Jadwa Global Sukuk Fund
Jadwa Global Sukuk Fund 2016 Annual Report
A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by the Capital Market Authority under the license number 37-6034 Head Office: Phone +966 11 279-1111 Fax +966 11 279-1571 P.O.Box 60677, Riyadh 11555, Saudi Arabia
) مرخصة من قبل هيئة السوق المالية بموجب7878110101 شركة مساهمة سعودية مقفلة (رقم السجل التجاري 83870-71 ترخيص رقم 77777 الرياض38311 ب. ص+233 77 112-7717 فاكس+233 77 112-7777 اإلدارة العامة هاتف المملكة العربية السعودية
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
1
Contents Investment Fund Information ............................................................................................................. 3 Fund Manager’s Commentary............................................................................................................ 5 Fund Performance ............................................................................................................................. 7 Fund Expenses .................................................................................................................................. 8 Disclosures ........................................................................................................................................ 9 Annex A: Custodian Statement ........................................................................................................ 11 Annex B: Auditor Statement and Financial Statements ................................................................... 13
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
2
Investment Fund Information Fund Name Jadwa Global Sukuk Fund
Benchmark 3-M LIBOR plus 100 basis points
Inception Date October 08, 2007G
Investment Objective and Policies The Fund aims to generate market returns by investing in a diversified portfolio of local, regional and global Sukuks. The Fund’s assets are invested predominantly in a diversified portfolio of sovereign, quasi-sovereign, corporate and convertible Sukuks. The Fund may also invest in Shariah compliant project finance and structured finance transactions. Excess cash which the Fund may have from time to time would be invested in short-term Murabaha deposits. The Fund Manager does not intend to borrow funds for investment but it may at times do so to meet redemption requests.
Distribution of Income and Gain Policy Dividends and/or income are reinvested in the Fund and not paid out or distributed to investors.
Fund Manager Jadwa Investment A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by the Capital Market Authority under the license number 37-6034 Head Office: P.O. Box 60677, Riyadh 11555, Saudi Arabia. Phone +966 11 279-1111 Fax +966 11 279-1571
Fund Custodian Jadwa Investment A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by the Capital Market Authority under the license number 37-6034 Head Office: P.O. Box 60677, Riyadh 11555, Saudi Arabia. Phone +966 11 279-1111 Fax +966 11 279-1571 The custodian is responsible for taking custody and protecting fund assets on behalf of all unitholders and for taking all required administrative measures in regards to the custody of the fund’s assets.
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
3
Fund Auditor KPMG Al Fozan PO BOX 92876 Al Riyadh 11663 Kingdom of Saudi Arabia
Net Asset Value per Unit (USD) As of December st 31
Net Asset Value (USD) Ending
Highest
Lowest
Number of Units
Expense Ratio (%)
2014
27,796,451.33
123.9490
124.2928
119.3485
224,257.2208
1.09
2015
55,366,858.09
125.0919
126.0732
124.0891
442,609.4547
1.07
2016
81,089,240.93
127.9189
128.0040
124.5319
633,911.3787
1.04
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
4
Fund Manager’s Commentary At Jadwa Investment, we are committed to our research-driven, high conviction approach to investing, which we believe can generate above-average risk-adjusted returns for our clients. Our investment strategy is based on long term views founded upon economic, industry and company level fundamentals. 2016 was a challenging year in capital markets globally, characterized by high levels of uncertainty. Oil prices collapsed at the start of the year and then more than doubled as global economic activity stabilized, US oil production levels declined and major oil producing nations stepped up efforts to reach supply cut agreements. Global credit markets remained strong during the first half of the year due to sluggish economic growth outlook, Fed’s decision to delay rate hikes and resulting minimal inflation expectations. The 10 year USD yield fell from 2.27% beginning of the year to 1.36% on July 8, 2016. Moreover, record low interest rates in the rest of the developed world (and negative yields on a number of European sovereigns) further buoyed credit markets to record highs. The outcome of US election and consequent alteration in economic outlook and growth/inflation expectations affected credit markets negatively. USD 10 year yields rose and closed the year at 2.44%, with majority of the increase taking place during the last two months Given oil is a major source of revenue for regional governments, low and volatile oil price during the beginning of the year affected investors’ risk appetite. However, 2Q 2016 onwards, as oil prices stabilized at relatively higher levels , regional credit markets gained strength and were largely in line with global peers. Jadwa Global Sukuk Fund had a 1.13% cumulative return for 12 months ended 31 December, 2016 taking the Fund’s total annualized return since inception (on 80 October 2007) to 2.70%. In comparison, the Fund’s benchmark achieved a total return of 1.77% for the 12 month period ended 31 December, 2016. The benchmark’s total annualized return since the Fund’s inception reached 1.82%.
Turnover 2016 Fund
4.76%
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
5
Allocation
% of Net Assets 31-Dec-2015
% of Net Assets 31-Dec-2016
Sukuk
96.39%
Sukuk
76.60%
Cash
3.61%
Cash
23.40%
Total
100.00%
Total
100.00%
Top 3 Geographical Allocations
Sector
% of Net Assets 31-Dec-2015
Sector
% of Net Assets 31-Dec-2016
UAE
53.62%
UAE
38.54%
Saudi Arabia
29.13%
Saudi Arabia
21.61%
Turkey
8.57%
Turkey
8.26%
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
6
Fund Performance
1-Year
3-Year
5-Year
Since Inception
Fund
2.26%
7.28%
16.05%
27.92%
Benchmark
1.77%
4.40%
7.25%
18.10%
Fund
Benchmark
2007
0.71%
1.38%
2008
-2.65%
3.98%
2009
2.95%
1.70%
2010
3.42%
1.35%
2011
5.59%
1.35%
2012
7.17%
1.44%
2013
0.94%
1.27%
2014
3.95%
1.24%
2015
0.92%
1.33%
2016
2.26%
1.77%
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
7
Fund Expenses
Expenses for 2016 (USD) Management Fees
954,797.54
Fund Board
4,571.47
Auditing Fees
5,333.50
Custodian's Fees
24,069.29
Legal Expenses
-
Cost of Sharia-compliant finance (when required)
-
Registration / Fees of Unit Processing
-
Other expenses Total Cost/Average Assets Ratio
2,111.74 990,883.54 1.04%
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
8
Disclosures Material Changes
The Fund’s auditor changed from Deloitte to KPMG
For additional information please refer to the Terms & Conditions available on www.jadwa.com
Kindly refer to Annex A & B for custodian and auditor statements regarding the Fund.
Fund Board Meeting th
Jadwa Head Office, Riyadh, 18 December 2016 Discussion Topics nd
Approval of minutes for previous meeting held on 22
Compliance officer’s review of funds’ compliance with laws and regulations
MLRO’s report on anti-money laundering activities
Disclosures of investors with holdings greater than 5% of fund assets
Economic and Market Outlook
2016 YTD performance review of the fund
Fund Board’s self-review: number of investment funds supervised
Jadwa Head Office, Riyadh, 22
nd
June 2016
June 2016
Discussion Topics
Approval of Minutes of Meeting held on 20 December 2015
Approval of appointment of KPMG Al-Fozan & Partners as Fund Auditor for the Fund
Considering proposal for custody and fund administration for Jadwa funds from HSBC Saudi Arabia
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
9
Resolutions
Appointing KPMG Al-Fozan & Partners as Fund Auditor of the Fund.
Appointment of HSBC Saudi Arabia as 3 party sub-custodian and sub-administrator of Jadwa’s public funds
Authorizing the Fund Manager's Head of Asset Management to make decisions on behalf of the Fund.
rd
Additional Information to Unitholders
Please refer to the Fund’s Terms & Conditions.
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
10
Annex A: Custodian Statement
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
11
Annex B: Auditor Statement and Financial Statements
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
13
Disclaimer: Jadwa Investment or its directors, staff, or affiliates makes no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information that is contained in this material. It is not the intention of this material to be used or deemed as an advice, option or for any action that may take place in future. Unless otherwise stated, all information contained in this material shall not be reproduced, in whole or in part, without the specific written permission of Jadwa Investment. The content of this document is for information purposes only. Jadwa Investment does not hold itself out as providing legal, financial or other advice via this document. Investments in Jadwa's products are governed by their Terms and Conditions. Some products are exposed to foreign currencies and changes in currency exchange rates may have an adverse effect on the value and price. The product's value is subject to fluctuations and the investor may not receive the full amount that is originally invested. The information provided in this document may be changed at any time without prior notice. Past performance is not indicative of future returns. Jadwa Investment is authorized and regulated by the Capital Market Authority of Saudi Arabia.
A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by the Capital Market Authority under the license number 37-6034 Head Office: Phone +966 11 279-1111 Fax +966 11 279-1571 P.O.Box 60677, Riyadh 11555, Saudi Arabia
) مرخصة من قبل هيئة السوق المالية بموجب7878110101 شركة مساهمة سعودية مقفلة (رقم السجل التجاري 83870-71 ترخيص رقم 77777 الرياض38311 ب. ص+233 77 112-7717 فاكس+233 77 112-7777 اإلدارة العامة هاتف المملكة العربية السعودية
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
1
Contents Investment Fund Information ............................................................................................................. 3 Fund Manager’s Commentary............................................................................................................ 5 Fund Performance ............................................................................................................................. 7 Fund Expenses .................................................................................................................................. 8 Disclosures ........................................................................................................................................ 9 Annex A: Custodian Statement ........................................................................................................ 11 Annex B: Auditor Statement and Financial Statements ................................................................... 13
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
2
Investment Fund Information Fund Name Jadwa Global Sukuk Fund
Benchmark 3-M LIBOR plus 100 basis points
Inception Date October 08, 2007G
Investment Objective and Policies The Fund aims to generate market returns by investing in a diversified portfolio of local, regional and global Sukuks. The Fund’s assets are invested predominantly in a diversified portfolio of sovereign, quasi-sovereign, corporate and convertible Sukuks. The Fund may also invest in Shariah compliant project finance and structured finance transactions. Excess cash which the Fund may have from time to time would be invested in short-term Murabaha deposits. The Fund Manager does not intend to borrow funds for investment but it may at times do so to meet redemption requests.
Distribution of Income and Gain Policy Dividends and/or income are reinvested in the Fund and not paid out or distributed to investors.
Fund Manager Jadwa Investment A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by the Capital Market Authority under the license number 37-6034 Head Office: P.O. Box 60677, Riyadh 11555, Saudi Arabia. Phone +966 11 279-1111 Fax +966 11 279-1571
Fund Custodian Jadwa Investment A Saudi Closed Joint Stock Company (registration no. 1010228782, Licensed by the Capital Market Authority under the license number 37-6034 Head Office: P.O. Box 60677, Riyadh 11555, Saudi Arabia. Phone +966 11 279-1111 Fax +966 11 279-1571 The custodian is responsible for taking custody and protecting fund assets on behalf of all unitholders and for taking all required administrative measures in regards to the custody of the fund’s assets.
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
3
Fund Auditor KPMG Al Fozan PO BOX 92876 Al Riyadh 11663 Kingdom of Saudi Arabia
Net Asset Value per Unit (USD) As of December st 31
Net Asset Value (USD) Ending
Highest
Lowest
Number of Units
Expense Ratio (%)
2014
27,796,451.33
123.9490
124.2928
119.3485
224,257.2208
1.09
2015
55,366,858.09
125.0919
126.0732
124.0891
442,609.4547
1.07
2016
81,089,240.93
127.9189
128.0040
124.5319
633,911.3787
1.04
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
4
Fund Manager’s Commentary At Jadwa Investment, we are committed to our research-driven, high conviction approach to investing, which we believe can generate above-average risk-adjusted returns for our clients. Our investment strategy is based on long term views founded upon economic, industry and company level fundamentals. 2016 was a challenging year in capital markets globally, characterized by high levels of uncertainty. Oil prices collapsed at the start of the year and then more than doubled as global economic activity stabilized, US oil production levels declined and major oil producing nations stepped up efforts to reach supply cut agreements. Global credit markets remained strong during the first half of the year due to sluggish economic growth outlook, Fed’s decision to delay rate hikes and resulting minimal inflation expectations. The 10 year USD yield fell from 2.27% beginning of the year to 1.36% on July 8, 2016. Moreover, record low interest rates in the rest of the developed world (and negative yields on a number of European sovereigns) further buoyed credit markets to record highs. The outcome of US election and consequent alteration in economic outlook and growth/inflation expectations affected credit markets negatively. USD 10 year yields rose and closed the year at 2.44%, with majority of the increase taking place during the last two months Given oil is a major source of revenue for regional governments, low and volatile oil price during the beginning of the year affected investors’ risk appetite. However, 2Q 2016 onwards, as oil prices stabilized at relatively higher levels , regional credit markets gained strength and were largely in line with global peers. Jadwa Global Sukuk Fund had a 1.13% cumulative return for 12 months ended 31 December, 2016 taking the Fund’s total annualized return since inception (on 80 October 2007) to 2.70%. In comparison, the Fund’s benchmark achieved a total return of 1.77% for the 12 month period ended 31 December, 2016. The benchmark’s total annualized return since the Fund’s inception reached 1.82%.
Turnover 2016 Fund
4.76%
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
5
Allocation
% of Net Assets 31-Dec-2015
% of Net Assets 31-Dec-2016
Sukuk
96.39%
Sukuk
76.60%
Cash
3.61%
Cash
23.40%
Total
100.00%
Total
100.00%
Top 3 Geographical Allocations
Sector
% of Net Assets 31-Dec-2015
Sector
% of Net Assets 31-Dec-2016
UAE
53.62%
UAE
38.54%
Saudi Arabia
29.13%
Saudi Arabia
21.61%
Turkey
8.57%
Turkey
8.26%
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
6
Fund Performance
1-Year
3-Year
5-Year
Since Inception
Fund
2.26%
7.28%
16.05%
27.92%
Benchmark
1.77%
4.40%
7.25%
18.10%
Fund
Benchmark
2007
0.71%
1.38%
2008
-2.65%
3.98%
2009
2.95%
1.70%
2010
3.42%
1.35%
2011
5.59%
1.35%
2012
7.17%
1.44%
2013
0.94%
1.27%
2014
3.95%
1.24%
2015
0.92%
1.33%
2016
2.26%
1.77%
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
7
Fund Expenses
Expenses for 2016 (USD) Management Fees
954,797.54
Fund Board
4,571.47
Auditing Fees
5,333.50
Custodian's Fees
24,069.29
Legal Expenses
-
Cost of Sharia-compliant finance (when required)
-
Registration / Fees of Unit Processing
-
Other expenses Total Cost/Average Assets Ratio
2,111.74 990,883.54 1.04%
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
8
Disclosures Material Changes
The Fund’s auditor changed from Deloitte to KPMG
For additional information please refer to the Terms & Conditions available on www.jadwa.com
Kindly refer to Annex A & B for custodian and auditor statements regarding the Fund.
Fund Board Meeting th
Jadwa Head Office, Riyadh, 18 December 2016 Discussion Topics nd
Approval of minutes for previous meeting held on 22
Compliance officer’s review of funds’ compliance with laws and regulations
MLRO’s report on anti-money laundering activities
Disclosures of investors with holdings greater than 5% of fund assets
Economic and Market Outlook
2016 YTD performance review of the fund
Fund Board’s self-review: number of investment funds supervised
Jadwa Head Office, Riyadh, 22
nd
June 2016
June 2016
Discussion Topics
Approval of Minutes of Meeting held on 20 December 2015
Approval of appointment of KPMG Al-Fozan & Partners as Fund Auditor for the Fund
Considering proposal for custody and fund administration for Jadwa funds from HSBC Saudi Arabia
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
9
Resolutions
Appointing KPMG Al-Fozan & Partners as Fund Auditor of the Fund.
Appointment of HSBC Saudi Arabia as 3 party sub-custodian and sub-administrator of Jadwa’s public funds
Authorizing the Fund Manager's Head of Asset Management to make decisions on behalf of the Fund.
rd
Additional Information to Unitholders
Please refer to the Fund’s Terms & Conditions.
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
10
Annex A: Custodian Statement
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
11
Annex B: Auditor Statement and Financial Statements
Jadwa Global Sukuk Fund Annual Report is available upon request free of charge and on www.jadwa.com
13
Disclaimer: Jadwa Investment or its directors, staff, or affiliates makes no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information that is contained in this material. It is not the intention of this material to be used or deemed as an advice, option or for any action that may take place in future. Unless otherwise stated, all information contained in this material shall not be reproduced, in whole or in part, without the specific written permission of Jadwa Investment. The content of this document is for information purposes only. Jadwa Investment does not hold itself out as providing legal, financial or other advice via this document. Investments in Jadwa's products are governed by their Terms and Conditions. Some products are exposed to foreign currencies and changes in currency exchange rates may have an adverse effect on the value and price. The product's value is subject to fluctuations and the investor may not receive the full amount that is originally invested. The information provided in this document may be changed at any time without prior notice. Past performance is not indicative of future returns. Jadwa Investment is authorized and regulated by the Capital Market Authority of Saudi Arabia.
