Unaudited Interim Financial Statements of. Global Iman Fund. June 30, 2011

Transcription

1 Unaudited Interim Financial Statements of Global Iman Fund June 30, 2011

2 Toronto Ontario 29-Aug-11

3 Statement of Net Assets (unaudited) June 30, 2011 December 31, 2010 $ $ ASSETS Current assets Investments, at fair value 5,009,698 3,502,901 Cash 265, ,096 Income receivable 6,905 10,583 Receivable for units issued 2,954 15,500 5,285,198 3,983,080 LIABILITIES Current liabilities Management fee payable (note 7) 24,518 9,846 Payable to related parties Accrued charitable donations (note 8) 14,723 14,723 Payable for units redeemed 18,600 2,086 57,852 26,666 Total net assets representing unitholders' equity 5,227,346 3,956,414 Net assets representing unitholders' equity (note 3) Series A 5,191,960 3,920,768 Series F 35,386 35,657 Net asset value per unit (note 4) Series A Series F Net assets per unit (note 4) Series A Series F See accompanying notes to the financial statement Page 1

4 Statement of Operations (unaudited) Period ended June $ $ Investment income Dividend income 60,195 37,991 Witholding taxes on foreign dividends (8,479) (5,009) 51,716 32,982 Expenses (Note 7) Management fees 65,640 42,144 Audit fees 22,000 19,764 Unitholder reporting costs 24,500 22,050 Custody fees 9,875 7,875 Independent Review Committee 6,000 6,000 Miscellaneous expenses ,015 97,833 Less: expenses reimbursed by Manager (note 7) (62,375) (55,689) Expenses, net of reimbursements 65,640 42,144 Net investment income (13,924) (9,162) Net (loss) gain on investments Net realized gain on sale of investments 172,087 55,812 Net loss on foreign exchange (29,004) (9,721) Transaction costs (notes 2(d) & 7) (5,825) (2,538) Amounts allocated for charitable donations (note 8) - 3,166 Change in unrealized depreciation of investments (214,069) (504,623) Net loss on investments (76,811) (457,904) Decrease in net assets from operations (90,735) (467,066) Decrease in net assets from operations per series Series A units (90,437) (467,066) Series F units (298) N/A Decrease in net assets from operations per unit Series A units (0.21) (1.53) Series F units (0.09) N/A Weighted average units outstanding for period Series A units 438, ,991 Series F units 3,363 N/A See accompanying notes to the financial statement Page 2

5 Statement of Changes in Net Assets (unaudited) Period ended June Series A Series F Series A Series F $ $ $ $ Net assets, beginning of period 3,920,730 35,684 3,009,183 - Decrease in net assets from operations (90,437) (298) (467,066) - Capital unit transactions Proceeds from units issued (note 3) 1,454, ,880 - Amount paid for redemptions (note 3) (93,252) - (282,369) - Net capital unit transactions 1,361, ,511 - Increase (decrease) in net assets for the period 1,271,230 (298) 79,445 - Net assets, end of period 5,191,960 35,386 3,088,628 - See accompanying notes to the financial statement Page1

6 Statement of Investments As at June 30, 2011 Number of Average Fair shares cost value $ $ Equities 95.84% China 1.99% Tencent Holdings Ltd. 4, , , , ,284 France 5.46% Sanofi-Aventis SA 2, , ,538 TOTAL SA 2, , , , ,236 Hong Kong 1.54% China Mobile Ltd. 9,000 89,609 80,315 89,609 80,315 Japan 3.56% DENSO Corp. 2,500 82,056 88,999 NTT DoCoMo Inc ,474 97, , ,269 South Korea 1.59% Samsung Electronics Co. Ltd., GDR ,233 82,873 91,233 82,873 Switzerland 10.22% ABB Ltd. 3,400 88,591 84,495 Novartis AG, Registered 2, , ,632 Roche Holding AG Genusscheine 1, , ,340 Syngenta AG , , , ,166 United Kingdom 9.54% AstraZeneca PLC 2, , , BP PLC 14, , ,569 GlaxoSmithKline PLC 7, , ,782 Reckitt Benckiser Group PLC 1,382 75,969 73,532 Rio Tinto PLC, Registered ,620 68, , ,622

7 Statement of Investments As at June 30, 2011 Number of Average Fair shares cost value $ $ United States 61.94% 3M Co. 2, , ,160 Amgen Inc. 2, , ,206 Apache Corp. 1, , ,611 Chevron Corp. 2, , ,593 Cisco Systems Inc. 10, , ,744 CVS Caremark Corp. 5, , ,856 Exxon Mobil Corp. 4, , ,881 Freeport-McMoRan Copper & Gold Inc., Class 'B' 2, , ,075 Google Inc., Class 'A' , ,803 Hewlett-Packard Co. 4, , ,728 Johnson & Johnson 3, , ,045 Medco Health Solutions Inc. 3, , ,326 Medtronic Inc. 2,471 98,170 91,789 Merck & Co. Inc. 5, , ,790 Microsoft Corp. 10, , ,868 Monsanto Co ,134 67,138 Qualcomm Inc. 3, , ,313 Schlumberger Ltd. 2, , ,007 3,306,927 3,237,933 Total equities 95.84% 5,116,071 5,009,698 Transaction costs (note 7) (4,065) Total investment portfolio 95.84% 5,112,006 5,009,698 Other assets, net of liabilities 4.16% 217,648 Net assets % 5,227,346 See accompanying notes to the financial statement

8 Notes to the Financial Statements For the period ending June 30, Organization The Global Iman Fund (the Fund ) is an open-ended investment unit trust established under the laws of the Province of Ontario. The Fund was established on February 6, 2009, and commenced operations on March 10, Global Growth Assets Inc. ("GGA" or the "Fund Manager") is the fund manager and CIBC Mellon ( the "CIBC") is the Fund's custodian. 2. Summary of significant accounting policies The financial statements of the Fund have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP"), as defined by the Canadian Institute of Chartered Accountants' Handbook (the "CICA Handbook"), and provides additional disclosures as required under National Instrument Investment Funds Continuous Disclosure ("NI "). GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements, of which the most signficant is the fair value of investments. Actual results may differ from such estimates. Below is a summary of the Fund's significant accounting policies: a) Investments have been recorded at fair value (as described in Note 5) in Canadian currency with the difference between this amount and the average cost being shown in Change in unrealized appreciation (depreciation) of investments. b) The fair values of investments denominated in currencies other than Canadian dollars are translated into Canadian dollars at the rates of exchange applicable on the valuation date. Purchases and sales of foreign securities and income and expenses are translated into Canadian dollars at the exchange rates prevailing on the dates of the transactions. c) Security transactions are recorded on the trade date. The gain or loss on sale of investments is calculated with reference to the average cost of the related investments, excluding transaction costs. Gains from investments not in compliance with the Fund's investment restrictions are segregated from the net assets of the Fund. d) Transaction costs are incremental costs that are directly attributable to the acquisition or disposal of an investment, which include fees and commissions paid to agents, advisors, brokers and dealers, levies by regulatory agencies and securities exchanges, transfer taxes and duties. The costs of each investment held by the Fund, disclosed in the Statement of Investments ("SOI"), includes transaction costs which is the basis used by the Fund for its day to day accounting. The SOI includes an adjustment to reduce the cost of investments for these embedded transaction costs, which have been expensed through the Statement of Operations. e) The Fund follows the accrual method of recording investment income and expenses. Foreign income and expenses are translated into Canadian dollars at the rates of exchange applicable on the valuation date. Dividends are accrued as of the ex-dividend date. 3. Unitholders' equity Unit transactions during the period were as follows: June 30, 2011 December 31, 2010 Number of Number of Series A Fund units Fund units Opening units 371, ,681 Subscriptions 135, ,496 Redemptions (8,800) (41,228) Ending units 498, ,949 October 28, June 30, 2011 December 31, 2010 Number of Number of Series F Fund units Fund units Opening units 3,363 Subscriptions 3,363 Ending units 3,363 3,363

9 Notes to the Financial Statements For the period ending June 30, Unitholders' equity (continued) For each Fund unit sold, the Fund receives an amount equal to the net asset value per unit ("NAV") at the date of sale; this amount is included in Proceeds from units issued in the Statement of Changes in Net Assets. Fund units are redeemable at the option of unitholders at their NAV on the redemption date. For each Fund unit redeemed, unitholders' equity is reduced by the NAV at the date of redemption. 4. Net asset value per unit and net assets per unit NI requires the daily NAV of an investment fund to be calculated using the valuation methodologies established in the Fund's Annual Information Form. The method by which the net assets per unit is calculated for financial reporting purposes is different from the method by which the NAV is calculated; the primary difference is that net assets per unit is calculated by valuing investments at their last bid price, whereas the NAV is calculated by valuing listed securites at their last trade price. Series A June 30, 2011 December 31, 2010 NAV per unit $ $ Use of bid pricing (0.02) (0.04) Net assets per unit $ $ Series F June 30, 2011 December 31, 2010 NAV per unit $ $ Use of bid pricing (0.03) Net assets per unit $ $ Financial instruments and capital management Capital Management The Fund defines its capital as its net assets and principally consists of its investments. The Fund's goals in managing its investments are as described below. Investment Objective and Strategies The fundamental investment objective of the Fund is to provide investors with long-term growth by investing primarily in a diversified portfolio of global investments that are in accordance with Islamic investment principles. Islamic investment principles generally preclude investments in certain kinds of businesses or sectors in prohibited sectors and also prohibit investments in issuers with unacceptable levels of leverage or financial risk. Unacceptable levels of l everage are based upon a predetermined set of criteria established by the Shari'ah Supervisory Board. To achieve its fundamental investment objective, under normal circumstances, the Fund will invest: a) directly in equity securities of public companies listed on the Dow Jones Islamic Market Index ("DJIMI") b) in instruments that mirror the performance of the DJIMI or instruments that mirror the performance of a selection of public companies listed on the DJIMI; and c) in other investments that have been deemed Shari'ah compliant by an applicable Shari'ah advisory committee.

10 Notes to the Financial Statements For the period ending June 30, Financial instruments and capital management (continued) Risk Management The Fund is exposed to various types of risks that are associated with its investment strategies, financial instruments and markets in which it invests. The most important risks include currency risk, liquidity risk and equity price risk. The risks and related risk management practices employed by the Fund are discussed below. The Fund Manager seeks to minimize potential adverse effects of these risks on the Fund's performance by employing professional, experienced portfolio advisers, daily monitoring of the Fund's positions and market events and by diversifying the investment portfolio within the constraints of the investment strategy. To assist in managing risks, the Fund Manager also uses internal guidelines that identify the target exposure for each type of risk, maintains a governance structure that oversees the Fund's investment activities and monitors compliance with the Fund's stated investment strategy and securities regulations that are in accordance with Islamic investment principles. Currency Risk Changes in the value of the Canadian dollar compared to foreign currencies will affect the value, in Canadian dollars, of any foreign securities held in the Fund. From time to time, the Fund may manage currency risk through foreign currency hedging strategies. The following table indicates the currencies to which the Fund had significant exposure as at June 30, 2011, on its trading monetary assets and liabilities in Canadian dollars: Currency Risk As a % of Currency Exposed Holdings* Net Assets U.S. Dollar 3,366, % Swiss Franc 541, % British Pound 501, % Euro Currency Unit 296, % Japanese Yen 191, % Hong Kong Dollar 188, % Australian Dollar 1, % The following table indicates the currencies to which the Fund had significant exposure as at June 30, 2010, on its trading monetary assets and liabilities in Canadian dollars: Currency Risk As a % of Currency Exposed Holdings* Net Assets U.S. Dollar 1,964, % Euro Currency Unit 274, % Japanese Yen 159, % Swiss Franc 149, % Hong Kong Dollar 85, % British Pound 76, % Australian Dollar 43, % *Amounts include cash. As at June 30, 2011, had the Canadian dollar strengthened or weakened by 5% (2009-5%) in relation to all currencies, with all other variables held constant, net assets would have decreased or increased, respectively, by approximately $254,394 (June 30, $137,699). In practice, the actual trading results may differ from this sensitivity analysis and the difference could be material. Liquidity Risk Unitholders may redeem their units on each valuation date. Therefore, the Fund is invested in securities that are traded in active markets and can be readily disposed. The Fund retains sufficient cash and cash equivalent positions to maintain liquidity. All of the Fund's liabilities are due within one month.

11 Notes to the Financial Statements For the period ending June 30, Financial instruments and capital management (continued) Equity Price Risk Equity price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer, or factors affecting all instruments traded in a market or market segment. As at June 30, 2011, management estimates that a 5% change in the DJIMI would have changed the Fund's net assets by $250,485 (June 30, $135,403) with all other factors held constant. In practice, the actual results may differ from this sensitivity analysis and the difference could be material. Fair Value of Financial Instruments Fair value represents the amount at which a financial instrument could be exchanged in an arm's length transaction between willing parties under no compulsion to act and is best evidenced by the last bid price in an open market. If no bid price exists for a security, the last traded price is then used. The Fund classifies its fair value measurements recognized in the Statement of Net Assets using a fair value hierarchy that reflects the significance of the inputs used to measure fair value into three broad levels. Investments measured at fair value are classified in one of three fair value hierarchy levels, based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three fair value hierarchy levels are as follows: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (ie., as prices) or indirectly (ie., derived from prices); and Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs). As at June 30, 2011 and December 31, 2010, the Fund's financial instruments recognized at fair value in the Statement of Net Assets were Cash and Investments at fair value. These were both considered to be Level 1. All other assets and liabilities were carried at amortized cost, and their fair values approximated carrying values. There were no transfers between levels 1, 2 or 3 (December 31, no transfers). 6. Income taxes The Fund qualifies as a mutual fund trust under the provisions of the Income Tax Act (Canada) ("ITA"). The Fund is subject to tax on its income including net realized capital gains, for the period which is not paid or payable to the unitholders as at the end of the period. Income taxes on net realized gains not paid or payable by the Fund is generally recovered by virtue of refunding provisions contained in the ITA and provincial income tax acts, as redemptions occur. The Fund ensures sufficient distributions of income and of net realized capital gains are made to unitholders of record for the Fund, so that no provision for income taxes is required in the financial statements. The Fund estimates its current non-capital loss carryforward balances of approximately $36,458 and expire in No value has been recognized in the statement of net assets with regards to the loss carryforwards. 7. Expenses and related party transactions The Fund Manager has been appointed by the Trustee to administer the day-to-day operations of the Fund. In return for the services provided, the Fund Manager receives annual management fees of 2.5% of the daily net asset value of the fund, paid directly by the Fund. As at June 30, 2011, management fees payable and payable to related parties were balances due to the Fund Manager and totaled $24,518 and $11, respectively (December 31, $9,846 and $11, respectively). Expenses are incurred for the Fund's operations. During the period, the Fund Manager has reimbursed the Fund for all the expenses (other than management fees) as disclosed in the Statement of Operations as well as a portion of tansaction costs paid to CIBC. 8. Charitable donations

12 Notes to the Financial Statements For the period ending June 30, 2011 The investment gains during the period were in compliance with Islamic investment principles. In 2009, Management has identified that it has made investment gains during the period that were not in compliance with Islamic investment principles. As required under the Fund's Simplified Prospectus, management has segregated $14,723 from the net assets of the Fund, for the purpose of donating these amounts to a registered Canadian charity. These charitable donations have not yet been paid and therefore $14,723 of net assets remain segregated as at June 30, Transition to International Financial Reporting Standards International Financial Reporting Standards ( IFRS ) will replace Canadian GAAP for publicly accountable enterprises, which include investment funds and other reporting issuers. Under the general transition rules for publicly accountable enterprises the Fund would adopt IFRS for their fiscal period beginning January 1, On January 12, 2011, the Canadian Accounting Standards Board amended the requirement to prepare financial statements in accordance with IFRS as issued by the International Accounting Standards Board, permitting investment companies, which include investment funds, to defer adoption of IFRS to fiscal years beginning on or after January 1, The Fund has elected to defer adoption of IFRS to January 1, In preparing to meet the requirements, the Manager has taken the following steps in managing the transition to IFRS: Established a working group to identify key differences between Canadian GAAP and IFRS and to coordinate the implementation of the transition plan, Identified areas where changes in disclosure will be required under IFRS standards, Evaluated current information technology and reporting systems for readiness in IFRS implementation, Assessed the likely impacts on business activity and operational areas such as internal controls, staffing and training requirements. The major changes identified for IFRS financial statements include the addition of a Statement of cash flows and the classification of unitholders equity (puttable instruments) as a liability within the statement of net asset s, unless certain conditions are met. Based on the current evaluation of the differences between Canadian GAAP and IFRS, the adoption of IFRS is expected to have no impact on the calculation of net assets or net asset value. IFRS is expected to affect the overall presentation of financial statements and result in additional disclosure in the accompanying notes. However, the Manager s assessment may change if new standards are issued or if the interpretations of current standards are revised.

13 Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund's financial performance for the six-month period ended June 30, 2011 and for the year ended December 31, This information is derived from the Fund's unaudited interim financial statement and audited annual financial statement. Series A Series F June 30, 2011 Dec 31, 2010 June 30, 2011 Dec 31, 2010 Net Asset Value, beginning of period $ $ $ $ Adjustment for new accounting standards (0.04) (0.06) Net Assets, beginning of period $ $ $ $ Increase (decrease) from operations: total revenue total expenses (0.15) (0.28) (0.09) (0.17) realized gains (losses) (0.03) unrealized gains (losses) (0.49) (0.49) (0.41) 2.28 Total increase (decrease) from operations (1) $ (0.21) $ (0.51) $ (0.09) $ 2.12 Distributions: From income (excluding dividends) From dividends From capital gains Return of capital Total Distributions (2) Net Assets, end of period $ $ $ $ Ratios and Supplemental Data (Based on trading NAV) Net Asset Value (000's) $ 5,206 $ 3,924 $ 35 $ 36 Number of units outstanding 498, ,949 3,363 3,363 Management expense ratio 2.82% 2.73% 1.70% 1.65% Management expense ratio before waivers or absorptions 2.82% 2.73% 1.70% 1.65% Portfolio turnover rate (3) 57.77% 39.61% 57.77% 39.61% Trading expense ratio (4) 0.25% 0.12% 0.25% 0.12% Supplemental information to the Financial Highlights are calculated are based on the following: (1) Net asset and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of units outstanding over the period. (2) Distributions were paid in cash/reinvested in additional units of the Fund, or both. (3) The Fund's portfolio turnover rate indicates how actively the Fund's portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the period. The higher a Fund's portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the period, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. (4) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset values during the period.