eastspring investments dana al-islahfor the financial year ended 31 march 2020 annual report...

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021

ANNUAL REPORT

EASTSPRING INVESTMENTSDANA AL-ISLAH

Eastspring Investments Berhad 200001028634 (531241-U)Level 22, Menara Prudential, Persiaran TRX Barat55188 Tun Razak Exchange, Kuala LumpurT: (603) 2778 3888 F: (603) 2789 7220eastspring.com/my

Client ServicesT: (603) 2778 1000 [email protected]

Dear Valued Investor,

Greetings from Eastspring Investments Berhad!

First and foremost, we would like to take this opportunity to thank you for choosing to invest with Eastspring Investments Berhad.

We are pleased to enclose a copy of the Annual/Interim/Quarterly Fund Reports of Eastspring Investments Berhad’s fund(s) for the reporting period ended 31 March 2021.

You may also download these reports from our website at www.eastspring.com/my

Should you require any assistance, please do not hesitate to contact our Client Services at 03-2778 1000.

Yours sincerely,

Raymond Tang Chee Kin Non-Independent, Executive Director and Chief Executive Officer

TABLE OF CONTENTS

Fund Information 1

Key Performance Data 3

Manager’s Report 6

Market Review 36

Rebates and Soft Commissions 40

Statement by the Manager 42

Trustee’s Report to the Unit Holders of

Eastspring Investments Dana al-Islah 43

Shariah Adviser’s Report to the Unit Holders of


Independent Auditors‘ Report to the Unit Holders of


Statement of Comprehensive Income 49

Statement of Financial Position 50

Statement of Changes in Equity 51

Statement of Cash Flows 52

Summary of Significant Accounting Policies 53

Notes to the Financial Statements 61

Corporate Directory 97

FUND INFORMATION

Name of Fund Eastspring Investments Dana al-Islah (the “Fund”)

Fund Category/ Type

Sukuk/income

Fund Objective The Fund seeks to provide investors with a stable income* stream and an opportunity for capital appreciation from Shariah-compliant fixed income and equity securities.

ANY MATERIAL CHANGES TO THE FUND’S OBJECTIVE WOULD REQUIRE UNIT HOLDERS’ APPROVAL.

* Income distributed to a Unit Holder will be reinvested into additional Units unless Unit Holder opts for the distribution to be paid out.

Performance Benchmark

The performance benchmark of the Fund is 78% Quant Shop MGS Short Index + 22% FTSE Bursa Malaysia EMAS Shariah Index (“FBMS”).

The composite benchmark index is a reflection of the Fund’s average asset allocation over the long-term of 78% of the Fund’s NAV in sukuk and Islamic liquid assets, and 22% of the Fund’s NAV in Shariah-compliant equities and Shariah-compliant equity-related securities.

Source: Quant Shop MGS Short Index (www.quantshop.com)FTSE Bursa Malaysia EMAS Shariah Index (“FBMS”)(www.bursamalaysia.com)

The performance of the Fund against the benchmark is published in the Manager’s monthly factsheet and is available from the Manager’s website at www.eastspring.com/my

Note: The risk profile of the Fund is different from the risk profile of the performance benchmark.

1Client Services : 03-2778 1000

Annual Report

FUND INFORMATION (CONTINUED)

Fund Income Distribution Policy

At least once a year, subject to the availability of income.

Breakdown of Unit Holdings by Size

As at 31 March 2021, the size of Eastspring Investments Dana al-Islah stood at 29.612 million units.

Fund Size

Breakdown of Unit Holdings

Unit Holdings

No. of Unit

Holders %

No. of Units* (‘000) %

5,000 units and below 391 31.83 1,100 3.71

5,001 to 10,000 units 263 21.42 1,934 6.54

10,001 to 50,000 units 459 37.38 9,853 33.27

50,001 to 500,000 units 110 8.96 13,206 44.60

500,001 units and above 5 0.41 3,518 11.88

Total 1,228 100.00 29,611 100.00

* excludes units held by the Manager.

Oct2020

Nov2020

Dec2020

Jan2021

Feb2021

Mar2021

Apr2020

Aug2020

Sep2020

May2020

Jun2020

Jul2020

Un

its

(Mill

ion

)

30

0

20

10

40

Client Services : 03-2778 10002

Eastspring Investments Dana al-Islah

Category 2021 2020 2019

(%) (%) (%)

Quoted Shariah-compliant securities

Consumer Products & Services 8.38 0.90 3.90

Energy 1.52 - 0.46

Financial Services 1.49 0.58 -

Health Care 1.07 4.09 4.72

Industrial Products & Services 3.44 - 4.17

Islamic Real Estate Investment Trust 0.83 - -

Plantation - 1.92 4.28

Property - 0.60 0.52

Technology 5.31 1.27 1.02

Telecommunications & Media 1.09 - 1.86

Transportation & Logistics 0.85 0.47 -

Utilities 2.17 0.99 1.02

26.15 10.82 21.95

Unquoted sukuk 72.48 85.36 72.94

Cash and other assets 1.37 3.82 5.11

Total 100.00 100.00 100.00

KEY PERFORMANCE DATAFOR THE FINANCIAL YEAR ENDED


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Category 2021 2020 2019

Net Asset Value (NAV) (RM'000) 22,994 15,242 15,717

Units In Circulation (Units '000) 29,612 22,142 22,816

Net Asset Value Per Unit (RM) 0.7765 0.6884 0.6888

Highest Net Asset Value Per Unit (RM)# 0.7789 0.7161 0.6892

Lowest Net Asset Value Per Unit (RM)# 0.7739 0.6769 0.6864

Total Return (%)

- Capital Growth 12.80 (0.04) (3.72)

- Income Distribution 3.09 - 4.14

Total Return (%) 16.29 (0.04) 0.26

Gross Distribution Per Unit (RM) 0.0241 - 0.0285

Net Distribution Per Unit (RM) 0.0241 - 0.0254

Management Expense Ratio (MER) (%)* 1.49 1.67 1.62

Portfolio Turnover Ratio (PTR) (times)^ 0.47 0.43 0.23

# Figure shown as ex-distribution.

* There were no significant changes to the MER during the period under review.

^ There were no significant changes to the PTR during the period under review.

KEY PERFORMANCE DATA (CONTINUED)



KEY PERFORMANCE DATA (CONTINUED)

1 year 1.4.2020 to31.3.2021

3 years 1.4.2018 to31.3.2021

5 years 1.4.2016 to31.3.2021

(%) (%) (%)

Average total return 16.29 5.23 4.65

Year ended1.4.2020 to

31.3.20211.4.2019 to

31.3.20201.4.2018 to

31.3.20191.4.2017 to

31.3.20181.4.2016 to

31.3.2017

(%) (%) (%) (%) (%)

Annual total return 16.29 (0.04) 0.26 5.23 2.35

Source: The above total return of the Fund was sourced from Lipper for Investment Management.

Bases of calculation and assumptions made in calculating returns:

Percentage growth =

NAVt = NAV at the end of the period

NAV0 = NAV at the beginning of the period Performance annualised = (1 + Percentage Growth)1/n - 1

Adjusted for unit split and distribution paid out for the period

n = Number of years

Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up.

NAVt -1NAV0


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Fund Performance Over the 5-year period, the Fund recorded a return of 25.51%, outperforming the benchmark return of 17.21% by 8.30%.

For the period under review, the Fund registered a return of 16.29%, outperforming the benchmark return of 8.80% by 7.49%.

The outperformance was attributable to the positive asset allocation and stock selection within the Shariah-compliant Equities.

The Fund had achieved its investment objective to provide investors with a stable income and an opportunity for capital appreciation from sukuk and Shariah-compliant equity securities.

The performance is calculated on NAV-to-NAV basis with gross income or dividend reinvested.

Benchmark: 78% Quant Shop MGS Short Index + 22% FBMS

Source: Lipper for Investment Management, www.quantshop.com and www.bursamalaysia.com, as at 31 March 2021.

Past performance of the Fund is not necessarily indicative of its future performance.

MANAGER’S REPORT

Eastspring Investments Dana al-Islah Benchmark

Eastspring Investments Dana al-Islah- Since Inception (SI) Return Vs Benchmark

SI %

Ch

ang

e

Sep2002

Oct2003

Nov2004

Dec2005

Jan2007

Feb2008

Mar2009

Apr2010

Jun2011

Jul2012

Aug2013

Nov2016

Dec2017

Sep2014

Oct2015

Mar2021

Jan2019

Feb2020

-50%

0%

100%

250%

200%

150%

50%

-50%

0%

100%

250%

200%

150%

50%



MANAGER’S REPORT (CONTINUED)

Analysis of Fund Performance

For the financial year ended 31 March 2021:

Income Return

Capital Return*

Total Return

Total Return of Benchmark

(%) (%) (%) (%)

3.09 12.80 16.29 8.80

* Capital return components (NAV per unit to NAV per unit).

Distribution/ Unit Split

Ex-Date 18-Mar-21

Distribution Per Unit (RM)

Gross 0.0241Net 0.0241Unit Split Nil

Impact on NAV arising from distribution for the financial year ended 31 March 2021.

Ex-Date 18-Mar-21

(RM per Unit)

Net Asset Value before distribution 0.8030Less: distribution (0.0241)Net Asset Value after distribution 0.7789

Investment Strategy During the Period Under Review

The Fund participated in selected quality sukuk for yield pick-up and traded on market volatility, subject to liquidity constraints.

When the COVID-19 pandemic hit, the Fund had gradually raised exposure in healthcare sector before rotated out into cyclical/value stocks when economic re-opening themes become stronger and stronger given more positive news on vaccines. The Fund stayed overweight in technology sector during the period under review for longer term growth.


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Asset Allocation

Asset Allocation31-Mar

202131-Mar

2020 Changes

(%) (%) (%)

Quoted Shariah-compliant securities 26.15 10.82 15.33 Unquoted sukuk 72.48 85.36 (12.88)Cash and other assets 1.37 3.82 (2.45)

Asset Allocation as at 31 March 2021

There were no significant changes in asset allocation of the Fund for the period under review.

State of Affairs ofthe Fund

There have been neither significant change to the state of affairs of the Fund nor any circumstances that materially affect any interests of the unit holders during the period under review.

In the recently issued Eastspring Investments Fifth Supplementary Master Prospectus dated 1 October 2020, the information in relation to the Shariah status reclassification risk and the Shariah investment guidelines, cleansing process and zakat for the Fund have been revised as set out in (a) and (b) below.


Unquoted sukuk 72.48%

Cash and other assets 1.37%

Quoted Shariah-compliant securities

26.15%




State of Affairs ofthe Fund(continued)

a. Shariah status reclassification riskApplicable only to Eastspring Dana al-Islah

1. Shariah-compliant equity securities

The risk refers to the risk that the currently held Shariah-compliant equity securities in the portfolio of the Fund may be reclassified as Shariah non-compliant in the periodic review of the securities by the SAC of the SC. If this occurs, the Manager will take the necessary steps to dispose of such securities.

Opportunity loss could occur due to the restriction on the Fund to retain the excess capital gains derived from the disposal of the reclassified Shariah non-compliant securities. In such an event, the Fund is required:

(i) to dispose of such securities with immediate effect or within one (1) calendar month if the value of the securities exceeds or is equal to the investment cost on the effective date of reclassification of the list of Shariah-compliant securities (“Reclassification“) by the SAC of the SC. The Fund is allowed to keep dividends received and capital gains from the disposal of the securities up to the effective date of Reclassification. However, any dividends received and excess capital gains from the disposal of the Shariah non-compliant securities after the effective date of Reclassification should be channeled to baitulmal and/or charitable bodies approved by the Shariah Adviser;


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(ii) to hold such securities if the value of the said securities is below the investment cost on the effective date of Reclassification until the total subsequent dividends received (if any) and the market price of the securities is equal to the cost of investment at which time disposal has to take place within one (1) calendar month, capital gains (if any) from the disposal of the securities should be channeled to baitulmal and/or charitable bodies approved by the Shariah Adviser; or

(iii) to dispose of such securities at a price lower than the investment cost which will result in a decrease in the Fund’s value.

2. Sukuk or Islamic money market instruments or Islamic deposits

This risk refers to the risk of a possibility that the currently held Shariah-compliant instruments invested by the Fund may be declared as Shariah non-compliant by the relevant authority or the Shariah Adviser. If this occurs, the Manager will take the necessary steps to dispose of such instruments. In such situation, the investment may need to be liquidated at an unfavourable market value which will affect the performance of the Fund.

Note: Please refer to cleansing process for the Fund for details.





b. SHARIAH INVESTMENT GUIDELINES, CLEANSING PROCESS AND ZAKAT FOR THE FUNDS

1. Shariah Investment Guidelines

The following guidelines are adopted by the Shariah Adviser in determining the Shariah status of investments of the Funds:

• The Funds must at all times and all stages of its operation comply with Shariah principles as resolved by the SAC of the SC or in cases where no specific rulings are made by the SAC of the SC, the decisions of the Shariah Adviser or the Shariah Supervisory Boards of relevant Islamic indices.

• The Funds must be raised and operated by the Manager, and finally redeemed by the investors on the basis of contracts which are acceptable in Shariah. The banking facilities and short-term money market instruments used for the Funds have to be Shariah-compliant. Similarly, all the other investment instruments including securities, sukuk, etc. must be Shariah-compliant.

• For Shariah-compliant securities listed on the Bursa Malaysia, the Funds’ investments must be strictly confined to those Shariah-compliant securities on the list approved by the SAC of the SC.

• For Islamic money market instruments or sukuk, they shall be based on the data readily available on BNM and the SC websites.

• The SAC of the SC has adopted a standard methodology to determine the Shariah compliance of companies listed on Bursa Malaysia. This methodology takes into consideration both the quantitative and qualitative aspects of the listed companies.



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(a) Quantitative analysis:

The quantitative part is a two-tier benchmark applied to the business activities of the companies and to the financial ratios of the companies. The business activity benchmarks consist of a 5% benchmark and a 20% benchmark.

(i) Business activity benchmarks

For the business activity benchmarks, the revenue or income contribution of Shariah non-compliant business activities to the group revenue or group profit before taxation of the listed companies will be computed and compared against the relevant business activity benchmarks, and must be less than the 5% or the 20% benchmarks.

The 5% benchmark would be applicable to the following business activities:

• Conventional banking and lending; • Conventional insurance; • Gambling; • Liquor and liquor-related activities; • Pork and pork-related activities; • Non-halal food and beverages; • Shariah non-compliant entertainment;





• Interest income1 from conventional accounts and instruments (including interest income awarded arising from a court judgement or arbitration);

• Dividends1 from Shariah non-compliant investments;

• Tobacco and tobacco-related activities; and• Other activities deemed non-compliant

according to Shariah principles as determined by the SAC of the SC.

1 Interest income and dividends from Shariah non-compliant investments will be compared against the group revenue. However, if the main activity of the company is holding of investment, the dividends from Shariah non-compliant investments will be compared against the group revenue and group profit before taxation.

The 20% benchmark would be applicable to the following activities:

• Share trading in Shariah non-compliant securities;

• Stockbroking business other than Islamic stockbroking company;

• Rental received from Shariah non-compliant activities; and

• Other activities deemed non-compliant according to Shariah principles as determined by the SAC of the SC.



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(ii) Financial ratio benchmarks

In addition, the financial ratios for cash in conventional accounts and instruments as well as interest-bearing debts over the total assets of the listed companies are also considered in the analysis carried out by the SAC of the SC to determine their Shariah compliance status.

The financial ratios applied are as follows:

• Ratio of cash over total assets

Cash will only include cash placed in conventional accounts and instruments, whereas cash placed in Islamic accounts and instruments will be excluded from the calculation.

• Ratio of debt over total assets

Debt will only include interest-bearing debt whereas Islamic financing or sukuk will be excluded from the calculation.

Both benchmark ratios, which are intended to measure riba and riba-based elements within a listed company’s balance sheet, must be less than 33%.





(b) Qualitative analysis:

As for qualitative aspect of the Shariah compliance analysis, an additional criterion will be considered namely the public perception or image of the listed company which must be acceptable from the Shariah perspective.

• The SAC of the SC had considered the following criteria for a Special Purpose Acquisition Company (SPAC) to be classified as Shariah-compliant:

• The proposed business activity should be Shariah-compliant;

• The entire proceeds raised from the initial public offering should be placed in an Islamic account; and

• In the event that the proceeds are invested, the entire investment should be Shariah-compliant.

• Shariah-compliant securities include ordinary shares and warrants (issued by the companies themselves). This means that warrants are classified as Shariah-compliant securities provided the underlying shares are also Shariah-compliant. On the other hand, loan stocks and bonds are Shariah non-compliant securities unless they are structured based on SAC of the SC’s approved Shariah rulings, concepts and principles.



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• For investment in foreign securities, the Funds are only allowed to invest in securities which are on the approved list of Dow Jones Islamic Market Index (DJIM) or other approved lists by the Shariah Adviser. In the event of reclassification of foreign Shariah-compliant securities to be Shariah non-compliant, the Funds are to abide by the rules as laid down by the SAC of the SC and by this Shariah Investment Guidelines. In the event that the Funds wish to invest in foreign securities not covered by DJIM or other approved lists by the Shariah Adviser, the Funds must submit to the Shariah Adviser the latest information pertaining to the issuer’s business activities, its complete financial statements and other related information to enable the Shariah Adviser to carry out Shariah screening.

• As for investment in foreign sukuk or any foreign investment instrument, the Funds must submit to the Shariah Adviser all pertinent information including the memoranda and prospectuses, its structures, utilisation of the proceeds, Shariah contracts and Shariah pronouncements by the relevant Shariah advisers advising the sukuk issuance or instrument, for the Shariah Adviser to confirm the Shariah status of the sukuk or instrument.

• The decision of the Shariah Adviser shall be final.

• To facilitate the purchase and sale of foreign securities, there may be a need to have cash placement in a conventional bank account outside Malaysia. In such circumstances, the conventional account should be non-interest bearing and the sole purpose is only to facilitate purchase and sale of foreign securities.





2. Cleansing Process for the Funds

(a) Wrong investment

(i) Investment in Shariah non-compliant equity securities

The said investment shall be disposed of/withdrawn with immediate effect, if possible; or otherwise within one (1) calendar month of knowing the status of the securities irrespective of market price considerations. In the event that the investment resulted in gain (through capital gain and/or dividend), it has to be channeled to baitulmal and/or charitable bodies approved by the Shariah Adviser. For the avoidance of doubt, dividends shall include both received before and after disposal of the Shariah non-compliant securities. The Shariah Adviser advises that this cleansing process (i.e. channeling of gain from wrongful investment to baitulmal and/or charitable bodies approved by the Shariah Adviser) shall be carried out within two (2) calendar months from the said disposal/withdrawal date. If the disposal of the securities resulted in losses to the Funds, the losses are to be borne by the Manager.



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(ii) Investment in other Shariah non-compliant instruments (i.e. fixed income instruments or bonds or money market instruments or deposits)

The said investment shall be disposed of/withdrawn with immediate effect, if possible; or otherwise within one (1) calendar month of knowing the status of the investment. In the event that the investment resulted in Shariah non-compliant income before or after the disposal of the instrument, it has to be channeled to baitulmal and/or charitable bodies approved by the Shariah Adviser. The Shariah Adviser advises that this cleansing process (i.e. channeling of income from wrongful investment to baitulmal and/or charitable bodies approved by the Shariah Adviser) shall be carried out within two (2) calendar months from the said disposal/withdrawal date. If the disposal of the investment resulted in losses to the Funds, the losses are to be borne by the Manager.





(b) Reclassification of Shariah status of the Funds’ investments

(i) Shariah-compliant equity securities

Reclassification of Shariah status refers to securities which were earlier classified as Shariah-compliant securities but due to failure to meet the set benchmark criteria, are subsequently reclassified as Shariah non-compliant by the SAC of the SC, the Shariah Adviser or the Shariah Supervisory Boards of relevant Islamic indices. If on the reclassification effective date, the value of the securities held exceeds or equal to the investment cost, the Funds which hold such Shariah non-compliant securities must liquidate them. To determine the time frame to liquidate such securities, the Shariah Adviser advises that such securities should be disposed of within one (1) calendar month of reclassification.

Any dividends received up to the reclassification effective date and capital gains arising from the disposal of the said reclassified Shariah non-compliant securities made with respect to the closing price on the reclassification effective day can be kept by the Funds. However, any dividends received and excess capital gain derived from the disposal after the reclassification effective day at a market price that is higher than the closing price on the reclassification effective day shall be channeled to baitulmal and/or charitable bodies approved by the Shariah Adviser. The Shariah Adviser advises that this cleansing process should be carried out within two (2) calendar months from the above disposal date.



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The Funds are allowed to hold the Shariah non-compliant securities if the market price of the said securities is below the investment cost. It is also permissible for the Funds to keep the dividends received during the holding period until such time when the total amount of the dividends received and the market value of the Shariah non-compliant securities held equal the investment cost. At this stage, the Funds are advised to dispose of their holdings. In addition, during the holding period, the Funds are allowed to subscribe to:

• any issue of new securities by a company whose Shariah non-compliant securities are held by the Funds e.g. rights issues, bonus issues, special issues and warrants [excluding securities whose nature is Shariah non-compliant e.g. irredeemable convertible unsecured loan stock (ICULS)]; and

• securities of other companies offered by the company whose Shariah non-compliant securities are held by the Funds,

on conditions that the Funds expedite the disposal of the Shariah non-compliant securities. For securities of other companies [as stated in the second bullet above], they must be Shariah-compliant securities.





(ii) Sukuk or Islamic money market instruments or Islamic deposits

This refers to the instruments which were earlier classified as Shariah-compliant instruments but due to certain factors such as changes in the issuers’ business direction and policy or failure to carry out proper Shariah contracts’ transactions, which render the instruments Shariah non-compliant by the relevant authority or the Shariah Adviser. If this occurs, the Manager will take the necessary steps to dispose of such instruments.

If on the reclassification effective date, the value of the Shariah non-compliant instruments held exceeds or equal to the investment cost, the Funds which holds such Shariah non-compliant instruments must liquidate them. To determine the time frame to liquidate such instruments, the Shariah Adviser advises that such reclassified Shariah non-compliant instruments should be disposed of within one (1) calendar month of reclassification.

Any income received up to the reclassification effective date and capital gains arising from the disposal of the said reclassified Shariah non-compliant instruments made on the reclassification effective day can be kept by the Funds.

However, any income received and excess capital gain derived from the disposal after the reclassification effective day at a price that is higher than the price on the reclassification effective day shall be channeled to baitulmal and/or charitable bodies approved by the Shariah Adviser. The Shariah Adviser advises that this cleansing process should be carried out within two (2) calendar months from the above disposal date.



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3. Zakat for the Funds

The Funds do not pay zakat on behalf of both Muslim individuals and Islamic legal entities who are investors of the Funds. Thus, investors are advised to pay zakat on their own.

THE SHARIAH ADVISER CONFIRMS THAT THE INVESTMENT PORTFOLIO OF THE FUNDS COMPRISES INSTRUMENTS THAT HAVE BEEN CLASSIFIED AS SHARIAH-COMPLIANT BY THE SAC OF THE SC, THE SAC OF BNM OR THE SHARIAH SUPERVISORY BOARDS OF RELEVANT ISLAMIC INDICES. FOR INSTRUMENTS THAT ARE NOT CLASSIFIED AS SHARIAH-COMPLIANT BY THE SAC OF THE SC, THE SAC OF BNM OR THE SHARIAH SUPERVISORY BOARDS OF RELEVANT ISLAMIC INDICES, THE SHARIAH ADVISER WILL REVIEW AND DETERMINE THE SHARIAH STATUS OF THE SAID INSTRUMENTS.

Besides, the information in relation to the profile of the Shariah Adviser has been revised as set out in (c) below.





c. Profile of Shariah Adviser

BIMB Securities Sdn Bhd has been appointed as the Shariah adviser for Eastspring Dana al-Ilham, Eastspring Dana al-Islah, Eastspring Dana Dinamik, Eastspring Islamic Income Fund and Eastspring Dinasti Equity Fund (“the Funds”). BIMB Securities Sdn Bhd will provide Shariah advisory services on the mechanism of the operations of the Funds to ensure the operations of the Funds comply with Shariah requirements as stipulated by the SC.

ABOUT BIMB SECURITIES SDN BHD

BIMB Securities Sdn Bhd is a stockbroking subsidiary of BIMB Holdings Bhd incorporated on 21 February 1994 licensed by the SC. The corporate mission of BIMB Securities Sdn Bhd is to be an active participant in a modern, innovative and dynamic Islamic capital market in Malaysia, catering for the needs of all investors, Muslims and non-Muslims, looking for Shariah-compliant investment products and services.

EXPERIENCE IN ADVISORY AND SERVICES

BIMB Securities Sdn Bhd is registered with the SC to act as a Shariah adviser for Islamic products and services regulated by the SC, which include Islamic collective investment schemes. BIMB Securities Sdn Bhd is independent from the Manager and does not hold office as a member of the investment committee of the Funds or any other funds managed and administered by the Manager. As at 30 June 2020, BIMB Securities Sdn Bhd is a corporate Shariah adviser to eighty (80) Islamic funds including one (1) Islamic real estate investment trust (REIT).



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ROLES AND RESPONSIBILITIES OF BIMB SECURITIES SDN BHD AS A SHARIAH ADVISER

As the Shariah adviser, the role of BIMB Securities Sdn Bhd is to ensure that the investment operations and processes of the Funds are in compliance with Shariah requirements. BIMB Securities Sdn Bhd will review the Funds’ investments on a monthly basis to ensure Shariah compliance and it also reviews the interim and annual reports of the Funds.

Notwithstanding the role played by the Shariah adviser, the ultimate responsibility for ensuring Shariah compliance of the Funds in all aspects of operations and processes rests solely with the Manager.

In line with the SC’s guidelines, the roles of BIMB Securities Sdn Bhd as the Shariah adviser are:

1. to advise on the Shariah aspects of the Funds and Funds operations and processes such that they are in accordance with Shariah requirements, and specifically the resolutions issued by the SAC of the SC;

2. to provide Shariah expertise and guidance in all matters related to the Funds, particularly on the Funds’ deed and prospectus, structure, investments and related operational matters;

3. to ensure that the Funds are managed and operated in accordance with Shariah as determined by the relevant SC regulations and standards, including resolutions issued by the SAC of the SC;

4. to review the Funds’ compliance reports as provided by the Manager’s compliance officer, and investment transaction reports provided or duly approved by the Trustee to ensure that the Funds’ investments are in line with Shariah requirements;





5. to issue a report for inclusion in the interim and annual reports of the Funds stating the Shariah adviser’s opinion on the Funds’ compliance with Shariah requirements in its investment, operations and processes for the financial period concerned;

6. to consult the SC where there is ambiguity or uncertainty as to an investment, instrument, system, procedure and/or process; and

7. to meet with the Manager beside on a quarterly basis, when urgently required for review of the Funds’ operations and processes.



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PROFILES OF THE SHARIAH PERSONNEL

Ir. Dr. Muhamad Fuad bin Abdullah (“Dr. Muhamad Fuad”)

Dr. Muhamad Fuad, the designated person in-charge of all Shariah matters in BIMB Securities Sdn Bhd is also appointed to the Shariah advisory committee of BIMB Securities Sdn Bhd effective 1st June 2011.

He graduated with a Bachelor of Science Degree in Electrical Engineering in 1977 and a Master of Philosophy Degree in Electrical Engineering in 1982, both from the University of Southampton, England. He also obtained a Bachelor of Arts (Jayyid) Degree in Shariah from the University of Jordan in 1994 and a Doctor of Philosophy in Muslim Civilization from the University of Aberdeen, Scotland in 1996.

Currently, he sits on the Shariah committees of Public Islamic Bank Berhad and AIA-Public Takaful Berhad. He is a registered Shariah adviser (2019-2022) with the SC.

He sits on the boards of Gagasan Nadi Cergas Berhad, Mesiniaga Berhad, PNB Commercial Sdn Bhd, Universiti Tun Abd Razak Sdn Bhd and Universiti Sains Islam Malaysia (USIM).

Dr. Muhamad Fuad is a recipient of the National Book Award 2015 for his book published by IKIM entitled “The influence of Islam Upon Classical Arabic Scientific Writings: An examination of the Extent of Their Reference to Quran, Hadith and Related Texts”.





Nurussaádah binti Nasarudin (“Nurussaádah”)

Nurussaádah joined BIMB Securities Sdn Bhd in June 2015. She is the designated Shariah officer responsible for the Shariah advisory services offered by the company.

Nurussaádah graduated with a Bachelor of Shariah majoring in Islamic Banking and Economics from the University of Yarmouk, Jordan.

Currently, she is responsible in providing Shariah inputs on the advisory, consultancy and research functions with regards to Islamic capital market and Islamic collective investment schemes, including but not limited to, conducting surveillance on the non-financial institution activities.

She is experienced in product development and review for Islamic capital market products specifically on Islamic stockbroking services.

Apart from that, the information in relation to the note in relation to the sale charge, distribution channels, how to purchase units, purchase application and acceptance for cash and EPF, how to pay for an investment, how to redeem units, switching between funds, transfer of units, how to keep track of your investment, treatment for joint application and reinvestment policy have been revised as set out in (d) to (n) below.



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d. Note in relation to sales charge

# Unit Holders who invests through the EPF Members Investment Scheme will be levied a sales charge of up to 0.50% of the NAV per Unit with i-Invest or up to 3.00% of the NAV per Unit with Electronic Member’s Investment Option (“e-PPA”) or such other rate that may be determined by the EPF from time to time.

e. Distribution channels

The Fund is distributed through the Manager’s head office, branch offices and Authorised Distributors. Please refer to the Directory of Sales Office and List of Distribution Channels sections at the end of this master prospectus for more information.

Should a Unit Holder wish to consider investment, subsequent investment, redemption, switching or transfer of Units, the Unit Holder must complete the relevant transaction forms which can be obtained from these distribution channels of the Manager. Upon confirming the transaction, the Unit Holder will receive a confirmation advice.

Any correspondence will ONLY be sent to the Unit Holder at the correspondence address and/or email address that is registered by the Manager as provided by the Unit Holder in the master account opening form.





f. How to purchase units

When purchasing Units of the Fund, investors must forward the following completed documents* to the Manager:

Individual Non-individual

• Master account opening form

• Transaction form• Proof of

payment which is acceptable by the Manager

• Suitability assessment form

• Certified true copy of identity card, passport or other identification

• Master account opening form• Transaction form• Proof of payment which is acceptable by

the Manager• Suitability assessment form• Certified true copy of board resolution• Certified true copy of latest annual return • Certified true copy of corporate structure

(where applicable)• Certified true copy of identity card or

passport of directors and authorised representatives

• Certified true copy of form 24 / return of allotment of shares under section 78 of the Companies Act 2016 (not required for a public listed company or an entity licensed by the SC, BNM or Labuan FSA)

• Certified true copy of form 49 / notification of change in the register of directors, managers and secretaries under section 58 of the Companies Act 2016

• Certified true copy of the constitution (if any)

• Certified true copy of the certificate of incorporation

• Certified true copy of form 13 / application for change of name under section 28 of the Companies Act 2016 (if applicable)

• Certified true copy of form 44 / notification of change in the registered address under section 46 of the Companies Act 2016 (if applicable)

• Personal data protection notice form for directors and authorised representatives



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Note:* The documents listed may be subject to change from time to time.

A Unit Holder may be required to forward to the Manager additional documents to authenticate his identification when transacting Units of the Fund. The Manager reserves the right to reject any application without providing any reason.

The Manager allows a Unit Holder the convenience of maintaining all his investments in ONE single master account regardless of the number of funds he invests with the Manager.

g. Purchase application and acceptance for cash and EPF

2nd and 3rd paragraphs:

Note: Our approved distributors may have an earlier cut-off time for purchase of Units request.

When the purchase application is received after the cut-off time stated above, the purchase application will be deemed to have been received on the next Business Day. The Manager reserves the right to vary the terms and conditions of investment and payment modes from time to time, which shall be communicated to you in writing. The Manager reserves the right to reject any application without providing any reason. The Manager may also reject any application that is incomplete and/or not accompanied by the required documents.





EPF Members Investment Schemes

EPF investor may transfer from the EPF Account 1, to be invested in a Fund (as per requirements of the EPF Members Investment Scheme). Investors are required to complete the Borang KWSP 9N (AHL) (manual submission) or initiate a transaction through i-Invest (online submission) for each application for investment into EPF Members Investment Scheme. The list of Funds that is allowed under the EPF Members Investment Scheme will be updated on the website at www.kwsp.gov.my as and when the EPF revises the list. EPF members who opted for Simpanan Shariah may only invest in Islamic funds eligible for investment under the EPF Members Investment Scheme.

h. How to pay for an investment

3rd paragraph:

Cheque can be deposited directly into the Manager’s bank account by using a bank deposit slip at any branch of the Manager’s principal bankers stated below. The original client’s copy of the bank deposit slip (proof of payment) must be sent together with the application for Units. Unit Holders are encouraged to indicate their name and National Registration Identity Card (“NRIC”) number on the bank deposit slip.



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i. How to redeem units

5th, 6th and 7th paragraphs:

Note: Our approved distributors may have an earlier cut-off time for redemption of Units request.

When the redemption application is received after the cut-off time stated above, the redemption application will be deemed to have been received on the next Business Day. The Manager reserves the right to vary the terms and conditions for redemption from time to time, which shall be communicated to you in writing.

9th paragraph:

[Deleted]

j. Switching between funds

3rd paragraph:

There is no limit on the frequency of switching and there is a minimum number of 1,000 Units for switching out of the Funds. However, the minimum switching (in or out) for Eastspring Cash Management is 10,000 Units and the minimum switching out for Eastspring Islamic Income and Eastspring Institutional Income is 10,000 Units. The Manager may at its sole discretion disallow switching into any fund which is managed by the Manager from time to time.





7th paragraph:

Note: Our approved distributors may have an earlier cut-off time for switching of Units request.

When a switching application is received after the cut-off time stated above, the switching application will be deemed to have been received on the next Business Day. The Manager reserves the right to vary the terms and conditions of switching from time to time, which shall be communicated to you in writing.

11th paragraph:

[Deleted]

k. Transfer of units

2nd paragraph:

A transfer is subject to the minimum balance and terms and conditions applicable for the Fund. However, both the transferor and the transferee should maintain the minimum holding of Units for the Fund after a transfer is made. If the transferee does not have any account with the Manager prior to this transfer application, he must forward the completed documents listed in page 187 of this master prospectus to the Manager for account opening in addition to a transfer form.

4th and 5th paragraphs:

Note: Our approved distributors may have an earlier cut-off time for transfer of Units request.

When the transfer application is received after the cut-off time stated above, the transfer application will be deemed to have been received on the next Business Day. The Manager reserves the right to vary the terms and conditions for transfer from time to time, which shall be communicated to you in writing.



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l. How to keep track of your investment

3rd and 4th paragraphs:

A Unit Holder can also review and track the performance of his Units by checking the Unit prices published every Business Day on the Manager’s website, www.eastspring.com/my.

A Unit Holder can always contact the Manager’s client services personnel to assist in the following:

1. enquiry on the latest Unit price and account balance;2. any transaction related enquiries, for example top up

investment, redemption, switching or transfer; 3. request to change personal details, for example address or

telephone no;4. request for confirmation advices on purchase and other

transactions related to your Unit holdings, half yearly statements and copy of annual and/or interim reports; and

5. other queries regarding the Fund’s performance.

m. Treatment for joint application – under Transaction details

New paragraph added:

In the event the Units carry more than one Unit Holder’s name, i.e. “Joint Application”, the redemption / switching / transfer application will be signed by both joint holders. If the application specifies “Either Applicant to sign”, any one Unit Holder who is eighteen (18) years old and above will have the authority to sign the application. In all cases, redemption proceeds will be paid to the principal account holder or in the names of both account holders in the register of Unit Holders.





n. Income reinvestment policy

2nd paragraph:

Should a Unit Holder elect the mode of distribution in the master account opening form or provide any written instruction to the Manager for the income distribution to be paid out, the income distribution proceeds will either be paid by cheque or credited to a Malaysian domiciled bank account via telegraphic or online transfer. Any fees or charges imposed by the bank will be borne by the Unit Holder.



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MARKET REVIEW

Fixed Income

The period was dominated by Covid-19 which had developed into a full-blown global pandemic and countries. Nations across the globe implemented unprecedented movement lockdowns to contain the spread of the virus and despite the subsequent introduction of multiple successful vaccines towards the end of 2020, large parts of the world continue to be under some form of movement restriction. The International Monetary Fund (“IMF”) announced that global economic growth in 2020 was -3.3%, higher than its earlier projection of -4.4%, due to stronger than expected growth in the second half of 2020.

The US Federal Reserve (“Fed”) held rates unchanged at 0-0.25% during the review period. A majority of the FOMC members continued to project for the FFR to stay unchanged through the end of 2023. The Fed now expects GDP and inflation to increase by 6.5% and 2.4% respectively in 2021, higher than its 4.2% and 1.8% forecast in December 2020.

Joe Biden emerged as the victor of the 2020 US presidential election and with Democratic control of both the US House and Senate, the new Biden administration successfully managed to pass a USD 1.9 trillion stimulus package to further speed up the economic recovery. The stimulus combined with mass vaccinations has led to significant upwards revisions in economic growth and inflation, the much talked about reflation trade. Given the prospect of much higher bond supply, stronger growth and inflation US yields have risen significantly over the review period with the US 10-year yield rising from 0.62% to 1.74%. Market sentiment was lifted by vaccine optimism following the announcements from Pfizer, SinoVac, Moderna and AstraZeneca on the high effectiveness in their experimental coronavirus vaccine during phase 3 trials.

BNM cut the overnight policy rate (“OPR”) by 75bps to 1.75% during the review period – 50 bps in May and 25bps in July, to support the economic recovery. BNM also cut the statutory reserve requirement (“SRR”) ratio from 3.00% to 2.00% and allowed financial institutions to recognize MGS and GII in their statutory reserve requirements from 16 May 2020 until 31 December 2022, which released an estimated RM46bn of liquidity into the banking system. The central bank considers its current monetary policy stance as appropriate and accommodative and reiterated its commitment to utilize its policy levers to foster a sustainable economic recovery. It has also indicated that its monetary stance going forward will continue to be determined by new data and information and their implications on inflation and growth. On the domestic front, BNM acknowledges that growth in 1Q2021 will be affected by containment measures but remains hopeful of a recovery from 2Q2021, as it expects Malaysia’s GDP to grow 6.0%-7.5%, slightly lower than its previous forecast of 6.5%-7.5%. Correspondingly, Malaysia’s headline inflation is expected to average 2.5%-4.0% in 2021 with a spike expected in 2Q2021.



To support the economy from the Covid-19 impact, the government announced 4 stimulus packages with a combined value of RM305bn in 2020, bringing the 2020 budget deficit to 6.2% of GDP. Budget 2021 continued to focus on fiscal support to boost growth given the challenging economic condition due to Covid-19 impact. Notably, development expenditure is set to increase 38.0% year-on-year (“y-o-y”) to RM69.0billion in 2021 and the government is committed to continue several infrastructure projects that are expected to have high multiplier impact on the economy. Fiscal deficit was expected to be lower at 5.4% in 2021, however the government announced another fiscal stimulus package, PEMERKASA, worth RM20b in mid-March 2021. The latest fiscal package involves RM11b of direct fiscal injection by the government and could lead to an increase in the country’s 2021 deficit to 6.0% of GDP, although the debt-to-GDP level is expected to come in at 58.5%, still under the 60% statutory debt limit. The higher projected deficit will also increase Malaysia’s average 2021-2023 budget deficit to 4.8% from 4.5% under the Medium-Term Fiscal Framework. That said, the government is committed to fiscal consolidation which appears achievable as the bulk of the fiscal injections are non-recurring measures.

FTSE Russell, in its September’s review, maintained Malaysia as a constituent of the World Government Bond Index (“WGBI”) but kept it on the watch list to assess the efficacies of measures taken to maintain the Market Accessibility Level. In March 2021 FTSE Russell removed Malaysia from the watchlist of its flagship World Government Bond Index (“WGBI”) and retained its membership in the index although at a slightly lower weight of 0.37% from 0.39% previously following the inclusion of China’s government bonds to the index over a phase-in period of 36 months starting 29 Oct 2021. FSTE Russell noted Malaysia’s improvement in secondary market liquidity as well as enhanced foreign exchange market structure and liquidity that support increasing market access to non-resident investors since Malaysia was placed on the watchlist of the WGBI index two years ago.

In December, Fitch Ratings downgraded Malaysia’s Long-Term Sovereign Rating to BBB+ from A- and revised the rating outlook to Stable from Negative, citing weakened key credit metrics triggered by the Covid-19 pandemic, as well as the lingering political uncertainty that weighs on the policy outlook and governance standards.

Malaysia’s Gross Domestic Product (“GDP”) growth for the 3Q2020 recovered to -2.7% y-o-y (2Q2020: -17.1% y-o-y), driven by reopening of economic activities and lifting of interstate travel ban which allowed more economic sectors to resume their operations. Malaysia’s 4Q2020 GDP fell 0.3% q-o-q (-3.4% y-o-y), attributable mainly to a larger drag from private consumption on the back of various movement restrictions imposed in 2020. The full year GDP of -5.6% y-o-y, the worst since the 1997/98 Asian Financial Crisis,


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was marginally lower than the government’s -3.5%-5.5% forecast range. Bank Negara Malaysia (“BNM”) remains hopeful that the strong external trades, turnaround in public and private sector expenditure and policy measures will drive Malaysia’s recovery from 2Q2021 after an expected weaker 1Q2021 following the re-imposition of MCO.

Malaysia’s headline inflation rate returned to the positive territory in February 2021 after registering the first annual deflation since 1969 in 2020. In February 2021, Malaysia’s inflation rate grew a marginal 0.1% y-o-y (January 2021: -0.2% y-o-y), as the 1.4% y-o-y increase in Food & Non-alcoholic Beverages helped offset the 2.0% y-o-y and 0.8% y-o-y declines in Transport (January 2021: -5.1% y-o-y) and Housing, Water, Electricity, Gas & Others Fuels (January 2021: -0.7% y-o-y). Despite the marginal 0.1% y-o-y inflation rate in February 2021, headline inflation is set to accelerate in the coming months on the back of improving economic activity as well as the low base effect from the plunge in oil price in 2Q2020.

Malaysia sovereign bond yields steepened during the year with short tenor bond yields down by more than 60 bps on the back of BNM rate cuts whilst longer tenor yields were up due to concerns of a larger fiscal deficit, global risk off sentiment and higher government bond supply from the longer tenors. 3-, 5-, 10- and 15-years MGS changed by -62bps, -41bps, -11ps and +26bps to close at 2.13%, 2.66%, 3.24%, and 3.88% respectively. Similarly, MGII yield curve shifted steeper, as 3-, 5-, 10- and 15-year yields changed by -76bps, -27bps, -10bps and +31bps to end at 2.14%, 2.73%, 3.35% and 4.03% respectively.

Equity

Global equity markets rebounded in early 2Q2020 as most countries look like they were close to their peak in the COVID-19 outbreak, and investors start to look towards economies re-opening. Governments globally had launched the fiscal and monetary stimulus packages in response to the COVID-19 outbreak, which has started to filter into the economies. In April, OPEC+ announced a record deal to slash global output collectively by 9.7mbpd off the market. Nevertheless, WTI prices plunged into negative territory as a result of a demand shock and dwindling storage capacity. By then end of 2Q2020, oil prices have rebounded to USD40/bbl as OPEC+ countries complied with the production cuts. Malaysian equities rallied on the back of strong retail investor interest and the strong price performance of the Malaysian glove players, given Malaysian glove players cater to 63% of global glove demand, and is poised to benefit from this COVID-19 pandemic. During the 2Q2020, the Malaysian government announced the Conditional Movement Control Order (“CMCO”) effective 4 May which saw relaxed movement control rules and extended the CMCO period to 9 June 2020. Bank Negara Malaysia (“BNM”) cut the



Overnight Policy Rates by 50 bps to 2% which was expected by the market. CMCO ended on the 9 June and was replaced by Recovery MCO which will be in place until 31 August, as more businesses re-open and interstate travel permitted. The government announced the RM35b National Economic Recovery Plan (“PENJANA”) stimulus, consisting of RM10b direct fiscal injection, RM8b in incentives and the rest via measures by public sector entities.

After an initial positive start for 3Q2020, Malaysian equity market corrected in the last 2 months of the quarter on the back of weaker 2Q2020 GDP data, weak results from the banks due to higher loan loss provisioning and lower net interest income. BNM cut OPR by 25bps to 1.75% after the July MPC. Retail participation remained above 40% for most of the 3Q2020, whilst foreign investors continued to be net sellers, recording a year-to-date net out flow of RM21.9b (double of the net outflow in 2019). By the end of the 3Q2020, investors were taking profit on the glove stocks, and there was growing concerns regarding political uncertainty as Dato Seri Anwar Ibrahim’s announcement of having the majority to form a new government, and Sabah’s state election which was won by the component parties in GRS. On the 28 July 2020, the Malaysian High Court sentenced former prime minister Datuk Seri Najib Razak to 12 years in jail and a fine of RM210m, having been found guilty of seven charges in the case relating to the 1MDB scandal. COVID-19 cases also surged in September following the Sabah elections, which was a cause of concern that the government may reimpose lockdowns.

Malaysian equity markets corrected in the early part of 4Q2020, on the back of concerns over political uncertainty, and the rising new COVID cases. As a result, the government reimplemented CMCO for many states. Politics also took the limelight in October when there was news that PM Muhyiddin Yassin had proposed to the Yang Di-Pertuan Agong to call for a state of emergency, which was later rejected on the basis that it was not necessary, with the reminder that all politicians should stop all politicking that could disrupt the stability of the government. Global markets rallied in last two months of the year. News of Pfizer-BioNTech COVID-19 vaccine with 90% efficacy buoyed the markets. Investor confidence improved and focused on economic recovery plays, at the expense of the rubber gloves sector. Brent crude oil prices climbed to the highest level since March 2020, also on optimism that the vaccine will contain the pandemic. However, in Malaysia, COVID-19 infections continue to surge, often exceeding 1,000 per day. The Malaysian government secured an initial supply of 12.8m doses of the Pfizer vaccine to immunize 6.4m Malaysians (20% of population). Fitch downgraded Malaysia’s sovereign credit rating to BBB+ from A- with a stable outlook, noting that the government’s swift response to COVID-19 pandemic & material relief measures have added to the country’s fiscal burden. For 2020, foreign investors were net sellers of Malaysian equity of RM24.6b and have been net sellers for three consecutive years now to the tune of RM47.5b.


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Malaysia’s equity markets for 1Q2021 started on a lower note. The spike in confirmed cases of COVID-19 in the country was the main reason behind the State of Emergency being enforced and the reintroduction of the Movement Control Order (“MCO”) for the second time since the pandemic started early 2020. The State of Emergency suspends Parliament at least until 1 August 2021, and by-elections and general elections cannot take place for now. The suspension of Regulated Short Selling (“RSS”) was lifted effective 1 January 2021, after it was imposed from 24th March 2020. Malaysia’s equity market performed relatively well mid-1Q2021 as lockdown measures were beginning to ease, and the vaccination program kicked off end of February 2021. The government announced that MCO 2.0 will be lifted to CMCO for Selangor, Kuala Lumpur, Johor, and Penang effective 5 March 2021. Improvement in investor sentiment mid-quarter was disrupted by concerns over rising bond yields and political instability towards end of 1Q2021. The government announced that Selangor, Johor, Penang and Kuala Lumpur will exit MCO and enter CMCO from 5 March, given the number of new Covid-cases have fallen to above 1000. On 8 March, crude oil prices rallied toward USD70 a barrel, after OPEC+ chose not to relax supply curbs even as the global economy recovers. The Malaysian government also unveiled a RM20bn stimulus package, dubbed PERMERKASA, of which RM11b is a direct fiscal injection.

The FBM KLCI closed the period under review at 1,573.51 points, up 16.48%. The broader FBM Emas (“FBMEmas”) Index closed the period under review higher by 25.7%. The MSCI Asia Pacific ex-Japan Index rose by 55.3% in USD terms.1

REBATES AND SOFT COMMISSIONS

During the period under review, the Manager and its delegates (if any) received goods and services which directly assist the investment management of the Fund, including research and advisory services, market analyses, data and quotation services, and computer hardware and software used for and/or in support of the investment process of fund managers.

The Manager and its delegates (if any) have not received any rebates or shared any commissions from any brokers during the same period under review.

1 Source: Bloomberg: World indices



EASTSPRING INVESTMENTS DANA AL-ISLAH FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2021


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STATEMENT BY THE MANAGER

We, Tang Chee Kin and Iskander Bin Ismail Mohamed Ali, being two of the Directors of Eastspring Investments Berhad, do hereby state that, in the opinion of the Manager, the accompanying financial statements set out on pages 49 to 96 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 March 2021 and of its financial performance, changes in equity and cash flows for the financial year ended on that date in accordance with the Malaysian Financial Reporting Standards and International Financial Reporting Standards.

For and on behalf of the Manager,EASTSPRING INVESTMENTS BERHAD

TANG CHEE KINExecutive Director/Chief Executive Officer

ISKANDER BIN ISMAIL MOHAMED ALIIndependent, Non-Executive Director

Kuala LumpurDate: 17 May 2021



TRUSTEE’S REPORT TO THE UNIT HOLDERS OF EASTSPRING INVESTMENTS DANA AL-ISLAH

We have acted as Trustee for Eastspring Investments Dana al-Islah (the “Fund”) for the financial year ended 31 March 2021. To the best of our knowledge, for the financial year under review, Eastspring Investments Berhad (the “Manager”) has operated and managed the Fund in accordance with the following:-

a. limitations imposed on the investment powers of the Manager under the Deed(s), the Securities Commission’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws;

b. valuation and pricing for the Fund is carried out in accordance with the Deed(s) of the Fund and any regulatory requirements; and

c. creation and cancellation of units for the Fund are carried out in accordance with the Deed(s) of the Fund and any regulatory requirements.

We are of the view that the distribution made during the financial year ended 31 March 2021 by the Manager is not inconsistent with the objectives of the Fund.

For Deutsche Trustees Malaysia Berhad

Ng Hon Leong Gerard AngHead, Trustee Operations Chief Executive Officer



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SHARIAH ADVISER’S REPORT TO THE UNIT HOLDERS OF EASTSPRING INVESTMENTS DANA AL-ISLAH (“FUND”)

We hereby confirm the following:

1. To the best of our knowledge, after having made all reasonable enquiries, Eastspring Investments Berhad has operated and managed the Fund for the period covered by these financial statements namely, the year ended 31 March 2021, in accordance with Shariah principles and complied with the applicable guidelines, rulings or decisions issued by the Securities Commission Malaysia pertaining to Shariah matters; and

2. The asset of the Fund comprises instruments that have been classified as Shariah compliant.

For and on behalf of the Shariah Adviser,BIMB SECURITIES SDN BHD

IR. DR. MUHAMAD FUAD ABDULLAHDesignated Shariah Person




INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF EASTSPRING INVESTMENTS DANA AL-ISLAH

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Our opinion

In our opinion, the financial statements of Eastspring Investments Dana al-Islah (“the Fund”) give a true and fair view of the financial position of the Fund as at 31 March 2021, and of its financial performance and its cash flows for the financial 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 March 2021, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 49 to 96.

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’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.


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Information other than the financial statements and auditors’ report thereon

The Manager of the Fund is responsible for the other information. The other information comprises 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 determine is necessary to enable the preparation of financial statements of the Fund that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Fund, the Manager is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance



with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

a. 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.

b. 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.

c. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager.

d. 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.

e. 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.


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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 LLP0014401-LCA & AF 1146 Chartered Accountants




STATEMENT OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 MARCH 2021

Note 2021 2020

RM RM

INVESTMENT INCOMEGross dividend income 108,033 80,203Profit income from Islamic deposits with licensed financial institutions 25,571 19,221Profit income from unquoted sukuk 564,415 614,027Net income/(loss) on financial assets at fair value through profit or loss 7 2,268,601 (350,000)

2,966,620 363,451

EXPENSESManagement fee 3 (253,248) (219,573)Trustee fee 4 (18,000) (18,000)Audit fee (7,000) (6,800)Tax agent fee (3,400) (3,400)Other expenses (20,586) (45,005)Transaction costs (31,976) (33,644)

(334,210) (326,422)

PROFIT BEFORE TAXATION 2,632,410 37,029

TAXATION 5 - (883)

PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME 2,632,410 36,146

Profit after taxation is made up of the following: Realised amount 1,571,567 283,697 Unrealised amount 1,060,843 (247,551)

2,632,410 36,146

The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements.


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STATEMENT OF FINANCIAL POSITIONAS AT 31 MARCH 2021

Note 2021 2020

RM RM

ASSETSCash and cash equivalents 8 295,331 603,458Financial assets at fair value through profit or loss 7 22,676,030 14,660,680Amount due from Manager 240,379 42,874Dividends receivable 34,707 10,930TOTAL ASSETS 23,246,447 15,317,942

LIABILITIESAmount due to Manager 202,674 32,130Accrued management fee 25,103 16,642Amount due to Trustee 1,529 1,525Other payables and accruals 23,529 25,207TOTAL LIABILITIES 252,835 75,504

NET ASSET VALUE OF THE FUND 22,993,612 15,242,438

EQUITYUnit holders’ capital 15,857,727 10,021,902Retained earnings 7,135,885 5,220,536

NET ASSET ATTRIBUTABLE TO UNIT HOLDERS 22,993,612 15,242,438

NUMBER OF UNITS IN CIRCULATION 10 29,612,397 22,142,075

NET ASSET VALUE PER UNIT (EX-DISTRIBUTION) (RM) 0.7765 0.6884




STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021

NoteUnit holders’

capitalRetainedearnings Total

RM RM RM

Balance as at 1 April 2020 10,021,902 5,220,536 15,242,438

Movement in unit holders’ contribution:Creation of units from applications 19,041,172 - 19,041,172Creation of units from distribution 713,188 - 713,188Cancellation of units (13,918,535) - (13,918,535)Distribution (Gross/Net: 2.41 sen) 6 - (717,061) (717,061)Total comprehensive income for the financial year - 2,632,410 2,632,410

Balance as at 31 March 2021 15,857,727 7,135,885 22,993,612

Balance as at 1 April 2019 10,532,198 5,184,390 15,716,588

Movement in unit holders’ contribution:Creation of units from applications 7,146,210 - 7,146,210Cancellation of units (7,656,506) - (7,656,506)Total comprehensive income for the financial year - 36,146 36,146

Balance as at 31 March 2020 10,021,902 5,220,536 15,242,438



Annual Report

STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 MARCH 2021

Note 2021 2020

RM RM

CASH FLOWS FROM OPERATING ACTIVITIESProceeds from sale of Shariah-compliant investments 9,091,295 8,885,540Purchase of Shariah-compliant investments (14,979,910) (10,038,370)Dividends received 84,256 73,373Profit income received from Islamic deposits 25,571 19,221Profit income received from unquoted sukuk 674,305 676,240Management fee paid (244,787) (219,687)Trustee fee paid (17,996) (18,004)Payment for other fees and expenses (32,664) (90,471)Net cash used in operating activities (5,399,930) (712,158)

CASH FLOWS FROM FINANCING ACTIVITIESCash proceeds from units created 18,843,667 7,157,324Payments for cancellation of units (13,747,991) (7,640,247)Distributions paid (3,873) -Net cash generated from/(used in) financing activities 5,091,803 (482,923)

NET DECREASE IN CASH AND CASH EQUIVALENTS (308,127) (1,195,081)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 603,458 1,798,539

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 8 295,331 603,458




The following accounting policies have been used in dealing with items which are considered material in relation to the financial statements.

A. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements have been prepared under the historical cost convention in accordance with the Malaysian Financial Reporting Standards (“MFRS”) and International Financial Reporting Standards (“IFRS”), as modified by financial assets at fair value through profit or loss.

The preparation of financial statements is in conformity with the MFRS and IFRS which 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 financial year. It also requires the Manager to exercise their judgement in the process of applying the Fund’s accounting policies. Although these estimates and judgement are based on the Manager’s best knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note J.

a. Standards, amendments to published standards and interpretations that are effective:

The Fund has applied the following amendments for the first time for the financial year beginning on 1 April 2020:

Amendments to the definition of material (Amendments to MFRS 101 and MFRS 108) effective 1 January 2020.

The amendments clarify the definition of materiality and use a consistent definition throughout MFRSs and the Conceptual Framework for Financial Reporting.

The definition of ‘material’ has been revised as “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of financial statements for general purposes make on the basis of those financial statements, which provide financial information about a specific reporting entity.”

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESFOR THE FINANCIAL YEAR ENDED 31 MARCH 2021


Annual Report

The amendments also:

• clarify that an entity assess materiality in the context of the financial statements as a whole.

• explain the concept of obscuring information in the new definition. Information is obscured if it has the similar effect as omitting or misstating of that information. For example, material transaction is scattered throughout the financial statements, dissimilar items are inappropriately aggregated, or material information is hidden by immaterial information.

• clarify the meaning of ‘primary users of financial statements for general purpose’ to whom those financial statements are directed, by defining them as ‘existing and potential investors, financiers and other creditors’ that must rely on financial statements for much of the financial information they need.

There are no other standards, amendments to standards or interpretations that are effective for financial year beginning on 1 April 2020 that have a material effect on the financial statements of the Fund.

b. Standards, amendments and interpretations that have been issued but not yet effective and have not been early adopted:

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 April 2020, and have not been early adopted in preparing these financial statements. None of these are expected to have a material effect on the financial statements of the Fund.

B. INCOME RECOGNITION

Profit income earned from Islamic deposits with licensed financial institutions and unquoted sukuk are recognised on an accrual basis, using the effective profit rate method.

Profit income is calculated by applying the effective profit rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets the effective profit rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).

Dividend income is recognised on the ex-dividend date, when the right to receive the dividend has been established.



Realised gain or loss on disposal of Shariah-compliant investments are accounted for as the difference between the net disposal proceeds and the carrying amount of Shariah-compliant securities, which is determined on a weighted average cost basis and on cost adjusted for accretion of discount and amortisation of premium on investments for unquoted sukuk.

C. TAXATION

Current tax expense is determined according to the Malaysian tax laws at the current rate based upon the taxable profit earned during the financial year.

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. FINANCIAL ASSETS AND FINANCIAL LIABILITIES

i. Classification

The Fund classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value through profit or loss, and• those to be measured at amortised cost

The Fund classifies its investments based on both the Fund’s business model for managing those financial assets and the contractual cash flow characteristics of the financial assets. The portfolio of financial assets is managed and performance is evaluated on a fair value basis. The Fund is primarily focused on fair value information and uses that information to assess the assets’ performance and to make decisions. The Fund has not taken the option to irrevocably designate any equity1 securities as fair value through other comprehensive income.

1 For the purposes of the investments made by the Fund, equity refers to Shariah-compliant equity instruments.


Annual Report

The contractual cash flows of the Fund’s debt instruments2 are solely principal and interest3, however, these instruments are neither held for the purpose of collecting contractual cash flows nor held both for collecting contractual cash flows and for sale. The collection of contractual cash flows is only incidental to achieving the Fund’s business model’s objective. Consequently, all investments are measured at fair value through profit or loss.

The Fund classifies cash and cash equivalents, amount due from Manager and dividends receivable as financial assets at amortised cost as these financial assets are held to collect contractual cash flows consisting of the amount outstanding.

The Fund classifies amount due to Manager, accrued management fee, amount due to Trustee and other payables and accruals as financial liabilities measured at amortised cost.

ii. Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date, the date on which the Fund commits to purchase or sell the asset. Shariah-compliant investments are initially recognised at fair value. Transaction costs are expensed in the statement of comprehensive income.

Financial 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 recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the quoted financial instrument.

Financial liabilities are derecognised when it is extinguished; i.e when the obligation specified in the contract is discharged or cancelled or expired.

² For the purposes of the investments made by the Fund, debt instruments refer to unquoted sukuk.

³ For the purposes of this Fund, interest refers to profits earned from Shariah-compliant investments.



Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are presented in the statement of comprehensive income within “net gain/(loss) on financial assets at fair value through profit or loss” in the financial year in which they arise.

Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as

eastspring investments dana al-islahfor the financial year ended 31 march 2020 annual report...

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