CIMB ISLAMIC PRS PLUS MODERATE

Transcription

1 CONTENTS PAGE(S) MEMBERS' LETTER 1 SHARIAH ADVISER S REPORT 2 STATEMENT BY THE PRS PROVIDER 3 TRUSTEE'S REPORT 4 INDEPENDENT AUDITORS REPORT 5-6 PRS PROVIDER S REPORT 7-17 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 18 STATEMENT OF FINANCIAL POSITION 19 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO MEMBERS 20 STATEMENT OF CASH FLOWS 21 NOTES TO THE FINANCIAL STATEMENTS DIRECTORY 43 LIST OF CWA (an Agency force of CIMB-Principal) OFFICES 44-48

2 MEMBERS LETTER Dear Valued Members, Thank you for investing in CIMB-Principal Asset Management Berhad ( CIMB-Principal ) funds. At CIMB-Principal, we are dedicated to provide the best service and guidance to our valued customers. We believe this will ensure your relationship with us is a long and satisfying one. We will continuously strive for customer satisfaction in the products we deliver and service we provide. We are also pleased to share the wonderful news that CIMB-Principal has won more awards. These awards are important because it means that the consistent investment process we have in place, supported by strong portfolio risk management and oversight practices, has yielded top-performing investment results for our loyal investors. AsianInvestor Asset Management Awards 2016 Best Fund House in Malaysia The Asset Triple A Asset Servicing, Fund Management and Investors Awards 2016 Asset Management Company of the Year Alpha Southeast Asia, Southeast Asia's 10th Annual Best Financial Institutions Awards 2016 Best Asset & Fund Manager ( ) in Malaysia We thank you for your ongoing support that plays an integral part to drive us to where we are now. This industry achievement will further boost our Southeast Asia s aspirations to be the most valued investment manager offering total asset management solutions and further strengthen our investment capabilities with sound track record. Moving forward, we are committed to deliver a better customer experience to you. Hence, we are taking the next step to know you better. For your information, we have started a customer information update exercise through s, phone and registered mail so that we can interact better with you in the future. We would like to thank those who have updated their latest information with us. For those who have not updated their information, our friendly Customer Service Officers will be in touch with you soon. Alternatively, you are also strongly encouraged to contact our Customer Care Centre directly at or your Consultant to update your latest information. I wish all of you a blessed and rewarding year ahead. Happy investing! Yours faithfully, for CIMB-Principal Asset Management Berhad Munirah Khairuddin Chief Executive Officer/Executive Director 1

3 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. 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 ABDUL GHANI ENDUT Group Head, Shariah & Governance/Designated Person Responsible for Shariah Advisory Kuala Lumpur 31 October

4 STATEMENT BY THE PRS PROVIDER TO THE MEMBERS OF I, being a Director 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 18 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 2016 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 Kuala Lumpur 31 October

5 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) (b) (c) limitations imposed on the investment powers of the PRS Provider and Trustee under the Deeds, the Securities Commission's Guidelines on Private Retirement Schemes, the Capital Markets and Services Act 2007 and other applicable laws; the valuation/pricing is carried out in accordance with the Deeds of the Fund and any regulatory requirements; and creation and cancellation of units are carried out in accordance with the Deeds and any regulatory requirements. For Deutsche Trustees Malaysia Berhad SOON LAI CHING Senior Manager, Trustee Operations MAHESH ANCHAN Head, Trustee Operations Kuala Lumpur 31 October

6 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF REPORT ON THE FINANCIAL STATEMENTS We have audited the financial statements of CIMB Islamic PRS Plus Moderate (the Fund ) on pages 18 to 42 which comprise the statement of financial position as at 31 August 2016 of the Fund, and the statement of comprehensive income, statement of changes in net assets attributable to members and statement of cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 16. PRS Provider s Responsibility for the Financial Statements The PRS Provider of the Fund is responsible for the preparation of financial statements so as to 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 that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Fund s preparation of financial statements that give a true and fair view 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 PRS Provider s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the PRS Provider, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 5

7 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF (CONTINUED) REPORT ON THE FINANCIAL STATEMENTS (CONTINUED) Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Fund as of 31 August 2016 and of its financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. 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 (No. AF: 1146) Chartered Accountants Kuala Lumpur 31 October

8 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 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. 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. Fund category/type Core (Moderate) When was the Fund launched? 12 November 2012 What was the size of the Fund as at 31 August 2016? RM16.47 million (27.70 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. 7

9 PERFORMANCE DATA Details of portfolio composition of the Fund for the last three financial years are as follows: % % % Shariah-compliant collective investment schemes 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 Total return (%) - Class A Class C Class X Capital growth (%) - Class A Class C Class X Income distribution (%) - Class A Class C Class X

10 PERFORMANCE DATA (CONTINUED) Management Expense Ratio ("MER") (%) Portfolio Turnover Ratio ("PTR") (times) # # The Fund's PTR decreased from 1.59 times to 0.46 times as there were less trading activities carried out during the financial year Since inception to % % % % 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. MARKET REVIEW (1 SEPTEMBER 2015 TO 31 AUGUST 2016) Sukuk Market players turned cautious in the fourth quarter of 2015 as the US Federal Reserve (the "Fed") signaled that it may hike its interest rate in December 2015, leading to a spike in sovereign yields. However, the first few months of 2016 saw the GII rally as investors took up positions after staying sidelined at the end Investors searched for relative yield pickup after Bank Negara Malaysia ("BNM") cut Statutory Reserve Requirement ("SRR") in February 2016, causing demand for sovereign issues extended out the curve. Dovish Federal Open Market Committee ("FOMC") stand and the easing done by global central banks such as the European Central Bank ("ECB") and Bank of Japan ("BOJ") due to the prospect of slow global growth also resulted in strong foreign flows into the Malaysian market. In the second quarter of 2016, GII market experienced volatility as investors took profit after hawkish FOMC minutes coupled with Brexit uncertainty. However, sovereign market rallied towards the end of June 2016 due to strong buying interest from foreign investors after the United Kingdom ("UK") voted to exit the European Union ("EU"). Yields were pushed lower as investors continue to anticipate prospects of further monetary stimulus by Bank of England, BOJ and ECB. BNM cut the SRR in February 2016 but kept its Overnight Policy Rate ("OPR") at 3.25% in 2015 and in the first half of 2016, stating that the stance of monetary policy remains supportive of growth despite downside risks to growth. However, on 13 July 2016, BNM cut its OPR for the first time in 7 years by 25 basis points ("bps") to 3.00% at its Monetary Policy Committee ("MPC") meeting. This came as a surprise to the market as the domestic economy is expected to be on track to report stable growth in The Central Bank cited risks from uncertainties in the global environment on the prospects of domestic growth to be the key rationale behind the pre-emptive rate cut. 9

11 MARKET REVIEW (1 SEPTEMBER 2015 TO 31 AUGUST 2016) (CONTINUED) Sukuk (continued) On macro front, the Malaysian economy advanced 4.00% in the second quarter 2016 supported by domestic demand. The stronger growth in domestic demand in the second quarter of 2016 was attributed to both private consumption and private investment. On a quarterly basis, the economy grew by 0.70%, slowing from a 1.00% expansion in the previous three months. The Malaysian economy recorded Gross Domestic Product ("GDP") growth of 5.00% in BNM expects GDP growth for 2016 to be between 4.00% to 4.50%. BNM lowered its inflation outlook from range 2.50% and 3.50% to 2.00% and 3.00% for Equity For the 1-year financial period under review, the FBMS Index rose by points or 8.63% to close at 12, points. In the fourth quarter of 2015, the FBMS Index rebounded strongly on the back of some stability returning to regional markets as well as the US stock market. In an effort to shore up the local equity market, the Malaysian government allocated RM20 billion to ValueCap to invest in good value stocks, which proved to be positive to the local stock exchanges. In the meantime, to strengthen ties with South East Asia and to help stabilise financial markets in Malaysia, China announced in November 2015 that they would buy Malaysian government bonds which helped both local equity and bond markets. Overall, in 2015, net foreign outflows from Malaysia amounted to RM19.30 billion, the largest annual outflow since records started in Malaysian equities had a rocky start in The FBMS Index fell sharply earlier in the quarter before rebounding towards the end. The sharp sell-off globally in January 2016 spooked traders and Malaysia was not spared. The Index continued its downtrend in the following month due to weak corporate earnings for the fourth quarter of 2015, as well as external and internal headwinds. The Index recovered in March 2016, lifted by higher oil prices, stronger Malaysian Ringgit ("MYR") and increasing investor optimism that the Fed may delay its future Funds rate hike. The confluence of these positive macro factors led to a RM6.10 billion net foreign equity inflow into the Malaysian market for the quarter. However, most of the gains in March 2016 were given up in the following month of April Investors were rattled by news of 1Malaysia Development Berhad s ("1MDB") bond default, which triggered a cross default on two other notes. BNM new internally sourced governor failed to lift the market. The Morgan Stanley Capital International ("MSCI") Index rebalancing subjected the Malaysian market to repositioning and short-selling activities, resulting in net foreign equity outflows of RM4.30 billion in May In June 2016, the MSCI Index shrugged off the Brexit vote partly due to mid-year window dressing activities. Post-Brexit, the resulting flight to safety caused global government bond yields to collapse, signaling deflationary growth concerns. On the local front, Barisan Nasional s ("BN") two by-election victories fuelled speculation of early elections. In July 2016, the Malaysian equity market remained flat for the month despite oil prices receding by 13.90% to USD41.6 per barrel and heightened political noise. The FBMS Index rose in August 2016, partly on expectations of an early general election, stronger commodity prices, and to some extent expectations of new leadership at Permodalan Nasional Berhad ("PNB"). 10

12 MARKET REVIEW (1 SEPTEMBER 2015 TO 31 AUGUST 2016) (CONTINUED) Asian Equity For the 1-year financial period under review, the Morgan Stanley Capital International All Country ("MSCI AC") Asia Pacific Islamic Ex Japan Index gained by points, or 11.23% to close at points, in US Dollar ("USD") terms. On 11 August 2015, the People s Bank of China ("PBOC") surprised investors by changing the Chinese Yuan Renminbi ("CNY") fixing mechanism and depreciated the currency by 3.00% to CNY6.40 against USD. The move jolted global markets. The sell-off escalated across Asian equities, currencies and fixed income with the lows hit in late September In fact, all Association of Southeast Asian Nations ("ASEAN") currencies hit decade-lows in September In the meantime, a credit rating provider, Moody s, and the provider of financial assistance to countries in the Asia Pacific region, Asian Development Bank, cut Asia s growth forecasts citing slower growth prospects. The International Monetary Fund ( IMF ) followed suit in October 2015 by cutting projections for global growth to 3.10% (from 3.30%) in Asian markets went through a sharp correction and bottomed in the month of January 2016 after the introduction of circuit breakers (mechanism to prevent panic selling) in China accelerate the selling from the first day of the year. This led to new fears of capital controls in China. Asian markets began rallying from February 2016 as sentiment towards China recovered on stimulus expectations. Helped by acceleration in China s credit growth and the Fed's accommodative stance, Asian markets underwent a strong risk-on rally in March 2016, which also saw commodity prices rebound from their lows in January 2016 and strengthening of Asian currencies versus the USD. However, the risk-on rally petered out in April 2016 as investors realised that these supportive factors are likely to be temporary. Stock markets corrected in the following month due to softer China economic activity data. The market gained momentum again in June 2016 as Asia benefited from strong portfolio flows into both equities and bonds, especially in the days following Brexit, surprising many investors. The passage of the tax amnesty law lifted Indonesian equities, currencies and bonds higher. Philippines equities surged to fresh year-to-date ("YTD") highs on the back of an optimistic outlook on the newly inaugurated Rodrigo Duterte administration as 16 th President of the Philippines. Asian equities continued to fare strongly in July 2016 and August 2016 with outstanding performances from China and Thailand. China outperformed driven by better than expected second quarter of 2016 corporate results as well as the approval of Shenzhen-Hong Kong Stock Connect, a stock trading channel which further opens China's capital markets to international investors. Meanwhile, Thailand benefitted from massive Emerging Markets ("EM") flow and cabinet's approval on the train projects which created optimistic expectation on fiscal capital expenditure spending. Real rates remain generally positive across the region, with inflation continuing to ease across most countries. In the meantime, earnings revisions seem to be stabilising with some selective upgrades. 11

13 FUND PERFORMANCE 1 year to years to Since inception to Class A Class C Class X 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 X gained 3.54% while Class C gained 3.53%. In the meantime, the benchmark gained 6.82% over the same reporting period. The underperformance came primarily from the allocation into Equity funds. The slight variation in the performance of Class A and Class X versus Class C was due to different timing of units created for each class. 1 year to % 6.00% 4.00% 2.00% 0.00% Class A, C and X* Benchmark -2.00% -4.00% 12

14 FUND PERFORMANCE (CONTINUED) 3 years to % 16.00% 11.00% 6.00% Class A, C and X* Benchmark 1.00% -4.00% Since inception to % 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. 13

15 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. This is due to increased awareness on long-term savings plan for retirement among unit holders as well as the tax incentives offered by the Government. The total NAV of Class X rose to RM8.32 million, or by 66.40%, over the 1-year period. Meanwhile, the total NAV of Class A and Class C grew by 37.30% and 30.00% respectively. For the 1-year period, the Fund ranked 13 th Balanced category in Lipper s ranking. in Quartile 3 under the Islamic Mixed Asset MYR 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 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. 14

16 MARKET OUTLOOK* Sukuk Uncertainties regarding the impact of Brexit to the US and global economy have resulted in diminished prospect for an aggressive US Fed rate hike. The Bank of England, BOJ and the ECB are expected to introduce further monetary stimulus to moderate the impact of the UK withdrawal from EU. We believe the diminished expectation of an aggressive Fed hike and the accommodative monetary policy by global central banks should be supportive of the domestic Sukuk market. The low yield environment will attract more issuers into the market culminating in bigger supply of Sukuk in the near term although ample liquidity in the market should see support for these new issues. Malaysia s economy is expected to continue to be challenging stemming from slower global growth. The Government forecasted that the economy will grow between 4.00% to 5.00% in 2016, driven by domestic demand. All eyes will be focused towards BNM's decisions in future MPC meetings. Market is expected to scrutinise the MPC s statements closely for any signs of accommodative monetary policy given Malaysia s GDP is expected to decline due to slower global growth. Local Equity We expect the FBMS Index to continue to trade range bound in the short term. Possible catalysts include earnings stability in the upcoming second quarter of 2016 results, speculation of early elections in first half of 2017 and more stimulus by the Government to support growth. Being a laggard market in the region, Malaysia may continue to see inflows from foreigners. We seek opportunities in the Malaysian Government-Linked Companies ("GLC") restructuring theme in the medium term in the plantation, property and services sectors. In a slow growth environment, we continue to like high dividend yielders. We also maintain our overweight in the construction sector as positive newsflow from more fiscal expansion from the Government will continue this year. From a research perspective, we seek new ideas in the e-commerce/logistics space. We are also looking into the affordable housing segment. Asian Equity Liquidity flows to Asia, especially ASEAN, have improved recently. Due to high leverage and tepid growth, the developed world appears crisis prone which suggests policy makers will remain vigilant and accommodative. This means that equity markets will probably remain choppy and outperformers will be a narrow group of stocks. Asia ex-japan looks relatively better as economies still appear responsive to conventional monetary policy and fiscal stimulus. Overall, we are neutral on Asian equities but would look to buy on weakness. Previously, jitters from large macro events, like a sharp China slowdown and Brexit, have been buying opportunities and this would probably continue to be the case as long as policymakers are concerned about muted economic growth. * 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. 15

17 INVESTMENT STRATEGY As this is a core Fund for the Private Retirement Schemes ("PRS"), the Fund will continue to remain fully invested with minimal cash kept for redemption purposes. Our asset allocation decisions will continue to be subject to market conditions. MEMBERS STATISTICS AS AT 31 AUGUST 2016 CLASS A Size of unit holdings (units) No. of members No. of units held % of units held (million) 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 % of units held (million) 5,000 and below ,001-10, ,001-50, , , ,001 and above Total CLASS X Size of unit holdings (units) No. of members No. of units held % of units held (million) 5,000 and below 1, ,001-10, ,001-50, , , ,001 and above Total 1,

18 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. 17

19 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 AUGUST Note RM RM INVESTMENT INCOME Dividend income 400, ,887 Net gain on financial assets at fair value through profit or loss 7 197, , , ,719 EXPENSES Private Pension Administrator's fee 4 5,348 2,007 Trustee s fee 5 5,348 - Audit fee 8,860 8,500 Tax agent s fee 5,800 4,600 Other expenses 2,673 2,759 28,029 17,866 PROFIT BEFORE TAXATION 570, ,853 Taxation 6 - (255) INCREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS 570, ,598 Profit after taxation and total comprehensive income comprise the following: Realised amount 407, ,036 Unrealised amount 162, , , ,598 The accompanying notes to the financial statements form an integral part of the audited financial statements. 18

20 STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2016 ASSETS Note RM RM Cash and cash equivalents (Shariah-compliant) 8 37,445 54,038 Financial assets at fair value through profit or loss (Shariah-compliant) 7 16,353,858 10,793,240 Amount due from the PRS Provider 9 123, ,866 Tax recoverable TOTAL ASSETS 16,515,229 10,955,783 LIABILITIES Amount due to the PRS Provider 9 35, Other payables and accruals 14,785 12,048 TOTAL LIABILITIES (EXCLUDING NET ASSETS ATTRIBUTABLE TO MEMBERS) 49,785 12,393 NET ASSET VALUE OF THE FUND 16,465,444 10,943,390 NET ASSETS ATTRIBUTABLE TO MEMBERS 16,465,444 10,943,390 REPRESENTED BY: FAIR VALUE OF OUTSTANDING UNITS - CLASS A 7,623,424 5,547,473 - CLASS C 524, ,810 - CLASS X 8,317,366 4,999,107 16,465,444 10,943,390 NUMBER OF UNITS IN CIRCULATION (UNITS) - CLASS A 12,822,681 9,677,959 - CLASS C 882, ,264 - CLASS X 13,990,216 8,721, ,695,195 19,091,519 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. 19

21 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 10,943,390 5,814,720 Movement due to units created and cancelled during the financial year: - Creation of units from applications 6,371,641 5,649,552 - Cancellation of units (1,420,077) (807,480) 15,894,954 10,656,792 Increase in net assets attributable to members during the financial year: Profit after taxation and total comprehensive income 570, ,598 NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE END OF THE FINANCIAL YEAR 16,465,444 10,943,390 The accompanying notes to the financial statements form an integral part of the audited financial statements. 20

22 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 collective investment schemes 3,707,410 11,363,111 Purchase schemes of Shariah-compliant collective investment schemes (8,654,517) (16,101,919) Private Pension Administrator s fee paid (5,170) (2,007) Trustee's fee paid (4,804) - Payments for other fees and expenses (15,317) (14,811) Receipt of advances from the PRS Provider - 4,338 Net cash used in operating activities (4,972,398) (4,751,288) CASH FLOWS FROM FINANCING ACTIVITIES Cash proceeds from units created 6,356,227 5,615,599 Payments for cancellation of units (1,400,422) (837,038) Net cash generated from financing activities 4,955,805 4,778,561 Net (decrease)/increase in cash and cash equivalents (16,593) 27,273 Cash and cash equivalents at the beginning of the financial year 54,038 26,765 Cash and cash equivalents at the end of the financial year 8 37,445 54, The accompanying notes to the financial statements form an integral part of the audited financial statements.

23 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 Trustee 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 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 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. 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. 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 a subsidiary of CIMB Group Sdn Bhd and regards CIMB Group Holdings Berhad as its ultimate holding company. The PRS Provider is also an associate of Principal International (Asia) Limited, which is a subsidiary of Principal Financial Group Inc. 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. 22

24 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) 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. It also requires the PRS Provider to exercise their judgment in the process of applying the Fund s accounting policies. Although these estimates and judgement 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(j). 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 2015: Annual Improvements to MFRS Cycle Annual Improvements to MFRS Cycle The adoption of these amendments did not have any impact on the current financial year or any prior period and is not likely to affect future periods. 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 2016 Amendments to MFRS 101 Presentation of financial statements - Disclosure Initiative (effective from 1 January 2016) provide clarifications on a number of issues, including: Materiality an entity should not aggregate or disaggregate information in a manner that obscures useful information. Where items are material, sufficient information must be provided to explain the impact on the financial position or performance. Disaggregation and subtotals line items specified in MFRS 101 may need to be disaggregated where this is relevant to an understanding of the entity s financial position or performance. There is also new guidance on the use of subtotals. Notes confirmation that the notes do not need to be presented in a particular order. 23

25 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) (i) Financial year beginning on/after 1 September 2016 (continued) Other comprehensive income ( OCI ) arising from investments accounted for under the equity method the share of OCI arising from equity-accounted investments is grouped based on whether the items will or will not subsequently be reclassified to profit or loss. Each group should then be presented as a single line item in the statement of other comprehensive income. According to the transitional provisions, the disclosures in MFRS 108 regarding the adoption of new standards/accounting policies are not required for these amendments. Annual Improvements to MFRS Cycle (effective from 1 January 2016) As these amendments merely clarify the existing requirements, they do not affect the Fund s accounting policies or any of the disclosures. (ii) Financial year beginning on/after 1 September 2017 MFRS 15 Revenue from Contracts with Customers (effective from 1 January 2017) replaces MFRS 118 Revenue and MFRS 111 Construction Contracts and related interpretations. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements. (iii) 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. The complete version of MFRS 9 was issued in November

26 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) (iii) Financial year beginning on/after 1 September 2018 (continued) 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 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. 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 1. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in OCI rather than the income statement, unless this creates an accounting mismatch. MFRS 9 introduces an expected credit loss 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 will apply this standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements. (b) Financial assets and financial liabilities Classification The Fund designates its investments in Shariah-compliant collective investment schemes 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 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. 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. 25

27 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities (continued) Classification (continued) 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 schemes are valued based on the most recent published NAV per unit or share of such Shariah-compliant collective investment schemes 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 profit method. 26

28 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 profit rate. The asset s carrying amount is reduced and the amount of the loss is recognised in statement of comprehensive income. If financing and receivables 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 schemes is accounted for as the difference between net disposal proceeds and the carrying amount of Shariah-compliant investments, determined on a weighted average cost basis. (d) Functional and presentation currency Items included in the financial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (the functional currency ). The financial statements are presented in Ringgit Malaysia ( RM ), which is the Fund s functional and presentation currency. 27

29 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Creation and cancellation of units The members contributions to the Fund meet the definition of puttable instruments classified as financial liability under MFRS 132 Financial Instruments: Presentation. The Fund issues cancellable units, in three classes of units, known respectively as the Class A, Class C and Class X, which are cancelled at the member s option and do not have identical features subject to restrictions as stipulated in the Disclosure Document and SC Guidelines on PRS. The units are classified as financial liabilities. Cancellable units can be put back to the Fund at any time for cash equal to a proportionate share of the Fund s NAV of respective classes. The outstanding units are carried at the redemption amount that is payable at the date of the statement of financial position if the member exercises the right to put back the unit to the Fund. Units are created and cancelled at the member s option at prices based on the Fund s NAV per unit of respective classes at the close of business on the relevant dealing day. The Fund s NAV per unit of respective classes is calculated by dividing the net assets attributable to members of respective classes with the total number of outstanding units of respective classes. (f) Cash and cash equivalents For the purpose of statement of cash flows, cash and cash equivalents comprise bank balances which are subject to an insignificant risk of changes in value. (g) Taxation Current tax expense is determined according to Malaysian tax laws at the current rate based upon the taxable profit earned during the financial year. (h) Increase/Decrease in net assets attributable to members Income not distributed is included in net assets attributable to members. (i) Segment information Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments. (j) Critical accounting estimates and judgments in applying accounting policies The Fund makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Funds results and financial position are tested for sensitivity to changes in the underlying parameters. 28