AlAhli Global Real Estate Income Fund

Transcription

1 AlAhli Global Real Estate Income Fund An open-ended investment fund organized under the Investment Funds Regulations of the CMA of the Kingdom of Saudi Arabia Terms and Conditions NCB Capital Company Prospective investors should read the entirety of these Terms and Conditions carefully and seek their own independent legal, zakat, Shariah, tax, financial and other advice before making any investment decision. 1

2 Fund Summary: Currency US Dollar Risk level High Risk Benchmark Idealratings Global REITs Index (REITs) Objectives To generate return and capital appreciation over the long run Minimum Investment USD 2,000 Minimum Additional Subscription USD 1,000 Minimum Additional Subscription through Regular Investment Scheme USD (100 Saudi Riyal) Minimum Redemption USD 1,000 Valuation Days Monday to Friday provided that they are US Business Days Dealing Days Monday to Thursday provided that they are Saudi Business Days and US Business Days Subscription/ Redemption Days Available on every Saudi Business Days and executed on Dealing Days Subscription/ Redemption Request cut off time Subscription are accepted at or before 12:30 p.m. on the Saudi Business Day prior to the target Dealing Day Subscription Fee Up to 2% Management Fee Payment of Redemption 1.85% p.a. of the Fund s NAV Redemption proceeds will be made available to investors before the close of the 2

3 Proceeds fourth business (provided that they are US and Saudi Business Days) following the later the valuation day on which the price for the redemption was determined Other expenses Other expenses are deducted from the Fund such as external audit, Shariah review, custody, data processing, and other similar charges as permitted under the Regulations. These expenses will not exceed 1.5% annually of the Fund s Net Asset Value Commencement Date December 2007 Initial Unit Price USD

4 Table of Contents: Fund Summary Definitions Fund Terms & Conditions 1. Name of the Fund 2. Fund Manager s Address 3. Commencement Date 4. Regulator 5. Date these Terms and Conditions were issued or last updated 6. Participation 7. Fund Currency 8. Fund Investment Objectives 9. Principal Investment Strategies 10. Principal Risks of Investing in the Fund 11. Fees and Expenses 12. Dealing Costs 13. Winding up and Appointment of Liquidator 14. Fund Board 15. Fund Manager 16. Custodian 17. Auditor 18. Annual Audited Financial Statements 19. Characteristics of the Units 20. Other Information 21. Shariah-compliant Investment Funds 22. Initial Offer 23. Investment by the Fund Manager in the Fund 24. Subscription and Redemption Procedures 25. Valuation of the Fund Assets 26. Early Redemption Fee 27. Termination of the Fund 28. Reporting to Unitholders 29. Conflict of Interest 30. Voting Right Policies 31. Changes to the Fund Terms and Conditions 32. Complaints Procedure 33. Governing Law 34. Compliance with Investment Fund Regulations 35. Summary of Financial Disclosure Appendix: Shariah Guidelines 4

5 Definitions: Alternative Channels Benchmark / Index The channels through which subscription and redemption requests are accepted including the phone and the website adopted by the Fund Manager. Such channels should not include branches of the Fund Manager. Idealratings Global REITs Index (REITs). Board The Board of Directors of the Fund, as set out in paragraph (14) of the Terms and Conditions. CMA The Capital Market Authority of Saudi Arabia. CML Capital Market Law of Saudi Arabia, which was issued by Royal Decree No. (M/30) dated 2/6/1424H corresponding to16/06/2003. Custodian A person who is authorized under the Authorized Persons Regulations to conduct the securities activity of custody. Dealing Day Any day on which the units of the Fund are subscribed and redeemed. Financial Year Means the financial year of the Fund. Fund Manager, the Company or NCB Capital NCB Capital Company (Commercial Registration No ), with its registered address at King Saud Road, P.O. Box 22216, Riyadh 11495, Kingdom of Saudi Arabia. Investment Funds Account Investments Means investment funds account held by Investors with NCB Capital. Means the cash, shares, and units in other mutual funds and related assets held and owned by the Fund. Investor Means any investor in the Fund, or any potential investor. Murabaha Selling a commodity as per the purchasing price with a defined and agreed profit mark-up. This mark-up may be a percentage of the selling price or a lump sum. This transaction may be concluded either without a prior promise to buy, in which case it is called an ordinary Murabaha, or with a prior promise to buy, in which case it is called banking Murabaha i.e. 5

6 Murabaha to the purchase order. Net Asset Value (NAV) Means the value of the assets of the Fund minus the liabilities of the Fund before deducting the other expenses. Real Estate Investment Trusts REITs Redemption Form Companies or funds owning and managing a pool of income generating real estate properties and at the same time they are listed on the markets and pay income to its investors. The form used to redeem units. Register Means the Unitholders register maintained by the Fund Manager or any party appointed by the Fund Manager. Regular Investment Scheme A scheme which allows investors to subscribe to the Fund with a fixed amount on a monthly basis. Regulations ( IFR ) Means the Investment Fund Regulations issued by the Capital Market Authority. Saudi Business Day Means a day on which banks and Authorized Persons in Saudi Arabia are normally open for business, not including any official holiday for banks in Saudi Arabia. Saudi Business Day Securities of Real Estate Investment Trusts REITs Shariah Board Shariah Guidelines Subscription Fee Means a day on which banks and Authorized Persons are normally open for business in Saudi Arabia, this does not include any official holiday in Saudi Arabia Shares or units of listed Real Estate Investment Trusts, such shares and units are traded in the markets. Shariah Board of the National Commercial Bank. The Shariah guidelines set by the Shariah Board for the Fund s investment as set out in the Shariah Guidelines Appendix. Fee charged upon subscription in the Fund. Subscription Form The form used to subscribe in the Fund. Subscription Monies Means the amount (net of Subscription Fee) paid by the Investor to the Fund Manager to invest in the Fund. 6

7 Switch Form The form used for switching between certain investment funds managed by NCB Capital Company and it forms a part of the redemption / switch form. Terms and Conditions Means these Terms and Conditions of the Fund. The Fund AlAhli Global Real Estate Income Fund. Unit The interest of the holders in an investment fund consisting of units (including fractions of a unit), and each unit shall be treated as representing one undivided interest in the assets of an investment fund. US Business Day Any day, on which banks in the United States of America are normally open for business, not including any official holiday for banks in the United States of America. USD or Dollars United States Dollar Valuation Day A business day on which the units of the Fund are valuated. 7

8 Terms and Conditions: 1. Name of the Investment Fund AlAhli Global Real Estate Income Fund. 2. Fund Manager s Address NCB Capital Company 4th Floor, Tower B, NCB Building, King Saud Road P.O. Box 22216, Riyadh 11495, Kingdom of Saudi Arabia Tel: Fax: Information about the Fund Manager can be found at the Fund Manager s website: 3. Commencement Date The Fund has already commenced accepting subscriptions on 8/11/1428H corresponding to 18/11/2007G. 4. Regulator The Fund Manager is NCB Capital Company. It was authorized by the Board of CMA pursuant to its Resolution No , dated 03/12/1427H, corresponding to 24/12/2006G, under License No , to carry out securities business including, dealing, as principal, agent and underwriter, managing, arranging, advising and custody. 5. Date these Terms and Conditions were Issued or Last Updated The Fund s Terms and Conditions were issued on 1/11/1428H corresponding to 11/11/2007G. The CMA has been notified on updating the Terms and Conditions on 08/03/1438H corresponding to 07/12/2016G. 6. Participation 6.1 The minimum initial subscription is two thousand dollars (USD 2,000). 6.2 Subsequent subscriptions must be in an amount of at least one thousand dollars (USD 1,000) except subscriptions through the Alternative Channels, and subscriptions switches to the Fund through the Regular Investment Scheme offered by the Fund Manager such as Thimar, which allows investors to subscribe to the Fund on a monthly basis of fixed amount. 6.3 Unitholders must maintain a minimum investment of one thousand dollars (USD 1,000), otherwise the Fund Manager has the right to redeem all of their Units on the next Dealing Day. The minimum redemptions amount must be no less than one thousand dollars (USD 1,000) except subscribing through Regular Investment Scheme. 7. Fund Currency The Fund is denominated in US Dollars. If the Investor provides any currency other than US Dollars, the exchange rate used, may be subject to alteration. 8

9 8. Fund Objectives AlAhli Global Real Estate Income Fund is an open ended fund seeking to generate return and capital appreciation in the long term through investing primarily in the securities of listed Real Estate Investment Trusts REITs, which own and operate income generating real estate properties, across the globe. In addition, the Fund has the right to invest in local and global equity in real estate sector or real estate development sector. Fund Index: Idealratings Global REITs Index (REITs). Unitholders may monitor the index s performance on the company s website. The Fund Manager reserves the right at its own discretion, acting in the best interest of the Unitholders, to fully or partially distribute income received from underlying investments (if any) and/or realized capital gain (if any) to the Unitholders twice a year within seven (7) Business Days from the end of June and December, each year, after obtaining the Fund Board approval. Unitholders eligible for the distribution will be the Unitholders of record at the valuation day before the last valuation day in June and December, each year. Such distributions will be credited to the Unitholders designated active current account with the National Commercial Bank, Saudi Arabia. It should be noted that the Fund may not be able to make any distribution in case of delay in receiving dividends by the Fund s underlying investment or in the event of low distributions volume by underlying investments. 9. Principal Investment Strategies 9.1 The Fund invests in securities of Real Estate Investment Trusts REITs, listed equity of real estate companies and real estate development companies, initial public offerings of REITs, initial public offering of real estate development companies, and units of investment funds that have similar objectives to the Fund. 9.2 The Fund investment is concentrated in the real estate sector, mainly in the real estate investment trusts REITs, without being limited to any particular country or a specific geographic area. 9.3 The Fund actively invests in the real estate sector, the Fund's asset allocation ranges in each class of securities as a percentage of the Fund s NAV according to the table below; Asset Class Minimum Maximum Securities of listed REITs and initial public offering of REITs Listed real estate and real estate development companies and initial public offering of real estate development companies Cash, Murabaha, Shariah complaint money markets funds 75% 100% 0% 15% 0% 10% Real estate funds with similar objectives to the fund 0% 10% 9

10 The fund may invest in securities issued by the fund manager or its affiliates, according to the Fund s objective. 9.4 The Fund will not invest in any other class of assets than those mentioned above. 9.5 The Fund shall comply with the applicable provisions set out in article (41) of the Investment Funds Regulations Investment Limitation : 9.6 The Fund has the right to obtain Shariah compliant financing provided that it shall not exceed 10% of its Net Asset Value, and a term of one year or less. However, such percentage shall not include financing to meet redemption requests. 9.7 The Fund Manager reserves the right to allocate the Fund s investment globally and / or locally as deemed appropriate. 9.8 The Fund may invest in investment funds that are approved to be publicly offered by the CMA provided that such funds are complying with the Shariah Guidelines. Also, the Fund has the right to invest GCC and / or internationally domiciled investment funds licensed by GCC and / or foreign authorities or commissions provided that such funds shall be subject to jurisdiction that employs regulation at least equivalent to the regulations applied to investment funds in Saudi Arabia. Should the Fund invest in other investment funds, it will for the purpose of achieving its objectives. The investee funds shall invest in investment funds that invest in the one or more of the asset classes mentioned in paragraph (9-3) above. The maximum exposure of the Fund to all types of investment funds will not exceed 20% its Net Asset Value and this limit will be reviewed quarterly. 9.9 The Fund may invest in Shariah compliant instrument for only hedging purposes after being approved by the Shariah Board not exceeding 10% of the Fund Net Asset Value. 10. Principal Risks of Investing in the Fund 10.1 The Fund is of high risk level and no assurance may be given by NCB Capital that any appreciation in the value of the Fund s investments will occur. The value of the Fund s underlying investments and the income derived from them may go down. No assurance may be given by NCB Capital that investment objectives of the Fund will actually be achieved. Moreover, past performance of the Fund, if any, is not an indication of any future growth of rates of return. Investors should consider the following risk factors before investing in the Fund: Industry Concentration Risk: There is a chance of Real Estate stocks and REITs declining or increasing owing to development affecting the real estate industry and property values. The universe of the real estate and REITs companies is relatively small compared to other sectors; therefore investors in this Fund should expect higher volatility than other investment funds in general investing in the diversified sectors. Risk of Investing in REITs: The Fund invests in units of REITs. Consequently, the Fund may be exposed to markets wherein the liquidity and activity is limited. Units prices of such funds may encounter volatility as a result of the markets movement in general and the real estate markets in particular. In addition, there is no guarantee that REITs distribute income to investors on an annual basis as required by the regulations because the distribution may be subject to the performance of the held underlying real assets, and the REIT ability to pay its obligations if any. Furthermore, investing in REITs is subject to risk of real estate assets, which may be valued or appraised 10

11 negatively due to factors such as declining lease rates, financial position of tenants, and natural resource. Accordingly, investing in REITs may affect the Fund s return and Units price negatively. Equity Market Risk: The Fund seeks to achieve long-term benefits from real estate equity investment. In general higher long-term equity returns are associated with higher volatility; therefore, the risk inherent in investing in equities is higher than in fixed income money market instruments, such as Murabaha and other instruments. Legal or political conditions can also affect a security s or investment value as well. Issuer Specific Risk: These include changes in the financial conditions of an issuer or counter party; changes in specific economic or political conditions that affect a particular type of security or issuer and changes in general economic. Currency Risk: This is the risk that the value of financial instruments will fluctuate due to a change in foreign exchange rates. The Fund views the US Dollar as its base currency. The Fund s investments may also be denominated in currencies other than its base currency. Accordingly the value of the Fund s assets may be affected favorably or unfavorably by fluctuations in currency rates. Interest Rate Risk: This is the risk that the value of financial instruments will fluctuate due to a change in interest rates. Accordingly the value of real estate securities and REITs stocks prices may be affected favorably or unfavorably by fluctuations in interest rates. Liquidity Risk: Liquidity of investments may be low in some periods and as a result this may increase the difficulty of liquidating such investments. Reduced market liquidity may adversely affect the market price of the Fund s investments and the Fund s ability to sell particular investments to meet its liquidity requirements. If total redemptions exceed 10% of the Fund s NAV, the Fund Manager has the right to postpone such redemptions to the next Dealing Day on pro rata basis. The Fund may suffer loss due to heavy redemptions. As a result, the Fund Manager may face difficulty in liquidating securities issued in small volume, and securities issued in way of private placement traded over the counter. Economic, Regulatory and Political Risks: This is the risk of changes in the economic conditions such as recession, inflation, declining oil prices, political risk, or economic changes affecting the markets in which the Fund invest. Also, the changes in the regulatory environment, legislation, accounting standards, and local regulations may adversely impact on the Fund s performance. Shariah Investment Risk: The Fund Shariah Board decides whether the Fund and its investments compliant with the Shariah, but there is a possibility that some investments may not satisfy the Shariah requirements, which could lead the Fund to avoid such investments or failure to obtain target return on these investments which may result in a decrease in the Unit price. Risks of dependence on the Fund Manager's Personnel: The Fund's performance depends largely on the capabilities and skills of the Fund Manager s employees, which may significantly affect the Fund s performance in the event of resignation or absence of any one of them and failure to secure a suitable alternative. 11

12 Conflict of Interest Risk: This risk arises in situations that affect the objectivity and independence of the Fund Manager's investment decisions due to a personal interest. This may adversely impact the Fund s performance. Natural Disaster Risk: Natural disasters, which are beyond the control of the Fund Manager, such as volcanoes, earthquakes, floods, and other climate changes may affect the performance of all sectors, including economic and investment sectors of the Fund s business, and adversely affect the performance of the Fund, and therefore may affect the Fund's investments and performance and consequently unit price. Risks of Investing in Other Funds: Other investment funds in which the Fund invests may be exposed to risks similar to those set out in this paragraph, "Principal Risks of Investing in the Fund" which may adversely affect the Fund's performance and the unit price Unitholders will bear any financial losses that may result from investing in the Fund, unless such losses are caused by the Fund Manager's negligence or default Investment in the Fund is not a deposit with any local bank sponsoring, selling securities or otherwise affiliated with the Fund. 11. Fees and Expenses 11.1 Subscription Fee: The Subscription Fee of up to 2% is calculated based on the gross amount paid by the Investor to the Fund, after which the remaining Subscription Monies are used to subscribe for Fund units Management Fee: The Fund Manager charges the Fund on every Dealing Day an annual Management Fee of 1.85% proportionate to the period of the Fund s Net Asset Value. The Management Fee will be rebated or waived in case any investment funds managed by NCB Capital invest in this Fund Other Expenses: The Fund Manager reserves the right to recover from the Fund any other expenses incurred on behalf of the Fund such as audit, legal, custody, data processing, and any other similar charges permissible by the regulations. However, other expenses are not expected to exceed 1.5% from the Fund s Net Asset Value. Please refer to the attached Summary of Financial Disclosure for details. 12. Dealing (brokerage) Costs Dealing costs or any other regulatory expenses are paid and charged directly to the Fund. Such expenses are subject to local regulations and brokers in the markets where the Fund buys and sells securities in. Dealing costs vary subject to the Fund portfolio turnover and activities. 13. Liquidation and Appointment of Liquidator In line with the Investment Funds regulations, the CMA shall have the authority to appoint a replacement Fund Manager or a liquidator or take any other measure it deems necessary. 14. Fund Board 14.1 The term of the board shall start following approval by the Board of CMA and the board will serve for a term of three (3) years (renewable). The Fund Board consists of the following members: 12

13 Mohammed Abdullah AlAli: (Chariman) Mr. AlAli is the Head of Product Development at NCB Capital. He previously held numerous positions with the Capital Market Authority from 2004 to 2013; where his last position was Head of Investment Funds & Offering Violations Unit. Prior to joining NCB Capital, Mohammed worked as a Director of Products Development at Jadwa Investment, and a credit officer at SAMBA Financial Group. Mohammed has over 12 years experience in the financial sector, including 9 years with the CMA. Mohammed is a CFA Charterholder and he holds an MBA from the University of San Francisco. Mohammad Jaafar Al Saggaf: (Non-independent Director) Mr. Al Saggaf is Vice President, Head of retail sales at NCB Capital. He joined NCB Capital since inception, and worked with NCB Group in Retail and Investment departments. He has more than 23 years of experience in the financial sector. He has diploma in Personal Financial Planning and Wealth Management from IOB, Dalhousie Alum, Canada. Dr. Abdulraouf S. Banaja: (Independent Director). Dr. Banaja serves as an independent advisor for a number of companies. He attained PHD in Economics from the University of California Santa Barbara, He worked as an associate professor at King Saud University and consultant to the Ministry of Finance and the Saudi Arabian Monetary Agency. He held several senior banking positions at other financial institutions, including SAAB, Gulf International Bank and NCB. Alaauldeen R. Sami: (Independent Director). Mr. Sami is the Vice President and Chief Investment Officer of Zahid Group Holding since He sits on the board of Ajil Financial Services, Jordan National Bank, Arab International Hotels Company, Arabian Transportation Industries, and Saudi Total Lubricants Ltd, among others. He holds BA degree in Economics from Cairo University, and MA in International Financial Management from the American University, Cairo. He started his career in 1977 with Cairo Barclays Bank, Cairo, and in 1979 moved to Saudi Hollandi Bank before joining Zahid Group The Fund Board s duties include, but are not limited to, the following: 1. Approving all Funds material contracts, reports and decisions. 2. Overseeing, and where appropriate, ratifying any conflict of interest the Fund Manager has identified in accordance with IFR. 3. Meeting at least twice annually with the Fund Manager s Compliance Officer (Compliance Committee) and the anti-money laundry reporting and anti-terrorist financing officer to ensure the Fund Manager s compliance with all applicable laws and regulations. 4. Approving recommendations made by the liquidator, if appointed pursuant to Article 22 of the IFR, Appointment of Liquidator or Replacement Fund Manager. 5. Ensuring completeness, accuracy and compliance of the Fund s Terms and Conditions, and all other document containing disclosures relating to the Fund, with the IFR. 6. Ensuring that the Fund Manager carries out its obligation in the best interest of Unitholders in accordance with the Terms and Conditions of the Fund and the IFR. 7. Acting in the best interests of the Fund and its Unitholders and observing its fiduciary duty. 8. Approving the appointment of the external auditor nominated by the Fund Manager. 13

14 Remunerations of Fund Board will be charged to the Fund. For details, please see the Summary of Financial Disclosure attached All Fund Board members are also directors in the following Funds: 1. AlAhli Asia Pacific Index Fund 2. AlAhli Emerging Markets Index Fund 3. AlAhli Europe Index Fund 4. AlAhli Freestyle Saudi Equity Fund 5. AlAhli GCC Growth and Income Fund 6. AlAhli GCC Trading Equity Fund 7. AlAhli Global Equity Fund 8. AlAhli Global Growth and Income Fund 9. AlAhli Health Care Trading Equity Fund 10. AlAhli Global Trading Equity Fund 11. AlAhli IPO Fund 12. AlAhli North America Index Fund 13. AlAhli Saudi Small and Mid-Cap Equity Fund 14. AlAhli Saudi Trading Equity Fund 15. AlAhli SEDCO Residential Development Fund Dr. Abdulraouf Banaja is an independent director in AlAhli Makkah Hospitality Fund and Elite Flexi Saudi Equities Fund. 15. Fund Manager 15.1 The Fund Manager is NCB Capital, whose registered head office address is: King Saud Road, P.O. Box 22216, Riyadh 11495, Kingdom of Saudi Arabia, phone , Fax Web site: The Fund Manager and other NCB Capital Company affiliates may, from time to time, act as Fund Managers or advisers to other funds or sub-funds, which may have investment objectives similar to those of the Fund. Therefore, the Fund Manager may in the course of its business have potential conflicts of duty or interest with one or more of such funds. However, in such an event, the Fund Manager will perform its obligations to act in the best interests of the relevant Unitholders as practically reasonable, with due regard to its obligations to other clients when undertaking any investment where potential conflicts of interest may arise. As of the date of issuance of these Terms and Conditions, neither the directors of the Fund Manager nor those of the Fund have any material business or interest which may conflict with those of the Fund As of the date of issue of these Terms and Conditions, the Fund Manager has no material business relationship or interest which would conflict with the interests of the Fund The Fund Manager has appointed the LaSalle Investment Management Securities B.V., the Netherlands as sub managers to the Fund, its duties includes opening separate independent investment accounts and manages the Fund Assets in line with the Investment strategies and Shariah guidelines. 14

15 15.5 The Fund Manager was authorized by the Board of CMA pursuant to Resolution No , dated 03/12/1427H, corresponding to 24/12/2006G, under license No , to carry out dealing, as principal, agent and underwriter, managing, arranging, advising and custody with respect to securities. 16. Custodian NCB Capital is the Custodian to the Fund. The portfolio s securities where applicable may be held by one or more internationally recognized securities custodians appointed by the Fund Manager. 17. Auditor The Auditors to the Fund are KPMG Al Fozan & Partners Zahran Business Centre, Tower A, 9th Floor, Prince Sultan Street PO Box Jeddah 21534, Kingdom of Saudi Arabia Telephone: Website: Annual Audited Financial Statements The Fund s independent audited annual financial statements will be made available within 90 days after the Fund s fiscal year, without any charges to the Unitholders and customers, upon request made to the Fund Manager. In addition, the semiannual financial statements reviewed by the external auditors will be available for Unitholders within 45 days from the date of the financials. Such statements will be available in the website of the Saudi Stock Exchange Tadawul. 19. Characteristics of the Units There shall be only one class of the Units in the Fund of equal rights and obligations. 20. Other Information 20.1 Confidentiality of Fund Information: Strictest confidentiality shall be observed at all times in the handling of the business of the Fund and the investments of subscribers. This shall not be construed as limiting the access of the Fund s regulatory authority (CMA) to the Fund s records for the purposes of regulatory supervision Death of Unitholder: The Investor's consent to these terms and conditions shall not terminate automatically upon his/ her death or disability; these terms and conditions shall be binding upon his/ her heirs, executors, administrators, personal representatives, trustees and successors if the Investor is an individual. If the Investor is a corporate body, this agreement shall not terminate upon the occurrence of any of the above to any partner or shareholder. Therefore, the Fund Manager shall have the right to suspend any transactions relating to these Terms and Conditions until the Fund Manager shall have received a court order, authorization, or such other sufficient evidence to prove the power of those mentioned above before allowing them to dispose of the Units Anti-money Laundering and Counter-Terrorist Financing Rules: The Fund Manager will comply with the Anti-money Laundering and Counter-Terrorist Financing Rules issued by the CMA Board under Resolution No dated 3/12/1429H, corresponding to 1/12/2008G, as amended. The Unitholder hereby confirms that the amounts used to subscribe to the Fund are not coming from 15

16 any suspicious or illegal sources. If the Fund Manager is in doubt as to the legal source of funds used in the investment transactions initiated by the investor, the Fund Manager shall suspend or decline such transactions for investigation purposes and reporting to the Saudi competent antimoney laundering and terrorist financing bodies and to provide any information or document required by such bodies. However, according to the Saudi Law, the Fund Manager may not inform Unitholders of any suspected transactions reported to competent official bodies Obligations of the Fund Manager The Fund Manager shall: Comply with all rules and implementing regulations issued by the Capital Market Authority and other instructions in force in Saudi Arabia applicable to the Fund s business. Manage the Fund s assets in the best interest of Unitholders in accordance with the terms and conditions of the Fund and carry out all its duties in respect of Unitholders register. Develop decision-making process in respect of the administration the Fund The Fund Manager shall not, nor any of its employees or agents or any other third parties engaged by the Fund Manager shall, be liable to any Unitholder for any losses, damages, costs, expenses or other liabilities incurred by the Unitholder or the Fund's assets, unless such losses, damages, costs, expenses or other liabilities are resulting from gross negligence, violation or default by any of these persons. Moreover, they shall not be liable responsible to the Unitholder under any circumstances for any indirect or consequential loss incurred, including failure to achieve the objectives of the Fund The Unitholder expressly acknowledges and agrees as follows: The Fund Manager does not give any representation or guarantee in respect of the performance or profitability of any investment by the Fund and the Fund Manager shall have no liability or responsibility in connection with any decline in the value of the managed investments or the assets of the Fund, unless such decline has resulted from gross negligence, misconduct or default. Should the Unitholder fail to provide the Fund Manager with the right mailing address and / or , the Unitholder agrees to hold the Fund Manager harmless in connection with any liability. The Unitholder hereby waives all its rights and claims against the Fund Manager arising directly or indirectly as a result of not providing any account statement, notices or any other information relating to the investments or of the Unitholder s inability to respond or check any information or to correct any alleged errors in the account statement or notices or any other information. If a Unitholder is subject to the laws of a jurisdiction other than that of Saudi Arabia, then it is such Unitholder s responsibility to conform to those laws without any obligation on the part of the Fund or the Fund Manager Sharing of Information: The information required to open and operate the investor's account and to comply with applicable regulations will be shared between the Fund Manager and other parties as determined by the Fund Manager. The Unitholder also agrees that such information may be shared with competent regulatory authorities Severability of Provisions: Should any provision of this agreement be or become invalid or unenforceable, the remaining provisions shall remain in full force and effect. 16

17 20.9 Language: Pursuant to paragraph (a) of Article (54) of the IFR, the Terms and Conditions of the Fund shall be in Arabic and made available upon request free of charge. These Terms and Conditions may be issued in English. However, in case of any semantic difference between the Arabic and English versions, the Arabic text shall prevail. 21. Shariah-Based Investment Fund 21.1 The Fund is a Shariah Compliant Fund. The Shariah Board appointed to the Fund consists of the following members: Sheikh Abdullah Bin Sulaiman Al-Maniya (Chairman) Member of the Supreme Scholars Council and former Chief Judge of the Cassation Court in Makkah. Holds MA from the Supreme Institute of Justice, Imam Saud bin Mohammad Islamic University. Sheikh Dr. Abdullah bin Abdulmlaziz Al Musleh (Member) Former dean of Imam Muhammad Bin Saud Islamic University, Abha, and Secretary General of the Panel of Scientific Miracles in the Quran and Sunnah. Attained PHD from the Faculty of Shariah, Imam Saud bin Mohammad Islamic University. Sheikh Dr. Muhammad Ali Al Gari (Member) Former Professor of Islamic Economics at King Abdulaziz University in Jeddah. He holds PHD in economics from the University of California The Fund will bear all fees payable to the Shariah for their services and audit For details of the rules used by Shariah Board members please see Shariah Rules Schedule. 22. Initial Offer Minimum amount to initiate the fund is 5 million US Dollar. Investment of Subscription Amounts During Subscription Period: During the Subscription Period, (expected to be 30 days from the Inception Day) the subscription amounts will be invested for the benefit of the Investor in Shariah-compliant Murabaha Fund of NCB Capital Funds and in such investment the unit holder will sign the Terms & Conditions to confirm that he has read and accepted them. The Unitholder will only bear the fees and expenses for the period he is subscribed into the Fund (where there will be no fee duplication). The Investment will mature on the Saudi Business Day before the Admission Date, and the accrued income from the Murabaha Fund (net investment after deduction of management fees and expenses) will be added to the subscription amount and invested in the Global Real Estate Fund. 23. Investment by Fund Manager in the Fund The Fund Manager may at its sole discretion subscribe in the Fund as an Investor at upon commencement of the Fund or thereafter and has the right to decrease or redeem its subscription as deemed appropriate. The Fund Manager s investments will be disclosed at the end of each financial year. In case the Fund Manager invests in the Fund, he shall be treated without any discrimination against other Investor. 24. Subscription and Redemption Procedure 17

18 Days on which units in the Fund may be subscribed and redeemed: Subscription and redemption applications are open on every Dealing Day (from Monday to Thursday) provided that they are Business Days in Saudi Arabia and the United States. Last time for submitting subscription and redemption applications to the Fund: Submission of Subscription Application forms: All subscriptions payable in USD must be made at or before 12:30 p.m. on the Saudi Business Day prior to the Dealing Day in order to commence participation in the Fund from the target Dealing Day. Applications received on a Saudi Business Day after 12:30 or if the target Dealing Day falls in official holiday for banks and authorized persons in Saudi Arabia or in the United States will be processed on the second Dealing Day following the subscription day. Submission of Redemption Application forms: Redemption may be made on any Dealing Day provided that a written notice or completed redemption form is received though branches at or before 12:30 p.m. on the Saudi Business Day prior to Dealing Day. Redemption applications received after 12:30 p.m. on a Saudi Business Day or if the target Dealing Day falls in official holiday for banks and authorized persons in Saudi Arabia or in the United States, will be processed on the second Dealing Day following the redemption day. If subscription application is received at or before 12:30 p.m. on a the Saudi Business Day before the Dealing Day, subscription in the Fund will be processed and will commence on the Dealing Day following the subscription request, otherwise subscription will be commenced on the next Dealing Day. Subscription, Redemption and Switching Procedures: Subscription Procedures: The Investor is required, if subscription is made through branch, to sign a copy of these Terms and Conditions and the Subscription Form. Investors may complete such procedures through the alternative channels (phone and website adopted by the Fund Manager). The subscription amount will be deducted from the investor s account. The Investor is required to provide identification in the form of a valid identity card (for Saudis) or an Iqama (for residents in Saudi Arabia), or a signed resolution, stamped with the company seal and a copy of the company s commercial registration for (Institutions) and other documents that may be required depending on the type of institution. Redemption Procedures: Redemption of Units in whole or in part can be requested by Unitholder at any time by submitting a written notice or completing and submitting a Redemption Form which can be obtained from designated branches or through alternative channels. Investors must provide valid Saudi Identification Card or Iqama, as applicable, if redemption is to be made through a branch. The Unitholder must specify whether redemption of units is in part or in whole. In case of a partial redemption, if the total value of its units on the Dealing Day fall below the partial redemption amount, the Fund Manager shall have the right to decline the redemption transaction on the targeted Dealing Day without any liability to the Fund Manager, in which case, the Investor must submit a new redemption request on the next Valuation Day. Switching Procedures: A switch between two open ended funds managed by NCB Capital is considered a single transaction made up of two separate components: redemption and 18

19 subscription. The redemption portion of the transaction is processed first in accordance with the Redemption Procedures clause above. The subscription portion of the transaction will then be processed in accordance with the Subscription Procedures. To request a switch, the Investor is required to complete a Switch Form and submit it to the designated staff along with a valid identification card, or through the Alternative Channels. Redemption proceeds will be paid to the Investor within four business days following the relevant valuation point on which redemption price of the unit was determined provided that the days between the valuation point and payment of redemption proceeds are Saudi Business Days and US Business Days. The amount to be redeemed should be at least one thousand dollar (USD 1,000). The value of units held by the Unitholder must be at least one thousand dollar (USD 1000) except redeeming or holding Units via Regular Investment Scheme where the minimum value to subscribe and redeem is equivalent to (USD 26.67). Rejection of Application: The Fund Manager reserves the absolute right to reject any subscription application, including the subscriptions that may result in a violation of CMA s regulations and/or any other regulations applicable to the Fund including its Terms and Conditions. Investors should note that if total redemptions exceed 10% or more of the Fund's NAV, the Fund Manager shall have the right to postpone the redemption to the next Dealing Day. Postponed redemption requests will be processed on pro rata basis. The investor should be aware that redemption or valuation of the Units of the Fund under certain unfavorable financial markets conditions may become difficult or rather impossible, in which event the days of subscription and redemption may temporarily postponed to the following Dealing Day as the Fund Manager deems appropriate. Redemption by The Fund Manager: Fund Manager has the right to redeem Units that were sold to any Investor in whole or in part with a notice to the Investor if such subscription could result in a violation of the Capital Market Authority and/or any other applicable regulations and/or the Terms and Conditions of the Fund without any liability on the Manager. Temporarily suspension of Subscription and subscription and redemption: The Fund Manger may suspend subscription or redemptions of the Fund s Units for as long as it is necessary and justified having regard to the best interest of the Unitholders in the following circumstances: If the Fund Manager reasonably believes that any such suspension is in the best interest of the Unitholders in the Fund; If there has been as suspension of dealing on the principal market in which the securities or other assets held by the Fund are dealt, either in general or in relation to assets of the Fund which the Fund Manager reasonably believes to be material to the Net Asset Value. 25. Valuation of the Assets of the Investment Fund: The initial unit price is USD 1. The unit value is computed by dividing the total asset value of the Fund, plus all income, including accrued income and reinvested income distributions, less liabilities, management fees and any expenses by the total number of units outstanding at that time. The value of the Fund, the unit price, will be conclusively determined by the Manager from Monday to Friday, provided that they are US Business Days, based on the latest available security prices on 19

20 that Valuation Day. If international markets are closed on any day, such valuation will be carried out on the next Valuation Day. Unit price will be published on the Saudi Business Day following the Valuation Day on the Company s website and on Tadawul s website. 26. Early Redemption Fee There is no early redemption fee. 27. Fund Termination The Fund Manager shall have the right to terminate without incurring any penalty to any affected party, by giving not less than sixty (60) calendar days written notice to Investors. In such case, the Fund shall be liquidated and net proceeds will be distributed to Investors pro rata to their holdings of Units. 28. Reporting to Unit Holders The Manager will issue a confirmation to each Investor when such Investor subscribes or redeems units in the Fund. A statement detailing each Investor s position is issued every three months or as determined by the Manager (however not more than 3 months). Statements to Investors are sent to the mailing address shown on the Application Form, unless notification of a change of address has been provided in writing. Any discrepancies must be brought to the attention of the Company within sixty (60) days of the date of issuance of such statements and confirmations, after which the statements issued by the Manager will be final and conclusive and the Manager shall not be liable to Investors in connection with any discrepancy. The Manager shall not be liable for any consequences arising from statements or confirmation advices that are held by the Company on the instructions of the Investor. 29. Conflict of Interest The Fund Manager s procedure for managing conflicts of interests will be made available upon request free of charge. 30. Voting Rights Policies After consulting with the Compliance Officer, the Fund Board approves the general policies of exercising the Fund voting rights related to the underlying assets held by the Fund. The Manager may exercise the voting rights after consulting with the Compliance Officer or as provided in the voting policies and procedures approved by the Fund Board. 31. Changes to the Terms and Conditions These Terms & Conditions shall remain in effect until materially amended by the Manager, subject to CMA prior approval. Investors will be notified before sixty (60) calendar days of reflecting any material change in the Terms and Conditions. 32. Complaint Procedure 20

21 Any complaint the Unitholder may have in connection with the Fund should be sent to NCB Capital Company through the Fund Manager s website: or through dial-up phone number ( ). In addition, a copy of the Fund Manager s policies and procedures for handling customer complaints will be made available upon written request without any charges. If no response to the complaint is received, Unitholder shall be entitled to submit his/ her complaint to CMA, Investor Complaint Unit. Unitholder may also submit the complaint to the Committee for the Resolution of Securities Disputes after ninety (90) calendar days following the date of submission of complaint to CMA, unless CMA has notified the complainant to file the complaint to the Committee prior to the expiration of such period. 33. Governing Law These Terms & Conditions are governed by the laws applicable in the Kingdom of Saudi Arabia. If a Unitholder is subject to the laws of a jurisdiction other than that of Saudi Arabia, then it is such Unitholder s responsibility to conform to those laws without any obligation on the part of the Fund or the Fund Manager. 34. Compliance with the Investment Fund Regulations The Terms and Conditions and other documents of the Fund shall be subject to the Investment Funds Regulations issued by the Board of CMA, and contain a complete and true disclosure of all material facts of the Fund. 35. Summary of Financial Disclosure 35.1 Summary of Financial Disclosure for the period ended December 2016: Table (1): Fees and expenses of the Fund in USD Amount in Type of Fees/Expenses Thousands of USD Subscription Fee (2% of each transactions) 4 Annual Fund Management Fees (1.85% of NAV) 206 Custody fees* 43 Annual remuneration of independent directors of the Fund* 4 External audit fees* 5 Financing charges* 0 Shariah audit* 6 CMA regulatory fees* 2 Fund Administration & Operation expenses including Tadawul publication fees* 7 21

22 *Other expenses shall not exceed in total 1.5% of the average value of Fund s asset. The actual other expenses were 0.61% of the average value of fund s asset. The Fund will review the expenses charged to the Fund on quarterly basis (every three months). The Fund Manager reserves the right to rebate or waive the management fees in case any fund managed by NCB Capital invests in the Fund Example of Unitholder s share of Fund total expenses The following table shows a hypothetical example of a Unitholder investment, assuming that the investment value of the Unitholder is USD 10,000 Table (2) - Hypothetical investment of a Unitholder and its share of the expenses in USD Description Amount Hypothetical Unitholder s investment 10,000 Total Dealing Cost (0.24%) 24 Total Other Expenses ( 0. % 61) 61 Management Fee (1.85%) 183 Unitholder s net investment amount 9,732 All expenses charged to the Fund will be disclosed in the annual financial statements of the Fund Basis of calculation, collection and payment of fees Management Fees: The Manager will charge the Fund on every Dealing Day an annual management fee of 1.85% to be proportionate to the period of the Fund s net asset value. Other Expenses: Expenses of the Fund s Board will be equally allocated to all funds supervised by the Board and managed by the Fund Manager. General floating expenses which are subject to change, such as Fund administration & operation cost, will be allocated based on the total assets value of each fund. All actual expenses will be calculated and deducted from the Fund s assets after having been allocated as units on each Valuation Day on the basis of 360 days as follows: Fund management fees = (Fund assets - other expenses) * (1.85%) * (number of days between the current Valuation Day and the last Valuation Day 360) We have assumed the following values: Fund's assets = USD 100,000 Total other expenses and liabilities of the Fund = USD 3.8 Net Assets Value of the Fund = USD 99,996.2 Annual management fees = 1.85% Valuation Day Wednesday Management Fees on the valuation day =99,996. 2* 1.85% * (2 360) = USD

23 35.4 Fund Performance compared to the benchmark for each of the last 10 years up to December 2016 Descriptions Fund Return (%) Benchmark (%) The following table shows the total returns for one, three, five, and ten years periods, where applicable, as of 31 December 2016 Particulars 1 Year 3 Years 5 Years 10 Years Annualized Fund Return (%) Annualized Benchmark (%) Neither the Fund nor the Index past performance is considered as a base for future performance. Past performance of the fund or the benchmark index does not guarantee future results, there is no guarantee for unitholders that the Fund performance or its performance relative to the benchmark will repeat or match past performance. The Fund Benchmark has been changed after obtaining CMA approval. 23