MEFIC LOCAL EQUITY FUND Managed by MIDDLE EAST
MEFIC LOCAL EQUITY FUND Managed by MIDDLE EAST FINANCIAL INVESTMENT COMPANY INTERIM FINANCIAL STATEMENTS (Unaudited) FOR THE SIX-MONTHS PERIOD ENDED JUNE 30, 2017 together with the INDEPENDENT AUDITOR’S REVIEW REPORT
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company UNAUDITED INTERIM FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REVIEW REPORT For the six-months period ended 30 June 2017
INDEX
PAGE
Independent auditor’s review report
2
Interim balance sheet
3
Interim statement of income
4
Interim statement of cash flows
5
Interim statement of changes in net assets attributable to unitholders
6
Notes to the interim financial statements
7 - 11
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MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company INTERIM BALANCE SHEET As at 30 June 2017 (Saudi Riyals)
Notes
30 June 2017
30 June 2016
ASSETS Cash and cash equivalents Investments held for trading Dividend receivable Total assets
7 8
98,324 12,772,720 7,218 12,878,262
1,299,431 7,340,035 8,200 8,647,666
9 9
15,370 46,450 61,820
10,800 32,340 43,140
Net assets attributable to the Unitholders
12,816,442
8,604,526
Units in issue (Numbers)
143,005.63
109,632.78
89.62
78.48
LIABILITIES Management fee payable Other expenses payable Total liabilities
Net assets value – per unit (Saudi Riyals)
The accompanying notes 1 to 13 form an integral part of these financial statements. -3-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company INTERIM STATEMENT OF INCOME (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals)
Note INCOME Realised loss on disposal of investments held for trading Unrealised gain on investments held for trading Dividend income Other income Total income
30 June 2017
30 June 2016
(336,869) 829,658 251,855 24 744,668
(209,985) 370,598 180,991 52 341,656
92,032 92,847 184,879
(61,819) (61,819) (123,638)
559,789
218,018
EXPENSES Management fee Other expenses Total expenses NET INCOME FOR THE PERIOD
6 6
The accompanying notes 1 to 13 form an integral part of these financial statements. - 4-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company INTERIM STATEMENT OF CASH FLOWS (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals)
30 June 2017
30 June 2016
CASH FLOWS FROM OPERATING ACTIVITIES 559,789
218,018
336,869 (829,658) 67,000
209,985 (370,598) 57,405
Dividend receivable Management fee payable Other expenses payable Investments held for trading - net Net cash used in operating activities
(1218) (300) 5,922 (1,198,630) (1,127,226)
(8,200) (104) 10,870 (1,084,708) (1,024,737)
Net decrease in cash and cash equivalent Cash and cash equivalent at 1 January
(1,127,226) 1,225,550
(1,024,737) 2,324,168
98,324
1,299,431
Net income for the period Adjustments for: Realized loss on investments held for trading Unrealized gain on investments held for trading Changes in operating assets and liabilities:
Cash and cash equivalent at 30 June
The accompanying notes 1 to 13 form an integral part of these financial statements. - 5-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company INTERIM STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals)
30 June 2016
30 June 2017 Net assets at 1 January Net income for the period
12,256,653 559,789
Net assets value at 30 June
12,816,442
UNIT TRANSACTIONS Units at 1 January / 30 June
8,386,508 218,018 8,604,526
Numbers 143,005.63
109,632.78
There were no transactions with unitholders during the current and prior period.
The accompanying notes 1 to 13 form an integral part of these financial statements. - 6-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) For the six months period ended 30 June 2017 (Saudi Riyals) 1.
THE FUND AND ITS ACTIVITIES MEFIC Local Equity Fund (the “Fund”) is an open-ended investment fund established and managed through an agreement between Middle East Financial Investment Company (the “Fund Manager”) and the Fund Investors (the “Unitholders”). The Fund aims to provide long-term capital growth by investing in shares of saudi companies listed on the saudi stock market, listed funds, money market funds and IPO funds which are compliant with Shariah investment guidelines of the Fund manager‟s Shariah Committee. The Fund commenced its operations on 15 Rajab 1436H (corresponding to 03 May 2015G). The approval from Capital Market Authority (CMA) for the establishment of the Fund was granted in its letter number 15/2001/5/3 dated 21 Rabi Al Thani 1436H (Corresponding to 10 February 2015G). In dealing with the Unitholders, the Fund Manager considers the Fund as an independent accounting unit. Accordingly, the Fund Manager prepares separate financial statements for the Fund. The interim results of the Fund may not be an indicator of its annual results of the operations.
2.
REGULATORY AUTHORITY The Fund is governed by Investment Funds Regulations as amended by CMA upto 16 Sha‟aban 1437 H (corresponding to 23 May 2016 G) detailing requirements for investment funds operating in the Kingdom of Saudi Arabia.
3.
SUBSCRIPTION / REDEMPTION (DEALING DAY & VALUATION DAY) Subscription / redemption requests will be accepted on all days on which the Saudi Stock Market is open. The value of the Fund‟s portfolio is determined twice weekly on Monday and Thursday (each being a “Valuation Day”). The net asset value of the Fund for the purpose of purchase or sale of units is determined by dividing the net value of assets (fair value of the Fund‟s assets minus fund liabilities) by the total number of outstanding fund units on the relevant valuation day.
4.
BASIS OF PREPARATION
a)
Statement of compliance These interim financial statements have been prepared in accordance with generally accepted accounting standards in the Kingdom of Saudi Arabia issued by the Saudi Organization of Certified Public Accountants (“SOCPA”), the Investment Funds Regulations as published by CMA in Saudi Arabia and the Fund‟s terms and conditions.
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MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) For the six months period ended 30 June 2017 (Saudi Riyals) BASIS OF PREPARATION (Continued) b)
Basis of measurement These interim financial statements have been prepared under the historical cost convention except for investments held for trading which are carried at fair value, using the accrual basis of accounting and the going concern concept.
c)
Functional and presentation currency These interim financial statements have been presented in Saudi Riyals (SR), which is the functional currency of the Fund.
d)
Use of estimates and judgment The preparation of these interim financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future years affected.
5.
SIGNIFICANT ACCOUNTING POLICIES The significant accounting and risk management policies used in the preparation of these interim financial statements are consistent with those used and disclosed in the financial statements for the year ended 31 December 2016.
6.
MANAGEMENT FEE AND OTHER CHARGES The Fund Manager charges each investor a subscription fee of a percentage not exceeding 1.5% of the subscribed amount to cover administration costs and is netted off against proceeds from issuance of units. Under the terms and conditions of the Fund, the Fund is liable to pay the following expenses to the Fund Manager: - Management fee at the rate of 1.50% per annum of the net assets value of the Fund at each valuation day, payable monthly. - Other expenses are charged at the rate of 1.50% of the net asset value of the fund at each valuation day, payable monthly.
7.
CASH AND CASH EQUIVALENTS As at 30 June 2017, the cash and cash equivalent include an amount of SR 0.012 million (30 June 2016: 1.28 million) which is held with the Fund Manager as custodian. The Fund Manager is authorized to utilize these funds for the purpose of trading in securities on behalf of the Fund. The remaining balance is held in the current account in a local bank.
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MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals) 8.
INVESTMENTS HELD FOR TRADING Notes Listed equity investments Investment in listed mutual fund units
8.1 & 8.2
30 June 2017
30 June 2016
12,772,720 -
6,424,230 915,805
12,772,720
7,340,035
8.1 The sector-wise composition of investments held for trading is summarized as follows: Fair value as at Retailing Food & Staples Retailing Insurance Transportation Food & Beverages Commercial & Professional Services Energy Banks Materials Consumer Services Health Care Equipment & Services Real Estate Management & Development Telecommunication Services
30 June 2017 700,330 286,500 1,509,717 324,000 1,192,813 2,457,067 3,620,139 200,880 1,064,082 721,956 695,237
30 June 2016* 400,000 609,316 95,668 644,032 295,500 414,245 1,160,289 1,284,183 1,114,230 406,767
12,772,721
6,424,230
*The Fund has rearranged comparatives to conform to latest sector wise composition of Saudi Stock Market. 8.2 As at 30 June 2017, cost of the above-mentioned investments held for trading amounted to SR 11.23 million (30 June 2016: SR 6.12 million). The above investments are in the equity shares quoted on Saudi Stock Market. 9.
TRANSACTIONS AND BALANCES WITH RELATED PARTIES Related parties of the Fund include the Unitholders, the Fund Manager and other funds managed by the Fund manager. In the ordinary course of its activities, the Fund transacts business with related parties. Related party transactions are in accordance with the terms and conditions of the Fund. All transactions with related parties are carried out based on mutually agreed prices under formal agreement. Related party transactions for the period are described as under: Related party Middle East Financial Investment Company (“the Fund Manager”)
Nature of transaction Management fee Other expenses
For the period 30 June 2016 30 June 2017 61,819 92,032 92,032
61,819
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MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals) TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued) The above transactions during the period resulted in the following balances due to related party: Related party Middle East Financial Investment Company (“the Fund Manager”)
Nature of balance Management fee payable Other expenses payable
30 June 2017
30 June 2016
15,370
10,800
46,450
32,340
10. FINANCIAL RISK MANAGEMENT Credit risk Credit risk is the risk that one party to a financial instrument fails to discharge an obligation and cause other party to incur a financial loss. The Fund is exposed to credit risk on its bank balance and dividend receivable. However, the bank balance is maintained with reputed local bank in the Kingdom of Saudi Arabia and the receivable is against dividend from reputable companies listed in the Kingdom of Saudi Arabia. Therefore, the Fund Manager believes that the Fund does not have any significant credit risk. Equity price risk Equity price risk is the risk that the fair value of equity investments will decrease as a result of changes in the levels of equity indices and the value of individual stocks. The Fund is exposed to equity price risk arising from its investments in equity shares. The Fund Manager endeavors to minimize the risk through diversification across various sectors of the Saudi stock market. Further, the Fund Manager has established risk guidelines to manage its equity price risk. Liquidity risk Liquidity risk is the risk that the Fund may encounter difficulty in generating funds to meet commitments associated with financial liabilities which comprise of fund management and other expenses payable. The Fund Manager monitors the liquidity requirements on a regular basis and ensures that sufficient funds are available to meet any commitments as they arise. Currency risk Currency risk is the risk that the value of a financial instrument may fluctuate due to change in the foreign exchange rates. The financial instruments of the Fund i.e. cash and payables are denominated in Saudi Arabian Riyals. Accordingly, the Fund is not exposed to any currency risk.
- 10-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals) 11. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial instruments comprise financial assets and financial liabilities. The Fund’s financial assets consist of investments held for trading and cash at bank; its financial liabilities are fees payable. Investments held for trading are carried at fair value. The fair value of other financial instruments is not materially different from their carrying values. 12. LAST VALUATION DATE The last valuation date of net asset value of the fund for the period was 30 June 2017 (2016: 30 June 2016). 13. APPROVAL OF INTERIM FINANCIAL STATEMENTS These interim financial statements were approved by the Fund’s Board on 11 Dhul Qa’ada 1438H corresponding to 3 August 2017G.
- 11-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company UNAUDITED INTERIM FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REVIEW REPORT For the six-months period ended 30 June 2017
INDEX
PAGE
Independent auditor’s review report
2
Interim balance sheet
3
Interim statement of income
4
Interim statement of cash flows
5
Interim statement of changes in net assets attributable to unitholders
6
Notes to the interim financial statements
7 - 11
-1-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company INTERIM BALANCE SHEET As at 30 June 2017 (Saudi Riyals)
Notes
30 June 2017
30 June 2016
ASSETS Cash and cash equivalents Investments held for trading Dividend receivable Total assets
7 8
98,324 12,772,720 7,218 12,878,262
1,299,431 7,340,035 8,200 8,647,666
9 9
15,370 46,450 61,820
10,800 32,340 43,140
Net assets attributable to the Unitholders
12,816,442
8,604,526
Units in issue (Numbers)
143,005.63
109,632.78
89.62
78.48
LIABILITIES Management fee payable Other expenses payable Total liabilities
Net assets value – per unit (Saudi Riyals)
The accompanying notes 1 to 13 form an integral part of these financial statements. -3-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company INTERIM STATEMENT OF INCOME (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals)
Note INCOME Realised loss on disposal of investments held for trading Unrealised gain on investments held for trading Dividend income Other income Total income
30 June 2017
30 June 2016
(336,869) 829,658 251,855 24 744,668
(209,985) 370,598 180,991 52 341,656
92,032 92,847 184,879
(61,819) (61,819) (123,638)
559,789
218,018
EXPENSES Management fee Other expenses Total expenses NET INCOME FOR THE PERIOD
6 6
The accompanying notes 1 to 13 form an integral part of these financial statements. - 4-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company INTERIM STATEMENT OF CASH FLOWS (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals)
30 June 2017
30 June 2016
CASH FLOWS FROM OPERATING ACTIVITIES 559,789
218,018
336,869 (829,658) 67,000
209,985 (370,598) 57,405
Dividend receivable Management fee payable Other expenses payable Investments held for trading - net Net cash used in operating activities
(1218) (300) 5,922 (1,198,630) (1,127,226)
(8,200) (104) 10,870 (1,084,708) (1,024,737)
Net decrease in cash and cash equivalent Cash and cash equivalent at 1 January
(1,127,226) 1,225,550
(1,024,737) 2,324,168
98,324
1,299,431
Net income for the period Adjustments for: Realized loss on investments held for trading Unrealized gain on investments held for trading Changes in operating assets and liabilities:
Cash and cash equivalent at 30 June
The accompanying notes 1 to 13 form an integral part of these financial statements. - 5-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company INTERIM STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals)
30 June 2016
30 June 2017 Net assets at 1 January Net income for the period
12,256,653 559,789
Net assets value at 30 June
12,816,442
UNIT TRANSACTIONS Units at 1 January / 30 June
8,386,508 218,018 8,604,526
Numbers 143,005.63
109,632.78
There were no transactions with unitholders during the current and prior period.
The accompanying notes 1 to 13 form an integral part of these financial statements. - 6-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) For the six months period ended 30 June 2017 (Saudi Riyals) 1.
THE FUND AND ITS ACTIVITIES MEFIC Local Equity Fund (the “Fund”) is an open-ended investment fund established and managed through an agreement between Middle East Financial Investment Company (the “Fund Manager”) and the Fund Investors (the “Unitholders”). The Fund aims to provide long-term capital growth by investing in shares of saudi companies listed on the saudi stock market, listed funds, money market funds and IPO funds which are compliant with Shariah investment guidelines of the Fund manager‟s Shariah Committee. The Fund commenced its operations on 15 Rajab 1436H (corresponding to 03 May 2015G). The approval from Capital Market Authority (CMA) for the establishment of the Fund was granted in its letter number 15/2001/5/3 dated 21 Rabi Al Thani 1436H (Corresponding to 10 February 2015G). In dealing with the Unitholders, the Fund Manager considers the Fund as an independent accounting unit. Accordingly, the Fund Manager prepares separate financial statements for the Fund. The interim results of the Fund may not be an indicator of its annual results of the operations.
2.
REGULATORY AUTHORITY The Fund is governed by Investment Funds Regulations as amended by CMA upto 16 Sha‟aban 1437 H (corresponding to 23 May 2016 G) detailing requirements for investment funds operating in the Kingdom of Saudi Arabia.
3.
SUBSCRIPTION / REDEMPTION (DEALING DAY & VALUATION DAY) Subscription / redemption requests will be accepted on all days on which the Saudi Stock Market is open. The value of the Fund‟s portfolio is determined twice weekly on Monday and Thursday (each being a “Valuation Day”). The net asset value of the Fund for the purpose of purchase or sale of units is determined by dividing the net value of assets (fair value of the Fund‟s assets minus fund liabilities) by the total number of outstanding fund units on the relevant valuation day.
4.
BASIS OF PREPARATION
a)
Statement of compliance These interim financial statements have been prepared in accordance with generally accepted accounting standards in the Kingdom of Saudi Arabia issued by the Saudi Organization of Certified Public Accountants (“SOCPA”), the Investment Funds Regulations as published by CMA in Saudi Arabia and the Fund‟s terms and conditions.
- 7-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) For the six months period ended 30 June 2017 (Saudi Riyals) BASIS OF PREPARATION (Continued) b)
Basis of measurement These interim financial statements have been prepared under the historical cost convention except for investments held for trading which are carried at fair value, using the accrual basis of accounting and the going concern concept.
c)
Functional and presentation currency These interim financial statements have been presented in Saudi Riyals (SR), which is the functional currency of the Fund.
d)
Use of estimates and judgment The preparation of these interim financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future years affected.
5.
SIGNIFICANT ACCOUNTING POLICIES The significant accounting and risk management policies used in the preparation of these interim financial statements are consistent with those used and disclosed in the financial statements for the year ended 31 December 2016.
6.
MANAGEMENT FEE AND OTHER CHARGES The Fund Manager charges each investor a subscription fee of a percentage not exceeding 1.5% of the subscribed amount to cover administration costs and is netted off against proceeds from issuance of units. Under the terms and conditions of the Fund, the Fund is liable to pay the following expenses to the Fund Manager: - Management fee at the rate of 1.50% per annum of the net assets value of the Fund at each valuation day, payable monthly. - Other expenses are charged at the rate of 1.50% of the net asset value of the fund at each valuation day, payable monthly.
7.
CASH AND CASH EQUIVALENTS As at 30 June 2017, the cash and cash equivalent include an amount of SR 0.012 million (30 June 2016: 1.28 million) which is held with the Fund Manager as custodian. The Fund Manager is authorized to utilize these funds for the purpose of trading in securities on behalf of the Fund. The remaining balance is held in the current account in a local bank.
- 8-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals) 8.
INVESTMENTS HELD FOR TRADING Notes Listed equity investments Investment in listed mutual fund units
8.1 & 8.2
30 June 2017
30 June 2016
12,772,720 -
6,424,230 915,805
12,772,720
7,340,035
8.1 The sector-wise composition of investments held for trading is summarized as follows: Fair value as at Retailing Food & Staples Retailing Insurance Transportation Food & Beverages Commercial & Professional Services Energy Banks Materials Consumer Services Health Care Equipment & Services Real Estate Management & Development Telecommunication Services
30 June 2017 700,330 286,500 1,509,717 324,000 1,192,813 2,457,067 3,620,139 200,880 1,064,082 721,956 695,237
30 June 2016* 400,000 609,316 95,668 644,032 295,500 414,245 1,160,289 1,284,183 1,114,230 406,767
12,772,721
6,424,230
*The Fund has rearranged comparatives to conform to latest sector wise composition of Saudi Stock Market. 8.2 As at 30 June 2017, cost of the above-mentioned investments held for trading amounted to SR 11.23 million (30 June 2016: SR 6.12 million). The above investments are in the equity shares quoted on Saudi Stock Market. 9.
TRANSACTIONS AND BALANCES WITH RELATED PARTIES Related parties of the Fund include the Unitholders, the Fund Manager and other funds managed by the Fund manager. In the ordinary course of its activities, the Fund transacts business with related parties. Related party transactions are in accordance with the terms and conditions of the Fund. All transactions with related parties are carried out based on mutually agreed prices under formal agreement. Related party transactions for the period are described as under: Related party Middle East Financial Investment Company (“the Fund Manager”)
Nature of transaction Management fee Other expenses
For the period 30 June 2016 30 June 2017 61,819 92,032 92,032
61,819
- 9-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals) TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued) The above transactions during the period resulted in the following balances due to related party: Related party Middle East Financial Investment Company (“the Fund Manager”)
Nature of balance Management fee payable Other expenses payable
30 June 2017
30 June 2016
15,370
10,800
46,450
32,340
10. FINANCIAL RISK MANAGEMENT Credit risk Credit risk is the risk that one party to a financial instrument fails to discharge an obligation and cause other party to incur a financial loss. The Fund is exposed to credit risk on its bank balance and dividend receivable. However, the bank balance is maintained with reputed local bank in the Kingdom of Saudi Arabia and the receivable is against dividend from reputable companies listed in the Kingdom of Saudi Arabia. Therefore, the Fund Manager believes that the Fund does not have any significant credit risk. Equity price risk Equity price risk is the risk that the fair value of equity investments will decrease as a result of changes in the levels of equity indices and the value of individual stocks. The Fund is exposed to equity price risk arising from its investments in equity shares. The Fund Manager endeavors to minimize the risk through diversification across various sectors of the Saudi stock market. Further, the Fund Manager has established risk guidelines to manage its equity price risk. Liquidity risk Liquidity risk is the risk that the Fund may encounter difficulty in generating funds to meet commitments associated with financial liabilities which comprise of fund management and other expenses payable. The Fund Manager monitors the liquidity requirements on a regular basis and ensures that sufficient funds are available to meet any commitments as they arise. Currency risk Currency risk is the risk that the value of a financial instrument may fluctuate due to change in the foreign exchange rates. The financial instruments of the Fund i.e. cash and payables are denominated in Saudi Arabian Riyals. Accordingly, the Fund is not exposed to any currency risk.
- 10-
MEFIC LOCAL EQUITY FUND Managed by Middle East Financial Investment Company NOTES TO THE INTERIM FINANCIAL STATEMENTS (Unaudited) For the six-months period ended 30 June 2017 (Saudi Riyals) 11. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial instruments comprise financial assets and financial liabilities. The Fund’s financial assets consist of investments held for trading and cash at bank; its financial liabilities are fees payable. Investments held for trading are carried at fair value. The fair value of other financial instruments is not materially different from their carrying values. 12. LAST VALUATION DATE The last valuation date of net asset value of the fund for the period was 30 June 2017 (2016: 30 June 2016). 13. APPROVAL OF INTERIM FINANCIAL STATEMENTS These interim financial statements were approved by the Fund’s Board on 11 Dhul Qa’ada 1438H corresponding to 3 August 2017G.
- 11-
