CIMB ISLAMIC PRS PLUS GROWTH UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018

Transcription

1 UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018

2 CONTENTS PAGE(S) MEMBERS LETTER 1 SHARIAH ADVISER S REPORT 2 STATEMENT BY THE PRS PROVIDER 3 TRUSTEE S REPORT 4 PRS PROVIDER S REPORT 5-15 Fund Objective and Policy Performance Data Market Review Fund Performance Portfolio Structure Market Outlook Investment Strategy Members Statistics Soft Commissions and Rebates UNAUDITED STATEMENT OF COMPREHENSIVE INCOME 16 UNAUDITED STATEMENT OF FINANCIAL POSITION 17 UNAUDITED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO MEMBERS 18 UNAUDITED STATEMENT OF CASH FLOWS 19 NOTES TO THE FINANCIAL STATEMENTS DIRECTORY 48

3 MEMBERS LETTER Dear Valued Member, 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 Schemes ( 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 Balanced - Malaysia : CIMB-Principal Income Plus Balanced Fund Best Fund Over 3 Years, Equity Global - Malaysia : CIMB-Principal Global Titans Fund 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. Pursuant to Schedule B1 Investment Restrictions and Limits for Core Funds under the Default Option of the Securities Commission Malaysia ( SC ) Guidelines on PRS, investment of core funds into one or more collective investment schemes of the same PRS Provider ( target funds ) is permitted for a five-year period from the launch of the Scheme or upon reaching RM200 million Net Asset Value ( NAV ) (whichever is earlier). The five-year period expired on 12 November 2017 and hence effective from end of October 2017, the Fund has sold its position in collective investment schemes and reinvested directly in the market in accordance to the Fund s investment policy and principal investment strategy. Thank you. Yours faithfully, for CIMB-Principal Asset Management Berhad Munirah Khairuddin Chief Executive Officer 1

4 SHARIAH ADVISER S REPORT TO THE MEMBERS OF CIMB ISLAMIC PRS PLUS GROWTH We have acted as the Shariah Adviser of CIMB Islamic PRS Plus Growth (the Fund ) for the six months financial period ended 28 February 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 six months financial period ended 28 February In addition, we confirm that the investment portfolio of the Fund comprises securities which have been classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission Malaysia and, where applicable the Shariah Advisory Council of Bank Negara Malaysia. For investments other than the abovementioned, we have reviewed the same and are of the opinion that these investments were in accordance with the Shariah Investment Guidelines of the Fund. This report is made solely to the members of the Fund, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report and we shall not be liable for any errors or non-disclosure on the part of the PRS provider. For and on-behalf of the Shariah Adviser CIMB Islamic Bank Berhad ASHRAF GOMMA ALI Director/Regional Head, Shariah & Governance/Designated Person Responsible for Shariah Advisory Kuala Lumpur 20 April

5 STATEMENT BY THE PRS PROVIDER TO THE MEMBERS OF CIMB ISLAMIC PRS PLUS GROWTH CIMB ISLAMIC PRS PLUS GROWTH We, being the Directors of CIMB-Principal Asset Management Berhad (the PRS Provider ), do hereby state that, in the opinion of the PRS Provider, the accompanying unaudited financial statements set out on pages 16 to 47 are drawn up in accordance with the provisions of the Deeds and give a true and fair view of the statement of financial position of the Fund as at 28 February 2018 and of its financial performance, changes in net assets attributable to members and cash flows for the financial period then ended in accordance with Malaysian Financial Reporting Standards ( MFRS ) Interim Financial Reporting and International Accounting Standards ( IAS ) 34 - Interim Financial Reporting. For and on behalf of the PRS Provider CIMB-Principal Asset Management Berhad (Company No.: K) MUNIRAH KHAIRUDDIN Chief Executive Officer/Executive Director ALEJANDRO ECHEGORRI Executive Director Kuala Lumpur 23 April

6 TRUSTEE S REPORT TO THE MEMBERS OF CIMB ISLAMIC PRS PLUS GROWTH We have acted as Trustee for CIMB Islamic PRS Plus Growth (the Fund ) for the six months financial period ended 28 February To the best of our knowledge, for the six months financial period under review, CIMB-Principal Asset Management Berhad (the PRS Provider ) has operated and managed the Fund in accordance with the following:- (a) limitations imposed on the investment powers of the PRS Provider under the Deed(s), the Securities Commission s Guidelines on Private Retirement Schemes, the Capital Markets and Services Act 2007 and other applicable laws; (b) valuation and pricing for the Fund has been carried out in accordance with the Deed(s) of the Fund and applicable regulatory requirements; and (c) creation and cancellation of units for the Fund have been carried out in accordance with the Deed(s) of the Fund and applicable regulatory requirement. For Deutsche Trustees Malaysia Berhad SOON LAI CHING Senior Manager, Trustee Operations RICHARD LIM HOCK SENG Chief Executive Officer Kuala Lumpur 20 April

7 PRS PROVIDER S REPORT FUND OBJECTIVE AND POLICY What is the investment objective of the Fund? The Fund seeks to provide capital growth over the long-term by investing in a portfolio of primarily Shariah-compliant equities with some exposure in Sukuk. Has the Fund achieved its objective? For the financial period 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 portfolio of mixed assets, primarily in Shariah-compliant equities with some exposure in Sukuk, to provide capital growth to the Fund. The investments by the Fund in Shariah-compliant equities which include foreign exposure shall not exceed 70% of the Fund s NAV and investments in both local and foreign Sukuk shall not be less than 30% of its NAV with a minimum credit rating of BBB3 or P2 by RAM Ratings ( RAM ) or equivalent rating by Malaysian Rating Corporation Berhad ( MARC ) or BBB by Standard & Poor's ( S&P ) or equivalent rating by Moody s or Fitch. The fixed income portion will provide capital stability to the Fund whilst the equity portion will provide the added return in a rising market. The Fund may opt to invest in Sukuk and Shariah-compliant equities either directly or via Shariah-compliant collective investment schemes. Fund category/type Core (Growth) When was the Fund launched? 12 November 2012 What was the size of the Fund as at 28 February 2018? RM49.74 million (73.03 million units) What is the Fund s benchmark? 70% Financial Times Stock Exchange ( FTSE ) Bursa Malaysia ("FBM") EMAS Shariah ("FBMS") Index + 30% Quant shop Government Investment Issues ( 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. 5

8 PERFORMANCE DATA Details of portfolio composition of the Fund for the last three financial periods are as follows: % % % Shariah-compliant collective investment schemes Shariah-compliant quoted securities - Basic Materials Construction Consumer Products Energy Finance Industrials Infrastructure Project Companies ( IPC ) Plantation Properties Real Estate Investment Trust ( REITs ) Technology Telecommunications Trading/Services Unquoted Sukuk Cash and other net assets Performance details of the Fund for the last three financial periods 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 to to to Highest NAV per unit (RM) - Class A Class C Class X Lowest NAV per unit (RM) - Class A Class C Class X

9 PERFORMANCE DATA (CONTINUED) Performance details of the Fund for the last three financial periods are as follows (continued): to to to Total return (%) - Class A (2.55) - Class C (2.55) - Class X (2.55) Capital growth (%) - Class A (2.55) - Class C (2.55) - Class X (2.55) Income distribution (%) - Class A Class C Class X Management Expense Ratio ( MER ) (%) ^ Portfolio Turnover Ratio ( PTR ) (times) # ^ The Fund s MER increased from 0.08% to 0.12% due to increased expenses during the financial period under review. # The Fund s PTR increased from 0.50 times to 1.29 times mainly due to our strategy to invest directly in securities % % % % % Annual total return - Class A (1.19) Class C (1.19) Class X (1.19) (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 period have been extracted from Lipper. MARKET REVIEW (1 SEPTEMBER 2017 TO 28 FEBRUARY 2018) Unquoted Sukuk During the financial period under review, Bank Negara Malaysia ( BNM ) kept its Overnight Policy Rate ( OPR ) unchanged at its Monetary Policy Committee ( MPC ) meeting held on 9 November BNM commented that the stance of monetary policy remains accommodative but added that given the strength of the global and domestic macroeconomic conditions, the MPC may consider reviewing the current degree of monetary accommodation. This is to ensure the sustainability of the growth prospects of the Malaysian economy. This statement signaled the Central Bank s readiness to review the OPR and follows their bullish assessment that growth prospects are expected to remain strong in On the Malaysian economy, BNM highlighted that growth has become more entrenched with continued strong performance from the domestic and external sectors. As for global growth, BNM maintained that the global economy continues to strengthen, with growth becoming more entrenched and synchronized across countries. 7

10 MARKET REVIEW (1 SEPTEMBER 2017 TO 28 FEBRUARY 2018) (CONTINUED) Unquoted Sukuk (Continued) In its subsequent MPC meeting held on 25 January 2018, BNM raised its OPR by 25 basis points ( bps ) to 3.25%, citing the steady growth path for the economy and as a pre-emptive move to prevent a build-up of risks that could arise from low interest rates for a prolonged period of time. The Central Bank views that global growth will accelerate in It views that the global economy has continued to strengthen, with global trade performing at a sustained pace. On the domestic front, BNM expects the strong growth momentum to carry on into 2018, on the back of spillovers from the external sector to the domestic economy. On the price front, the Central Bank expects the inflation rate to moderate in 2018, on account of a reduced effect of global cost factors, while the stronger Malaysian Ringgit ( MYR ) would also translate to lower import prices after the MYR strengthened from RM4.271 to RM3.917 against US Dollar ( USD ) during the financial period under review. Consequently, the domestic Sukuk market experienced some selloff with yields rising across the board in particular the GII with yields on the 3-year to 15-year GII traded wider by 10 bps to 20 bps while the 20-year to 30-year GII rose by only 1 bps to 6 bps during the financial period under review. Corporate Sukuk yields also traded higher with yields rising in the range of 3 bps to 18 bps overall. On the economic front, Malaysia recorded real Gross Domestic Product ( GDP ) growth of 5.9% y-o-y, slowing down from +6.2% y-o-y in the third quarter of This is mainly due to a slowdown in exports however, domestic demand remained resilient. For the full-year 2017, Malaysia recorded a stellar GDP growth of 5.9% y-o-y (2016: 4.2% y-o-y), the fastest in three years, mainly due to a surge in exports and subsequent pick-up in domestic demand. Meanwhile inflationary pressure continues to eased with Consumer Price Index ( CPI ) growth in January 2018 and February 2018 eased to a low of 2.7% and 1.4% y-o-y respectively (December 2017: +3.5% y-o-y) on slower rise in fuel and food prices, while core inflation rate in January 2018 remained at +2.2% y-o-y but slowed to 1.8% y-o-y in February 2018 (December 2017: +2.2% y-o-y). Local Equity The FBMS Index rose by points or 1.1% to 13, points over the financial period under review. The FBMS Index rose in September 2017 and October 2017 on the back of higher crude oil price, stronger-than-expected third quarter of 2017 GDP growth and a stronger MYR in anticipation of BNM s OPR hike in It then fell by 1.2% in November 2017 as construction stocks underperformed on worries of foreign contractors dominance after a change in Mass Rapid Transit Line 3 ( MRT3 ) project delivery partners ( PDP ) format to turnkey contractor with mandatory funding. The FBMS Index then recovered by 3.0% in December 2017 on the back of window dressing activities, driven by technology stocks. For 2017, net foreign inflows amounted to RM10.3 billion. The FBMS Index started on a positive note in 2018 by rising 2.7% in January 2018 on the back of outperformance in Permodalan Nasional Berhad ( PNB ) related companies. The buoyant market was also aided by the strengthening of the MYR by 3.9% and the increase in crude oil prices by 3.3% during the month. Foreign investors were net buyers of RM3.4 billion in January February 2018 was a volatile month as investors began re-pricing more and earlier interest rate hikes in the US, on the back of higher inflation expectations. In line with the global rout, the FBMS Index fell by 1.7% to 13, points. Consumer price inflation eased in January 2018 to 2.7% (3.5% y-o-y in December 2017) due to currency gains and a higher base, as fuel prices and electricity tariffs were raised a year ago. In February 2018, foreign investors net sold about RM1.1 billion. 8

11 MARKET REVIEW (1 SEPTEMBER 2017 TO 28 FEBRUARY 2018) (CONTINUED) Foreign Equity The Morgan Stanley Capital International All Country ( MSCI AC ) Asia ex Japan Islamic Index posted a solid gain of 8.74%, in USD term, closing at 1, points over the financial period under review. In MYR term, the Index fell slightly lower by 0.11%. Asian equities eased 0.3% in USD terms in September Technology and consumer discretionary outperformed while materials and telecommunications underperformed. It then rebounded sharply in October 2017 and ended the fourth quarter being the best performing region in Emerging Markets ( EM ) in The 19 th National Congress of the Communist Party of China was held on 18 to 25 October 2017 in Beijing, with the new leadership team announced. The Indian Government announced a bold plan to recapitalize state-owned banks. China and South Korea agreed to mend ties after the Terminal High Altitude Area Defense ( THAAD ) feud. The European Central Bank ( ECB ) announced it would extend quantitative easing ( QE ) by nine months, to September 2018, at a reduced pace of EUR30 billion per month. December 2017 was marked by tax cuts in the US, the US Federal Reserve (the Fed ) hikes, strong European growth indicators, and People s Bank of China ( PBOC ) raising open market operations ( OMO ) rate by 5 bps. Market continued its rally in January 2018, on the back of positive revisions to global growth, lack of USD strength (post US tax reform), and increasing commodities prices. However, Asian equities went into a risk-off mode and slipped 4.9% month-on-month ( m-o-m ) in USD terms in February 2018 triggered by a surge in US 10-year yields and concerns of higher inflation. The selloff was broadbased with underperformance in energy, telecoms, industrials, real estate and financials while healthcare was the only gainer. FUND PERFORMANCE 6 months to year to years 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 N/A N/A N/A years to Since inception to Class A Class C Class X Class A Class C Class X % % % % % % Income Capital Total Return Benchmark Average Total Return

12 FUND PERFORMANCE (CONTINUED) For the 6-month period, Class A, Class C and Class X gained 1.88%. Meanwhile, the benchmark appreciated by 2.84% over the same reporting period. The underperformance of the Fund relative to its benchmark was driven mainly by the allocation into equities. The slight variation in the performance between Class A, Class C and Class X, if any, was due to different timing of units created for each class. 6 months to % 4.00% 3.50% 3.00% 2.50% 2.00% Class A, C and X* Benchmark 1.50% 1.00% 0.50% 0.00% 1 year to % 12.00% 10.00% 8.00% 6.00% Class A, C and X* Benchmark 4.00% 2.00% 0.00% 10

13 FUND PERFORMANCE (CONTINUED) 3 years to % 20.00% 15.00% 10.00% Class A, C and X* Benchmark 5.00% 0.00% -5.00% 5 years to % 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% Class A, C and X* Benchmark 10.00% 5.00% 0.00% 11

14 FUND PERFORMANCE (CONTINUED) Since inception to % 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% Class A, C and X* Benchmark * 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. 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 period under review for all the three classes - Class A, Class C and Class X. The NAV per unit of Class A rose by 10.37%, over the 1-year period. Meanwhile, the NAV per unit of both Class C and Class X grew by 10.35%. For the 1-year period, the Fund ranked 5 th in Quartile 3 under the Mixed Asset MYR Aggressive Islamic category in the Lipper rankings. Performance data represents the combined income and capital return as a result of holding units in the Fund for the specified length of time, based on NAV to NAV price. The performance data assumes that all earnings from the Fund are reinvested and are net of management and trustee fees. Past performance is not reflective of future performance and income distributions are not guaranteed. Unit prices and income distributions, if any, may fall and rise. All performance figures for the financial period have been extracted from Lipper. 12

15 PORTFOLIO STRUCTURE Asset allocation (% of NAV) Shariah-compliant collective investment schemes Shariah-compliant quoted securities Unquoted Sukuk Cash and other net assets TOTAL The Fund was fully invested during the financial period under review. A minimal level of liquid assets was maintained primarily for redemption purposes. At the reporting date, some material amount of creations was still sitting in the receivables which will be invested into securities. MARKET OUTLOOK* Unquoted Sukuk After signalling a possible monetary policy normalisation in its MPC meeting in November 2017, BNM decided to raise its OPR by 25 bps to 3.25% on 25 January 2018 citing that it was a pre-emptive move to prevent the build-up of risks that could arise from low interest rates for a prolonged period of time. It also stated that at current OPR level, the stance of monetary policy remains accommodative. We believe that BNM will pause for the rest of 2018 but we will re-assess the outlook in the second half of 2018 taking into consideration the 2018 first two quarters domestic GDP growth and core inflation. For 2018, there will be a total of 33 auctions comprising of 15 Malaysia Government Securities ( MGS ) and 18 GII issuances compared to 32 auctions seen in The gross issuances for 2018 is expected to be around RM103 billion with sizeable maturities of about RM62.8 billion after BNM conducted a fixed income switching exercise reducing the 2018 MGS/MGII maturity amount. We expect BNM to target more issuances with longer durations to manage the maturities which are now mostly concentrated in the short end. The targeted amounts of private placements are smaller in 2018 versus 2017 with the bulk of it being in first quarter of We expect similar primary issuances for government guaranteed financing but anticipate lower issuances on the lower rated corporate financing. Local Equity Market will remain volatile as investors digest the recent corporate earnings, monitor inflation expectations and watch global central banks dial back their balance sheets. While markets may correct, we remain optimistic that these corrections are not the start of a bear market. Hence, we will stay invested, but continue to trim portfolio risk by reducing exposure to stocks which have risen exponentially. 13

16 MARKET OUTLOOK (CONTINUED)* Foreign Equity Upside in Asian equities should be guided by earnings growth of about 13% in 2018, but the volatility could be higher given trade tensions, rising fixed income yields and credit spreads, and diminishing Central Bank fixed income purchases. Investor sentiment on the Goldilocks scenario (growth that is not too high as to stoke inflation) will also be tested especially if US wage growth data shows a pickup significantly beyond 3%. Our view is that US corporates can manage a gradual rise through better productivity and pricing. * This market outlook does not constitute an offer, invitation, commitment, advice or recommendation to make a purchase of any investment. The information given in this article represents the views of CIMB-Principal or based on data obtained from sources believed to be reliable by CIMB-Principal. Whilst every care has been taken in preparing this, CIMB-Principal makes no guarantee, representation or warranty and is under no circumstances liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this market outlook. INVESTMENT STRATEGY In November 2017, the Fund began investing directly in securities. Being one of the core funds under PRS, we will continue to remain fully invested with minimal cash kept for redemption purposes. MEMBERS STATISTICS AS AT 28 FEBRUARY 2018 CLASS A Size of unit holdings (units) No. of members No. of units held % of units held (million) 5,000 and below 6, ,001-10,000 1, ,001-50, , , ,001 and above Total 8, 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

17 MEMBERS STATISTICS AS AT 28 FEBRUARY 2018 (CONTINUED) CLASS X CIMB ISLAMIC PRS PLUS GROWTH Size of unit holdings (units) No. of members No. of units held % of units held (million) 5,000 and below 7, ,001-10,000 1, ,001-50, , , ,001 and above Total 10, 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 period 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. 15

18 UNAUDITED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018 CIMB ISLAMIC PRS PLUS GROWTH to to Note RM RM INVESTMENT INCOME Dividend income 288, ,307 Profit income 6 202,924 - Net gain on financial assets at fair value through profit or loss 8 605, ,664 Net foreign exchange loss (135,920) - 961, ,971 EXPENSES Private Pension Administrator's fee 4 9,115 5,990 Trustee s and custodian fees 5 16,111 5,990 Audit fee 6,341 5,210 Tax agent s fee 4,600 2,000 Transaction costs 102,212 - Other expenses 22,157 7, ,536 26,513 PROFIT BEFORE TAXATION 800, ,458 Taxation 7 (6,612) - INCREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS 794, ,458 Increase in net assets attributable to members is made up as follows: Realised amount 3,251, ,038 Unrealised amount (2,457,137) 156, , ,458 The accompanying notes to the financial statements form an integral part of the unaudited financial statements. 16

19 UNAUDITED STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY Audited Note RM RM ASSETS Cash and cash equivalents (Shariah-compliant) 9 578,093 75,169 Financial assets at fair value through profit or loss (Shariah-compliant) 8 48,867,023 41,618,816 Amount due from stockbrokers 443,490 - Amount due from the PRS Provider , ,319 Dividends receivable 48,293 - Tax recoverable TOTAL ASSETS 50,567,840 42,182,360 LIABILITIES Amount due to stockbrokers 788,721 - Amount due to the PRS Provider 10 19,626 74,014 Other payables and accruals 18,841 17,765 TOTAL LIABILITIES (EXCLUDING NET ASSETS ATTRIBUTABLE TO MEMBERS) 827,188 91,779 NET ASSET VALUE OF THE FUND 49,740,652 42,090,581 NET ASSETS ATTRIBUTABLE TO MEMBERS 49,740,652 42,090,581 REPRESENTED BY: FAIR VALUE OF OUTSTANDING UNITS - Class A 23,158,058 19,381,123 - Class C 1,964,012 1,685,036 - Class X 24,618,582 21,024,422 49,740,652 42,090,581 NUMBER OF UNITS IN CIRCULATION (UNITS) - Class A 34,000,169 28,990,175 - Class C 2,883,743 2,520,426 - Class X 36,145,619 31,449, ,029,531 62,959,677 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 unaudited financial statements. 17

20 UNAUDITED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO MEMBERS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY to RM to RM NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE BEGINNING OF THE FINANCIAL PERIOD 42,090,581 27,177,310 Movement due to units created and cancelled during the financial period: - Creation of units from applications 8,545,770 6,716,750 - Cancellation of units (1,689,715) (994,872) 48,946,636 32,899,188 Increase in net assets attributable to members during the financial period 794, ,458 NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE END OF THE FINANCIAL PERIOD 49,740,652 33,779,646 The accompanying notes to the financial statements form an integral part of the unaudited financial statements. 18

21 UNAUDITED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018 CIMB ISLAMIC PRS PLUS GROWTH to RM to RM CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from disposal of Shariah-compliant quoted securities 6,333,473 - Proceeds from disposal of Shariah-compliant collective investment schemes 44,509,982 11,510,000 Proceeds from disposal of unquoted Sukuk 5,324,474 - Purchase of Shariah-compliant quoted securities (39,196,466) - Purchase of Shariah-compliant collective investment schemes (1,958,343) (16,922,000) Purchase of unquoted Sukuk (21,278,749) - Dividend income received 233,536 - Profit income received from Shariah-compliant deposits with licensed Islamic financial institutions 4,708 - Profit income received from unquoted Sukuk 228,507 - Private Pension Administrator s fees paid (9,017) (5,805) Trustee's and custodian fees paid (16,013) (5,805) Payments for other fees and expenses (32,218) (16,263) Tax refund received Net realised foreign exchange loss (259,088) - Net cash used in operating activities (6,115,214) (5,438,877) CASH FLOWS FROM FINANCING ACTIVITIES Cash proceeds from units created 8,403,204 6,497,389 Payments for cancellation of units (1,724,103) (996,974) Net cash generated from financing activities 6,679,101 5,500,415 Net increase in cash and cash equivalents 563,887 61,538 Effects of foreign exchange differences (60,963) - Cash and cash equivalents at the beginning of the financial period 75,169 33,152 Cash and cash equivalents at the end of the financial period 578,093 94,690 Cash and cash equivalents comprised of: Shariah-compliant deposits with licensed Islamic financial institutions 470,041 - Bank balances 108,052 94,690 Cash and cash equivalents at the end of the financial period 578,093 94,690 The accompanying notes to the financial statements form an integral part of the unaudited financial statements. 19

22 NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY THE FUND, THE PRS PROVIDER AND ITS PRINCIPAL ACTIVITY CIMB ISLAMIC PRS PLUS GROWTH CIMB Islamic PRS Plus Growth (the Fund ) is governed by a Deed dated 8 November 2012, a First Supplemental Deed dated 2 January 2014 and a Second Supplemental Deed dated 25 November 2014 (collectively referred to as the Deeds ) made between CIMB-Principal Asset Management Berhad (the PRS Provider ) and Deutsche Trustees Malaysia Berhad (the Trustee ). The Fund offers three classes of units known respectively as Class A, Class C and Class X. In accordance with the Disclosure Document, Class A and Class C are for members who have attained the age of 18 years as of the date of opening a private pension account. Class A and C have different management fee. Class X is for members who participate via respective employers and is subject to a minimum of 200 participating employees per employer or 50 participating employees under payroll deduction per employer. The Fund will invest in a portfolio of mixed assets, primarily in Shariah-compliant equities with some exposure in Sukuk, to provide capital growth to the Fund. The investments by the Fund in Shariah-compliant equities which include foreign exposure shall not exceed 70% of the Fund s NAV and investments in both local and foreign Sukuk shall not be less than 30% of its NAV with a minimum credit rating of BBB3 or P2 by RAM or equivalent rating by MARC or BBB by S&P or equivalent rating by Moody s or Fitch. The fixed income portion will provide capital stability to the Fund whilst the equity portion will provide the added return in a rising market. The Fund may opt to invest in Sukuk and Shariahcompliant equities either directly or via Shariah-compliant collective investment schemes. All investments are subjected to the 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 International Financial Reporting Standards ( 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 period. 20

23 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC PRS PLUS GROWTH (a) Basis of preparation (continued) It also requires the PRS Provider to exercise their judgment in the process of applying the Fund s accounting policies. Although these estimates and judgment are based on the PRS Provider s best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2(l). Standards, amendments to published standards and interpretations to existing standards that are effective: The Fund has applied the following amendments for the first time for the financial year beginning 1 September 2017: Amendments to MFRS 107 Statement of Cash Flows - Disclosure Initiative introduce an additional disclosure on changes in liabilities arising from financing activities. The adoption of these amendments did not have any impact on the current financial period or any prior financial 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 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments 1 are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument 2 is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest 3. 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. 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. 21

24 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC PRS PLUS GROWTH (a) Basis of preparation (continued) (i) Financial year beginning on/after 1 September 2018 (continued) MFRS 9 introduces an expected credit loss ( ECL ) model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The Fund has reviewed its financial assets and liabilities and has assessed the following impact from the adoption of the new standard on 1 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. (b) Financial assets and financial liabilities Classification The Fund designates its investments in Shariah-compliant collective investment schemes, Shariah-compliant quoted securities and unquoted Sukuk as financial assets at fair value through profit or loss at inception. Financial assets are designated at fair value through profit or loss when they are managed and their performance are evaluated on a fair value basis. Financing and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and have been included in current assets. The Fund s financing and receivables comprise cash and cash equivalents, amount due from the PRS Provider, amount due from stockbrokers 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 the PRS Provider, and other payables and accruals as other financial liabilities. 22

25 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC PRS PLUS GROWTH (b) Financial assets and financial liabilities (continued) 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. 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 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 period 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). Shariah-compliant quoted securities in Malaysia are valued at the last traded market price quoted on Bursa Malaysia Securities Bhd ( Bursa Securities ) at the date of the statement of financial position. Foreign Shariah-compliant 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 Shariah-compliant 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 Shariah-compliant quoted securities for a period exceeding 14 days, or such shorter period as agreed by the Trustee, then the Shariah-compliant quoted securities are valued as determined in good faith by the PRS Provider, based on the methods or bases approved by the Trustee after appropriate technical consultation. Unquoted Sukuk denominated in Ringgit Malaysia ( RM ) are revalued on a daily basis based on fair value prices quoted by a Bond Pricing Agency ( BPA ) registered with the SC as per the SC Guidelines on PRS. Refer to Note 2(l) for further explanation. 23

26 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC PRS PLUS GROWTH (b) Financial assets and financial liabilities (continued) Recognition and measurement (continued) Shariah-compliant deposits with licensed Islamic financial institutions are stated at cost plus accrued profit calculated on the effective profit method over the period from the date of placement to the date of maturity of the respective Shariah-compliant deposits. Financing and receivables and other financial liabilities are subsequently carried at amortised cost using the effective profit method. Impairment for assets carried at amortised costs For assets carried at amortised cost, the Fund assesses at the end of the reporting period 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 period, 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. 24

27 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC PRS PLUS GROWTH (c) Income recognition Dividend income is recognised on the ex-dividend date when the right to receive payment is established. Profit income from Shariah-compliant deposits with licensed Islamic financial institutions and unquoted Sukuk are recognised on a time proportionate basis using the effective profit rate method on an accrual basis. Realised gain or loss on disposal of Shariah-compliant collective investment schemes is accounted for as the difference between the net disposal proceeds and the carrying amount of Shariah-compliant investments, determined on a weighted average cost basis. Realised gain or loss on disposal of unquoted Sukuk is accounted for as the difference between the net disposal proceeds and the carrying amount of unquoted Sukuk, determined on cost adjusted for accretion of discount or amortisation of premium. (d) 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 RM, which is the Fund s functional and presentation currency. Due to mixed factors in determining the functional currency of the Fund, the PRS Provider 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: i) The Fund's units are denominated in RM; ii) Significant portion of the Fund s expenses are denominated in RM; and iii) Significant portion of the cash is denominated in RM for the purpose of making settlement of foreign trades. 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 period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in statement of comprehensive income. 25

28 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC PRS PLUS GROWTH (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 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 and Shariah-compliant deposits held in highly liquid investments that are readily convertible to known amounts of cash and which are subjected 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 period. Tax on dividend income from foreign Shariah-compliant quoted securities is based on the tax regime of the respective countries that the Fund invests in. (h) Increase/Decrease in net assets attributable to members Income not distributed is included in net assets attributable to members. (i) Transaction 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, advisors, brokers and dealers. Transaction costs, when incurred, are immediately recognised in the statement of comprehensive income as expenses. (j) 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. 26