CIMB ISLAMIC DALI EQUITY THEME FUND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2017

Transcription

1 FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2017

2 CONTENTS PAGE(S) INVESTORS' LETTER 1 MANAGER'S REPORT 2-10 Fund Objective and Policy Performance Data Market Review Fund Performance Portfolio Structure Market Outlook Investment Strategy Unit Holdings Statistics Soft Commissions and Rebates STATEMENT BY MANAGER 11 TRUSTEE S REPORT 12 SHARIAH ADVISER'S REPORT 13 INDEPENDENT AUDITORS' REPORT STATEMENT OF COMPREHENSIVE INCOME 18 STATEMENT OF FINANCIAL POSITION STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 21 STATEMENT OF CASH FLOWS 22 NOTES TO THE FINANCIAL STATEMENTS DIRECTORY 56 LIST OF CWA (an Agency force of CIMB-Principal) OFFICES 57-61

3 INVESTORS' LETTER Dear Valued Investors, Thank you for your continued support and for the confidence that you have placed in us. We are pleased to share that CIMB-Principal Asset Management Berhad ( CIMB-Principal ) Malaysia concluded the first half of 2017 with RM48 billion in Asset Under Management ( AUM ) and CIMB- Principal s Group AUM has increased by 14% to RM63 billion, for 1-year period ending 30 June Our AUM for Private Retirement Schemes ( PRS ) business has increased by 25% year-on-year ( y-o-y ) to RM388 million as at 30 June We continue to achieve prestigious recognitions from The Edge Thomson Reuters Lipper Fund Awards: The Edge Thomson Reuters Lipper Malaysia Fund Awards 2017 Best Equity Global, 3 years & 5 years : CIMB-Principal Global Titans Fund Best Equity Asia Pacific Ex-Japan, 5 years : CIMB-Principal Asian Equity Fund Best Equity Asia Pacific Ex-Japan - Malaysia Islamic, 5 years : CIMB Islamic Asia Pacific Equity Fund Thomson Reuters Lipper Fund Award Global Islamic 2017 Best Equity Asia Pacific Ex-Japan (Islamic), 3 years : CIMB Islamic Asia Pacific Equity Fund These awards reflect our consistent fund performance, in tandem with our commitment to provide the best customer experience to you. CIMB-Principal was also awarded Fund House of the Year in Malaysia by AsianInvestor for its Asset Management Awards 2017, its second consecutive win and The Employees' Provident Fund ( EPF ) External Portfolio Managers Awards 2017 for the Best Global Bond Portfolio Manager. These industry recognitions reflect our success in scaling up our investment capabilities while building a solid track record and earning the trust of our clients over time. With effect from 30 June 2017, there is an additional risk (i.e. Risks associated with investment in Shariah-compliant warrants) disclosure under "Specific risks associated with the investment portfolio of the fund" section. Pursuant to the revised Guidelines on Unit Trust Funds dated 24 May 2017, we now have the right to withdraw all units held by you in the event we are of the opinion that such withdrawal is necessary to ensure that we comply with any relevant laws, regulations and guidelines. We will first notify you before making any such compulsory withdrawal of your units. Please refer to the Prospectus dated 30 June 2017 for further details. Thank you. Yours faithfully, for CIMB-Principal Asset Management Berhad Munirah Khairuddin Chief Executive Officer/Executive Director 1

4 MANAGER S REPORT FUND OBJECTIVE AND POLICY What is the investment objective of the Fund? The Fund aims to provide investors with medium to long-term capital appreciation through investments in securities of Malaysian companies that will benefit from prevailing investment themes and that conform with Shariah principles. Has the Fund achieved its objective? For the financial period under review, the Fund has met its objective. What are the Fund investment policy and principal investment strategy? The strategy of the Fund is to invest in sectors that are related to the prevailing domestic and/or global investment themes. At least 70% of the Fund s Net Asset Value ("NAV") will be invested in equities listed on Bursa Malaysia that conform with Shariah principles and up to 28% of the Fund's NAV may be invested in other permissible investments. At least 2% of the Fund's NAV will be invested in Shariah-compliant liquid assets for liquidity purposes. Fund category/type Equity (Shariah-compliant)/Growth How long should you invest for? Recommended three (3) years or more Indication of short-term risk (low, moderate, high) High When was the Fund launched? Class MYR 28 February 2008 Class SGD 18 February 2016 What was the size of the Fund as at 30 November 2017? RM1, million (3, million units) What is the Fund s benchmark? Financial Times Stock Exchange ("FTSE") Bursa Malaysia ("FBM") EMAS Shariah ("FBMS") Index Note: Investors should note that the risk profile of the Fund is not same as the risk profile of the benchmark. What is the Fund distribution policy? Given the Fund's investment objective, the Fund is not expected to pay any distribution. All income earned by the Unit holders is proportionately reinvested within the Fund. Distributions, if any, will be incidental and will vary from period to period depending on market conditions and performance of the Fund. What was the net income distribution for the financial year ended 30 November 2017? The Fund distributed a total net income of RM35.29 million to unit holders for the financial year ended 30 November

5 MANAGER S REPORT (CONTINUED) FUND OBJECTIVE AND POLICY (CONTINUED) The Fund s NAV per unit are as follows: NAV per unit (Before distribution) NAV per unit (After distribution) Date MYR MYR Class MYR Class SGD PERFORMANCE DATA Details of portfolio composition of the Fund for the last three financial years are as follows: % % % Shariah-compliant quoted securities - Construction Consumer Products Finance Industrials Infrastructure Project Companies ("IPC") Plantation Properties Real Estate Investment Trusts ("REITs") Technology Trading/Services Cash and other net assets Performance details of the Fund for the last three financial years are as follows: NAV (RM Million) - Class MYR 1, , , Class SGD Units in circulation (Million) - Class MYR 3, , , Class SGD NAV per unit (RM) - Class MYR Class SGD Highest NAV per unit (RM) - Class MYR Class SGD Lowest NAV per unit (RM) - Class MYR Class SGD Total return (%) - Class MYR 5.42 (4.21) (0.82) - Class SGD 9.04 (12.16) - Capital growth (%) - Class MYR 2.16 (9.97) (5.52) - Class SGD 5.72 (12.16) - Income distribution (%) 3

6 PERFORMANCE DATA (CONTINUED) Income distribution (%) - Class MYR Class SGD Management Expense Ratio ("MER") (%) Portfolio Turnover Ratio ("PTR") (times) # # The Fund's PTR increased from 0.54 times to 0.95 times as there was more trading activities during the financial year under review RM RM RM Distribution on 30 October 2015 Gross/Net distribution per unit (sen) - Class MYR Distribution on 21 July 2016 Gross/Net distribution per unit (sen) - Class MYR Distribution on 27 October 2017 Gross/Net distribution per unit (sen) - Class MYR Class SGD % % % % % Annual total return - Class MYR 5.42 (4.21) (0.82) (Launch date: 28 February 2008) Since inception to % Annual total return - Class SGD (4.22) (Launch date: 18 February 2016) Past performance is not necessarily indicative of future performance and that unit prices and investment returns may go down, as well as up. All performance figures for the financial year have been extracted from Lipper. 4

7 MARKET REVIEW (1 DECEMBER 2016 TO 30 NOVEMBER 2017) CIMB ISLAMIC DALI EQUITY THEME FUND The FBMS Index rose by points or 8.56% to 12, points during the financial year under review. In December 2016, the FBMS Index rose by 1.0% on mild year-end window-dressing activity. The bright spot was the stronger commodity prices which saw both West Texas Intermediate ("WTI") Crude and Crude Palm Oil ("CPO") gaining 45% to close the year at US Dollar ("USD") and RM 3,198.5, respectively. At the beginning of the year, the FBMS Index rose by 1.8% in January 2017 driven by a mild rally in Government-linked Companies ("GLC") related companies. Corporate news on GLC reforms particularly Permodalan Nasional Berhad ("PNB") related companies have increased optimism that the momentum on GLC restructuring is gathering strength. In February 2017, the FBMS Index rallied further by 0.90% led by inflows from foreign funds. GLC restructuring remained key theme as UMW Holdings Bhd and Sime Darby Bhd led gainers for the consumer discretionary and industrial sectors. The FBMS Index rallied by 3.42% in March 2017, driven by net foreign inflows of RM4.4 billion. For first quarter of 2017, net foreign inflows amounted to RM5.7 billion. GLC restructuring remained a key investment theme. In April 2017, the FBMS Index rose by 1.25%, driven by inflows from foreign funds. The Malaysian Ringgit ("MYR") strengthened by 1.9% from RM to RM per USD during the month. In their second series of initiatives to develop the onshore financial market, Bank Negara Malaysia ("BNM") allowed all residents to participate in short-selling activities and registered non-bank entities to fully hedge their underlying assets with effect from 2 May Malaysia s March 2017 headline inflation hit a high of 5.1% y-o-y, fuelled mainly by transport cost. The FBMS Index fell by 1.3% in May 2017, despite a strong first quarter of 2017 Gross Domestic Product ("GDP") growth of 5.6% y-o-y. The MYR strengthened by 1.3% from RM to RM per USD during the month, led by portfolio inflows in both the equity and fixed income markets. Notable developments during the month were: 1) BNM maintained the Overnight Policy Rate ("OPR") at 3% 2) Purchasing Managers Index ("PMI") rose to 50.7 in April 2017 from 49.5 in March 2017;3) Malaysia and China signed nine Memoranda of Understanding (more than USD$7.22 billion) during the China Belt and Road Forum. The FBMS Index was flat in June 2017, rising marginally by 0.14%. For half year ended 2017 the FBMS had risen by 6.7%. Notable events during the month include: 1) United Kingdom ( UK ) Election which resulted in a minority government 2) Macron victory in French Election; 3) Qatar sanctioned by its neighbours for alleged terrorism funding; 4) Brent breaking below USD50 per barrel to a low of USD44.82 per barrel 5) US Federal Reserve (the "Fed") raised rates by 0.25 basis points ("bps") and impending balance sheet normalisation; 6) China A-shares inclusion in Morgan Stanley Capital International ("MSCI") in 2018; 6) Speculation of European Central Bank ("ECB") quantitative easing ("QE") tapering by Meanwhile, the local market was negatively surprised by the suspension of Felda Global Ventures ("FGV") Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). The MYR touched a low of RM per USD before closing the month at RM per USD (weakened 0.3% month-on-month ("m-o-m")). In July 2017, FBMS Index fell by 0.82% to close at 12,717 points. The key highlight during the month was the listing of Lotte Chemical Titan Holdings Bhd the largest initial public offering since The stock fell at debut due to weak investor demand and suffered another sharp drop after it announced a 72% decline in its second quarter net profit. On 31 July 2017, Lotte Chemical Titan Holdings Bhd closed at RM 4.70 or 27% below its Initial Public Offering ("IPO") price of RM Meanwhile, the key measures announced by the Government at this year s Invest Malaysia were: 1) launch of the Leading Entrepreneur Accelerator Platform ("LEAP") market; 2) plans to establish an integrity and governance unit at GLCs; and 3) greater gender diversity and corporate governance in Corporate Malaysia. 5

8 MARKET REVIEW (1 DECEMBER 2016 TO 30 NOVEMBER 2017) (CONTINUED) The FBMS Index rose by 32 points or 0.25% in August 2017 despite the geopolitical tension in Korea. Malaysia s macroeconomic fundamentals remained strong as GDP for the second quarter of 2017came in at 5.8%, following a 5.6% expansion in the first quarter of Consequently, various economists upgraded their full year GDP forecast for Malaysia to 5.2% to 5.5% (Government estimate 4.3% to 4.8%). Meanwhile, inflation continued to moderate to 3.2% in July 2017 after peaking at 5.1% in March BNM was expected to keep the OPR unchanged at 3.00% for the rest of MYR stabilised at RM 4.30 to the US Dollar despite a sizeable Government bond maturity during the month. The FBMS Index rose by points or 0.38% in September 2017 in spite of foreign institutions remaining net sellers for the second consecutive month, selling RM 0.7 billion. The FBMS continued to prove resilient in absorbing negative shocks despite the rise of external uncertainties. August 2017 inflation jumped to 3.7% from 3.2% in July 2017, pushed by the run-up in oil prices which saw the WTI closing up 9.4% at USD51.67 per barrel from USD47.23 per barrel a month earlier. As the higher inflation was cost-pushed, BNM kept the OPR unchanged at 3.00%. MYR traded to a low of RM per USD during the month before closing the month at RM per USD. On the ground, the 14 General Election ("GE14") newsflow gained traction. In October 2017, the FBMS Index outperformed the Kuala Lumpur Composite Index ("KLCI"), rising by 2.23% versus a fall of 0.44% for the latter. We saw net foreign outflows of RM0.3bn, the third consecutive month of outflows. Year-to-date ("YTD"), net foreign inflows were RM9.8 billion, compared with RM3.2bn outflows in Brent touched a high of USD61.37 per barrel on 31 October 2017, while the MYR closed at RM 4.23 per USD. As expected, Budget 2018, tabled on 27 October 2017, was both expansionary and people-centric. Fiscal discipline was maintained as shown by a smaller deficit target of 2.8% for 2018 from 3.0% this year. In November 2017, the FBMS Index fell by points or 1.24% to 12, points The third quarter of 2017 result season failed to re-rate the market. In addition to this, the Sime demerger exercise failed to lift sentiments in the market. We saw net foreign outflows of RM 15 million, the fourth consecutive month of outflows. YTD, net foreign inflows were RM9.37 billion, compared with RM 3.2 billion outflows in Malaysia s economy expanded 6.2% y-o-y in third quarter of 2017, the fifth straight quarter of improvement, as domestic demand strengthened. BNM kept the OPR at 3% during the Monetary Policy Committee ("MPC") meeting, but indicated that the MPC may consider reviewing the current degree of monetary accommodation given the strength of global and domestic macroeconomic conditions. FUND PERFORMANCE Class MYR 1 year to years to years to Since inception to % % % % Income Capital 2.16 (12.87) (0.33) Total Return Benchmark 8.56 (0.89) Average Total Return For the financial year under review, the Fund increase by 5.42%, but underperformed the benchmark by 3.14%. 6

9 FUND PERFORMANCE (CONTINUED) Class SGD 1 year to Since inception to % Income Capital 5.72 (7.14) Total Return 9.08 (4.22) Benchmark (1.75) Average Total Return 9.04 (2.38) For the financial year under review, the Fund fell 4.22%, underperforming the benchmark by 2.47%. CLASS MYR 90% 80% 70% 60% Class MYR FBMS Index 50% 40% 30% 20% 10% 0% -10% 7

10 FUND PERFORMANCE (CONTINUED) CLASS SGD 1% -1% -3% -5% -7% -9% -11% Class SGD FBMS Index -13% Changes in NAV Class MYR Changes % NAV (RM Million) 1, , (20.95) NAV/Unit (RM) Class SGD NAV (RM Million) > NAV/Unit (RM) NAV of the Fund (Class MYR) declined by 20.95% for the financial year, while NAV per unit increased by 2.16% due to the positive investment performance and distribution of income. Meanwhile, NAV of the Fund (Class SGD) rose by more than 100% for the financial year, while NAV per unit increased by 2.22%. Performance data represents the combined income and capital return as a result of holding units in the Fund for the specified length of time, based on NAV to NAV price. The performance data assumes that all earnings from the Fund are reinvested and are net of management and trustee fees. Past performance is not reflective of future performance and income distributions are not guaranteed. Unit prices and income distributions, if any, may fall and rise. All performance figures for the financial year have been extracted from Lipper. 8

11 PORTFOLIO STRUCTURE Asset allocation (% of NAV) Shariah-compliant quoted securities Cash and other net assets TOTAL Asset allocation was increased from 87.65% as at 30 November 2016 to 96.21% as at 30 November 2017 as we turned more positive on the market given that the benign inflationary pressure globally has led to slower than expected interest rate hikes by Central Banks across the globe. MARKET OUTLOOK* We remain positive on Malaysia in the run up to the GE14 this year. The stronger-than-expected GDP should lift street earnings. Portfolio inflows have pushed the MRY up to below RM 4.00 versus the USD at the time of writing, as foreign funds are still underweighted Malaysia. Firmer commodity prices are also a positive for Malaysia. In terms of valuation, MSCI Malaysia was the worst performing market in 2017, as we currently trade at a 14% premium to the region versus the average of 24%. Overall, there is no change to our view of an improving global economy in The risk to our view will come from a more volatile market due to the reversal of QE in the developed markets. *This market outlook does not constitute an offer, invitation, commitment, advice or recommendation to make a purchase of any investment. The information given in this article represents the views of CIMB-Principal or based on data obtained from sources believed to be reliable by CIMB-Principal. Whilst every care has been taken in preparing this, CIMB-Principal makes no guarantee, representation or warranty and is under no circumstances liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this market outlook. INVESTMENT STRATEGY In terms of our Malaysia strategy, we remain positive on the market and will continue to buy on dips on the back of 7% expected earnings growth. Our base case is that there is no political upheaval arising from the GE14. In terms of strategy, we will participate selectively in GE14 plays. Certain large-cap beneficiaries of higher oil price have also seen a good run up. In addition, we will hold on to our longer-terms themes, i.e. construction, e-commerce/logistics, Chinese tourism, consumer and technology. UNIT HOLDINGS STATISTICS Breakdown of unit holdings by size as at 30 November 2017 are as follows: CLASS MYR Size of unit holdings (units) No. of unit holders No. of units held % of units held (million) 5,000 and below 6, ,001-10,000 9, ,001-50,000 29, , ,000 13,617 1, ,001 and above Total 59,799 3,

12 UNIT HOLDINGS STATISTICS (CONTINUED) CLASS SGD Size of unit holdings (units) No. of unit holders No. of units held % of units held (million) 5,000 and below ,001-10, ,001-50, , , ,001 and above Total SOFT COMMISSIONS AND REBATES CIMB-Principal Asset Management Berhad (the Manager ) and the Trustee (including their officers) will not retain any form of rebate or soft commission from, or otherwise share in any commission with, any broker in consideration for directing dealings in the investments of the Funds unless the soft commission received is retained in the form of goods and services such as financial wire services and stock quotations system incidental to investment management of the Funds. All dealings with brokers are executed on best available terms. During the financial year under review, the Manager and the Trustee did not receive any rebates from the brokers or dealers but have retained soft commission in the form of goods and services such as financial wire services and stock quotations system incidental to investment management of the Funds. 10

13 STATEMENT BY MANAGER TO THE UNIT HOLDERS OF CIMB ISLAMIC DALI EQUITY THEME FUND CIMB ISLAMIC DALI EQUITY THEME FUND We, being the Directors of CIMB-Principal Asset Management Berhad (the Manager ), do hereby state that, in the opinion of the Manager, the accompanying audited financial statements set out on pages 18 to 55 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 30 November 2017 and of its financial performance, changes in net assets attributable to unit holders and cash flows for the financial year then ended in accordance with the provisions of the Malaysian Financial Reporting Standards ( MFRS ) and International Financial Reporting Standards ( IFRS ). For and on behalf of the Manager CIMB-Principal Asset Management Berhad (Company No.: K) MUNIRAH KHAIRUDDIN Chief Executive Officer/Executive Director ALEJANDRO ECHEGORRI Executive Director Kuala Lumpur 30 January

14 TRUSTEE S REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DALI EQUITY THEME FUND We have acted as Trustee of CIMB Islamic DALI Equity Theme Fund (the Fund ) for the financial year ended 30 November To the best of our knowledge, CIMB-Principal Asset Management Berhad (the Manager ), has operated and managed the Fund in accordance with the following: a) limitations imposed on the investment powers of the Manager and the Trustee under the Deeds, the Securities Commission s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws; b) valuation/pricing is carried out in accordance with the Deeds and any regulatory requirements; and c) creation and cancellation of units are carried out in accordance with the Deeds and any regulatory requirements. During this financial year, a total distribution of 1.05 sen per unit (gross) for MYR class and 9.00 sen per unit (gross) for SGD class have been distributed to the unit holders of the Fund. We are of the view that the distribution is not inconsistent with the objectives of the Fund. For HSBC (Malaysia) Trustee Berhad TAN BEE NIE Head, Trustee Operations Kuala Lumpur 30 January

15 SHARIAH ADVISER S REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DALI EQUITY THEME FUND CIMB ISLAMIC DALI EQUITY THEME FUND We have acted as the Shariah Adviser of CIMB Islamic DALI Equity Theme Fund (the "Fund") for the financial year ended 30 November Our responsibility is to ensure that the procedures and processes employed by CIMB-Principal Asset Management Berhad (the "Manager") are in accordance with Shariah and Shariah Investment Guidelines. In our opinion, the Manager has managed and administered the Fund in accordance with the Shariah Investment Guidelines of the Fund and complied with applicable guidelines, rulings or decisions issued by the Securities Commission Malaysia pertaining to Shariah matters for the financial year ended 30 November In addition, we confirm that the investment portfolio of the Fund comprises securities which have been classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission Malaysia and, where applicable the Shariah Advisory Council of Bank Negara Malaysia with the exception of Hume Industries Bhd and Digi.Com Bhd. Hume Industries Bhd securities have been fully disposed in the current year at loss position while Digi.Com Bhd securities have yet to be fully disposed due to the market value was lower than the investment cost. However, such holding is still within the ambit of the Shariah Investment Guidelines of the Fund. For investments other than the abovementioned, we have reviewed the same and are of the opinion that these investments were in accordance with the rulings of the Shariah Adviser and the Shariah Investment Guidelines of the Fund. This report is made solely to the unit holders of the Fund, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report and we shall not be liable for any errors or non-disclosure on the part of the Manager. For and on-behalf of Shariah Adviser CIMB Islamic Bank Berhad ASHRAF GOMMA ALI Director/Regional Head, Shariah & Governance/Designated Person Responsible for Shariah Advisory Kuala Lumpur 30 January

16 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DALI EQUITY THEME FUND REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion CIMB ISLAMIC DALI EQUITY THEME FUND In our opinion, the financial statements of CIMB Islamic DALI Equity Theme Fund (the "Fund") give a true and fair view of the financial position of the Fund as at 30 November 2017, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. What we have audited We have audited the financial statements of the Fund, which comprise the statement of financial position as at 30 November 2017, and the statement of comprehensive income, statement of changes in net assets attributable to unit holders and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 18 to 55. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and other ethical responsibilities We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ( By-Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. 14

17 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DALI EQUITY THEME FUND (CONTINUED) CIMB ISLAMIC DALI EQUITY THEME FUND REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) 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 include the financial statements of the Fund and our auditor s 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 intend to liquidate the Fund or to cease operations, or have no realistic alternative but to do so. The Manager is also responsible for overseeing the Fund s financial reporting process. 15

18 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DALI EQUITY THEME FUND (CONTINUED) CIMB ISLAMIC DALI EQUITY THEME FUND REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) 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) (b) (c) (d) (e) Identify and assess the risks of material misstatement of the financial statements of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager. Conclude on the appropriateness of the Manager s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the Fund, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 16

19 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF CIMB ISLAMIC DALI EQUITY THEME FUND (CONTINUED) CIMB ISLAMIC DALI EQUITY THEME FUND REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Auditors responsibilities for the audit of the financial statements (continued) 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 holders of the Fund and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS PLT LLP LCA & AF 1146 Chartered Accountants Kuala Lumpur 30 January

20 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2017 CIMB ISLAMIC DALI EQUITY THEME FUND Note RM RM INVESTMENT INCOME/(LOSS) Dividend income 30,936,648 35,078,811 Profit income 4 3,228,683 6,061,497 Net gain/(loss) on financial assets at fair value through profit or loss 9 66,172,625 (73,445,567) Net foreign exchange (loss)/gain (929) ,337,027 (32,305,097) EXPENSES Management fee 5 19,200,384 21,253,132 Trustee s fee 6 640, ,438 Transaction costs 5,562,149 3,808,366 Audit fee 14,500 14,000 Tax agent s fee 9,833 4,700 Other expenses 1,683,479 1,816,469 27,110,358 27,605,105 PROFIT/(LOSS) BEFORE FINANCE COST AND TAXATION 73,226,669 (59,910,202) Finance cost 7 (35,292,470) (83,157,746) PROFIT/(LOSS) BEFORE TAXATION 37,934,199 (143,067,948 Taxation 8 (19,749) (38,512) INCREASE/(DECREASE) IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 37,914,450 (143,106,460) Increase/(decrease) in net assets attributable to unit holders are made up as follows: Realised amount 61,089,301 (58,237,566) Unrealised amount (23,174,851) (84,868,894) 37,914,450 (143,106,460) The accompanying notes to the financial statements form an integral part of the audited financial statements. 18

21 STATEMENT OF FINANCIAL POSITION AS AT 30 NOVEMBER Note RM RM ASSETS Cash and cash equivalents (Shariah-compliant) 10 36,367, ,540,329 Financial assets at fair value through profit or loss (Shariah-compliant) 9 1,026,898,549 1,183,508,092 Amount due from stockbrokers 24,268,480 11,061,622 Amount due from Manager 193, ,976 Dividends receivable 1,174,436 1,582,895 Tax recoverable - 91,805 TOTAL ASSETS 1,088,901,962 1,358,720,719 LIABILITIES Amount due to stockbrokers 12,759,003 4,145,560 Amount due to Manager 7,285,154 2,465,424 Accrued management fee 1,353,625 1,688,421 Amount due to Trustee 45,121 56,281 Other payables and accruals 159, ,866 TOTAL LIABILITIES (EXCLUDING NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS) 21,602,011 8,593,552 NET ASSET VALUE OF THE FUND 1,067,299,951 1,350,127,167 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 1,067,299,951 1,350,127,167 The accompanying notes to the financial statements form an integral part of the audited financial statements. 19

22 STATEMENT OF FINANCIAL POSITION (CONTINUED) AS AT 30 NOVEMBER 2017 (CONTINUED) REPRESENTED BY: CIMB ISLAMIC DALI EQUITY THEME FUND Note RM RM FAIR VALUE OF OUTSTANDING UNITS (MYR) - Class MYR 1,067,260,594 1,350,124,252 - Class SGD 39,357 2,915 1,067,299,951 1,350,127,167 NUMBER OF UNITS IN CIRCULATION (UNITS) - Class MYR 3,274,080,765 4,231,097,876 - Class SGD 14,000 1, ,274,094,765 4,231,098,936 NET ASSET VALUE PER UNIT (MYR) - Class MYR Class SGD NET ASSET VALUE PER UNIT IN RESPECTIVE CURRENCIES - Class MYR MYR MYR Class SGD SGD SGD The accompanying notes to the financial statements form an integral part of the audited financial statements. 20

23 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER RM RM NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS AT THE BEGINNING OF THE FINANCIAL YEAR 1,350,127,167 1,461,785,213 Movement due to units created and cancelled during the financial year: - Creation of units from applications - Class MYR 63,130, ,053,803 - Class SGD 36,623 11,332 - Creation of units from distribution - Class MYR 31,035,982 74,351,120 - Class SGD Cancellation of units - Class MYR (414,945,346) (188,959,723) - Class SGD - (8,118) 1,029,385,501 1,493,233,627 Increase/(decrease) in net assets attributable to unit holders during the financial year 37,914,450 (143,106,460) NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS AT THE END OF THE FINANCIAL YEAR 1,067,299,951 1,350,127,167 The accompanying notes to the financial statements form an integral part of the audited financial statements. 21

24 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER 2017 CIMB ISLAMIC DALI EQUITY THEME FUND Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from disposal of Shariah-compliant quoted securities 1,310,691, ,275,822 Purchases of Shariah-compliant quoted securities (1,098,064,627) (751,235,683) Dividend income received 31,325,358 35,541,467 Profit income received from Shariah-compliant deposits with licensed Islamic financial institutions 3,228,683 6,061,497 Management fee paid (19,535,180) (21,381,772) Trustee s fee paid (651,173) (712,726) Tax refunded 91,805 - Payments for other fees and expenses (1,786,570) (1,836,829) Donation to charitable bodies paid - (28,667) Net cash generated from operating activities 225,299,527 59,683,109 CASH FLOWS FROM FINANCING ACTIVITIES Cash proceeds from units created 63,910, ,497,875 Payments for cancellation of units (410,125,616) (188,258,090) Distribution paid (4,256,298) (8,806,626) Net cash used in financing activities (350,471,837) (50,566,841) Net (decrease)/increase in cash and cash equivalents (125,172,310) 9,116,268 Effects of foreign exchange differences (841) 162 Cash and cash equivalents at the beginning of the financial year 161,540, ,423,899 Cash and cash equivalents at the end of the financial year 10 36,367, ,540,329 Cash and cash equivalents comprised of: Bank balances 298,726 23,317 Shariah-compliant deposits with licensed Islamic financial institutions 36,068, ,517,012 Cash and cash equivalents at the end of the financial year 10 36,367, ,540,329 The accompanying notes to the financial statements form an integral part of the audited financial statements. 22

25 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 NOVEMBER THE FUND, THE MANAGER AND ITS PRINCIPAL ACTIVITY CIMB ISLAMIC DALI EQUITY THEME FUND CIMB Islamic DALI Equity Theme Fund (the Fund ) is governed by a Principal Master Deed dated 15 May 2008, a Third Supplemental Master Deed dated 25 June 2008, a Sixth Supplemental Master Deed dated 14 July 2008, a Seventh Supplemental Master Deed dated 19 November 2008, a Fifteenth Supplemental Master Deed dated 21 September 2012, a Seventeenth Supplemental Master Deed dated 25 March 2015 all executed between the Management Company and the AmTrustee Berhad (hereinafter known as the "Previous Trustee"), and a Principal Master Deed dated 10 April 2015 (collectively referred to as the Deeds ), between CIMB-Principal Asset Management Berhad (the Manager ) and HSBC (Malaysia) Trustee Berhad (the Trustee ). The strategy of the Fund is to invest in sectors that are related to the prevailing domestic and/or global investment themes. At least 70% of the Fund s NAV will be invested in equities listed on Bursa Malaysia that conform with Shariah principles and up to 28% of the Fund s NAV may be invested in other permissible investments. At least 2% of the Fund s NAV will be invested in Shariah-compliant liquid assets for liquidity purposes. All investments will be subjected to the Securities Commission Malaysia ( SC ) Guidelines on Unit Trust Funds, SC requirements, the Deeds, except where exemptions or variations have been approved by the SC, internal policies and procedures and the Fund s objective. The Manager, a company incorporated in Malaysia, is a subsidiary of CIMB Group Sdn Bhd and regards CIMB Group Holdings Berhad as its ultimate holding company. The Manager is also an associate of Principal International (Asia) Limited, which is a subsidiary of Principal Financial Group Inc. The principal activities of the Manager are the establishment and management of unit trust funds and fund management activities. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements: (a) Basis of preparation The financial statements have been prepared in accordance with the provisions of the MFRS and IFRS. The financial statements have been prepared under the historical cost convention, as modified by financial assets at fair value through profit or loss. The preparation of financial statements in conformity with MFRS and IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported year. It also requires the Manager to exercise their judgment in the process of applying the Fund s accounting policies. Although these estimates and assumptions are based on the Manager s best knowledge of current events and actions, actual results may differ. 23

26 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2(m). Standards, amendments to published standards and interpretations to existing standards that are effective: The Fund has applied the following amendments for the first time for the financial year beginning 1 December 2016: Amendments to MFRS 101 Presentation of Financial Statements - Disclosure Initiative provide clarifications on a number of issues, including: Materiality - an entity should not aggregate or disaggregate information in a manner that obscures useful information. Where items are material, sufficient information must be provided to explain the impact on the financial position or performance. Disaggregation and subtotals - line items specified in MFRS 101 may need to be disaggregated where this is relevant to an understanding of the entity s financial position or performance. There is also new guidance on the use of subtotals. Notes confirmation that the notes do not need to be presented in a particular order. Other comprehensive income ( OCI ) arising from investments accounted for under the equity method - the share of OCI arising from equity-accounted investments is grouped based on whether the items will or will not subsequently be reclassified to profit or loss. Each group should then be presented as a single line item in the statement of other comprehensive income. According to the transitional provisions, the disclosures in MFRS 108 regarding the adoption of new standards/accounting policies are not required for these amendments. Annual Improvements to MFRSs Cycle The adoption of these amendments did not have any impact on the current financial year or any prior financial year and is not likely to affect future years.. 24

27 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) The standards, amendments to published standards and interpretations to existing standards that are applicable to the Fund but not yet effective and have not been early adopted are as follows: (i) Financial year beginning on/after 1 December 2017 Amendments to MFRS 107 Statement of Cash Flows Disclosure Initiative (effective from 1 January 2017) introduce an additional disclosure on changes in liabilities arising from financing activities. The Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements. (ii) Financial year beginning on/after 1 December 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through OCI. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments 1 are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument 2 is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest 3. For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives 1. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in OCI rather than the income statement, unless this creates an accounting mismatch. MFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements. ¹ For the purposes of the investments made by the Fund, equity instruments and derivatives refers to Shariah-compliant equity instruments and Shariah-compliant derivatives. ² For the purposes of the investments made by the Fund, debt instruments refers to Sukuk. ³ For the purposes of this Fund, interest refers to profits earned from Shariah-compliant investments. 25

28 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities Classification The Fund designates its investments in Shariah-compliant quoted securities as financial assets at fair value through profit or loss at inception. Financial assets are designated at fair value through profit or loss when they are managed and their performance evaluated on a fair value basis. Financing and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and have been included in current assets. The Fund s financing and receivables comprise cash and cash equivalents, amount due from stockbrokers, amount due from Manager and dividends receivable. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. The Fund classifies amount due to stockbrokers, amount due to Manager, accrued management fee, amount due to Trustee and other payables and accruals as other financial liabilities. Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Fund commits to purchase or sell the asset. Shariah-compliant investments are initially recognised at fair value. Transaction costs are expensed in the statement of comprehensive income. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the rights to receive cash flows from the Shariah-compliant investments have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expired. Unrealised gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss are presented in the statement of comprehensive income within net gain or loss on financial assets at fair value through profit or loss in the financial year which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of gross dividend income when the Fund s right to receive payments is established. 26

29 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities (continued) Recognition and measurement (continued) Shariah-compliant quoted securities in Malaysia are valued at the last done market price quoted on Bursa Malaysia Securities Berhad ( Bursa Securities ) at the date of the statement of financial position. If a valuation based on the market price does not represent the fair value of the Shariah-compliant quoted securities, for example during abnormal market conditions or when no market price is available, including in the event of a suspension in the quotation of the Shariah-compliant quoted securities for a period exceeding 14 days, or such shorter period as agreed by the Trustee, then the Shariah-compliant quoted securities are valued as determined in good faith by the Manager, based on the methods or basis approved by the Trustee after appropriate technical consultation. Shariah-compliant deposits with licensed Islamic financial institutions are stated at cost plus accrued profit calculated on the effective profit method over the period from the date of placement to the date of maturity of the respective deposits. Financing and receivables and other financial liabilities are subsequently carried at amortised cost using the effective profit method. Impairment for assets carried at amortised costs For assets carried at amortised cost, the Fund assesses at the end of the reporting year whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective profit rate. The asset s carrying amount is reduced and the amount of the loss is recognised in statement of comprehensive income. If financing and receivables has a variable profit rate, the discount rate for measuring any impairment loss is the current effective profit rate determined under the contract. As a practical expedient, the Fund may measure impairment on the basis of an instrument s fair value using an observable market price. If, in a subsequent financial year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in statement of comprehensive income. When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined. 27