CIMB-PRINCIPAL EQUITY GROWTH & INCOME FUND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018

Transcription

1 FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018

2 CONTENTS PAGE(S) INVESTORS LETTER 1 MANAGER S REPORT 2-7 Fund Objective and Policy Performance Data Market Review Fund Performance Portfolio Structure Market Outlook Investment Strategy Unit Holdings Statistics Soft Commissions and Rebates STATEMENT BY MANAGER 8 TRUSTEE S REPORT 9 INDEPENDENT AUDITORS REPORT STATEMENT OF COMPREHENSIVE INCOME 14 STATEMENT OF FINANCIAL POSITION 15 STATEMENT OF CHANGES IN EQUITY 16 STATEMENT OF CASH FLOWS 17 NOTES TO THE FINANCIAL STATEMENTS DIRECTORY 58

3 INVESTORS' LETTER Dear Valued Investors, 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 concluded the 1 st Quarter of 2018 with RM52.06 billion in Asset under Management ( AUM ). Our AUM for Private Retirement Scheme ("PRS") business increased by 33% year-on-year ( y-o-y ) to RM541 million as at 31 March We continue to achieve prestigious recognitions from The Edge Thomson Reuters Lipper Fund Awards as follows: The Edge Thomson Reuters Lipper Malaysia Fund Awards 2018 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 Balance Best Fund Over 3 Years, Equity Global - Malaysia : CIMB-Principal Global Titans Thomson Reuters Lipper Fund Award Global Islamic 2017 Best Equity Asia Pacific Ex-Japan (Islamic), Best Fund over 5 years : CIMB Islamic Asia Pacific Equity Fund 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. CIMB-Principal was also awarded Fund House of the Year in Malaysia by AsianInvestor for the Asset Management Awards 2017, its second consecutive win and The Employees' Provident Fund ("EPF") External Portfolio Managers Awards 2017 for the Best Global Bond Portfolio Manager. These industry recognitions reflect our success in scaling up our investment capabilities while building a solid track record and earning the trust of our clients over time. Thank you. Yours faithfully, for CIMB-Principal Asset Management Berhad Munirah Khairuddin Chief Executive Officer 1

4 MANAGER S REPORT FUND OBJECTIVE AND POLICY What is the investment objective of the Fund? The Fund aims to achieve capital appreciation over the medium to long-term through all types of investments that have the potential for above average growth over time. Has the Fund achieved its objective? For the financial year under review, The Fund has met its objective of capital appreciation over the medium to long-term. What are the Fund investment policy and principal investment strategy? The Fund may invest between 70% to 98% (both inclusive) of its Net Asset Value ( NAV ) in equities in order to gain long-term capital growth. The Fund may opt to invest in foreign equities up to a maximum of 30% of its NAV. Such foreign equities must be equity securities of companies domiciled in, listed in, and/or have significant operations in Asia ex Japan. Significant operations means major businesses of the company. For example, the Fund can invest in a company with significant business/operations in Thailand but listed on the New York Stock Exchange ("NYSE"). The threshold for significant operations would be if more than 30% of total group revenue derives from countries in Asia ex Japan. The calculation would be based on the most recent financial reports released by the companies (e.g. interim and annual reports). In line with its objective, the investment policy and strategy of the Fund will be to invest primarily in equities, with a bias towards growth stocks that have the potential to deliver long-term capital appreciation and to a lesser extent focus on dividend yielding stocks that provides income. The Fund may opt to seek investment exposure via Collective Investment Schemes that is in line with the Fund s objective, subject to the requirement of the Securities Commission Malaysia ( SC ) Guidelines. To a lesser extent, the Fund invests in liquid assets primarily for the purpose of cash management. The investment management function for the foreign investments of this Fund has been delegated to CIMB-Principal Asset Management (S) Pte. Ltd. ("CIMB-Principal (S)") with the approval of the SC. CIMB Principal (S) will be responsible for investing and managing these foreign investments in accordance with the investment objective and within the investment restrictions. Fund category/type Equity/Growth How long should you invest for? Recommended between three (3) years and five (5) years or more Indication of short-term risk (low, moderate, high) High When was the Fund launched? 15 May 1991 What was the size of the Fund as at 30 April 2018? RM million ( million units) What is the Fund s benchmark? 70% Financial Times Stock Exchange ("FTSE") Bursa Malaysia ("FBM") Top 100 ("FBM100") Index + 30% Morgan Stanley Capital International ("MSCI") All Country ("AC") Asia ex Japan Index Note: The benchmark is for performance comparison only. The benchmark is customised as such to align it closer to the structure of the portfolio and to reflect the composition of the portfolio in line with the markets they operate in. Investors are cautioned that the risk profile of the Fund is higher than the benchmark. 2

5 FUND OBJECTIVE AND POLICY (CONTINUED) What is the Fund distribution policy? The Manager has the discretion to distribute part or all of the Fund s distributable income. The distribution (if any) may vary from period to period depending on the investment objective and the performance of the Fund. What was the net income distribution for the financial year ended 30 April 2018? The Fund distributed a total net income of RM8.58 million to unit holders for the financial year ended 30 April As a result, the NAV per unit dropped from RM to RM on 27 July PERFORMANCE DATA Details of portfolio composition of the Fund for the last three financial years are as follows: % % % Collective investment scheme Quoted securities - Basic Materials Construction Consumer Products Energy Finance Industrials Infrastructure Projects Companies ("IPC") Plantation Properties Real Estate Investment Trusts ("REITs") Technology Telecommunications Trading/Services Utilities Cash and other net assets Performance details of the Fund for the last three financial years are as follows: NAV (RM Million) Units in circulation (Million) NAV per unit (RM) Highest NAV per unit (RM) Lowest NAV per unit (RM) Total return (%) (6.40) - Capital growth (%) (11.35) - Income distribution (%) Management Expense Ratio ("MER") (%) * Portfolio Turnover Ratio (PTR") (times) # * The Fund's MER decreased from 1.76% to 1.72% due to higher average NAV during the financial year under review. # The Fund's PTR decreased from 1.00 times to 0.62 times due to lesser portfolio rebalancing activities. 3

6 PERFORMANCE DATA (CONTINUED) Date of distribution Gross distribution per unit (sen) Net distribution per unit (sen) % % % % % Annual total return (6.40) (Launch date: 15 May 1991) 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 MAY 2017 TO 30 APRIL 2018) Asia Pacific ex-japan For the financial year under review, the Asian ex-japan equities as measured by the MSCI Asia ex- Japan Index recorded a gain of close to 21% on the back of a synchronised global growth scenario coupled with a low inflationary environment supporting accommodative policies by the global Central Banks. This supported earnings estimates revision upwards through most of the period under review. However, this Goldilocks scenario is being challenged by rising trade tensions between China & the US, a peaking of global growth momentum and an increasing risk of higher inflation. As a result, the stock market remained in a tight range in the last months. Malaysia For the financial year under review, the FBM100 Index rose by points or 4.84% to close at 12, points. Malaysia announced strong Gross Domestic Product ( GDP ) growth numbers in The country grew 5.6%, 5.8%, 6.2% and 5.9% y-o-y in the first, second, third and fourth quarters of 2017, respectively. For 2017 as a whole, Malaysia s GDP expanded at a respectable 5.9%. The country continued to grow in 2018, albeit at a slower rate of 5.4% in the first quarter of Meanwhile, the Consumer Price Index ( CPI ) was between 1.3% (lowest in March 2018) and 4.3% (highest in September 2017) for the year under review. Earlier, the CPI had peaked at 5.1% in March For the financial year under review, the Malaysian Ringgit ( MYR ) strengthened close to 10% from RM4.341 to RM3.923 per US Dollar ( USD ), led by portfolio inflows in both the equity and fixed income markets. Bursa was lifted by net foreign inflows amounting to RM6.2 billion. Bank Negara Malaysia ( BNM ) held the Overnight Policy Rate ( OPR ) at 3.00% for most of the financial year under review, hiking OPR only once by 25 basis points ( bps ) in January 2018 to 3.25%. In terms of Initial Public Offerings ( IPO ), the key highlight was the listing of Lotte Chemical Titan Holdings Sdn Bhd ( Lotte ) in July 2017, the largest IPO since The stock fell at debut due to weak investor demand and suffered another sharp drop after it announced a 72% decline in its second quarter net profit. Lotte touched a low of RM4.10 on 1 August 2017, significantly below its IPO price of RM6.50. The stock closed at RM5.47 at the end of the current review period. Budget 2018, which was tabled on 27 October 2018, was both expansionary and people-centric. Fiscal discipline was maintained as shown by a smaller deficit target of 2.8% for 2018 from 3.0% this year. 4

7 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 MARKET REVIEW (1 MAY 2017 TO 30 APRIL 2018) (CONTINUED) Malaysia (continued) The Index traded range-bound from May 2017 till November 2017, before staging a strong run in the following two months. The Index gained 4.5% in December 2017, followed by 3.6% in January Market rose on the back of year-end window dressing activities, driven mainly by banking and technology stocks, as well as a stronger MYR and higher oil prices. This coincided with BNM raising the OPR by 25 bps in January In February 2018, market volatility increased as investors began re-pricing more interest rate hikes in the US, earlier than expected, on the back of higher inflation expectations. In addition, mounting US- China trade tensions unnerved equity markets as evidenced by the global selldown in March FUND PERFORMANCE 1 year to years to years to Since inception to % % % % Income Capital Total Return Benchmark Average Total Return The Fund had a strong gain in the past year, recording a 11.98% gain in MYR terms. The Fund gained 5.50% from income while also gaining 6.14% in capital. The Fund has outperformed its benchmark return of 6.34% by 5.64%. 450% 400% 350% 300% CIMB-Principal Equity Growth & Income Fund 70% FBM100 Index + 30% MSCI AC Asia ex Japan 250% 200% 150% 100% 50% 0% 5

8 FUND PERFORMANCE (CONTINUED) Changes in NAV Changes % NAV (RM Million) NAV/Unit (RM) The Fund s total NAV has increased over the past year due to the performance of the underlying investments. 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) Collective investment scheme Quoted securities - local Quoted securities - foreign Cash and other net assets TOTAL As at the end of May 2018, the Fund had 65.78% in quoted local securities, 26.86% in quoted foreign securities and 6.28% in cash and other net assets. MARKET OUTLOOK* Asia Pacific ex-japan The outlook for Asia ex-japan equities is still positive in the near to medium term. The global synchronised economic recovery is still intact albeit at a slightly softer pace while the inflationary outlook remains modest. Hence, we expect the global Central Banks to gradually raise interest rates in line with the gradual expected rise in inflation rates. The rising trade tension is unlikely to derail into a all-out trade war. These conditions should continue to support a positive environment for Asian equities and support a fairly strong earnings growth in Asia. However, we would expect greater volatility in the near term as investors adjust to the tighter monetary policies. Malaysia The market has been volatile. The market sold off in May 2018, rattled by 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 corporate earnings season. Meanwhile, global trade tensions were back in focus, and there was fear of contagion from Italian politics. These were happening against a backdrop of Central Banks plans to normalise monetary policies, leading to worries of possible policy missteps. *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. 6

9 INVESTMENT STRATEGY Asia Pacific ex-japan In view of our positive view on equities, the investment strategy is to remain fully invested in the near term. Our favoured sectors will include the technology, financial, resources and consumer discretionary sectors. On a country basis, we prefer China, Hong Kong, Singapore and Malaysia where earnings estimates revision upwards appears to be gaining momentum. Other Association of Southeast Asian Nations ( ASEAN ) countries are seeing a more modest recovery as they are grappling with slower domestic growth and an uncertain political climate. Malaysia In this risk-off period, we take a more defensive view for capital protection until we see more clarity in the new government s austerity measures. We have sold into strength to raise cash for future deployment into quality names with reasonable risk/reward profiles during market retracements. We continue to prefer big capital companies with strong fundamentals in sectors such as Banks, Consumer, Technology and Industrials. We maintain our view that, despite the short term volatility, investors should position for the longer term, where risk premiums may potentially reduce as a result of better governance. UNIT HOLDINGS STATISTICS Breakdown of unit holdings by size as at 30 April 2018 are as follows: Size of unit holdings (units) No of unit holders No of units held % of units held (million) 5,000 and below 62, ,001 to 10,000 1, ,001 to 50,000 2, ,001 to 500, ,001 and above Total 66, SOFT COMMISSIONS AND REBATES CIMB-Principal Asset Management Berhad (the "Manager"), 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 Manager and the Trustee did not receive any rebates from the brokers or the dealers but have retained soft commission in the form of goods and services such as financial wire services and stock quotations system incidental to investment management of the Funds. 7

10 STATEMENT BY MANAGER TO THE UNIT HOLDERS OF We, being the Directors of CIMB-Principal Asset Management Bhd (the Manager ), do hereby state that, in the opinion of the Manager, the accompanying audited financial statements set out on pages 14 to 57 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 30 April 2018 and of its financial performance, changes in equity 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 Manager CIMB-Principal Asset Management Berhad (Company No.: K) MUNIRAH KHAIRUDDIN Chief Executive Officer/Executive Director ALEJANDRO ECHEGORRI Executive Director Kuala Lumpur 21 June

11 TRUSTEE S REPORT TO THE UNIT HOLDERS OF We, AmanahRaya Trustees Bhd, have acted as Trustee of CIMB-Principal Equity Growth & Income Fund for the financial year ended 30 April In our opinion, CIMB-Principal Asset Management Berhad, the Manager, has operated and managed CIMB-Principal Equity Growth & Income Fund in accordance with the limitations imposed on the investment powers of the management company under the Deeds, securities laws and the applicable Guidelines on Unit Trust Funds for the financial year then ended. We are of the opinion that: (a) (b) (c) Valuation and pricing is carried out in accordance with the Deeds and any regulatory requirement; Creation and cancellation of units are carried out in accordance with the Deeds and any regulatory requirement; and The distribution of income made by CIMB-Principal Equity Growth & Income Fund as declared by the Manager is appropriate and reflects the investment objective of CIMB-Principal Equity Growth & Income Fund. Yours faithfully AMANAHRAYA TRUSTEES BERHAD HABSAH BINTI BAKAR Chief Executive Officer Kuala Lumpur, Malaysia 19 June

12 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion In our opinion, the financial statements of CIMB-Principal Equity Growth & Income Fund (the Fund ) give a true and fair view of the financial position of the Fund as at 30 April 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 30 April 2018, and the statement of comprehensive income, statement of changes in equity 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 14 to 57. 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. 10

13 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF (CONTINUED) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Information other than the financial statements and auditors report thereon The Manager of the Fund is responsible for the other information. The other information comprises the Manager s report but does not include the financial statements of the Fund and our auditor s 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 Manager for the financial statements The Manager 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 in Malaysia. The Manager is also responsible for such internal control as the Manager 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 Manager 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 Manager either intend to liquidate the Fund or to cease operations, or have no realistic alternative but to do so. 11

14 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS 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 Manager. Conclude on the appropriateness of the Manager 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. 12

15 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS 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 Manager 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 holders of the Fund and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS LLP LCA & AF 1146 Chartered Accountants Kuala Lumpur 21 June

16 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 APRIL Note RM RM INVESTMENT INCOME Dividend income 5,546,955 3,840,693 Interest income from deposits with licensed financial institutions 207, ,354 Net gain on financial assets at fair value through profit or loss 9 16,832,970 20,440,427 Net foreign exchange (loss)/gain (582,006) 212,377 Other income 4 50,249 42,460 22,055,252 24,910,311 EXPENSES Management fee 5 2,471,312 2,183,579 Trustee s and custodian fees 6 168, ,260 Transaction costs 613, ,895 Audit fee 12,900 12,580 Tax agent s fee 35,764 41,472 Other expenses 213, ,108 3,515,809 3,563,894 PROFIT BEFORE TAXATION 18,539,443 21,346,417 Taxation 7 (126,303) (104,106) PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 18,413,140 21,242,311 Profit after taxation is made up as follows: Realised amount 13,757,682 15,574,973 Unrealised amount 4,655,458 5,667,338 18,413,140 21,242,311 The accompanying notes to the financial statements form an integral part of the audited financial statements. 14

17 STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL Note RM RM ASSETS Cash and cash equivalents 10 10,390,117 16,466,473 Financial assets at fair value through profit or loss 9 155,247, ,734,218 Amount due from stockbrokers 2,550,091 1,098,985 Amount due from Manager 959, ,020 Amount due from Manager of collective investment scheme - Management fee rebate 12,349 26,398 Dividends receivable 78, ,101 Tax recoverable 214, ,108 TOTAL ASSETS 169,451, ,030,303 LIABILITIES Amount due to stockbrokers 3,533,739 2,134,195 Amount due to Manager 32, ,138 Accrued management fee 200, ,044 Amount due to Trustee 9,510 8,915 Other payables and accruals 35,395 41,777 TOTAL LIABILITIES 3,812,036 2,778,069 NET ASSET VALUE OF THE FUND 165,639, ,252,234 EQUITY Unit holders capital 72,307,779 73,751,811 Retained earnings 93,332,017 83,500,423 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 165,639, ,252,234 NUMBER OF UNITS IN CIRCULATION (UNITS) ,518, ,330,854 NET ASSET VALUE PER UNIT (RM) The accompanying notes to the financial statements form an integral part of the audited financial statements. 15

18 STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018 Unit holders Retained capital earnings Total Note RM RM RM Balance as at 1 May ,751,811 83,500, ,252,234 Movement in unit holders contributions: - Creation of units from applications 16,777,274-16,777,274 - Creation of units from distribution 8,261,305-8,261,305 - Cancellation of units (26,482,611) - (26,482,611) Total comprehensive income for the financial year - 18,413,140 18,413,140 Distribution for the financial year 8 - (8,581,546) (8,581,546) Balance as at 30 April ,307,779 93,332, ,639,796 Balance as at 1 May ,192,301 70,803, ,995,994 Movement in unit holders contributions: - Creation of units from applications 17,195,928-17,195,928 - Creation of units from distribution 8,115,827-8,115,827 - Cancellation of units (18,752,245) - (18,752,245) Total comprehensive income for the financial year - 21,242,311 21,242,311 Distribution for the financial year 8 - (8,545,581) (8,545,581) Balance as at 30 April ,751,811 83,500, ,252,234 The accompanying notes to the financial statements form an integral part of the audited financial statements. 16

19 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 APRIL Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from disposal of quoted securities 102,705, ,894,557 Purchase of collective investment scheme (973,942) - Purchase of quoted securities (99,068,921) (142,589,540) Dividend income received 5,593,929 3,798,166 Interest income received from deposits with licensed financial institutions 207, ,354 Management fee paid (2,461,565) (2,163,485) Trustee s and custodian fees paid (168,266) (171,323) Payments for other fees and expenses (268,440) (302,773) Net realised foreign exchange loss (45,008) (178,508) Other income received 64,298 21,469 Tax paid (30,390) (170,385) Net cash generated from operating activities 5,554,026 5,512,532 CASH FLOW FROM FINANCING ACTIVITIES Cash proceeds from units created 16,083,887 17,226,658 Payments for cancellation of units (26,852,148) (18,475,213) Distribution paid (320,241) (429,754) Net cash used in financing activities (11,088,502) (1,678,309) Net (decrease)/increase in cash and cash equivalents (5,534,476) 3,834,223 Effects of foreign exchange differences (541,880) 370,362 Cash and cash equivalents at the beginning of the financial year 16,466,473 12,261,888 Cash and cash equivalents at the end of the financial year 10 10,390,117 16,466,473 Cash and cash equivalents comprised of: Bank balances 4,043,332 3,031,554 Deposits with licensed financial institutions 6,346,785 13,434,919 Cash and cash equivalents at the end of the financial year 10 10,390,117 16,466,473 The accompanying notes to the financial statements form an integral part of the audited financial statements. 17

20 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 APRIL THE FUND, THE MANAGER AND ITS PRINCIPAL ACTIVITY CIMB-Principal Equity Growth & Income Fund (the Fund ) is governed by a Principal Master Deed dated 15 May 2008, a Third Supplemental Master Deed dated 14 July 2008, a Sixth Supplemental Master Deed dated 16 July 2009, a Seventh Supplemental Master Deed dated 11 February 2010, Thirteenth Supplemental Master Deed dated 26 June 2012, and an Eighteenth Supplemental Master Deed dated 25 March 2015 (collectively referred to as the Deeds ), made between CIMB-Principal Asset Management Bhd (the Manager ) and AmanahRaya Trustees Bhd (the Trustee ). The Fund may invest between 70% to 98% (both inclusive) of its NAV in equities in order to gain long-term capital growth. The Fund may opt to invest in foreign equities up to a maximum of 30% of its NAV. Such foreign equities must be equity securities of companies domiciled in, listed in, and/or have significant operations in Asia ex Japan. Significant operations means major businesses of the company. For example, the Fund can invest in a company with significant business/operations in Thailand but listed on the NYSE. The threshold for significant operations would be if more than 30% of total group revenue derives from countries in Asia ex Japan. The calculation would be based on the most recent financial reports released by the companies (e.g. interim and annual reports). In line with its objective, the investment policy and strategy of the Fund will be to invest primarily in equities, with a bias towards growth stocks that have the potential to deliver long-term capital appreciation and to a lesser extent focus on dividend yielding stocks that provides income. The Fund may opt to seek investment exposure via Collective Investment Schemes that is in line with the Fund s objective, subject to the requirement of the SC Guidelines. To a lesser extent, the Fund invests in liquid assets primarily for the purpose of cash management. The investment management function for the foreign investments of this Fund has been delegated to CIMB-Principal (S) with the approval of the SC. CIMB-Principal (S) will be responsible for investing and managing these foreign investments in accordance with the investment objective and within the investment restrictions. All investments are subjected to the SC Guidelines on Unit Trust Funds, 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 Manager, a company incorporated in Malaysia, is jointly owned by CIMB Group and Principal International (Asia) Limited. The principal activities of the Manager are the establishment and management of unit trust funds and fund management activities. 18

21 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. It also requires the Manager to exercise their judgment in the process of applying the Fund s accounting policies. Although these estimates and assumptions are based on the Manager 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(m). 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 May 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. 19

22 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) 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 May 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 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 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. 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 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 ( 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 impacts from the adoption of the new standard on 1 January 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. 20

23 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities Classification The Fund designates its investments in collective investment schemes and quoted securities 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. Loans 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 loans and receivables comprise cash and cash equivalents, amount due from stockbrokers, amount due from Manager, amount due from Manager of Collective Investment Schemes and dividends receivable. 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 stockbrokers, amount due to Manager, accrued management fee, amount due to Trustee, 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. Investments are initially recognised at fair value. Transaction costs are expensed in the statement of comprehensive income. 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 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. Collective investment schemes are valued based on the most recent published NAV per unit or share of such collective investment scheme or, if unavailable, the last published price of such unit or share (excluding any sales charge included in such selling price). 21

24 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities Recognition and measurement (continued) Quoted securities in Malaysia are valued at the last done market price quoted on Bursa Malaysia Securities Bhd ( Bursa Securities ) at the date of the statement of financial position. Foreign quoted securities are valued at the last traded market price quoted on the respective foreign stock exchanges at the close of the business day of the respective foreign stock exchanges. If a valuation based on the market price does not represent the fair value of the quoted securities, for example during abnormal market conditions or when no market price is available, including in the event of a suspension in the quotation of the quoted securities for a period exceeding 14 days, or such shorter period as agreed by the Trustee, then the quoted securities are valued as determined in good faith by the Manager, based on the methods or bases approved by the Trustee after appropriate technical consultation. Deposits with licensed financial institutions are stated at cost plus accrued interest calculated on the effective interest method over the period from the date of placement to the date of maturity of the respective deposits. Loans and receivables and other financial liabilities are subsequently carried at amortised cost using the effective interest method. Impairment for assets carried at amortised costs For assets carried at amortised cost, the Fund assesses at the end of the reporting year whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The asset s carrying amount is reduced and the amount of the loss is recognised in statement of comprehensive income. If loans and receivables has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest 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. 22

25 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Foreign currency 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. Due to mixed factors in determining the functional currency of the Fund, the Manager has used its judgement to determine the functional currency that most faithfully represents the economic effects of the underlying transactions, events and conditions and have determined the functional currency to be in RM primarily due to the following factors: Functional and presentation currency i) Units of the Fund are denominated in RM. ii) All of the Fund s expenses are denominated in RM. iii) Majority of the Fund s cash balances and investments are denominated in RM. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in statement of comprehensive income. (d) Income recognition Dividend income is recognised on the ex-dividend date when the right to receive payment is established. Interest income from deposits with licensed financial institutions is recognised on a time proportionate basis using effective interest rate method on an accrual basis. Realised gain or loss on disposal of collective investment scheme and quoted securities are accounted for as the difference between the net disposal proceeds and the carrying amount of collective investment scheme and quoted securities, determined on a weighted average cost basis. (e) Cash and cash equivalents For the purpose of statement of cash flows, cash and cash equivalent comprise bank balances and deposits held in highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (f) 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. 23

26 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (f) Taxation (continued) Tax on dividend income from foreign quoted securities and foreign collective investment schemes is based on the tax regime of the respective countries that the Fund invests in. (g) Distribution A distribution to the Fund s unit holders is accounted for as a deduction from realised reserve. A proposed distribution is recognised as a liability in the year in which it is approved by the Trustee. (h) Transactions costs Transaction costs are costs incurred to acquire or dispose financial assets or liabilities at fair value through profit or loss. They include fees and commissions paid to agents, advisers, brokers and dealers. Transaction costs, when incurred, are immediately recognised in the statement of comprehensive income as expenses. (i) Other income Management fee rebate is derived from the collective investment scheme held by the Fund on an accrual basis to ensure no double charging of management fee. It is accrued daily based on the fair value of collective investment schemes held. (j) Amount due from/to stockbrokers Amount due from and amount due to stockbrokers represent receivables for quoted securities and collective investment scheme sold and payables for quoted securities and collective investment scheme purchased that have been contracted for but not yet settled or delivered on the statement of financial position date respectively. These amounts are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment for amount due from stockbrokers. A provision for impairment of amount due from stockbrokers is established when there is objective evidence that the Fund will not be able to collect all amounts due from the relevant stockbroker. Significant financial difficulties of the stockbroker, probability that the stockbroker will enter bankruptcy or financial reorganisation, and default in payments are considered indicators that the amount due from stockbrokers is impaired. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. (k) Unit holders capital The unit holders contributions to the Fund meet the criteria to be classified as equity instruments under MFRS 132 Financial Instruments: Presentation. Those criteria include: the units entitle the holder to a proportionate share of the Fund s NAV; the units are the most subordinated class and class features are identical; there is no contractual obligations to deliver cash or another financial asset other than the obligation on the Fund to repurchase; and the total expected cash flows from the units over its life are based substantially on the profit or loss of the Fund. 24