Jadwa Saudi Equity Index Fund - Jadwa Investment
Jadwa Saudi Equity Index 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 Saudi Equity Index 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............................................................................................................ 4 Fund Performance ............................................................................................................................. 6 Fund Expenses .................................................................................................................................. 7 Disclosures ........................................................................................................................................ 8 Annex A: Custodian Statement ........................................................................................................ 10 Annex B: Auditor Statement and Financial Statements ................................................................... 12
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
2
Investment Fund Information
Fund Name Jadwa Saudi Equity Index Fund
Benchmark S&P Saudi Shariah Index (TR)
Inception Date June 29, 2008G
Investment Objective and Policies To provide long-term capital growth by investing in Saudi equity market, in proportion to the constituents of the S&P Saudi Shariah Index. The underlying investments of the Fund shall be in accordance with Shariah investment guidelines of the Fund Manager’s Shariah Committee. The Fund Manager employs a passive investment strategy by investing its assets in companies listed on the Saudi equity market in proportion with the weights of each constituent of the Index. The Fund Manager may maintain up to 5% of the Fund’s assets in Shariah compliant liquid instruments to manage 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 Capital Market Authority under 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 Capital Market Authority under license number 37-6034 Head Office: P.O.Box 60677, Riyadh 11555, Saudi Arabia. Phone +966 11 279-1111 Fax +966 11 279-1571
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
3
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.
Fund Auditor KPMG Al Fozan PO BOX 92876 Al Riyadh 11663 Kingdom of Saudi Arabia
Net Asset Value per Unit As of December st 31
Net Asset Value Ending
Highest
Lowest
Number of Units
Expense Ratio (%)
2014
9,690,029.34
97.6238
135.1631
85.7809
99,258.9218
1.84
2015
8,152,647.08
82.1352
115.2745
80.8668
99,258.9192
1.86
2016
8,693,708.28
88.6835
89.5041
64.6421
98,030.7539
2.12
Fund Manager’s Commentary 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. Given oil is a major source of revenue for Saudi Arabia, low and volatile oil price along with uncertainty related to government spending affected investors’ risk appetite. Moreover, delay in government payments and periodic issuance of local government debt squeezed money supply from the system. As a result, the first three quarters of the year were marked by rising interbank rates and declining valuations of local risk assets. Towards year end, however, the local bourse remained buoyed driven by substantial improvement in money supply (due to successful debut international government bond issuance and measures taken by SAMA to ease system liquidity), stabilization of oil prices at relatively higher levels, as well as positive steps taken by CMA and Tadawul to enable inclusion of Saudi Arabia into emerging market equity indices. Market outlook further strengthened with announcements of 2017 Budget, NTP 2020 and Balanced Budget 2020 which highlighted key government measures to reform the economy, and brought clarity regarding future direction of government policies. Jadwa Saudi Equity Index Fund had a 7.97% cumulative return for 12 months ended 31 December, 2016. In comparison, the Fund’s benchmark achieved a total return of 10.57% for the 12 month period ended 31 December, 2016.
For more details on performance please refer to the Fund Performance section.
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
4
Turnover
2016 Fund
4.35%
Equity Allocation
% of Net Assets 31-Dec-2015
% of Net Assets 31-Dec-2016
Equity
99.42%
Equity
99.78%
Cash
0.58%
Cash
0.22%
Total
100.00%
Total
100.00%
Sector
% of Net Assets 31-Dec-2015
Sector
% of Net Assets 31-Dec-2016
Materials
35.70%
Materials
39.08%
Banks
19.72%
Banks
22.40%
Telecommunication Services
9.00%
Telecommunication Services
8.22%
Top 3 Sector Allocations
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
5
Fund Performance
1-Year
3-Year
5-Year
Since Inception
Fund
7.97%
-15.35%
17.92%
-11.32%
Benchmark
10.57%
-10.53%
29.53%
0.51%
Fund
Benchmark
2008*
-49.08%
-51.32%
2009
32.92%
37.25%
2010
11.29%
13.35%
2011
-0.14%
2.46%
2012
10.12%
12.44%
2013
26.50%
28.76%
2014
-6.82%
-4.83%
2015
-15.87%
-14.98%
2016
7.97%
10.57%
*from inception June 29, 2008
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
6
Fund Expenses
Expenses for 2016 (SAR) Management Fees
116,836.70
Fund Board
17,143.00
Auditing Fees
20,000.00
Custodian's Fees
-
Legal Expenses
-
Cost of Sharia-compliant finance (when required)
-
Registration / Fees of Unit Processing
-
Other expenses
11,175.00
Total
165,154.70
Cost/Average Assets Ratio
2.12%
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
7
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
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
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
8
Additional Information to Unitholders
Please refer to the Fund’s Terms & Conditions.
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
9
Annex A: Custodian Statement
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
10
Annex B: Auditor Statement and Financial Statements
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
12
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 Saudi Equity Index 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............................................................................................................ 4 Fund Performance ............................................................................................................................. 6 Fund Expenses .................................................................................................................................. 7 Disclosures ........................................................................................................................................ 8 Annex A: Custodian Statement ........................................................................................................ 10 Annex B: Auditor Statement and Financial Statements ................................................................... 12
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
2
Investment Fund Information
Fund Name Jadwa Saudi Equity Index Fund
Benchmark S&P Saudi Shariah Index (TR)
Inception Date June 29, 2008G
Investment Objective and Policies To provide long-term capital growth by investing in Saudi equity market, in proportion to the constituents of the S&P Saudi Shariah Index. The underlying investments of the Fund shall be in accordance with Shariah investment guidelines of the Fund Manager’s Shariah Committee. The Fund Manager employs a passive investment strategy by investing its assets in companies listed on the Saudi equity market in proportion with the weights of each constituent of the Index. The Fund Manager may maintain up to 5% of the Fund’s assets in Shariah compliant liquid instruments to manage 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 Capital Market Authority under 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 Capital Market Authority under license number 37-6034 Head Office: P.O.Box 60677, Riyadh 11555, Saudi Arabia. Phone +966 11 279-1111 Fax +966 11 279-1571
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
3
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.
Fund Auditor KPMG Al Fozan PO BOX 92876 Al Riyadh 11663 Kingdom of Saudi Arabia
Net Asset Value per Unit As of December st 31
Net Asset Value Ending
Highest
Lowest
Number of Units
Expense Ratio (%)
2014
9,690,029.34
97.6238
135.1631
85.7809
99,258.9218
1.84
2015
8,152,647.08
82.1352
115.2745
80.8668
99,258.9192
1.86
2016
8,693,708.28
88.6835
89.5041
64.6421
98,030.7539
2.12
Fund Manager’s Commentary 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. Given oil is a major source of revenue for Saudi Arabia, low and volatile oil price along with uncertainty related to government spending affected investors’ risk appetite. Moreover, delay in government payments and periodic issuance of local government debt squeezed money supply from the system. As a result, the first three quarters of the year were marked by rising interbank rates and declining valuations of local risk assets. Towards year end, however, the local bourse remained buoyed driven by substantial improvement in money supply (due to successful debut international government bond issuance and measures taken by SAMA to ease system liquidity), stabilization of oil prices at relatively higher levels, as well as positive steps taken by CMA and Tadawul to enable inclusion of Saudi Arabia into emerging market equity indices. Market outlook further strengthened with announcements of 2017 Budget, NTP 2020 and Balanced Budget 2020 which highlighted key government measures to reform the economy, and brought clarity regarding future direction of government policies. Jadwa Saudi Equity Index Fund had a 7.97% cumulative return for 12 months ended 31 December, 2016. In comparison, the Fund’s benchmark achieved a total return of 10.57% for the 12 month period ended 31 December, 2016.
For more details on performance please refer to the Fund Performance section.
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
4
Turnover
2016 Fund
4.35%
Equity Allocation
% of Net Assets 31-Dec-2015
% of Net Assets 31-Dec-2016
Equity
99.42%
Equity
99.78%
Cash
0.58%
Cash
0.22%
Total
100.00%
Total
100.00%
Sector
% of Net Assets 31-Dec-2015
Sector
% of Net Assets 31-Dec-2016
Materials
35.70%
Materials
39.08%
Banks
19.72%
Banks
22.40%
Telecommunication Services
9.00%
Telecommunication Services
8.22%
Top 3 Sector Allocations
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
5
Fund Performance
1-Year
3-Year
5-Year
Since Inception
Fund
7.97%
-15.35%
17.92%
-11.32%
Benchmark
10.57%
-10.53%
29.53%
0.51%
Fund
Benchmark
2008*
-49.08%
-51.32%
2009
32.92%
37.25%
2010
11.29%
13.35%
2011
-0.14%
2.46%
2012
10.12%
12.44%
2013
26.50%
28.76%
2014
-6.82%
-4.83%
2015
-15.87%
-14.98%
2016
7.97%
10.57%
*from inception June 29, 2008
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
6
Fund Expenses
Expenses for 2016 (SAR) Management Fees
116,836.70
Fund Board
17,143.00
Auditing Fees
20,000.00
Custodian's Fees
-
Legal Expenses
-
Cost of Sharia-compliant finance (when required)
-
Registration / Fees of Unit Processing
-
Other expenses
11,175.00
Total
165,154.70
Cost/Average Assets Ratio
2.12%
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
7
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
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
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
8
Additional Information to Unitholders
Please refer to the Fund’s Terms & Conditions.
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
9
Annex A: Custodian Statement
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
10
Annex B: Auditor Statement and Financial Statements
Jadwa Saudi Equity Index Fund Annual Report is available upon request free of charge and on www.jadwa.com
12
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.
