ANNUAL REPORT - HSBC Saudi Riyal Murabaha Fund

Transcription

1 ANNUAL REPORT - HSBC Saudi Riyal Murabaha Fund *FUND REPORTS ARE AVAILABLE UPON REQUEST FREE OF CHARGE

2 Table of Contents A. MANAGEMENT INFORMATION... 3 C. FUND PERFORMANCE... 4 D. FUND MANAGER... 6 E. CUSTODIAN STATEMENT... 8 F. AUDITOR STATEMENT... ERROR! BOOKMARK NOT DEFINED. 2

3 A. Management Information 1. Fund Name HSBC Saudi Riyal Murabaha Fund 2. Fund Manager Name Address 3. Fund Sub-Manager (if any) Name Address 4. Custodian Name Address Duties and Responsibilities HSBC Saudi Arabia 7267 Olaya, AlMurooj Riyadh Kingdom of Saudi Arabia Phone: Fax: Website: None HSBC Saudi Arabia 7267 Olaya, AlMurooj Riyadh Kingdom of Saudi Arabia Phone: Fax: Website: To preserve the assets of the Fund. To keep all the necessary documents that support the performance of his contractual obligations to the Fund. To deposit cash amounts owned by the Fund in the Fund s account. To manage cash transactions for the Fund, including the deduction of investment credit and expenses of the Fund in accordance with the Terms and Conditions of the Fund and the Information Memorandum. The Custodian is responsible for holding and protecting the Fund's assets for the Fund s unit holders. 5. Auditor Name Address KPMG Al Fozan & Al Sadhan KPMG Tower Salahudeen Al Ayoubi Road P O Box Riyadh Kingdom of Saudi Arabia Phone:

4 B. Fund Information 1. Investment Objectives, Policies and Polices The Fund is an open-ended Shariah compliant investment fund that aims to achieve competitive returns at minimal risk by strictly adhering to Shariah compliant commodity trading and interest free financing models, as well as to enable investors to access their investments, if required, at short notice. 1. Distribution of Income and Gain Policy The Fund does not distribute any income but rather reinvest it in the Fund itself, which will be reflected on the price and value of the units. C. Fund Performance 1. Fund Performance During the Last 3 Years (SAR) Criteria/Year End of year NAV 2,210,342,693 1,714,809,555 1,389,452,013 End of year NAV/unit Highest NAV/unit Lowest NAV/unit No. of units in issue 147,893, ,035,645 90,563,545 Dividends/unit Expense Ratio 0.35% 0.35% 0.44% 2. Fund Returns Year 1Yr 3Yrs 5Yrs Return 2.03% 3.28% 4.54% Year Return 5.14% 4.89% 3.51% 1.07% 0.66% 0.50% 0.46% 0.75% 0.61% 0.62% 2.03% 4

5 3. Fund Fees (SAR) Type of Fee or Expense Amount (SR) Percentage of AUM Subscription Fee - - Management Fee 6,957, % Custodian Fee - - Auditor Fee - - Independent Board of Directors Remuneration - - Regulatory Fees - - Index Cost - - Debt Cost - - Dividend Purification (Only if Shariah Compliant) - - Bank Charges 4, % 4. Material Changes on the Fund during the Year No material changes occurred on the Fund during the year Detailed Fundamental, Material, Notifiable, or Significant Changes Made on the Fund s Terms and Conditions During the Year - Changes that were made on 29/3/2016 (Attached are the details of the 1st Changes) - Changes that were made on 28/11/2016 (Attached are the details of the 2nd Changes) Valuation Day 6. Valuation or Pricing Errors during the Year Reason and Brief Description of the Error Percentage Impact on NAV Impact Corrective Action 27-Nov-16 Valuation Error % Valuation was corrected. No impact on the fund or any investor. Total impact on the fund is SAR which was compensated to the fund accordingly NAV was rectified immediately the following day 5

6 D. Fund Manager 1. Investment Activities of the Period During the year, the Fund expanded its counterparty infrastructure by setting up relationships with new institutions and continued to invest in both Murabaha deposits and Sukuk. During the year, Fund s exposure to Sukuk also reduced by SAR 70 Mn. 2. Investment Limitation Breaches None. 3. Commentary on Investment Fund s Performance During the Period During the year the Saudi Riyal interbank rates rose on steady basis till October, The One-month Saudi Riyal Interbank offered rates increased from 1.28% at the beginning of the year to around 2.1% in October, The increasing interbank rates primarily reflected the liquidity squeeze in the Saudi Riyal interbank market, as the Saudi Govt. issued bonds amounting to SAR 97 bn. in local currency during the year. Separately the Saudi Govt. raised USD 10 bn. through international syndicated loan and USD 17.5 bn. through international Bond issuance during the year. The upward trend in the Saudi Riyal interbank offered rate stemmed in October, as SAMA stepped in, by introducing a new money market instrument: a 90-day repurchase agreement to ease the liquidity pressures faced by the Banks. Additionally, the Saudi Govt. also didn t issue any further debt in local currency post September, The Fund returned 2.03% in 2016; whereas, the benchmark returned 1.81% 4. Any Additional Information that Might Enable Unit Holders to Make Informed Decisions that are Based on Sufficient Information about the Fund During the Year There is no additional information to be disclosed; however, investors need to read and understand the Fund s Terms and Conditions and all related documents and/or obtain advice from their own legal, regulatory, tax, and/or investment advisors. 5. Distribution of Management Fees (only if the fund is substantially investing in other funds) Not Applicable. 6

7 6. Special Commission Received by Fund Manager (if any, including what they are and the manner in which they were utilized) None. 7. Fund Manager or Affiliates Investment in the Fund HSBC Saudi Arabia s investment in the Fund: Fund Name Units Price Fund CCY Value Fund CCY Value SAR HSBC Saudi Riyal Murabaha Fund - ART 34,984, SAR 536,740, ,740, Annual Voting Practices Used by the Board Not Applicable. 9. Cases of Conflict of Interest Approved by the Board None. 10. Board of Directors Report (must include subjects that were discussed and voting results, as well as fund performance and goals) SUBJECT APPROVAL DETAILS MEETING DATE FUND BOARD CAPACITY EVALUATION As required by the Regulation, the Fund Board capacity was evaluated and it was approved by the Fund Board that the current Fund Boards have sufficient capacity to supervise the Funds under their respective Fund Board 22 December 2016 APPROVAL OF AUDITOR The Fund Board approved the appointment of KPMG as the Financial Auditor for HSBC SA Mutual Funds 27 October

8 E. Custodian Statement A statement based on its opinion whether the fund manager has: - issued, transferred and redeemed the units in accordance with the provisions of the Investment Funds Regulations and the fund's Terms and Conditions; - Valued and calculated the price of units in accordance with the provisions of the Investment Funds Regulations, the fund's Terms and Conditions and the information memorandum; - Breached any of the investment restrictions, limitations and borrowing powers applicable to the Investment fund Regulations. Not applicable, Fund custodian responsibility does not include providing his opinion on these points. F. Auditor Statement A statement whether, in the auditor s opinion: - The financial statements have been prepared and audited in accordance with SOCPA standards, the Investment Funds Regulations,the fund's terms and conditions and the information memorandum; Auditor s opinion available in Annex1 page 2. - The financial statements give a true and fair view of the net income and the net gains or losses of the investment fund s assets in that accounting period; Auditor s responsibility does not include providing his option on this point. - The financial statements give a true and fair view of the financial position of the investment fund at the end of the period. Auditor s opinion available in Annex1 page 2. 8

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