Investments that stand the test of time

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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 YEAR ENDED 31 AUGUST 2018

3 CONTENTS PAGE(S) MEMBERS LETTER 1 SHARIAH ADVISER S REPORT 2 STATEMENT BY THE PRS PROVIDER 3 TRUSTEE S REPORT 4 INDEPENDENT AUDITORS' REPORT 5-8 PRS PROVIDER S REPORT 9-20 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 21 STATEMENT OF FINANCIAL POSITION 22 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO MEMBERS 23 STATEMENT OF CASH FLOWS 24 NOTES TO THE FINANCIAL STATEMENTS DIRECTORY 57

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 We have acted as the Shariah Adviser of CIMB Islamic PRS Plus Moderate (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 PRS provider 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 ( SACSC ) 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 members 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 the 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 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 21 to 56 are drawn up in accordance with the provisions of the Deeds and give a true and fair view of the statement of 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 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 We have acted as Trustee for CIMB Islamic PRS Plus Moderate (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) 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; (b) valuation and pricing for the Fund has been carried out in accordance with the Deed(s) of the Fund and applicable regulatory requirements; and (c) creation and cancellation of units for the Fund have been carried out in accordance with the Deed(s) of the Fund and applicable 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 REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion In our opinion, the financial statements of CIMB Islamic PRS Plus Moderate (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 21 to 56. 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 (CONTINUED) REPORT ON THE AUDIT OF 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 determine 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 (CONTINUED) REPORT ON THE AUDIT OF 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 (CONTINUED) REPORT ON THE AUDIT OF 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 unit holder 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 a moderate level of capital growth over the long-term by investing in a diversified portfolio of Shariah-compliant equity and Sukuk. Has the Fund achieved its objective? For the financial year under review, the Fund has performed in line with its objective as stated under the Fund Performance section. What are the Fund investment policy and principal investment strategy? The Fund will invest in a mix of Shariah-compliant equities and Sukuk to provide a moderate level of capital growth to the Fund. The investments by the Fund in Shariah-compliant equities which include foreign exposure shall not exceed 60% of the Fund s Net Asset Value ( NAV ) and investments in both local and foreign Sukuk shall not be less than 40% of its NAV with a minimum credit rating of BBB3 or P2 by RAM Ratings ( RAM ) or equivalent rating by Malaysian Rating Corporation Berhad ( MARC ) or BBB by Standard & Poor s ( S&P ) or equivalent rating by Moody s or Fitch. The fixed income portion will provide capital stability to the Fund whilst the equity portion will provide the added return in a rising market. The Fund may opt to invest in Sukuk and Shariah-compliant equities either directly or via Shariah-compliant collective investment schemes. Fund category/type Core (Moderate) When was the Fund launched? 12 November 2012 What was the size of the Fund as at 31 August 2018? RM30.28 million (45.58 million units) What is the Fund s benchmark? 60% Financial Times Stock Exchange ( FTSE ) Bursa Malaysia ( FBM ) EMAS Shariah ("FBMS") Index + 40% Quant shop Government Investment Issue ( GII ) Short 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 schemes Shariah-compliant quoted securities - Basic Materials Construction Consumer Products Energy Finance Industrials Infrastructure Project Companies ( IPC ) Plantation Properties Real Estate Investment Trust ( REIT ) Technology Telecommunications Trading/Services Unquoted Sukuk Cash and other net assets Performance details of the Fund for the last three 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

14 PERFORMANCE DATA (CONTINUED) Performance details of the Fund for the last three financial years are as follows (continued): Total return (%) - Class A Class C Class X Capital growth (%) - Class A Class C Class X Income distribution (%) - Class A Class C Class X Management Expense Ratio ( MER ) (%) ^ Portfolio Turnover Ratio ( PTR ) (times) # ^ The Fund s MER decreased from 0.23% to 0.18% due to increased expenses while the average NAV dropped slightly during the financial year under review. # The Fund s PTR increased from 0.50 times to 1.17 times primarily due to our strategy to invest directly in securities % % % % % Annual total return - Class A Class C Class X (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. 11

15 MARKET REVIEW (1 SEPTEMBER 2017 TO 31 AUGUST 2018) Local Equity The FBMS Index rose by points or 0.5% to 12, points over the financial year under review. The FBMS Index rose in September 2017 and October 2017 on the back of higher Brent crude oil prices, stronger-than-expected third quarter of 2017 Gross Domestic Product ( GDP ) growth and a stronger Malaysian Ringgit ( MYR ) in anticipation of Bank Negara Malaysia s ( BNM ) Overnight Policy Rate ( OPR ) hike in It then fell by 1.2% in November 2017 as construction stocks underperformed on worries of foreign contractors dominance after a change in Mass Rapid Transit ( MRT ) 3 project delivery partners ( PDP ) format to turnkey contractor with mandatory funding. The FBMS Index then recovered by 3.0% in December 2017 on the back of window dressing activities, driven by technology stocks. For 2017, net foreign inflows amounted to RM10.3 billion. The FBMS Index started on a positive note in 2018 by rising 2.7% in January 2018 on the back of outperformance in Permodalan Nasional Bhd ( PNB ) related companies. The buoyant market was also aided by the strengthening of the MYR by 3.9% and the increase in crude oil prices by 3.3% during the month. Foreign investors were net buyers of RM3.4 billion in January February 2018 was a volatile month as investors began re-pricing more and earlier interest rate hikes in the United States ( US ), on the back of higher inflation expectations. In line with the global rout, the FBMS Index fell by 1.7% to 13, points. Consumer price inflation eased in January 2018 to 2.7% (3.5% year-on-year ( y-o-y ) in December 2017) due to currency gains and a higher base, as fuel prices and electricity tariffs were raised a year ago. In February 2018, foreign investors net sold about RM1.1 billion. In March 2018, the FBMS Index fell by points or 1.5% to 13, points due to rising concerns of escalating US-China trade disputes. The decline continued into April 2018 with the FBMS Index reaching a low of 12, points on 4 April 2018, before recovering to close at 13, points. In April 2018, the MYR depreciated by 1.5%, while the 10-year Malaysian Government Securities ( MGS ) rose by 19 basis points ( bps ) to 4.13%. Technology, consumer staples and telecommunications underperformed during the month. May 2018 and June 2018 saw the FBMS Index succumbing to heavy foreign selling, falling by 8.2% or 1, points over the 2 months to 12, as investors re-priced policy risk. The period after the 14 th General Elections ( GE14 ) accounted for 7.5% of that fall. During the 2 months, foreigners net sold RM10.5 billion, bringing the first six months of 2018 total net foreign flows outflow of RM6.8 billion versus net inflow of RM10.8 billion in The market sold off due to headline news of a higher RM1 trillion national debt burden, concerns about the fiscal position and sovereign credit rating following the zero-rating of the Good and Services Tax ( GST ), cancellation of mega infrastructure projects and the sanctity of toll roads concession agreements. Sentiment was further dampened by the weak first quarter of 2018 corporate earnings season. After two consecutive months of net foreign selling post GE14, the FBMS Index ended higher by 5.9% or points to close at 12, points in July 2018, as local investors started to bargainhunt. Foreigners continued to sell in the market with a total net outflow of RM1.7 billion, which is much lower than the RM4.9 billion in June The FBMS Index ended August 2018 flat even as foreigners continued to sell in the market, albeit of a smaller amount compared to the previous months. During the month, the MYR weakened by 1% to close at RM4.11 against US Dollar ( USD ), the 10-year MGS dropped by 5 bps to 4.03% and Brent crude oil strengthened by 4.2% to USD77.42 per barrel. 12

16 MARKET REVIEW (1 SEPTEMBER 2017 TO 31 AUGUST 2018) (CONTINUED) Foreign Equity Over the financial period year review, Asian ex Japan markets were flat in MYR terms and up by 4% in USD terms. Oil price rallied strongly reaching USD 70 per barrel mainly due to Organisation of the Petroleum Exporting Countries ( OPEC ) production discipline and supply disruptions in certain countries such as Venezuela. At the beginning of the financial period under review, Asian markets broadly continued the rally which started since the start of 2017 until January 2018, benefiting from global synchronised recovery, as reflected by the broad-based rise in the Purchasing Managers Index ( PMI ) across the globe. Asian equities were supported by stable to low US bond yields and stable USD. However, Asia went into a risk-off mode in February 2018, triggered by a surge in the US bond yield and concerns of higher inflation after wage growth rose more than expected. Subsequently, sentiment worsened as US-China trade tensions escalated and Technology sector concerns mounted with weakness in the mobile phone supply chain and China Internet companies due to regulations. Other issues include a slowing China with the deleveraging process underway, and Emerging Market ( EM ) weakness in Turkey and Argentina towards August Unquoted Sukuk During the financial year under review, BNM s Monetary Policy Committee ( MPC ) met six times from the month of September 2017 up to the end of August The MPC kept the OPR at 3% throughout 2017 but commented at the last meeting of the year then that they may consider reviewing the current degree of monetary accommodation to ensure sustainability of growth prospects of the Malaysian economy. Following this, BNM raised the OPR by 25 bps to 3.25% at the first MPC meeting in January There were no further changes to the OPR up to the end of August At the last MPC meeting on 11 July 2018, the MPC stated that the positive growth performance of the Malaysian economy is expected to be sustained, driven by both domestic and external demand. However, the MPC s statement was a bit dovish as it mentioned that the balance of risks to the global growth outlook in Asia has slightly tilted to the downside due to the global trade tensions. They remain positive on the local economic outlook and stated that the domestic financial markets have remained resilient despite non-resident portfolio outflows. In terms of inflation, headline inflation averaged at 3.7% in Overall, the Consumer Price Index ( CPI ) increased by 2.7% in January 2018 and eased lower to 1.4% between the months of February 2018 to April It spiked up slightly in May 2018 to 1.8% before settling much lower at 0.8% in June Headline inflation the month of August 2018 was the lowest since February 2015 at 0.2% y-o-y (July 2018: 0.9%) amid the tax holiday and lower y-o-y fuel prices. Overall, in the second quarter of 2018, the impact of GST zerorisation was offset by higher transport inflation whilst core inflation (excluding the impact of GST zerorisation) also moderated slightly to 1.5% (first quarter of 2018: 1.9%). The Malaysian economy grew by 5.4% y-o-y in the first quarter ended 31 March 2018 (fourth quarter of 2017: 5.9% y-o-y) and 4.5% y-o-y in the second quarter ended 30 June The growth in the second quarter of 2018 continued to be supported by private sector activity but commodity-specific shocks affected growth slightly. There were supply disruptions in the mining and agriculture sectors caused by adverse weather conditions as well as certain constraints. On a quarter-on-quarter ( q-o-q ) basis, the economy grew by 0.3%. Following the release of the second quarter of 2018 GDP numbers, the Central Bank brought down its full year growth forecast to 5.0% from the earlier 5.5% to 6.0% range. 13

17 MARKET REVIEW (1 SEPTEMBER 2017 TO 31 AUGUST 2018) (CONTINUED) Unquoted Sukuk (Continued) As for government bond yields, it declined in fourth quarter of 2017 reflecting an increased demand by non-resident investors following the better than expected GDP growth in the third quarter of The performance in the first quarter of 2018 was mixed amid volatile global financial markets during the period. However, in the second quarter of 2018, yields trended higher due to non-resident portfolio outflows amid external developments. The broad based sell-off was triggered by risk-off sentiments arising from expectations of a faster pace of monetary policy normalisation in the US and rising trade tensions. On the external front, the US Federal Reserve (the Fed ) raised interest rates twice during the financial period under review. They raised interest rates by 25 bps at the Federal Open Market Committee ( FOMC ) meetings held in March 2018 and June In the last FOMC statement released, they changed multiple phrases from its previous missives, pointing to a more optimistic view on economic growth and higher inflation expectations. They also indicated a very high likelihood of two more rate increases in FUND PERFORMANCE 1 year to years to Class A Class C Class X Class A Class C Class X % % % % % % Income Capital Total Return Benchmark Average Total Return Since inception to 5 years 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 A and Class C gained 2.78% while Class X gained 2.76%. Meanwhile, the benchmark appreciated by 2.45% over the same reporting period. The outperformance of the Fund relative to its benchmark was driven mainly by the allocation into equities. The slight variation in the performance between Class A, Class C and Class X, if any, was due to different timing of units created for each class. 14

18 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 % 4.00% 3.00% 2.00% Class A, C and X* Benchmark 1.00% 0.00% -1.00% -2.00% 3 years to % 16.00% 11.00% Class A, C and X* Benchmark 6.00% 1.00% -4.00% 15

19 FUND PERFORMANCE (CONTINUED) 5 years to % 31.00% 26.00% 21.00% Class A, C and X* Benchmark 16.00% 11.00% 6.00% 1.00% -4.00% Since inception to % 33.00% 28.00% 23.00% 18.00% 13.00% 8.00% Class A, C and X* Benchmark 3.00% -2.00% * 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. 16

20 FUND PERFORMANCE (CONTINUED) Changes in NAV Class A Changes % NAV (RM Million) NAV/Unit (RM) Class C Changes % NAV (RM Million) NAV/Unit (RM) Class X Changes % NAV (RM Million) NAV/Unit (RM) 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 to RM12.07 million, or by 21.94%, over the 1-year period. Meanwhile, the total NAV of Class C and Class X grew 45.71% and 32.72% respectively. The the NAV per unit of Class A, Class C and Class X grew by 2.61%. For the 1-year period, the Fund ranked 3 rd in Quartile 1 under the Mixed Asset MYR Balanced 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 schemes Shariah-compliant quoted securities Unquoted Sukuk 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. At the reporting date, some material amount of creations was still sitting in the receivables which will be invested into securities. 17

21 MARKET OUTLOOK* Local Equity September 2018 saw the FBM Kuala Lumpur Composite Index ( FBMKLCI ) succumbed to selling pressure as investors locked in gains made in the previous month on worries that the USD200 billion trade tariffs imposed on China may impact global growth and EM currencies. The downtrend was exacerbated further by the financial crisis in Argentina which led investors to flee the Peso, causing worry of a contagion effect in EM. Sentiment in the local bourse was further affected by the announcement of the cancellation of 3 China-backed projects (the East Coast Rail Line ( ECRL ) and the 2 gas pipeline projects estimated at USD23 billion) and the deferment of High-Speed Rail ( HSR ) to September 2020, which sent the Construction Index tumbling by 5.38% month-on-month ( m-o-m ). We are cautious on the equity market, globally and domestically, going into the fourth quarter of US-China trade conflicts have intensified and will persist for longer than earlier expected. Domestically, investors will be waiting for the upcoming budget in November 2018 to get a glimpse of the future fiscal and monetary policies for the country. Foreign Equity The divergence in economic growth between US and the rest of the world remains the backdrop for asset allocation amongst investors. As investors assess the escalating and protracted trade war and the impact on Asian growth and industrial policies, markets are likely to be volatile. Markets may want to have a sense on where the sequence of US Federal (the Fed ) rate hikes could end before being comfortable with liquidity & foreign exchange in EM. China will ease policy in a calibrated manner to cushion the economic slowdown. This includes a weaker Chinese Yuan Renminbi ( CNY ) which policymakers need to manage judiciously to avoid a repeat of the August 2015 devaluation. Unquoted Sukuk The MPC kept the OPR at 3.25% as widely-expected. In March 2018, BNM raised its forecast for Malaysia s economic growth between 5.5% to 6.0% from 5.0% to 5.5% previously. However, they have revised their forecast to 5.0% following the release of the second quarter of 2018 GDP growth figure. Overall, we expect the central bank to maintain OPR at 3.25% for the remainder of We believe headline inflation will inch upwards due to the low base effect as well as the implementation of the new Sales and Services Tax ( SST ) in September We foresee an increase in near term volatility following the change in Government as well as pockets of policy uncertainty. That being said, we believe there may be long term gains following this short term volatility. * 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. 18

22 INVESTMENT STRATEGY Local Equity We are expecting a prudent budget by Government with private sector taking the lead role in generating economic growth. On the back of all these uncertainties, we reiterate our capital preservation investment strategy with preference on big cap Government-Linked Companies ( GLCs ) and companies with strong fundamentals and solid cash flow and dividends in sectors such as Banks, Utilities & Renewable Energy, and Industrials. We are also positive on exporters as US- China trade conflicts may benefit technology-related and Electronics Manufacturing Services ( EMS ) players in Malaysia. Foreign Equity The focus is to manage risk by balancing our exposure to above average growth stocks with defensives such as REITs. We also intend to diversify our holdings into more stocks with domestic oriented catalysts and improving fundamentals. The strength of the USD, pace of monetary policy tightening in developed markets and Asia earnings per share growth will be keenly watched. Unquoted Sukuk In line with the cautious investor sentiment, we have a preference for high quality corporate bonds with strong fundamentals versus government bonds for better yield pick-up and better total return. 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 1, ,001-10, ,001-50, , , ,001 and above Total 2, CLASS C Size of unit holdings (units) No. of members No. of units held (million) % of units held 5,000 and below ,001-10, ,001-50, , , ,001 and above Total

23 MEMBERS STATISTICS AS AT 31 AUGUST 2018 (CONTINUED) CLASS X 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 3, SOFT COMMISSIONS AND REBATES 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. 20

24 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 AUGUST Note RM RM INVESTMENT INCOME Dividend income 414, ,976 Profit income 6 405,206 - Net gain on financial assets at fair value through profit or loss 8 91, ,599 Net foreign exchange loss (41,835) - 869,790 1,822,575 EXPENSES Private Pension Administrator's fee 4 10,774 8,007 Trustee and custodian fees 5 22,258 8,007 Audit fee 9,900 9,360 Tax agent s fee 1,600 11,200 Transaction costs 110,231 - Other expenses 16,489 9, ,252 45,935 PROFIT BEFORE TAXATION 698,538 1,776,640 Taxation 7 (3,753) - INCREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS 694,785 1,776,640 Increase in net assets attributable to members is made up as follows: Realised amount 1,033,499 1,378,219 Unrealised amount (338,714) 398, ,785 1,776,640 The accompanying notes to the financial statements form an integral part of the audited financial statements. 21

25 STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST Note RM RM ASSETS Cash and cash equivalents (Shariah-compliant) 9 462, ,674 Financial assets at fair value through profit or loss (Shariah-compliant) 8 29,694,908 23,409,249 Amount due from stockbrokers 421,087 - Amount due from the PRS Provider , ,932 Dividends receivable 18,418 - Tax recoverable TOTAL ASSETS 30,968,630 23,682,973 LIABILITIES Amount due to stockbrokers 661,093 - Amount due to the PRS Provider 10 7, ,702 Other payables and accruals 14,822 17,999 TOTAL LIABILITIES (EXCLUDING NET ASSETS ATTRIBUTABLE TO MEMBERS) 683, ,701 NET ASSET VALUE OF THE FUND 30,284,997 23,551,272 NET ASSETS ATTRIBUTABLE TO MEMBERS 30,284,997 23,551,272 REPRESENTED BY: FAIR VALUE OF OUTSTANDING UNITS - Class A 12,066,126 9,894,864 - Class C 1,018, ,420 - Class X 17,200,809 12,958,988 30,284,997 23,551,272 NUMBER OF UNITS IN CIRCULATION (UNITS) - Class A 18,161,477 15,282,875 - Class C 1,532,096 1,076,980 - Class X 25,891,054 20,016, ,584,627 36,375,995 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. 22

26 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 23,551,272 16,465,444 Movement due to units created and cancelled during the financial year: Creation of units from applications - Class A 2,853,032 2,528,326 - Class C 338, ,884 - Class X 5,298,523 4,557,623 Cancellation of units - Class A (963,867) (1,041,380) - Class C (38,255) (88,868) - Class X (1,448,996) (852,397) 29,590,212 21,774,632 Increase in net assets attributable to members during the financial year 694,785 1,776,640 NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE END OF THE FINANCIAL YEAR 30,284,997 23,551,272 The accompanying notes to the financial statements form an integral part of the audited financial statements. 23

27 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 AUGUST Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from disposal of Shariah-compliant quoted securities 8,577,004 - Purchase of Shariah-compliant quoted securities (26,297,304) - Proceeds from unquoted Sukuk 2,281,591 - Purchase of unquoted Sukuk (14,481,906) - Proceeds from disposal of Shariah-compliant collective investment schemes 24,684,598 7,343,000 Purchase of Shariah-compliant collective investment schemes (959,000) (12,491,000) Dividend income received 319,032 - Profit income received from Shariah-compliant deposits with licensed Islamic financial institutions 5,679 - Profit income received from unquoted Sukuk 522,466 - Private Pension Administrator s fees paid (10,553) (7,761) Trustee's and custodian fees paid (22,037) (7,761) Payments for other fees and expenses (31,608) (27,200) Tax refund received Net realised foreign exchange loss (31,336) - Net cash used in operating activities (5,443,374) (5,190,009) CASH FLOWS FROM FINANCING ACTIVITIES Cash proceeds from units created 8,267,017 7,266,181 Payments for cancellation of units (2,457,102) (1,988,943) Net cash generated from financing activities 5,809,915 5,277,238 Net increase in cash and cash equivalents 366,541 87,229 Effects of foreign exchange differences (29,089) - Cash and cash equivalents at the beginning of the financial year 124,674 37,445 Cash and cash equivalents at the end of the financial year 9 462, ,674 Cash and cash equivalents comprised of: Bank balances 158, ,674 Shariah-compliant deposits with licensed Islamic financial institutions 304,053 - Cash and cash equivalents at the end of the financial year 9 462, ,674 The accompanying notes to the financial statements form an integral part of the audited financial statements. 24

28 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 AUGUST THE FUND, THE PRS PROVIDER AND ITS PRINCIPAL ACTIVITY CIMB Islamic PRS Plus Moderate (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 Documents, Class A and Class C are for members who have attained 18 years of age 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 Fund will invest in a mix of Shariah-compliant equities and Sukuk to provide a moderate level of capital growth to the Fund. The investments by the Fund in Shariah-compliant equities which include foreign exposure shall not exceed 60% of the Fund s NAV and investments in both local and foreign Sukuk shall not be less than 40% of its NAV with a minimum credit rating of BBB3 or P2 by RAM or equivalent rating by MARC or BBB by S&P or equivalent rating by Moody s or Fitch. The fixed income portion will provide capital stability to the Fund whilst the equity portion will provide the added return in a rising market. The Fund may opt to invest in Sukuk and Shariahcompliant equities either directly or via Shariah-compliant collective investment schemes. All investments are subjected to the Securities Commission Malaysia ( SC ) Guidelines on 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. 25

29 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 judgment 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(l). 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 period beginning 1 September 2017: Amendments to MFRS 107 Statement of Cash Flows - Disclosure Initiative introduce 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. 26

30 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. 27