CIMB ISLAMIC DEPOSIT FUND FINANCIAL STATEMENT FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2018

Transcription

1 FINANCIAL STATEMENT FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2018

2 CONTENTS PAGE(S) INVESTORS' LETTER 1 MANAGER'S REPORT 2-9 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 10 TRUSTEE'S REPORT 11 SHARIAH ADVISER S REPORT 12 INDEPENDENT AUDITORS REPORT STATEMENT OF COMPREHENSIVE INCOME 17 STATEMENT OF FINANCIAL POSITION 18 STATEMENT OF CHANGES IN EQUITY 19 STATEMENT OF CASH FLOWS 20 NOTES TO THE FINANCIAL STATEMENTS DIRECTORY 39 LIST OF CWA (an Agency force of CIMB-Principal) OFFICES 40-44

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 2 nd Half of 2017 with RM51 billion in Asset under Management ( AUM ). CIMB-Principal s Group AUM increased by 11% to RM68 billion, for 1-year period ending 31 December Our AUM for Private Retirement Scheme ("PRS") business increased by 51% year-on-year ( y-o-y ) to RM517 million as at 31 December We continue to achieve prestigious recognitions from The Edge Thomson Reuters Lipper Fund Awards: The Edge Thomson Reuters Lipper Malaysia Fund Awards 2017 Best Equity Global, 3 years & 5 years : CIMB-Principal Global Titans Fund Best Equity Asia Pacific Ex-Japan, 5 years : CIMB-Principal Asian Equity Fund Best Equity Asia Pacific Ex-Japan - Malaysia Islamic, 5 years : CIMB Islamic Asia Pacific Equity 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 awards reflect our consistent fund performance, in tandem with our commitment to provide the best customer experience to you. 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 provide investors with liquidity and regular income, whilst maintaining capital stability by investing primarily in deposits that comply with the Shariah principles. Has the Fund achieved its objective? For the financial year under review, the Fund is in line with its stated objective. What are the Fund investment policy and principal investment strategy? The Fund seeks to achieve its objective by investing at least 95% of the Fund s NAV in Deposits. Up to 5% of the Fund s NAV may be invested in Shariah-compliant money market instruments, shortterm Sukuk and/or notes with a minimum credit rating of A3 or P1 by RAM or equivalent rating by MARC or by local rating agency(ies) of the country of issuance or BBB- by S&P or equivalent rating by Moody s or Fitch, all of which have a remaining maturity period of less than 365 days. The investment policy is to invest in liquid and low risk short-term investments for capital preservation*. The Fund will be actively managed to provide liquidity and to accommodate the short-term cash flow requirements of its Unit holders. * The Fund is neither a capital guaranteed fund nor a capital protected fund. Fund category/type Money Market (Shariah-compliant)/Income How long should you invest for? Recommended one (1) year Indication of short-term risk (low, moderate, high) Low When was the Fund launched? 9 September 2009 What was the size of the Fund as at 31 January 2018? RM1, million (1, million units) What is the Fund s benchmark? Islamic Interbank Overnight Rate Note: The benchmark is customised as such to align it closer to the structure of the portfolio and the objective of the Fund. The Islamic Interbank Overnight Rate is reflective of the objective of the Fund. Thus, investors are cautioned that the risk profile of the Fund is higher than investing in Shariah-compliant deposits. What is the Fund distribution policy? Monthly, depending on the level of income (if any) the Fund generates. What was the net income distribution for the financial year ended 31 January 2018? The Fund distributed a total net income of RM59.80 million to unit holders for the financial year ended 31 January

5 FUND OBJECTIVE AND POLICY (CONTINUED) The Fund s NAV per unit are as follows: Date NAV per unit (Before distribution) NAV per unit (After distribution) PERFORMANCE DATA Details of portfolio composition of the Fund for the last three financial years are as follows: % % % Shariah-compliant deposits with licensed Islamic financial institutions Performance details of the Fund for the last three financial years are as follows: NAV (RM Million)* 1, , Units in circulation (Million) 1, , NAV per unit (RM)* Highest NAV per unit (RM) Lowest NAV per unit (RM)* Total return (%) Capital growth (%) Income distribution (%) *Ex-distribution Management Expense Ratio ("MER") (%) Portfolio Turnover Ratio ("PTR") (times) # # The Fund s PTR for the financial year under review was 5.64 times, a decrease from times a year ago due to increase in average NAV. 3

6 PERFORMANCE DATA (CONTINUED) Date of distribution Distribution on 28 February 2017 Gross/Net distribution per unit (sen) Distribution on 31 March 2017 Gross/Net distribution per unit (sen) Distribution on 28 April 2017 Gross/Net distribution per unit (sen) Distribution on 31 May 2017 Gross/Net distribution per unit (sen) Distribution on 30 June 2017 Gross/Net distribution per unit (sen) Distribution on 31 July 2017 Gross/Net distribution per unit (sen) Distribution on 30 August 2017 Gross/Net distribution per unit (sen) Distribution on 29 September 2017 Gross/Net distribution per unit (sen) Distribution on 31 October 2017 Gross/Net distribution per unit (sen) Distribution on 30 November 2016 Gross/Net distribution per unit (sen) Distribution on 29 December 2016 Gross/Net distribution per unit (sen) Distribution on 30 January 2018 Gross/Net distribution per unit (sen) Distribution on 29 February 2016 Gross/Net distribution per unit (sen) Distribution on 31 March 2016 Gross/Net distribution per unit (sen) Distribution on 29 April 2016 Gross/Net distribution per unit (sen) Distribution on 31 May 2016 Gross/Net distribution per unit (sen) Distribution on 30 June 2016 Gross/Net distribution per unit (sen) Distribution on 29 July 2016 Gross/Net distribution per unit (sen) Distribution on 30 August 2016 Gross/Net distribution per unit (sen) Distribution on 30 September 2016 Gross/Net distribution per unit (sen) Distribution on 31 October 2016 Gross/Net distribution per unit (sen) Distribution on 30 November 2016 Gross/Net distribution per unit (sen) Distribution on 30 December 2016 Gross/Net distribution per unit (sen) Distribution on 3 January 2017 Gross/Net distribution per unit (sen)

7 PERFORMANCE DATA (CONTINUED) Date of distribution Distribution on 27 February 2015 Gross/Net distribution per unit (sen) Distribution on 31 March 2015 Gross/Net distribution per unit (sen) Distribution on 30 April 2015 Gross/Net distribution per unit (sen) Distribution on 29 May 2015 Gross/Net distribution per unit (sen) Distribution on 30 June 2015 Gross/Net distribution per unit (sen) Distribution on 31 July 2015 Gross/Net distribution per unit (sen) Distribution on 28 August 2015 Gross/Net distribution per unit (sen) Distribution on 30 September 2015 Gross/Net distribution per unit (sen) Distribution on 30 October 2015 Gross/Net distribution per unit (sen) Distribution on 30 November 2015 Gross/Net distribution per unit (sen) Distribution on 31 December 2015 Gross/Net distribution per unit (sen) Distribution on 29 January 2016 Gross/Net distribution per unit (sen) % % % % % Annual total return (Launch date: 9 September 2009) 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. 5

8 MARKET REVIEW (1 FEBRUARY 2017 TO 31 JANUARY 2018) During the financial year under review, Bank Negara Malaysia s ( BNM ) Monetary Policy Committee ( MPC ) met six times from the month of February 2017 to January The MPC decided to maintain the Overnight Policy Rate ( OPR ) at 3% throughout At the last MPC meeting held on 9 November 2017, the MPC 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 signalled the Central Bank s readiness to review the OPR and follows their bullish assessment that growth prospects are expected to remain strong in Following this, BNM decided to raise the OPR by 25 basis points ( bps ) to 3.25% at the first MPC meeting held on 25 January The MPC cited that with the economy firmly on a steady growth path, they have decided to normalise the degree of monetary accommodation. Consecutively, they have also recognised the need to pre-emptively ensure that the stance of monetary policy is appropriate to prevent the build-up of risks that could arise from interest rates being too low for a prolonged period of time. The Central Bank also cited that at the current level of OPR, the stance of monetary policy remains accommodative and that inflation will be dependent on oil prices. They expect inflation to average lower in 2018 on expectations of a smaller effect from global cost factors. On the Malaysian economy, BNM stated that the latest indicators reaffirmed the strength in exports and domestic activity. It is expected that domestic demand will remain the key driver of growth, underpinned by favourable income and labour market conditions. Real Gross Domestic Product ( GDP ) growth for the first 3 quarters of 2017 exceeded market expectations and the market is expecting it to stay above 5.00% in GDP growth for third quarter of 2017 was 6.20% y-o-y (second quarter of 2017: 5.80%; first quarter of 2017: 5.60%) with the economy continuing to surprise us on the private consumption front. The World Bank expects Malaysia s GDP growth to moderate to 5.20% in 2018 from an estimated 5.80% in 2017 on the back of a gradual slowdown in China which offsets a pickup of activity in the entire region. Headline inflation averaged at around 3.70% in 2017 and moving forward, it is expected to average lower on the back of a smaller effect from global cost factors. The index for Food & Non-Alcoholic Beverages was the main contributor to the rise in Consumer Price Index ( CPI ) for the period January to December 2017, registering an increase of 4.0% as well as transport. The Malaysian CPI y-o-y was at a high of 4.50% in February 2017 with overall index at from in the corresponding month of the previous year. The y-o-y index continued rising further to 5.10% in April 2017 and following this spike, it began to decline from May 2017 and dropped to a low of 3.20% in July The index rose again in the month of September 2017 to 4.30% but ended at 3.50% in December

9 FUND PERFORMANCE 1 year to years to years to Since inception % % % % Income Capital Total Return Benchmark Average Total Return As at 31 January 2018, the Fund gave a 1 year return of 3.25%, outperforming the benchmark by 21bps.Since inception, the Fund has delivered a return of 24.62% to unit holders underperforming the benchmark by 2.67% % 25.00% 20.00% Islamic Interbank Overnight Rate CIMB Islamic Deposit Fund 15.00% 10.00% 5.00% 0.00% Changes in NAV Changes % NAV (RM Million)* 1, , NAV/Unit (RM)* *Ex-distribution The Fund s NAV grew by 39.42% for the one year period ended 31 st January 2018 from RM1, million to RM1,857.45million. During the same period, the Fund s NAV per unit was RM per unit. 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. 7

10 PORTFOLIO STRUCTURE Asset allocation (% of NAV) Shariah-compliant deposits with licensed Islamic financial institutions TOTAL The Fund was 100% invested in deposits with Shariah-compliant financial institutions as at 31 January MARKET OUTLOOK* BNM raised the OPR by 25 bps at the first MPC meeting in 2018 which was held on 25 January The next upcoming MPC meeting which is the first amongst the remaining five scheduled for the year will be held on 7 March 2018 and subsequently on 10 May We do not expect any further rate hikes in 2018 but believe the outlook for the second-half of 2018 will need to be reassessed following the release of GDP numbers and core inflation in the first half of the year. Investors will also be closely monitoring the impending 14 th Malaysian General Elections which could provide the Malaysian Ringgit ( RM ) with headwinds in the first half of the year, but good economic and financial fundamentals are expected to be supportive of the Ringgit. Inflation is expected to moderate in 2018 on expectations of a smaller effect from global cost factors. * 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 The Fund s objective is to provide investors with liquidity and regular income hence it will continue to maintain its investment primarily in deposits. 8

11 UNIT HOLDINGS STATISTICS Breakdown of unit holdings by size as at 31 January 2018 are as follows: Size of unit holdings (units) No. of units held No. of unit holders (million) % of units held 5,000 and below ,001-10, ,001-50, , , ,001 and above 22 1, Total 30 1, 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 Trustee did not receive any rebates from the brokers or 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. 9

12 STATEMENT BY MANAGER TO THE UNIT HOLDERS OF CIMB ISLAMIC DEPOSIT FUND We, being the Directors of CIMB-Principal Asset Management Berhad (the Manager"), do hereby state that, in the opinion of the Manager, the accompanying audited financial statements set out on pages 17 to 38 are drawn up in accordance with the provisions of the Deeds and give a true and fair view of the financial position of the Fund as at 31 January 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 20 March

13 TRUSTEE S REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DEPOSIT FUND We have acted as Trustee of CIMB Islamic Deposit Fund (the Fund ) for the financial year ended 31 January To the best of our knowledge, CIMB-Principal Asset Management Berhad (the Manager ), has operated and managed the Fund in accordance with the following: (a) (b) limitations imposed on the investment powers of the Manager and the Trustee under the Deeds, the Securities Commission s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws; valuation/pricing is carried out in accordance with the Deeds and any regulatory requirements; and c) creation and cancellation of units are carried out in accordance with the Deeds and any regulatory requirements. During this financial year, a total distribution of 3.21 sen per unit (gross) has been distributed to the unit holders of the Fund. We are of the view that the distribution is not inconsistent with the objective of the Fund. For HSBC (Malaysia) Trustee Berhad TAN BEE NIE Head, Trustee Operations Kuala Lumpur 23 March

14 SHARIAH ADVISER S REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DEPOSIT FUND We have acted as the Shariah Adviser of CIMB Islamic Deposit Fund (the Fund ) for the financial year ended 31 January Our responsibility is to ensure that the procedures and processes employed by CIMB-Principal Asset Management Berhad (the Manager ) are in accordance with Shariah and Shariah Investment Guidelines. In our opinion, the Manager has managed and administered the Fund in accordance with the Shariah Investment Guidelines of the Fund and complied with applicable guidelines, rulings or decisions issued by the Securities Commission Malaysia pertaining to Shariah matters for the financial year ended 31 January In addition, we confirm that the investment portfolio of the Fund comprises of deposits 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 investment other than the abovementioned, we have reviewed the same and of the opinion that these investments were in accordance with the rulings of the Shariah Adviser and Shariah Investment Guidelines of the Fund. This report is made solely to the unit holders of the Fund, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report and we shall not be liable for any errors or non-disclosure on the part of the Manager. For and on behalf of Shariah Adviser CIMB Islamic Bank Berhad ASHRAF GOMMA ALI Director/Regional Head, Shariah & Governance/Designated Person Responsible for Shariah Advisory Kuala Lumpur 23 March

15 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DEPOSIT FUND REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion CIMB ISLAMIC DEPOSIT FUND In our opinion, the financial statements of CIMB Islamic Deposit Fund (the Fund ) give a true and fair view of the financial position of the Fund as at 31 January 2018, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. What we have audited We have audited the financial statements of the Fund, which comprise the statement of financial position as at 31 January 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 17 to 38. 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. 13

16 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DEPOSIT FUND (CONTINUED) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Information other than the financial statements and auditors report thereon CIMB ISLAMIC DEPOSIT FUND The Manager of the Fund is responsible for the other information. The other information comprises Manager s report, but does not include the financial statements of the Fund and our auditors report thereon. Our opinion on the financial statements of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Fund or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the 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. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of financial statements of the Fund that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Fund, the 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 intends to liquidate the Fund or to cease operation, has no realistic alternative but to do so. 14

17 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DEPOSIT FUND (CONTINUED) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Auditors responsibilities for the audit of the financial statements CIMB ISLAMIC DEPOSIT FUND 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. 15

18 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DEPOSIT FUND (CONTINUED) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Auditors responsibilities for the audit of the financial statements (continued) CIMB ISLAMIC DEPOSIT FUND 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 holder of the Fund and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS PLT LLP LCA & AF1146 Chartered Accountants Kuala Lumpur 23 March

19 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2018 Note RM RM INVESTMENT INCOME Profit income 4 68,640,508 13,401,812 EXPENSES Management fee 5 8,301,213 1,734,607 Trustee s fee 6 737, ,187 Audit fee 9,800 8,240 Tax agent s fee 6,500 4,000 Other expenses 553, ,218 9,608,868 2,024,252 PROFIT BEFORE TAXATION 59,031,640 11,377,560 Taxation PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 59,031,640 11,377,560 Profit after taxation is made up as follows: Realised amount 59,031,640 11,377,560 The accompanying notes to the financial statements form an integral part of the audited financial statements. 17

20 STATEMENT OF FINANCIAL POSITION AS AT 31 JANUARY Note RM RM ASSETS Cash and cash equivalents (Shariah-compliant) 10 20,726 22,703 Financial assets at fair value through profit or loss (Shariah-compliant) 9 1,856,728,820 1,332,427,322 Amount due from Manager 1,611, ,000 TOTAL ASSETS 1,858,360,546 1,332,757,025 LIABILITIES Accrued management fee 745, ,340 Amount due to Trustee 66,239 37,097 Distribution payable 48,477 42,623 Other payables and accruals 66,821 40,325 TOTAL LIABILITIES 926, ,385 NET ASSET VALUE OF THE FUND 1,857,433,815 1,332,219,640 EQUITY Unit holders capital 1,857,448,598 1,332,205,339 (Accumulated loss)/retained earning (14,783) 14,301 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 1,857,433,815 1,332,219,640 NUMBER OF UNITS IN CIRCULATION (UNITS) 11 1,857,463,518 1,332,220,342 NET ASSET VALUE PER UNIT (RM) (EX-DISTRIBUTION) The accompanying notes to the financial statements form an integral part of the audited financial statements. 18

21 STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2018 Unit holders' Retained capital earnings Total Note RM RM RM Balance as at 1 February ,332,205,339 14,301 1,332,219,640 Movement in unit holders' contributions: - Creation of units from applications 1,776,258,907-1,776,258,907 - Creation of units from distributions 59,230,765-59,230,765 - Cancellation of units (1,309,506,695) - (1,309,506,695) Total comprehensive income for the financial year - 59,031,640 59,031,640 Distributions 7 (739,718) (59,060,724) (59,800,442) Balance as at 31 January ,857,448,598 (14,783) 1,857,433,815 Balance as at 1 February ,541,545 7, ,549,153 Movement in unit holders' contributions: - Creation of units from applications 1,199,935,148-1,199,935,148 - Creation of units from distributions 12,382,507-12,382,507 - Cancellation of units (199,112,693) - (199,112,693) Total comprehensive income for the financial year - 11,377,560 11,377,560 Distributions 7 (1,541,168) (11,370,867) (12,912,035) Balance as at 31 January ,332,205,339 14,301 1,332,219,640 The accompanying notes to the financial statements form an integral part of the audited financial statements. 19

22 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 JANUARY Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from maturity of Shariah-compliant deposits with licensed Islamic financial institutions 10,140,213,502 6,303,789,712 Placement of Shariah-compliant deposits with licensed Islamic financial institutions (10,664,515,000) (7,315,547,000) Profit income received from Shariah-compliant deposits with licensed Islamic financial institutions and Hibah earned 68,640,508 13,401,812 Management fee paid (7,973,359) (1,439,277) Trustee s fee paid (708,743) (127,935) Payments for other fees and expenses (543,274) (115,248) Net cash used in operating activities (464,886,366) (1,000,037,936) CASH FLOWS FROM FINANCING ACTIVITIES Cash proceeds from units created 1,774,954,907 1,199,683,748 Payments for cancellation of units (1,309,506,695) (199,112,693) Distributions paid (563,823) (533,268) Net cash generated from financing activities 464,884,389 1,000,037,787 Net decrease in cash and cash equivalents (1,977) (149) Cash and cash equivalents at the beginning of the financial year 22,703 22,852 Cash and cash equivalents at the end of the 10 financial year 20,726 22,703 Cash and cash equivalents comprised of: Bank balances 10 20,726 22,703 Cash and cash equivalents at the end of the financial year 20,726 22,703 The accompanying notes to the financial statements form an integral part of the audited financial statements. 20

23 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 JANUARY THE FUND, THE MANAGER AND ITS PRINCIPAL ACTIVITY CIMB Islamic Deposit Fund (the Fund ) is governed by a Principal Master Deed dated 15 May 2008, a Tenth Supplemental Master Deed dated 23 July 2009, a Fourteenth Supplemental Master Deed dated 26 June 2012, a Fifteen Supplemental Master Deed dated 21 September 2012 and a Seventeenth Supplemental Master Deed dated 25 March 2015 (collectively referred to as the Deeds ), made between CIMB-Principal Asset Management Berhad (the Manager ) and HSBC (Malaysia) Trustee Berhad (the Trustee ). The Fund seeks to achieve its objective by investing at least 95% of the Fund s NAV in Deposits. Up to 5% of the Fund s NAV may be invested in Shariah-compliant money market instruments, short-term Sukuk and/or notes with a minimum credit rating of A3 or P1 by RAM or equivalent rating by MARC or by local rating agency(ies) of the country of issuance or BBB- by S&P or equivalent rating by Moody s or Fitch, all of which have a remaining maturity period of less than 365 days. The investment policy is to invest in liquid and low risk shortterm investments for capital preservation*. 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 a subsidiary of CIMB Group Sdn Bhd and regards CIMB Group Holdings Berhad as its ultimate holding company. The Manager is also an associate of Principal International (Asia) Limited, which is a subsidiary of Principal Financial Group Inc. The principal activities of the Manager are the establishment and management of unit trust and fund management activities. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements: (a) Basis of preparation The financial statements have been prepared in accordance with the provisions of the MFRS and IFRS. The financial statements have been prepared under the historical cost convention, as modified by financial assets at fair value through profit or loss. The preparation of financial statements in conformity with MFRS and IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported year. It also requires the Manager to exercise their judgment in the process of applying the Fund s accounting policies. Although these estimates and judgment 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(j). 21

24 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC DEPOSIT FUND (a) Basis of preparation (continued) 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 February 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 years and is not likely to affect future years. The standards, amendments to published standards and interpretations to existing standards that are applicable to the Fund but not yet effective and have not been early adopted are as follows: (i) Financial year beginning on/after 1 February 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 OCI. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments 1 are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument 2 is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest 3. For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives 1. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in OCI rather than the income statement, unless this creates an accounting mismatch. MFRS 9 introduces an expected credit loss ( 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. 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. 22

25 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC DEPOSIT FUND (a) Basis of preparation (continued) (i) Financial year beginning on/after 1 February 2018 (continued) The Fund has reviewed its financial assets and liabilities and is expecting the following impact from the adoption of the new standard on 1 January 2018: The Fund has reviewed its financial assets and liabilities and does not expect any impact from the adoption of the new standard on 1 February 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 recognitionof impairment provisions based on expected credit losses ( 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 deposits with licensed Islamic financial institutions 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. Deposits with licensed financial institutions are stated at fair value. Due to the shortterm nature of the deposits, the cost plus accrued profit calculated based on the effective profit method over the period from the date of placement to the date of maturity of the respective deposits is a reasonable estimate of fair value. Financing and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and have been included in current assets. The Fund s financing and receivables comprise cash and cash equivalents and amount due from Manager. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. The Fund classifies accrued management fee, amount due to Trustee, distribution payable, and other payables and accruals as other financial liabilities. 23

26 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC DEPOSIT FUND (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 deposits with licensed Islamic financial institutions are initially recognised at fair value. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the rights to receive cash flows from the Shariah-compliant investments have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expired. 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 year whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective profit rate. The asset s carrying amount is reduced and the amount of the loss is recognised in statement of comprehensive income. If financing and receivables has a variable profit rate, the discount rate for measuring any impairment loss is the current effective profit rate determined under the contract. As a practical expedient, the Fund may measure impairment on the basis of an instrument s fair value using an observable market price. If, in a subsequent financial year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in statement of comprehensive income. When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined. 24

27 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC DEPOSIT FUND (c) Income recognition Profit income from Shariah-compliant deposits with licensed Islamic financial institutions is recognised on a time proportionate basis using effective profit rate method on an accrual basis. (d) Functional and presentation currency Items included in the financial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (the functional currency ). The financial statements are presented in Ringgit Malaysia ( RM ), which is the Fund s functional and presentation currency. (e) Cash and cash equivalents For the purpose of statement of cash flows, cash and cash equivalents comprise bank balances which are subject to an insignificant risk of changes in value. (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. (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 financial year in which it is approved by the Trustee. (h) 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. The outstanding units are carried at the redemption amount that is payable at each financial year if unit holder exercises the right to put the unit back to the Fund. Units are created and cancelled at prices based on the Fund s NAV per unit at the time of creation or cancellation. The Fund s NAV per unit is calculated by dividing the net assets attributable to unit holders with the total number of outstanding units. (i) Segment information Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments. 25

28 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CIMB ISLAMIC DEPOSIT FUND (j) Critical accounting estimates and judgments in applying accounting policies The Fund makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Fund s results and financial position are tested for sensitivity to changes in the underlying parameters. Estimates and judgment are continually evaluated by the Manager and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In undertaking any of the Fund s investment, the Manager will ensure that all assets of the Fund under management will be valued appropriately, that is at fair value and in compliance with the SC Guidelines on Unit Trust Funds. However, the Manager is of the opinion that there are no accounting policies which require significant judgement to be exercised. 3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT OBJECTIVES AND POLICIES Financial instruments of the Fund are as follows: Financial assets at fair value through profit or loss Financing and receivables Total 2018 RM RM RM Cash and cash equivalents (Shariahcompliant) (Note 10) - 20,726 20,726 Shariah-compliant deposits with licensed Islamic financial institutions (Note 9) 1,856,728,820-1,856,728,820 Amount due from Manager - 1,611,000 1,611,000 1,856,728,820 1,631,726 1,858,360, Cash and cash equivalents (Shariahcompliant) (Note 10) - 22,703 22,703 Shariah-compliant deposits with licensed Islamic financial institutions (Note 9) 1,332,427,322-1,332,427,322 Amount due from Manager - 307, ,000 1,332,427, ,703 1,332,757,025 All current liabilities are financial liabilities which are carried at amortised cost. The Fund aims to provide investors with liquidity and regular income, whilst maintaining capital stability by investing primarily in deposits that comply with the Shariah principles. The Fund is exposed to a variety of risks which include market risk (inclusive of interest rate risk), liquidity risk and credit risk. 26

29 3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Financial risk management is carried out through internal control process adopted by the Manager and adherence to the investment restrictions as stipulated in the Deeds and SC Guidelines on Unit Trust Funds. (a) Market risk (i) Interest rate risk Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Interest rate is a general economic indicator that will have an impact on the management of the Fund. It does not in any way suggest that this Fund will invest in conventional financial instruments. All investment carried out for the Fund including placements and deposits are in accordance with Shariah. The Fund s exposure to fair value interest rate risk arises from Shariahcompliant investment in money market instruments. The interest rate risk is expected to be minimal as the Fund s investments comprise mainly Shariahcompliant short term deposits with approved licensed Islamic financial institutions. As at the end of each financial year, the Fund is not exposed to a material level of interest rate risk. The Fund is not exposed to cash flow interest rate risk as the Fund does not hold any financial instruments at variable interest rate. (b) Liquidity risk Liquidity risk is the risk that the Fund will encounter difficulty in meeting its financial obligations. The Manager manages this risk by maintaining sufficient level of liquid assets to meet anticipated payments and cancellations of the units by unit holders. Liquid assets comprise bank balances, Shariah-compliant deposits with licensed Islamic financial institutions and other instruments, which are capable of being converted into cash within 7 business days. This is expected to reduce the risks for the entire portfolio without limiting the Fund s growth potentials. 27