebates from the brokers or dealers but have retained soft commissions in the form of goods and services such as financial wire services and stock quotations system incidental to investment management of the Funds. 18

22 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2018 CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY Note RM RM INVESTMENT (LOSS)/INCOME Dividend income 1,979,301 1,852,312 Net (loss)/gain on financial assets at fair value through profit or loss 7 (5,105,302) 4,969,328 (3,126,001) 6,821,640 EXPENSES Private Pension Administrator's fee 4 29,215 12,257 Trustee s fee 5 29,215 12,257 Audit fee 9,900 9,360 Tax agent s fee 4,600 5,200 Other expenses 19,692 16,179 92,622 55,253 (LOSS)/PROFIT BEFORE TAXATION (3,218,623) 6,766,387 Taxation (DECREASE)/INCREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS (3,218,623) 6,766,387 (Decrease)/Increase in net assets attributable to members is made up as follows: Realised amount 2,066,203 2,066,885 Unrealised amount (5,284,826) 4,699,502 (3,218,623) 6,766,387 The accompanying notes to the financial statements form an integral part of the audited financial statements. 19

23 STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2018 CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY Note RM RM ASSETS Cash and cash equivalents (Shariah-compliant) 8 251, ,681 Financial assets at fair value through profit or loss (Shariah-compliant) 7 87,313,007 40,703,008 Amount due from the PRS Provider 9 860, ,503 TOTAL ASSETS 88,424,418 41,327,192 LIABILITIES Amount due to the PRS Provider 9 821, ,000 Other payables and accruals 23,154 15,986 TOTAL LIABILITIES (EXCLUDING NET ASSETS ATTRIBUTABLE TO MEMBERS) 844, ,986 NET ASSET VALUE OF THE FUND 87,579,649 41,200,206 NET ASSETS ATTRIBUTABLE TO MEMBERS 87,579,649 41,200,206 REPRESENTED BY: FAIR VALUE OF OUTSTANDING UNITS - Class A 60,777,632 28,441,108 - Class C 13,589,536 4,319,231 - Class X 13,212,481 8,439,867 87,579,649 41,200,206 NUMBER OF UNITS IN CIRCULATION (UNITS) - Class A 79,770,286 36,450,809 - Class C 17,834,302 5,534,907 - Class X 17,338,832 10,815, ,943,420 52,801,099 NET ASSET VALUE PER UNIT (RM) - Class A Class C Class X The accompanying notes to the financial statements form an integral part of the audited financial statements. 20

24 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO MEMBERS FOR THE FINANCIAL YEAR ENDED 31 AUGUST RM RM NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE BEGINNING OF THE FINANCIAL YEAR 41,200,206 22,958,868 Movement due to units created and cancelled during the financial year: Creation of units from applications - Class A 42,114,444 13,380,700 - Class C 11,147,656 1,768,430 - Class X 5,611,288 5,154,811 Cancellation of units - Class A (7,581,714) (8,003,532) - Class C (1,254,483) (608,561) - Class X (439,125) (216,897) 90,798,272 34,433,819 (Decrease)/Increase in net assets attributable to members during the financial year (3,218,623) 6,766,387 NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE END OF THE FINANCIAL YEAR 87,579,649 41,200,206 The accompanying notes to the financial statements form an integral part of the audited financial statements. 21

25 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2018 CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from disposal of Shariah-compliant collective investment scheme 2,680,000 3,782,680 Purchase of Shariah-compliant collective investment scheme (52,216,000) (14,796,000) Private Pension Administrator s fees paid (27,679) (11,666) Trustee's fee paid (27,679) (11,666) Payments for other fees and expenses (30,096) (31,157) Net cash used in operating activities (49,621,454) (11,067,809) CASH FLOWS FROM FINANCING ACTIVITIES Cash proceeds from units created 58,566,687 20,280,638 Payments for cancellation of units (8,864,707) (9,061,157) Net cash generated from financing activities 49,701,980 11,219,481 Net increase in cash and cash equivalents 80, ,672 Cash and cash equivalents at the beginning of the financial year 170,681 19,009 Cash and cash equivalents at the end of the financial year 8 251, ,681 Cash and cash equivalents comprises of: Bank balance 251, ,681 Cash and cash equivalents at the end of the financial year 8 251, ,681 The accompanying notes to the financial statements form an integral part of the audited financial statements. 22

26 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2018 CIMB ISLAMIC PRS PLUS ASIA PACIFIC EX JAPAN EQUITY 1. THE FUND, THE PRS PROVIDER AND ITS PRINCIPAL ACTIVITIES CIMB Islamic PRS Plus Asia Pacific Ex Japan Equity (the Fund ) is governed by a Deed dated 8 November 2012, a First Supplemental Deed dated 2 January 2014 and a Second Supplemental Deed dated 25 November 2014 (collectively referred to as the Deeds ), made between CIMB-Principal Asset Management Berhad (the PRS Provider ) and Deutsche Trustees Malaysia Berhad (the Trustee ). The Fund offers three classes of units known respectively as Class A, Class C and Class X. In accordance with the Disclosure Document, Class A and Class C are for members who have attained the age of 18 years as of the date of opening a private pension account. Class A and C have different management fee. Class X is for members who participate via respective employers and is subject to a minimum of 200 participating employees per employer or 50 participating employees under payroll deduction per employer. The principal activity of the Fund is to invest at least 95% of its net asset value ( NAV ) in the Target Fund, a Malaysian domiciled fund established on 2 June 2006, which invests in Shariah-compliant equities listed on the stock exchanges in the emerging and developed markets of Asia Pacific ex Japan. The Fund will also maintain up to a maximum of 5% of its NAV in liquid assets. All investments are subjected to the Securities Commission Malaysia ( SC ) Guidelines on Private Retirement Schemes ( PRS ), SC requirements, the Deeds, except where exemptions or variations have been approved by the SC, internal policies and procedures and the Fund s objective. The PRS Provider, a company incorporated in Malaysia, is jointly owned by CIMB Group Sdn Bhd and Principal International (Asia) Limited. The principal activities of the PRS Provider are the establishment and management of unit trust funds and fund management activities. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements: (a) Basis of preparation The financial statements have been prepared in accordance with the provisions of the MFRS and IFRS. The financial statements have been prepared under the historical cost convention, as modified by financial assets at fair value through profit or loss. The preparation of financial statements in conformity with MFRS and IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported year. 23

27 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) It also requires the PRS Provider to exercise their judgment in the process of applying the Fund s accounting policies. Although these estimates and judgments are based on the PRS Provider s best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2(k). Standards, amendments to published standards and interpretations to existing standards that are effective: The Fund has applied the following amendments for the first time for the financial year beginning 1 September 2017: Amendments to MFRS 107 Statement of Cash Flows - Disclosure Initiative (effective from 1 January 2017) introduces an additional disclosure on changes in liabilities arising from financing activities. The adoption of these amendments did not have any impact on the current financial year or any prior financial year and is not likely to affect future years. The standards, amendments to published standards and interpretations to existing standards that are applicable to the Fund but not yet effective and have not been early adopted are as follows: (i) Financial year beginning on/after 1 September 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments 1 are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument 2 is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest 3. ¹ For the purposes of the investments made by the Fund, equity instruments and derivatives refers to Shariah-compliant equity instruments and Shariah-compliant derivatives. ² For the purposes of the investments made by the Fund, debt instruments refers to Sukuk. ³ For the purposes of this Fund, interest refers to profits earned from Shariah-compliant investments. 24

28 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) (i) Financial year beginning on/after 1 September 2018 (continued) For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main changes are: For financial liabilities should be recognised directly to OCI. There is no subsequent recycling to profit or loss. When a financial liability measured at amortised cost is modified without this resulting in derecognition, a gain or loss, being the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate, should be recognised immediately in profit or loss. MFRS 9 introduces an expected credit loss ( ECL ) model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The Fund has reviewed its financial assets and liabilities and has assessed the following impact from the adoption of the new standard on 1 September 2018: There will be no impact on the Fund's accounting for financial assets as the Fund's equity investments currently measured at fair value through profit or loss will continue to be measured on the same basis under MFRS 9. There will be no impact on the Fund's accounting for financial liabilities as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Fund does not have any such liabilities. The new impairment model requires the recognition of impairment provisions based on ECL rather than only incurred credit losses as is the case under MFRS 139. It applies to financial assets classified at amortised cost. Based on the assessments undertaken to date, the Fund does not expect any loss allowance to be recognised upon adoption of MFRS 9. 25

29 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities Classification The Fund designates its investment in Shariah-compliant collective investment scheme as financial assets at fair value through profit or loss at inception. Financial assets are designated at fair value through profit or loss when they are managed and their performance are evaluated on a fair value basis. Financing and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and have been included in current assets. The Fund s financing and receivables comprise cash and cash equivalents, and amount due from the PRS Provider. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. The Fund classifies amount due to the PRS Provider, and other payables and accruals as other financial liabilities. Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Fund commits to purchase or sell the asset. Shariah-compliant investments are initially recognised at fair value. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the rights to receive cash flows from the Shariah-compliant investments have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expired. Unrealised gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss are presented in the statement of comprehensive income within net gain or loss on financial assets at fair value through profit or loss in the financial year which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of gross dividend income when the Fund s right to receive payments is established. Shariah-compliant collective investment scheme is valued based on the most recent published NAV per unit or share of such Shariah-compliant collective investment scheme or, if unavailable, on the last published price of such unit or share (excluding any sales charge included in such selling price). Financing and receivables and other financial liabilities are subsequently carried at amortised cost using the effective interest method. 26

30 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities (continued) Impairment for assets carried at amortised costs For assets carried at amortised cost, the Fund assesses at the end of the reporting year whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The asset s carrying amount is reduced and the amount of the loss is recognised in statement of comprehensive income. If financing has a variable profit rate, the discount rate for measuring any impairment loss is the current effective profit rate determined under the contract. As a practical expedient, the Fund may measure impairment on the basis of an instrument s fair value using an observable market price. If, in a subsequent financial year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in statement of comprehensive income. When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined. (c) Income recognition Dividend income is recognised on the ex-dividend date when the right to receive payment is established. Realised gain or loss on disposal of Shariah-compliant collective investment scheme is accounted for as the difference between the net disposal proceeds and the carrying amount of Shariah-compliant investments, determined on a weighted average cost basis. 27