CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
CONTENTS
INVESTOR LETTER
MANAGER’S REPORT
PAGE(S)
1
2-8
Fund objective and policy
Performance Data
Market review
Fund performance
Portfolio structure
Market outlook
Unit holdings statistic
Soft commission and rebates
STATEMENT BY MANAGER
TRUSTEE’S REPORT
INDEPENDENT AUDITORS’ REPORT
9
10
11 - 12
STATEMENT OF COMPREHENSIVE INCOME
13
STATEMENT OF FINANCIAL POSITION
14
STATEMENT OF CHANGES IN EQUITY
15
STATEMENT OF CASH FLOWS
16
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORY
LIST OF CIMB WEALTH ADVISORS BERHAD’S OFFICES
17 - 36
37
38 - 40
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
INVESTOR LETTER
Dear Valued Investors,
Thank you for investing with CIMB-Principal Asset Management Berhad (“CIMB-Principal”).
CIMB-Principal Asset Management Berhad (“CIMB-Principal”) was recently awarded the Asian
Investor 2013 Investment Performance Award for Asian Fund House of the Year. This prestigious
award is granted to the best overall fund house headquartered in Asia Pacific, recognised for a
combination of business strategy, execution, investment performance, asset gathering, innovation
and success. Being deemed the ‘Best Asian Fund House’ is a confirmation of our efforts as Asian
investment manager. This regional recognition of our performance and capabilities also
demonstrates our success in pursuing our strategy towards offering products, services and solutions
that match the risk profile and investment appetite of our clients in the region.
With twenty Islamic unit trust funds, CIMB-Principal has one of the most extensive selections of
Islamic unit trust funds available. There are five local equity funds, seven regional/global equity
funds, two mixed asset funds, two fixed income funds, two money market funds and two wholesale
funds.
On another note, as the year wraps up it’s the perfect time to evaluate your retirement plan. It is
worth thinking about saving more now to have that little extra during your retirement years. CIMBPrincipal also offers CIMB Islamic PRS Plus, a private retirement scheme with the most PRS funds
in the country and the only Islamic Asia Pacific Ex Japan Equity PRS Fund. The CIMB Islamic PRS
Plus won Best Islamic Product at Asia Asset Management’s Best of the Best Awards 2012.
If you are already a member of CIMB-Principal PRS Plus or CIMB Islamic PRS Plus, you are doing
more than most to plan for your retirement. As an added plus, the extra contributions made are tax
efficient savings for retirement. Contributing to a private retirement scheme can grant tax relief of up
to RM3,000 per year* on a continuous basis for a period of 10 years from year assessment 2012. If
you have done so yet, make sure to maximise your PRS tax relief in this last quarter. Otherwise this
unused tax credit will be lost forever. To find out more, you may email us at service@cimbprincipal.com.my or contact our PRS Ambassadors at 603 7718 3100 from 8.30am–5.30pm,
Mondays to Fridays.
Before signing off, I am pleased to announce that Puan Munirah Khairuddin has been promoted to
Chief Executive Officer (CEO), CIMB-Principal, helming the business in Malaysia. Having joined the
company in November 2006 and appointed as Deputy CEO in November 2008, the action
formalises and reflects her business responsibilities in Malaysia. I have been re-designated as the
CEO, ASEAN Region, focusing on the growth and competitiveness of our regional business.
Happy Investing!
Yours sincerely,
Pedro Esteban Borda
Executive Director / CEO, ASEAN Region
CIMB-Principal Asset Management Berhad
Munirah Khairuddin
Chief Executive Officer
CIMB-Principal Asset Management Berhad
*Assuming that you do not contribute to deferred annuities
1
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
MANAGER’S REPORT
What is the investment objective of the Fund?
The Fund is a close-ended fund that aims to provide income and capital preservation* for a period of
five (5) years by investing primarily in a credit linked investment structured product issued in
Malaysia.
* The Fund is neither a capital guaranteed fund nor a capital protected fund.
Has the fund achieved its objective?
For the period under review, the Fund is in line with its stated objectives as stated under the fund
performance review.
What are the fund investment policy and its strategy?
The CIMB-Principal Structured Investment Wholesale Fund is a close-ended fund in which at least
95% of the Fund’s NAV will be invested in a five (5)-year credit linked investment structured product
(“Structured Product”) to be issued by CIMB Bank Berhad*, while up to 5% of the remaining Fund’s
NAV will be invested in liquid assets for liquidity purpose.
The Structured Product is not a principal protected/guaranteed investment. The Structured Product
is not insured by the Perbadanan Insurans Deposit Malaysia (also known as the Malaysia Deposit
Insurance Corporation). As the Structured Product is a credit linked investment structured product,
the performance of the Structured Product is linked to the performance of its underlying asset, i.e.
the Reference Obligation, which is a five (5)-year senior unsecured bond that is unrated, nontradable and non-transferable. Through this Structured Product (subject to non-occurrence of any
Events), the Fund will receive semi-annual coupon payments from the Structured Product (via the
semi-annual coupon payments received from the Reference Obligation), which will then be
distributed to the Unit holders.
Due to the nature of this Fund, the Manager will generally adopt a buy-and-hold strategy whereby
the Structured Product invested will be held for the tenure of the Fund. There will be no trading of
the Fund’s investment portfolio as withdrawal (prior to the Maturity Date) is not allowed.
The Fund’s policies on investments are carried out in accordance with the Deed and it will continue
its operations until terminated in accordance with the provisions of the Deed.
* CIMB Bank Berhad (as the Issuer) and the Manager are related companies within the CIMB
Group; hence, conflict of interest may arise.
Fund category/ type
Wholesale Fund (Structured Product) / Income.
How long should you invest for?
5 years
Indication of short-term risk (low, moderate, high)
High.
When was the Fund launched?
9 August 2012
What was the size of the Fund as at 30 September 2013?
RM 2,043.95 million (2,005 million units)
2
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
MANAGER’S REPORT (CONTINUED)
What is the fund’s benchmark?
Five (5)-year CIMB Bank fixed deposit rate at the Commencement Date.
Given that the objective of the Fund is to provide income and capital preservation*, the Fund is
benchmarked against the five (5)-year CIMB Bank fixed deposit rate at Commencement Date for
performance comparison purpose only. The five (5)-year fixed deposit rate at the Commencement
Date provides an indication on the annual^ rate of return over five (5) years receivable by investors
should they deposit their money with financial institutions. Investors should note that the risk profile
of this Fund is higher than placement of deposit, and hence, investors should expect the Fund to
outperform the benchmark.
The information can be obtained from www.cimbbank.com.my on the Commencement Date.
Thereafter, information on the benchmark can be obtained from CIMB-Principal’s website at
http://www.cimb-principal.com.my.
* The Fund is neither a capital guaranteed fund nor a capital protected fund.
^ The fixed deposit rate is stated in percentage per annum. Hence, for the five (5)-year fixed deposit
rate, it shows the annual rate of return in the five years, For example, if the fixed deposit rate at
Commencement Date is 3% per annum, it means if an investor invest in fixed deposit for the next
five years, he will earn 3% annually for the next five years.
What is the fund distribution policy?
The Fund will pay distribution on a semi-annual basis, depending on the level of income (if any) that
the Fund generates. Unit holders should note that the Fund’s distributions are not guaranteed as it
depends on the coupons received from the Structured Product, which is the Fund’s main source of
income. However, pursuant to the Deed, the Manager has the right to make provisions for reserves
in respect of distribution of the Fund. If the income available is too small or insignificant, any
distribution may not be of benefit to the Unit holders as the total cost to be incurred in any such
distribution may be higher than the amount for distribution. The Manager has the discretion to
decide on the amount to be distributed to the Unit holders
What was the net income distribution for the year ended 30 September 2013?
The Fund distributed a total of RM 156 million income to unit holders for the financial year ended 30
September 2013.
The Fund’s net asset value per unit after distributions is as follows:
Date
14.02.2013
14.08.2013
NAV before
distribution
1.0753
1.0736
Net distribution
(sen per unit)
3.9222
3.8583
3
NAV after
distribution
1.0360
1.0350
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
PERFORMANCE DATA
Details of portfolio composition of the Fund for the financial period is as follows:
30.09.2013
%
98.83
1.17
100.00
Structured Product
Cash and other net assets
Performance details of the Fund for the financial period are as follows:
Net asset value (RM Million)
Units in circulation (million)
Net asset value per unit (RM)
Highest NAV per unit (RM)
Lowest NAV per unit (RM)
Total return (%)
- Capital growth (%)
- Income distribution (%)
Date of distribution
Gross distribution per unit (sen)
Net distribution per unit (sen)
14.02.2013
3.9222
3.9222
Management expense ratio (%)
Portfolio turnover ratio (times) #
30.09.2013
2,043.95
2,005.00
1.0194
1.0751
1.0000
9.76
1.96
7.65
14.08.2013
3.8583
3.8583
0.09
0.49
Total
Return
%
8.98
- Since Inception
Annualized
Return
%
8.98
(Launch date: 9 August 2012)
#The portfolio turnover ratio was at 0.5 times as the investment activities kicked off during the
inception of the Fund.
Since Inception
to 30.09.2013
8.98
Annual total return (%)
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 years ended have been extracted
from Lipper.
4
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
MARKET REVIEW (9 AUGUST 2012 TO 30 SEPTEMBER 2013)
In the fourth quarter of 2012, Malaysian Government Securities (MGS) yield curve gave a modest
rally. The rally was primarily due to a mix of concerns, from the faltering confidence that the US may
not be able to meet its fiscal cliff deadline as well as the unexpected decline in the Malaysian export
figures. The MGS auction calendar for 2013 was released in December 2012, comprising 30
tenders of 15 MGS, 12 Government Investment Issues (GII) and 3 Skim Pinjaman Perumahan
Kerajaan (SPK) auctions.
In the first quarter of 2013, Malaysia launched its first Exchange Traded Bonds and Sukuk (ETBS)
platform and DanaInfra Nasional Berhad became the first sukuk issuer with its RM300 million
offering to tap the retail market. DanaInfra is the funding vehicle for Klang Valley’s Mass Rapid
Transit (MRT) projects and the maiden retail sukuk has a tenure of 10 years and was priced at
4.00%. Proceeds from the issuance will be used to partly fund the MRT projects. The bullish
sentiment in the bond market was further driven by external factors, as global market players were
concerned that the Cyprus bailout would reignite the eurozone debt crisis. The domestic front was
mostly quiet as market players remained in a cautious mood as they awaited the announcement of
the dissolution of the Parliament for the 13th general election.
During the second quarter of 2013, the MGS yield curve outperformed its regional counterparts in
May, after the ruling coalition party Barisan Nasional recorded its 13th straight general election
victory. However, the Malaysian bond market was not spared from the global rout in June, as jittery
investors sold down the sovereign market in view of Federal Reserve (Fed) Chairman Bernanke’s
tapering comments on the US Quantitative Easing (QE) programme.
In the third quarter of 2013, the ringgit bond market suffered in July after Fitch became the first
amongst the rating agencies to take a negative rating action when it revised the outlook of
Malaysia’s sovereign to negative from stable. Thereon, geopolitical concerns, weak emerging
markets’ currencies including the ringgit and the selloff in the equities markets weighed on the local
government bonds. Towards the end of the period, local investors regained confidence following the
country’s inaugural issuance of a 30-year MGS which received robust interest from the market.
FUND PERFORMANCE
Since inception
to 30.09.2013
7.65
1.96
8.98
3.18
8.98
Income (%)
Capital (%)
Total Return (%)
Benchmark (%)
Average Total Return (%)
Since inception, the Fund gained total return of 9.76%, outperforming the benchmark which gained
3.18%. The outperformance of the Fund was due to coupons received from the investment in
Structured Product.
5
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
FUND PERFORMANCE (CONTINUED)
Changes in Net Asset Value (“NAV”)
30.09.2013
2,043.95
1.0194
NAV (RM Million)
Net Asset Value per unit (RM Million)
% Changes
-
The Fund’s total NAV stood at RM 2.04 billion while the NAV per unit was valued at RM 1.0194 as
at 30 September 2013.
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 have been extracted from Lipper.
PORTFOLIO STRUCTURE
Asset allocation
(% of NAV)
30.09.2013
Structured product
98.83
Cash and other net assets
1.17
TOTAL
100.00
The Fund remained fully invested during the period under review. Some cash and other liquid
assets are maintained at all times primarily for liquidity purposes.
6
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
PORTFOLIO STRUCTURE (CONTINUED)
Asset allocation (continued)
MARKET OUTLOOK
We expect Bank Negara Malaysia (BNM) to keep the overnight policy rate (OPR) at 3.0% for 2013.
Despite rising inflation towards the end of the year, there is little impetus for the central bank to hike
rates this year as higher inflation is mainly policy induced and not arising from demand pull factors.
In its statement, BNM has turned more cautious highlighting the “increased uncertainties to the
balance of risk” on growth and inflation outlook and noting the extended weakness in external
conditions. In addition, fluctuations in currency thus far have mostly been driven by external shocks
and dollar swings.
INVESTMENT STRATEGY
As this is a structured wholesale fund, the investment strategy has been preset at the inception of
the Fund. The Fund will remain fully invested with minimal cash kept for liquidity purposes in order
to fully participate in the investment into the Structured Product.
UNIT HOLDING STATISTICS
Breakdown of unit holdings by size as at 30 September 2013 are as follows:
Size of unit holding
No of unit holders
No. of units held
(million)
% of units held
2
2
2,005.00
2,005.00
100.00
100.00
5,000 and below
5,001 to 10,000
10,001 to 50,000
50,001 to 500,000
500,001 and above
7
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
SOFT COMMISSIONS AND REBATES
The management company 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 management company did not receive any rebates and
soft commissions from brokers or dealers.
8
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
STATEMENT BY MANAGER TO THE UNITHOLDERS OF
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
I, being the Director 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
13 to 36 are drawn up in accordance with the provisions of the Deed and give a true and fair view of
the statement of financial position of the Fund as at 30 September 2013 and of its financial
performance, changes in equity and cash flows for the financial period from 9 August 2012 (date of
launch) to 30 September 2013 in accordance with Malaysian Financial Reporting Standards and
International Financial Reporting Standards.
For and on behalf of the Manager
CIMB-Principal Asset Management Berhad
(Company No.: 304078-K)
MUNIRAH KHAIRUDDIN
Chief Executive Officer
Kuala Lumpur
29 November 2013
9
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
TRUSTEE’S REPORT TO THE UNITHOLDERS OF
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
We have acted as Trustee of CIMB-Principal Structured Investment Wholesale Fund (“the Fund”)
for the financial period from 9 August 2012 (Date of Launch) to 30 September 2013. 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)
limitations imposed on the investment powers of the Manager and the Trustee under the Deed,
the Securities Commission’s Guidelines on Wholesale Funds, the Capital Markets and Services
Act 2007 and other applicable laws;
b)
valuation/pricing is carried out in accordance with the Deed and any regulatory requirements; and
c)
creation and cancellation of units are carried out in accordance with the Deed and any regulatory
requirements.
During this financial period, a total distribution of 7.7805 sen per unit (gross) has been distributed to
the unitholders of the Fund. We are of the view that the distribution is not inconsistent with the
objectives of the Fund.
For HSBC (Malaysia) Trustee Berhad
Tan Bee Nie
Head, Trustee Operations
Kuala Lumpur
Date: 29 November 2013
10
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OF
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of CIMB-Principal Structured Investment Wholesale Fund
on pages 13 to 36, which comprise the statement of financial position as at 30 September 2013 of
the Fund, and the statements of comprehensive income, changes in equity and cash flows for the
financial period from 9 August 2012 (date of launch) to 30 September 2013, and a summary of
significant accounting policies and other explanatory notes, as set out on Note 1 to 16.
Manager’s Responsibility for the Financial Statements
The Manager of the Fund is responsible for the preparation of financial statements so as to give a
true and fair view in accordance with Malaysian Financial Reporting Standards and International
Financial Reporting Standards, and for such internal control as the Manager determines are
necessary to enable the preparation of financial statements that are free from material misstatement
whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with approved standards on auditing in Malaysia. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on our judgment, including
the assessment of risks of material misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, we consider internal control relevant to the Fund’s
preparation of financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Manager’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the Manager, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
11
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OF
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND (CONTINUED)
REPORT ON THE FINANCIAL STATEMENTS (CONTINUED)
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Malaysian
Financial Reporting Standards and International Financial Reporting Standards so as to give a true
and fair view of the financial position of the Fund as of 30 September 2013 and of its financial
performance and cash flows for the financial period from 9 August 2012 (date of launch) to 30
September 2013.
OTHER MATTERS
This report is made solely to the unitholders of the Fund and for no other purpose. We do not
assume responsibility to any other person for the content of this report.
PRICEWATERHOUSECOOPERS
(No. AF: 1146)
Chartered Accountants
Kuala Lumpur
29 November 2013
12
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL PERIOD FROM 9 AUGUST 2012 (DATE OF LAUNCH)
TO 30 SEPTEMBER 2013
Note
NET INVESTMENT INCOME
Interest income from deposits with licensed
financial institutions
Interest income from investment in structured
product
Net gain on financial assets at fair value through
profit or loss
EXPENSES
Management fee
Trustee’s fee
Audit fee
Tax agent’s fee
Other expenses
09.08.2012
(date of launch)
to 30.09.2013
RM
182,792
176,515,068
8
20,088,000
─────────
196,785,860
─────────
4
5
1,168,440
642,642
10,000
7,544
2,747
─────────
1,831,373
─────────
PROFIT BEFORE TAXATION
194,954,487
Taxation
7
PROFIT AFTER TAXATION ANDTOTAL
COMPREHENSIVE INCOMEFORTHE
FINANCIAL PERIOD
─────────
194,954,487
═════════
Profit after taxation is made up as follows:
Realised amount
Unrealised amount
174,866,487
20,088,000
─────────
194,954,487
─────────
The accompanying notes to the financial statements form an integral part of the audited financial
statements.
13
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2013
Note
CURRENT ASSETS
Financial assets at fair value through profit or loss
Cash and cash equivalents
8
9
TOTAL ASSETS
CURRENT LIABILITIES
Accrued management fee
Amount due to Trustee
Other payables and accruals
2013
RM
2,040,603,068
3,501,679
───────────
2,044,104,747
───────────
85,974
47,286
17,000
───────────
150,260
───────────
TOTAL LIABILITIES
NET ASSET VALUE OF THE FUND
2,043,954,487
═══════════
EQUITY
Unitholders' capital
Retained earnings
2,005,000,000
38,954,487
───────────
NET ASSETS ATTRIBUTABLE TO
UNITHOLDERS
10
NUMBER OF UNITS IN CIRCULATION
(UNITS)
10
2,043,954,487
═══════════
2,005,000,001
═══════════
NET ASSET VALUE PER UNIT (RM)
(EX-DISTRIBUTION)
1.0194
══════════
The accompanying notes to the financial statements form an integral part of the audited financial
statements.
14
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL PERIOD FROM 9 AUGUST 2012 (DATE OF LAUNCH)
TO 30 SEPTEMBER 2013
Unitholders’
capital
RM
Retained
earnings
RM
Total
RM
-
-
-
2,005,000,000
-
2,005,000,000
───────────
2,005,000,000
═══════════
194,954,487
(156,000,000)
────────────
38,954,487
═══════════
194,954,487
(156,000,000)
───────────
2,043,954,487
═══════════
Note
Balance as at 9 August 2012
(date of launch)
Movement in unitholders' contribution:
Creation of units from applications
Total comprehensive income for
the financial period
Distributions for the financial period
Balance as at 30 September 2013
10
6
The accompanying notes to the financial statements form an integral part of the audited financial
statements.
15
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL PERIOD FROM 9 AUGUST 2012 (DATE OF LAUNCH)
TO 30 SEPTEMBER 2013
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Purchase of unquoted structured product
Interest received from deposits with licensed
financial institutions
Interest income received from investment in
structured product
Management fees paid
Trustee’s fee paid
Payment for other fee and expenses
(2,000,000,000)
182,792
156,000,000
(1,082,466)
(595,356)
(3,291)
────────────
(1,845,498,321)
────────────
Net cash used in operating activities
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from unit created
Distribution paid
2,005,000,000
(156,000,000)
────────────
1,849,000,000
────────────
Net cash generated from financing activities
3,501,679
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the
financial period
Cash and cash equivalents at the end of the
financial period
09.08.2012
(date of launch)
to 30.09.2013
RM
────────────
9
3,501,679
════════════
The accompanying notes to the financial statements form an integral part of the audited financial
statements.
16
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL PERIOD FROM 9 AUGUST 2012 (DATE OF LAUNCH)
TO 30 SEPTEMBER 2013
1.
THE FUND, THE MANAGER AND ITS PRINCIPAL ACTIVITY
CIMB-Principal Structured Investment Wholesale Fund (the “Fund”) was constituted pursuant
to the Master Deed dated 9 August 2012 (the “Deed”) between CIMB-Principal Asset
Management Berhad (the “Manager”) and HSBC (Malaysia) Trustee Berhad (“the Trustee”).
The CIMB-Principal Structured Investment Wholesale Fund is a close-ended fund in which at
least 95% of the Fund’s net asset value (“NAV”) will be invested in a five (5)-year credit linked
investment structured product (“Structured Product”) issued by CIMB Bank Berhad, while up
to 5% of the remaining Fund’s NAV will be invested in liquid assets for liquidity purpose.
The main objective of the Fund is to provide income and capital preservation for a period of
five (5)-year by investing primarily in a credit linked investment Structured Product issued in
Malaysia.
All investments will be subject to the Securities Commission (“SC”) Guidelines on Wholesale
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. Its principal
activities are the establishment and management of unit trusts 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
Malaysian Financial Reporting Standards (“MFRS”) and International Financial
Reporting Standards.
The financial statements have been prepared under the historical cost convention.
17
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
Basis of preparation (continued)
The preparation of financial statements in conformity with MFRS 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 revenue and expenses during
the reported financial period. It also requires the Manager to exercise their judgment in
the process of applying the Fund’s accounting policies. The Manager believes that the
underlying assumptions are appropriate and the Fund’s financial statements therefore
present the financial position results fairly. 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(l).
(i)
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:
Financial year beginning on/after 1 October 2013
•
MFRS 13 “Fair value measurement” (effective from 1 January 2013)
aims to improve consistency and reduce complexity by providing a
precise definition of fair value and a single source of fair value
measurement and disclosure requirements for use across MFRSs. The
requirements do not extend the use of fair value accounting but provide
guidance on how it should be applied where its use is already required
or permitted by other standards. The enhanced disclosure requirements
are similar to those in MFRS 7 “Financial instruments: Disclosures”, but
apply to all assets and liabilities measured at fair value, not just
financial ones.
This standard is not expected to have a significant impact on the Fund’s
financial statements.
•
Amendment to MFRS 7 “Financial instruments: Disclosures” (effective
from 1 January 2013) requires more extensive disclosures focusing on
quantitative information about recognised financial instruments that are
offset in the statement of financial position and those that are subject to
master netting or similar arrangements irrespective of whether they are
offset.
This standard is not expected to have a significant impact on the Fund’s
financial statements.
18
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
Basis of preparation (continued)
(i)
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: (continued)
Financial year beginning on/after 1 October2014
•
Amendment to MFRS 132 “Financial instruments: Presentation”
(effective from 1 January 2014) does not change the current offsetting
model in MFRS 132. It clarifies the meaning of ‘currently has a legally
enforceable right of set-off’ that the right of set-off must be available
today (not contingent on a future event) and legally enforceable for all
counterparties in the normal course of business. It clarifies that some
gross settlement mechanisms with features that are effectively
equivalent to net settlement will satisfy the MFRS 132 offsetting criteria.
This standard is not expected to have a significant impact on the Fund’s
financial statements.
Financial year beginning on/after 1 October 2015
•
MFRS 9 “Financial instruments -classification and measurement of
financial assets and financial liabilities”(effective from 1 January 2015)
replaces the multiple classification and measurement models in MFRS
139 with a single model that has only two classification categories:
amortised cost and fair value. The basis of classification depends on
the entity’s business model for managing the financial assets and the
contractual cash flow characteristics of the financial asset.
The accounting and presentation for financial liabilities and for derecognising financial instruments has been relocated from MFRS 139,
without change, except for financial liabilities that are designated at fair
value through profit or loss (“FVTPL”). Entities with financial liabilities
designated at FVTPL recognise changes in the fair value due to
changes in the liability’s credit risk directly in other comprehensive
income (OCI). There is no subsequent recycling of the amounts in OCI
to profit or loss, but accumulated gains or losses may be transferred
within equity.
The guidance in MFRS 139 on impairment of financial assets and
hedge accounting continues to apply.
MFRS 7 requires disclosure on transition from MFRS 139 to MFRS 9.
This standard is not expected to have a significant impact on the Fund’s
financial statements.
19
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b)
Financial assets and financial liabilities
Classification
The Fund designates its investment in five (5)-year credit linked investment structured
product (“Structured Product”) as a financial asset at fair value through profit or loss at
inception.
Financial assets are designated at fair value through profit or loss when they are
managed and their performance evaluated on a fair value basis.
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and have been included in current
assets. The Fund’s loans and receivables comprise cash and cash equivalents.
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, other payables
and accruals as other financial liabilities.
Recognition and measurement
Regular purchase and sales of financial assets are recognised on the trade-date, the
date on which the Fund commits to purchase or sell the asset. Structured products 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
investments have expired or have been transferred and the Fund has transferred
substantially all risks and rewards of ownership.
The Structured Product is recorded at cost and subsequently revalued to their fair
values as at the date of the statement of financial position.
In accordance with the Deed, valuation of the Structured Product is provided by the
issuer on a daily basis. As a counter check on the fair value provided by the issue, the
Manager will perform a separate valuation on the Structured Product.
The issuer’s pricing will be verified and any significant differences between the
Manager’s valuation and the issuer’s valuation, and significant differences impacting
the Fund’s net asset value would be investigated and adjusted accordingly.
Financial liabilities are derecognised when it is extinguished, i.e. when the obligation
specified in the contract is discharged or cancelled or expires.
Unrealised gains or losses from changes in the fair value of the investments 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 period which they arise.
20
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b)
Financial assets and financial liabilities (continued)
Deposits with licensed financial institutions are stated at cost plus accrued interest
calculated on the effective interest method over the period from the date of placement
to the date of maturity of the respective deposits.
Loans and receivables are subsequently carried at amortised cost using the effective
interest method.
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
interest rate. The asset’s carrying amount of the asset is reduced and the amount of
the loss is recognised in profit or loss. If ‘loans and receivables’ or a ‘held-to-maturity
investment’ has a variable interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate determined under the contract. As
a practical expedient, the Fund may measure impairment on the basis of an
instrument’s fair value using an observable market price.
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 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.
(c)
Income recognition
Interest income earned from short term deposits and investment in structured product
is recognised on an accrual basis using the effective interest rate method.
Realised gain or loss on disposal of investments is accounted for as the difference
between the net disposal proceeds and the carrying amount of investments,
determined on a weighted average cost basis.
21
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d)
Functional and presentation currency (continued)
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,
which is the Fund’s functional and presentation currency.
(e)
Creation and cancellation of units
The Fund issues cancellable units, which are cancelled at the unitholder’s option and
are classified as equity. Cancellable units can be returned to the Fund at any time for
cash equal to a proportionate share of the Fund’s net asset value (“NAV”). The
outstanding units are carried at the redemption amount that is payable at the
statement of financial position date if the unitholder exercises the right to return the
unit to the Fund.
Units are created and cancelled at the unitholder’s option 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 unitholders with the total number of
outstanding units.
(f)
Cash and cash equivalents
For the purpose of statement of cash flows, cash and cash equivalents comprise cash
and bank balances and deposits held in highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
(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.
(h)
Distributions
A distribution to the Fund’s unitholders is accounted for as a deduction from realised
reserve. Proposed distributions to unit holders are recognised in the statement of
changes in equity upon approval by the Board of Directors of the Manager.
(i)
Unitholders’ capital
The unitholders’ contributions to the Fund meet the definition of puttable instruments
classified as equity instruments under MFRS 132 “Financial Instruments:
Presentation”.
The units in the Fund are puttable instruments which entitle the unitholders to a prorate
share of the net asset of the Fund. The units are subordinated and have identical
features. There is no contractual obligation to deliver cash or another financial asset
other than the obligation on the Fund to repurchase the units. The total expected
cashflows from the units in the Fund over the life of the units are based on the change
in the net asset of the Fund.
22
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j)
Segmental information
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different from those of
other business segments. A geographical segment is engaged in providing products or
services within a particular economic environment that are subject to risks and returns
that are different from those of segments operating in other economic environments.
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.
(k)
Fair value of financial instruments
Financial instruments comprise financial assets and financial liabilities. Fair value is
the amount at which a financial asset could be exchanged between knowledgeable
and willing parties in an arm’s length transaction. The information presented herein
represents the estimates of fair values as at the date of the statement of financial
position.
Financial instruments of the Fund are as follows:
2013
Structured Product (Note 8)
Cash and cash equivalents
(Note 9)
Financial
assets at fair
value
through
profit or loss
RM
Loans and
receivables
RM
Total
RM
2,040,603,068
-
2,040,603,068
──────────
2,040,603,068
═════════
3,501,679
─────────
3,501,679
═════════
3,501,679
───────────
2,044,104,747
═══════════
All current liabilities are financial liabilities which are carried at amortised cost.
(l)
Critical accounting estimates and judgments in applying accounting policies
The Fund makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, rarely equal the related actual results. To
enhance the information content of the estimates, certain key variables that are
anticipated to have material impact to the Funds’ results and financial position are
tested for sensitivity to changes in the underlying parameters.
Estimates and judgments 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 Wholesale Funds.
23
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
3.
RISK MANAGEMENT OBJECTIVES AND POLICIES
The investment objective of the Fund is to provide income and capital preservation for a
period of five (5) years by investing primarily in a credit linked investment structured product
issued in Malaysia. The CIMB-Principal Structured Investment Wholesale Fund is a closeended fund in which at least 95% of the Fund’s NAV will be invested in a five (5)-year credit
linked investment structured product (“Structured Product”) to be issued by CIMB Bank
Berhad*, while up to5% of the remaining Fund’s NAV will be invested in liquid assets for
liquidity purpose.
The Structured Product is not a principal protected or guaranteed investment. The Structured
Product is not insured by the Perbadanan Insurans Deposit Malaysia (also known as the
Malaysia Deposit Insurance Corporation).As the Structured Product is a credit linked
investment structured product, the performance of the Structured Product is linked to the
performance of its underlying asset (the “Reference Obligation”), which is a five (5)-year
senior unsecured bond that is unrated, non-tradable and non-transferable. Through this
Structured Product, subject to non-occurrence of any Events, the Fund will receive semiannual coupon payments from the Structured Product, via the semi-annual coupon payments
received from the Reference Obligation, which will then be distributed to the unitholders.
The Fund is exposed to a variety of risks which include market risk (inclusive of price risk and
interest rate risk), credit risk, liquidity risk, non-compliance risk and capital risk.
Financial risk management is carried out through internal control process adopted by the
Manager and adherence to the investment restrictions as stipulated by the information
memorandum and SC Guidelines on Wholesale Fund.
(a)
Market risk
(i)
Price risk
Price risk is the risk that the fair value or future cash flows of the Structured
Product will fluctuate because of changes in market prices (other than those
arising from interest rate risk), whether those changes are caused by factors
specific to the individual financial instrument or its issuer, or factors affecting all
similar financial instruments traded in the market.
The Fund’s overall exposure to price risk was as follows:
2013
RM
5-Year Credit Linked Investment
Structured Product designated at fair
value through profit or loss
24
2,040,603,068
═══════════
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
3.
RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(a)
Market risk (continued)
(i)
Price risk (continued)
The table below summarises the sensitivity of the Fund’s net asset value and
profit after tax to movements in prices of Structured Product at the end of the
reporting period. The analysis is based on the assumptions that the price of the
Structured Product increased and decreased by 5% with all the other variables
held constant. This represents management’s best estimate of a reasonable
possible shift in the Structured Product, having regard to the historical volatility
of the prices.
% Change in price
of structured
product
2013
-5%
0%
5%
═════════
(ii)
Market value
RM
Impact on profit
after taxation/net
asset value
RM
1,938,572,915
2,040,603,068
2,142,633,221
═══════════
(102,030,153)
102,030,153
═══════════
Interest rate risk
In general, when interest rates rise, Structured Product prices will tend to fall
and vice versa. Therefore, the NAV of the Fund may also tend to fall when
interest rates rise or are expected to rise. However, investors should be aware
that should the Fund hold a Structured Product till maturity, such price
fluctuations would dissipate as it approaches maturity, and thus the growth of
the NAV shall not be affected at maturity. In order to mitigate interest rates
exposure of the Fund, the Manager will manage the duration of the portfolio via
shorter or longer tenured assets depending on the view of the future interest
rate trend of the Manager, which is based on its continuous fundamental
research and analysis.
This risk is crucial in a Structured Product fund since Structured Product
portfolio management depends on forecasting interest rate movements. Prices
of Structured Product move inversely to interest rate movements, therefore as
interest rates rise, the prices of Structured Product decrease and vice versa.
Furthermore, Structured Product with longer maturity and lower yield coupon
rates are more susceptible to interest rate movements.
Investors should note that Structured Product and money market instruments
are subject to interest rate fluctuations. Such investments may be subject to
unanticipated rise in interest rates which may impair the ability of the issuers to
make payments of interest income and principal, especially if the issuers are
highly leveraged. An increase in interest rates may therefore increase the
potential for default by an issuer.
25
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
3.
RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(a)
Market risk (continued)
(ii)
Interest rate risk (continued)
The table below summarises the sensitivity of the Fund’s profit after tax and net
asset value to movements in prices of Structured Product held by the Fund at
the end of the reporting period as a result of movement in interest rate. The
analysis is based on the assumptions that the interest rate increased and
decreased by 100 basis points (1%) with all other variables held constant. The
analysis is also based on the assumption that the Issuer and the Manager will
not exercise the call and put option to withdraw or redeem from the Structured
Product at Par Value, in whole or in part, during the tenure of the Structured
Product. This represents management’s best estimate of a reasonable possible
shift in the interest rate, having regard to the historical volatility of the interest
rate.
% Change in interest
rate
Impact on profit after taxation
/ net asset value
2013
RM
(66,080,158)
68,803,521
══════════
+1%
-1%
The Fund’s exposure to interest rate risk associated with deposit with a
licensed financial institution is not material as the carrying value of the deposit
is a reasonable estimate of fair value as the deposit are held on a short term
basis.
(b)
Credit risk
Credit risk refers to the risk that a counter party will default on its contractual
obligations resulting in financial loss to the Fund.
The credit risk arising from placements of deposits in licensed financial institutions is
managed by ensuring that the Fund will only place deposits in reputable licensed
financial institutions. The credit/default risk is minimal as all transactions in Structured
Product are settled/paid upon delivery using approved brokers. The following table sets
out the credit risk concentration of the Fund at the end of each reporting period:
Structured
product
at fair value
through
profit or loss
RM
Cash and
cash
equivalents
RM
Total
RM
2013
Industry
Finance
-AAA
2,040,603,068
═══════════
3,501,679 2,044,104,747
════════════ ══════════
All financial assets of the Fund are neither past due nor impaired.
26
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
3.
RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(c)
Liquidity risk
Liquidity risk can be defined as the ease with which a security can be sold at or near
its fair value depending on the volume traded in the market. If a security encounters a
liquidity crunch, the security may need to be sold at a discount to the market fair value
of the security. This in turn would depress the NAV and/or growth of the Fund.
Generally, all investments are subject to a certain degree of liquidity risk depending on
the nature of the investment instruments, market, sector and other factors. For the
purpose of the Fund, the fund manager will attempt to balance the entire portfolio by
investing in a mix of assets with satisfactory trading volume and those that
occasionally could encounter poor liquidity. This is expected to reduce the risks for the
entire portfolio without limiting the Fund’s growth potentials.
The Manager manages this risk by maintaining sufficient level of liquid assets to meet
anticipated payments and cancellations of the units by unitholders. Liquid assets
comprise bank balance, deposits with licensed financial institutions and other
instruments, which are capable of being converted into cash within 7 business days.
The table below summarises the Fund’s financial liabilities into relevant maturity
groupings based on the remaining period as at the end of the reporting period to the
contractual maturity date. The amounts in the table are the contractual undiscounted
cash flows.
2013
Accrued management fee
Amount due to Trustee
Other payables and accruals
Contractual cash out flows
(d)
Less than
1 month
RM
Between
1 month
to 1 year
RM
Total
RM
85,974
47,286
─────────
133,260
═════════
17,000
─────────
17,000
═════════
85,974
47,286
17,000
─────────
150,260
═════════
Non-compliance risk
Non-compliance risk arises when the Manager and others associated with the Fund do
not follow the rules set out in the Fund’s constitution, or the law that govern the Fund,
or act fraudulently or dishonestly. It also includes the risk of the Manager not
complying with internal control procedures. The non-compliance may expose the Fund
to higher risks which may result in a fall in the value of the Fund which in turn may
affect its investment goals. However, the risk can be mitigated by the internal controls
and compliance monitoring undertaken by the Manager.
27
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
3.
RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(e)
Capital risk management
The capital of the Fund is represented by equity consisting of unitholders’ capital and
retained earnings. The amount of equity can change significantly on a daily basis as
the Fund is subject to daily subscriptions and redemptions at the discretion of
unitholders. The Fund’s objective when managing capital is to safeguard the Fund’s
ability to continue as a going concern in order to provide returns for unitholders and
benefits for other stakeholders and to maintain a strong capital base to support the
development of the investment activities of the Fund.
(f)
Fair value estimation
The fair value of financial assets and liabilities that are not traded in an active market is
determined by using valuation techniques. The Fund uses a variety of methods and
makes assumptions that are based on market conditions existing at each period end
date. Valuation techniques used for non-standardised financial instruments such as
options, currency swaps and other over-the-counter derivatives, include the use of
comparable recent arm’s length transactions, reference to other instruments that are
substantially the same, discounted cash flow analysis, option pricing models and other
valuation techniques commonly used by market participants making the maximum use
of market inputs and relying as little as possible on entity-specific inputs.
For instruments for which there is no active market, the Fund may use internally
developed models, which are usually based on valuation methods and techniques
generally recognised as standard within the industry. Valuation models are used
primarily to value unlisted equity, debt securities and other debt instruments for which
market were or have been inactive during the financial period. Some of the inputs to
these models may not be market observable and are therefore estimated based on
assumptions.
The output of a model is always an estimate or approximation of a value that cannot
be determined with certainty, and valuation techniques employed may not fully reflect
all factors relevant to the positions the Fund holds. Valuations are therefore adjusted,
where appropriate, to allow for additional factors including model risk, liquidity risk and
counterparty risk.
The fair value are based on the following methodology and assumptions:
(i)
Bank balance and deposits and placements with financial institutions with
maturities less than 1 year, the carrying value is a reasonable estimate of fair
value.
(ii)
The carrying value less impairment provision of receivables and payables are
assumed to approximate their fair values. The carrying value of the financial
assets and financial liabilities approximate their fair value due to their short
term nature.
28
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
3.
RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(f)
Fair value estimation (continued)
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation
method. The different levels have been defined as follows:
•
•
•
Quoted prices (unadjusted) in active market for identical assets or liabilities
(Level 1)
Inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (that is, as prices) or indirectly (that is,
derived from prices) (Level 2)
Inputs for the asset and liability that are not based on observable market data
(that is, unobservable inputs) (Level 3)
The level in the fair value hierarchy within which the fair value measurement is
categorised in its entirety is determined on the basis of the lowest level input that is
significant to the fair value measurement in its entirety. For this purpose, the
significance of an input is assessed against the fair value measurement in its entirety.
If a fair value measurement uses observable inputs that require significant adjustment
based on unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement in its
entirety requires judgment, considering factors specific to the asset or liability.
The determination of what constitutes ‘observable’ requires significant judgment by the
Fund. The Fund considers observable data to be that market data that is readily
available, regularly distributed or updated, reliable and verifiable, not proprietary, and
provided by independent sources that are actively involved in the relevant market.
Level 1
RM
Financial
assets at fair
value through
profit or loss:
- Structured
product
Level 2
RM
Level 3
RM
Total
RM
2,040,603,068
═══════════
2,040,603,068
═══════════
Section 1.01
═════════
═══════════
Investments classified within Level 3 have significant unobservable inputs, as they
trade infrequently. Level 3instruments include the Structured Product. As observable
prices are not available for these securities, the Fund has used valuation techniques to
derive the fair value. The Fund’s policies on valuation of these financial assets are
stated in Note 2(b).
29
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
4.
MANAGEMENT FEE
In accordance with Clause 24(1) of the Master Deed dated 9 August 2012, the Manager is
entitled to a maximum management fee of 3.00% per annum, calculated daily based on the
net asset value of the Fund.
For the financial period from 9 August 2012 (date of launch) to 30 September 2013, the
management fee is recognised at a rate of 0.05% per annum.
There will be no further liability to the Manager in respect of management fee other than the
amount recognised above.
5.
TRUSTEE’SFEE
In accordance with Clause 24(2) of the Master Deed dated 9 August 2012, the Trustee is
entitled to a fee not exceeding 0.15% per annum calculated based on the net asset value of
the Fund, subject to a minimum fee of RM30,000 per annum.
For the financial period from 9 August 2012 (date of launch) to30 September 2013, the
Trustee fee is recognised at a rate of 0.0275% per annum.
There will be no further liability to the Trustee in respect of trustee fee other than amounts
recognised above.
6.
DISTRIBUTION
Distribution to unitholders is from the following sources:
2013
RM
Interest income from investment in structured product
Distribution on 14 February 2013
Net distribution per unit (sen)
Gross distribution per unit (sen)
156,000,000
══════════
3.9222
3.9222
══════════
Distribution on 14 August 2013
Net distribution per unit (sen)
Gross distribution per unit (sen)
3.8583
3.8583
══════════
Net distribution above is sourced from current realised interest income from investment in
structured product. Gross distribution is derived using total income less total expenses.
Gross distribution per unit is derived from gross realised income less expense divided by the
number of units in circulation, while net distribution for unit is derived from net realised income
less expenses and taxation divided by the number of units in circulation.
30
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
7.
TAXATION
2013
RM
Tax charged for the financial period:
- current taxation – local
══════════
A numerical reconciliation between the profit before taxation multiplied by the Malaysian
statutory income tax rate and tax expense of the Fund is as follows:
2013
RM
Profit before taxation
194,954,487
═══════════
Taxation at Malaysian statutory rate of 25%
Tax effects of:
Investment income not subject to tax
Expenses not deductible for tax purposes
Restriction on tax deductible expenses for wholesale
funds
Taxation
8.
48,738,622
(49,196,465)
162,733
295,110
───────────
═══════════
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2013
RM
Designated at fair value through profit or loss at inception
- Structured product
Net gain on financial assets at fair value through profit or
loss
- change in unrealised fair value gain
31
2,040,603,068
═══════════
20,088,000
═══════════
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
8.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED)
Nominal
value
RM
Aggregate
cost
RM
Market
value
RM
Percentage
of net asset
value
%
2,000,000,000
═══════════
2,020,515,068
2,040,603,068
═══════════
98.84
═════════
2013
MALAYSIA
5-year Credit Linked
Investment Structured
Products
UNREALISED GAIN
ON FINANCIAL
ASSETS ATFAIR
VALUE THROUGH
PROFIT OR LOSS
20,088,000
───────────
TOTAL FINANCIAL
ASSETS AT FAIR
VALUE THROUGH
PROFIT OR LOSS
2,040,603,068
═══════════
The Structured Product consists of the Reference Obligation and embedded financial
derivatives.
The Reference Obligation is a five (5)-year senior unsecured bond that is unrated,
non-tradable and non-transferable. The performance of the Structured Product is referenced
to the credit performance of the Reference Entity and the performance of the Reference
Obligation. Through the Reference Obligation, the Structured Product (subject to nonoccurrence of any Events) pays the semi-annual coupons as well as the Principal Amount
(adjusted for any Call Amount) at its maturity.
The embedded financial derivatives consist of a call and a put option. The call option, when
exercised will allow the Issuer to withdraw from the Structured Product at Par Value, whether
in whole or in part, at any time during the tenure of the Structured Product. Whilst the put
option, when exercised will allow the Manager to redeem from the Structured Product at Par
Value, in whole, at any time during the tenure of the Structured Product.
As the Structured Product is a credit linked investment structured product that is referenced to
the credit performance of a bond, the performance of the Structured Product is subject to the
occurrence of events on the Reference Obligation and its issuer, the Reference Entity, which
affects the Structured Product. Upon occurrence of such events, the Structured Product may
be terminated earlier than its maturity and the Fund may receive less than its Principal
Amount (adjusted for Call Amount, if any) plus returns if otherwise held to its maturity,
including the possibility of some degree of loss on the Principal Amount or stand to lose the
entire Principal Amount.
32
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
9.
CASH AND CASH EQUIVALENTS
2013
RM
Deposits with licensed financial institutions
Bank balances
3,481,807
19,872
─────────
3,501,679
═════════
The effective weighted average interest rates per annum of deposits with licensed financial
institutions are as follows:
2013
%
Deposits with licensed financial institutions
3.25
═════════
Deposits with licensed financial institutions have an average maturity of 8 days.
10.
NUMBER OF UNITS IN CIRCULATION AND NET ASSETS ATTRIBUTABLE TO
UNITHOLDERS
At the beginning of the
financial period
Creation of units during the
financial period
Total comprehensive income
for the financial period
Distribution for the financial
period
At the end of the financial
period
33
No. of units
2013
RM
-
-
2,005,000,001
2,005,000,000
-
194,954,487
───────────
(156,000,000)
───────────
2,005,000,001
═══════════
2,043,954,487
═══════════
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
11.
MANAGEMENT EXPENSE RATIO (“MER”)
2013
%
MER
M
0.09
═════════
MER is derived from the following calculation:
MER =
A
B
C
D
E
F
(A + B + C + D + E) x 100
F
=
=
=
=
=
=
Management fee
Trustee fee
Audit fee
Tax agent fee
Other expenses
Average net asset value of the Fund calculation on a daily basis
The average net asset value of the Fund for the financial period ended calculated on daily
basis is RM 2,040,751,987.
12.
PORTFOLIO TURNOVER RATIO (“PTR”)
2013
PTR (times)
0.49
═════════
PTR is derived based on the following calculation:
(Total acquisition for the financial period + total disposal for the financial period) ÷ 2
Average net asset value of the Fund for the financial period calculated on a daily
basis
where:
total acquisition for the financial period = RM2,000,000,000
total disposal for the financial period = Nil
34
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
13.
UNITS HELD BY THE MANAGER AND RELATED PARTIES TRANSACTIONS AND
BALANCES
The related parties and their relationship with the Fund are as follows:
Related parties
Relationship
CIMB-Principal Asset Management Berhad
The Manager
CIMB Group Sdn Berhad
Holding company of the Manager
CIMB Group Holdings Berhad (“CIMB”)
Ultimate holding company of the Manager
CIMB Bank Berhad
Fellow subsidary to the Manager
Subsidiaries and associates of CIMB as
disclosed in its financial statements
Subsidiary and associated companies of the
ultimate holding company of the Manager
Units held by the Manager and parties related to the Manager
There were no units held by the Manager, the Director or parties related to the Manager as at
the end of the financial period.
In addition to related party disclosure mentioned elsewhere in the financial statements, set out
below are other significant related party transaction. The Manager is of the opinion that all
transactions with the related company have been entered into in the normal course of
business at agreed terms between the related parties and the interest rates on fixed and
short-term deposits were at normal commercial rates.
2013
RM
Significant related party transaction
Interest income from deposits with licensed financial institutions:
- CIMB Bank Berhad
- CIMB Islamic Bank Berhad
24,780
2,503
Interest income from Structured Product:
-CIMB Bank Berhad
Purchase of Structured Product:
-CIMB Bank Berhad
176,515,068
2,000,000,000
Significant related party balances
Structured Product:
- CIMB Bank Berhad
2,040,603,068
35
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
14.
TRANSACTIONS WITH BROKERS/DEALERS
Details of transactions with top 10 brokers/dealers for the financial period from 9 August 2012
(date of launch) to 30 September 2013 are as follows:
Percentage
Percentage
of total
Value of
of total
Brokerage
brokerage
trades
trades
fees
fees
Brokers/dealers
RM
%
RM
%
CIMB Investment Bank
Berhad #
2,000,000,000
88.09
CIMB Bank Berhad#
128,509,000
5.66
Affin Bank Berhad
42,156,000
1.86
Hong Leong Bank Berhad
39,745,000
1.75
RHB Bank Berhad
37,569,000
1.65
Public Bank Berhad
8,723,000
0.38
AmBank Berhad
7,470,000
0.33
OCBC Bank Berhad
2,000,000
0.09
Public Bank Islamic
1,300,000
0.06
Alliance Bank Berhad
1,000,000
0.04
Others
2,000,000
0.09
───────────
─────────
─────────
─────────
2,270,472,000
100.00
═══════════
═════════
═════════
═════════
# Included in transactions by the Fund are trades conducted with CIMB Investment Bank Berhad
and CIMB Bank Berhad fellow subsidiaries of the Manager amounting to RM 2,000,000,000 and
RM 128,509,000.The Manager is of the opinion that all transactions with the related company
have been entered into in the normal course of business at agreed terms between the related
parties.
15.
SEGMENT INFORMATION
The internal reporting provided to the chief operating decision-maker for the fund’s assets,
liabilities and performance is prepared on a consistent basis with the measurement and
recognition principles of MFRS and International Financial Reporting Standard. The CEO, who
is the chief operating decision-maker, is responsible for the performance of the fund and
considers the business to have a single operating segment located in Malaysia. Asset
allocation decisions are based on a single, integrated investment strategy and the Fund’s
performance is evaluated on an overall basis.
The investment objective of the Fund is a close-ended fund that aims to provide income and
capital preservation* for a period of five (5) years by investing primarily in a credit linked
investment structured product issued in Malaysia. The reportable operating segment derives
its income by seeking investments to achieve targeted returns consummate with an
acceptable level of risk within the portfolio. These returns consist of interest and dividend
income earned from investments and gains on the appreciation in the value of investments.
There were no changes in reportable operating segment during the financial period.
16.
COMPARATIVES
There are no comparative figures as this is the first set of financial statements prepared since
the launch of the Fund.
36
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
DIRECTORY
Head office of the Manager
CIMB-Principal Asset Management Berhad (Company No.: 304078-K)
Level 5, Menara Milenium,
8, Jalan Damanlela,
Bukit Damansara.
50490 Kuala Lumpur, MALAYSIA.
Postal address
CIMB-Principal Asset Management Berhad (Company No.: 304078-K)
P.O.Box 10571,
50718 Kuala Lumpur, MALAYSIA.
Internet site
www.cimb-principal.com.my
E-mail address
service@cimb-principal.com.my
General investment enquiries
(03) 7718 3100
Trustee for the CIMB-Principal Structured Investment Wholesale Fund
HSBC (Malaysia) Trustee Berhad (Co. No. 001281-T)
13th, Floor, Bangunan HSBC,
South Tower,
No 2, Lebuh Ampang,
50100 Kuala Lumpur, MALAYSIA
Auditors of the Trusts and of the Manager
PricewaterhouseCoopers(Company No. AF: 1146)
Level 10, 1 Sentral,
Jalan Travers, Kuala Lumpur Sentral,
PO Box 10192, 50706 Kuala Lumpur, MALAYSIA.
37
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
CIMB-Principal Structured Investment Wholesale Fund is also available from CWA’s Offices
ADDRESS
TELEPHONE
HEAD OFFICE
• 50, 52 & 54, Jalan SS21/39, Damansara Utama,
47400 Petaling Jaya, Selangor.
03-77183000
FINANCIAL PLANNING CENTRE
• 3-2, Jalan PJU 8/3B, Damansara Perdana,
47820 Petaling Jaya, Selangor.
03-77262000
REGIONAL OFFICES
• No 5, Jalan Todak 4, Bandar Sunway,
Seberang Jaya, 13700 Perai, Penang.
04-3702155
04-3702156
• 23 & 23A Jalan Harimau Tarum
Taman Century, 80250 Johor Bahru, Johor.
07-3341748
• 46, 2nd Floor, Jalan SS 21/39 Damansara Utama
47400, Petaling Jaya, Selangor.
03-77122888
• 5B, Lot 414, Section 10, KTLD Jalan Rubber,
93400 Kuching, Sarawak.
082-259777
• No 1 Jalan Pasar Baru, Kampung Air,
88000 Kota Kinabalu, Sabah.
088-239951
088-239952
BRANCHES
• 30A, First Floor, Persiaran Greentown 1,
Greentown Business Centre, 30450 Ipoh, Perak.
05-2439001
05-2439002
• Ground Floor, No 298B
Jalan Tok Hakim,
15000 Kota Bharu, Kelantan.
09-7471172
09-7471190
• No 13B, 2nd Floor, Jalan Mamanda 7/1,
Off Jalan Ampang, 68000 Ampang, Selangor.
03-42702970
• 169-2, Jalan Radin Bagus, Bandar Baru Sri Petaling,
57000 Kuala Lumpur.
03-90592333
• 21, Jalan Melaka Raya 24,Taman Melaka Raya, 75000 Melaka.
06-2811111
• 1st and 2nd Floor, Lot 1092, Jalan Merpati, 98000 Miri, Sarawak.
085-432525
38
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
CIMB-Principal Structured Investment Wholesale Fund is also available from CWA’s Offices
(continued)
ADDRESS
TELEPHONE
SALES OFFICES (CONTINUED)
• 32-33rd Floor Jalan 1/27F, KL Satellite Centre (KLSC),
Wangsa Maju, Section 5, 53300 Kuala Lumpur.
03-41422911
• Unit 113 & 213, Block C, Damansara Intan,
1, Jalan SS20/27, 47400 Petaling Jaya, Selangor.
03-71182234
• A-2-1, Block A, 8 Jalan PJU 1A/20A,
Dataran Ara Damansara, 47301 Petaling Jaya, Selangor.
03-78430506
• Lot C-615 & Lot C-616, Level 6, Block C, Kelana Square,
17, Jalan SS7/26, Kelana Jaya, 47301 Petaling Jaya, Selangor.
03-78806893
• A-2-3, Block A, 8 Jalan PJU 1A/20A,
Dataran Ara Damansara, 47301 Petaling Jaya, Selangor.
03-78430503
• Unit B-3A-1, Setiawangsa Business Suites, Jalan Setiawangsa 11
Taman Setiawangsa, 54200, Kuala Lumpur.
03-42566277
• No 3A, Jalan Hentian 3, Pusat Hentian Kajang,
43000, Kajang, Selangor
03-87345695
• 2-6A Jalan PJU 8/3A, Bandar Damansara Perdana,
47820 Petaling Jaya, Selangor.
03-77256320
• The Strand, 32A-3, Jalan PJU5/20D, Kota Damansara
47810, Petaling Jaya, Selangor.
03-61428382
• A-7, Tingkat 1, Lorong Tun Ismail 12, Sri Dagangan 2,
25000, Kuantan, Pahang
09-5161430
• Unit A-2-5 & A-3-5, Block A, Pusat Perdagangan Pelangi, Pelangi Damansara
PJU6 Persiaran Surian, 47800, Petaling Jaya, Selangor
03-77252880
• Lot No 35-2, 2nd Floor, Jalan Sepah Puteri 5/1B, Pusat Dagangan Seri Utama
PJU5, Kota Damansara, 47410, Selangor
03-61403046
• 1-91-2, Block I, Jalan Teknologi 3/9, Kota Damansara
47810, Petaling Jaya, Selangor.
03-61407275
• J-06-01, Level 6, Block J, Solaris Mont Kiara,
Jalan Solaris, 50480 Kuala Lumpur.
03-62040113
• Suite B-12-11, Plaza Mont Kiara,2 Jalan 1/70C,
Mont Kiara, 50480 Kuala Lumpur.
03-62039036
• 47A, Tingkat 1, Jalan Badminton 13/29, Seksyen 13, Shah Alam, 40100, Selangor
03-55191210
39
CIMB-PRINCIPAL STRUCTURED INVESTMENT WHOLESALE FUND
CIMB-Principal Structured Investment Wholesale Fund is also available from CWA’s Offices
(continued)
ADDRESS
TELEPHONE
SALES OFFICES (CONTINUED)
• Block E-1-03A & E-2-03A, Jalan SS6/20A, Dataran Glomac,
47301, Kelana Jaya, Selangor.
03-78807082
• 98ª, Jalan SS21/29, Damansara Utama,
47400, Petaling Jaya, Selangor.
03-77250825
• D10-08-G & D10-08-1, Pusat Perdagangan Dana 1, Jalan PJU1A/46,
47301, Petaling Jaya, Selangor.
03-78311267
• No 2-2, Jalan 2/76C, Desa Pandan,
55100, Kuala Lumpur.
03-92819448
• 37-2, Jalan Cecawi 6/33, PJU5, Kota Damansara,
47810, Petaling Jaya, Selangor.
03-61422970
• Lot 252, No 73, Tingkat 1, Jalan Besar Pusat Niaga Paka,
23100, Paka, Terengganu
09-8278001
• 41B, Jalan Medan Pusat 2D, Seksyen 9,
43650, Bandar Baru Bangi, Selangor.
03-89264155
• No 41B, 43B, Jalan Wan Kadir 2, Taman Tun Dr Ismail,
60000, Kuala Lumpur.
03-77241789
• 15A, Jalan Ruby, 96000 Sibu, Sarawak.
084-325515
40