MEFIC Murabaha SAR Fund - June 30, 2017
MEFIC Murabaha SAR Fund ‐ June 30, 2017 اﻟﺘﻘﺮﻳﺮ اﻟﻨﺼﻒ ﺳﻨﻮي ﻟﺼﻨﺪوق ﻣﻴﻔﻚ ﻟﻠﻤﺮاﺑﺤﺔ ﺑﺎﻟﺮﻳﺎل اﻟﺴﻌﻮدي Article 71 A
Top Ten Holdings
B
Name of Stock
Fee Details
% Holding in the stock
Name
% of Total NAV
i Sukuk Investment 1
6.77%
i Management Fees
ii Sukuk Investment 2
4.84%
ii Other Fees
0.5% 0.0%
iii Murabaha Investment 1
4.81%
iii Total Expenses Ratio
0.5%
iv Murabaha Investment 2
4.81%
v Murabaha Investment 3
4.78%
vi Murabaha Investment 4
4.13%
C
vii Murabaha Investment 5
3.84%
Amount
%
Profit Distribution
Nil
0.00%
D
Dealing Expenses in the Fund
Nil
0.00%
5,153,284.08
0.98%
Nil
0.00%
viii Murabaha Investment 6
3.84%
E
Fund Manager Investment in the Fund
ix Sukuk Investment 3
3.03%
H
Fund Borrowing %
x Sukuk Investment 4 * Stock holdings as at June 30, 2017
2.97% G
Fund & Index Performance (2017)
F
Standard Measure of Risk
i Standard Deviation – Fund
0.41%
YTD
Benchmark
Alpha
ii Standard Deviation -Benchmark
0.02%
2.44
1.2
1.24
** the information in based on the first half year 2017
Annex 5 A
Investment fund information i Name of the Fund
MEFIC SAR MURABAHA FUND To provide capital increase and liquidity through investment in low risk money market instruments which are shariah compliant and provide a return above 3 month SAIBOR Terms & Conditions Available on Tadawul Website No Distribution of Dividend Fund Annual Financial Report as of 31 Dec 2016 is available on Tadawul website and available on request to investors at free of charge
ii Investment Objective iii Policy & Procedure iv Distribution of Income & Gain Policy v Statement of Fund Report B Fund Performance Table
1 Year 2.79%
Return
Annual Return
NAV Unit Price NAV High NAV Low Number of Units Expense Ratio Income distribution
2011 0.80%
3 Year 2.15% 2012 1.16%
2013 1.6%
5 Year 2.02% 2014 2.3%
2015 1.39%
Inception 1.68% 2016 2.80%
1H 2017 2.44%
2013 86,838,046 103.08 103.08 101.43 842,395 0.51% 0.00%
2014 361,810,636 105.47 105.48 103.07 3,430,437 0.51% 0.00%
2015 570,959,702 106.94 106.94 105.47 5,338,989 0.51% 0.00%
2016 292,987,318 109.94 109.94 106.94 2,664,906 0.51% 0.00%
2014 826,260 0 0.5%
2015 2,359,443 524 0.5%
2016 2,157,684 1,528 0.5%
1H 2017 1,190,523 0 0.5%
C Fund Fees and Expenses
Management Fee Other Expense Total Expense Ratio
Page 1 of 2
1H 2017 524,238,607 111.27 111.27 109.94 4,711,208 0.50% 0.00%
MEFIC Murabaha SAR Fund ‐ June 30, 2017 اﻟﺘﻘﺮﻳﺮ اﻟﻨﺼﻒ ﺳﻨﻮي ﻟﺼﻨﺪوق ﻣﻴﻔﻚ ﻟﻠﻤﺮاﺑﺤﺔ ﺑﺎﻟﺮﻳﺎل اﻟﺴﻌﻮدي D Fund Manager Information
Name & Address Investment Activities Investment Fund Performance Material Changes
MEFIC Capital, 7758 King Fahed Road Olaya Riyadh 12333 MEFIC Capital is an Authorized Person regulated by CMA with License # 37-060209. MEFIC Capital’s investment management business focuses on the management of public-listed funds, private placements, and real estate funds. MEFIC offers broad range of investment products to meet the varying investment needs and risk profiles of both institutional and retail investors. As at 31-Dec-2016, MEFIC had assets under management (AUM) of SAR 2.2bn, and MEFIC funds outperformed benchmarks during the period under review.
The fund generated an annualized return of 2.44% as compared to benchmark return of 1.2%, Aplha of 1.24% None
E Custodian Information
Name & Address Custodian Responsibilites Custodian Opnion
MEFIC Capital, 7758 King Fahed Road Olaya Riyadh 12333 All necessary administrative measures regarding custody of assets; Taking custody & protecting fund assets MEFIC verifies that the below have been done in accordance with IFR & Funds’ Terms and Conditions 1. Issuance, transfer and redemption of the units 2. Valuation and calculated the NAV price of units 3. Not breached any of the investment restrictions, limitations and borrowing powers
F Auditor Information
Name & Address
Auditor Opinion
BDO Dr. Mohamed Al-Amri & Co. P.O. Box 8736, Riyadh 11492, Kingdom of Saudi Arabia The financial statements have been prepared and audited in accordance with SOCPA standards, the Investment Funds Regulations, the fund's terms and conditions 1. Financial statements give a true and fair view of the net income and the net gains or losses of the investment fund’s assets in that accounting period; T 2. True and fair view of the financial position of the investment fund at the end of the period.
mefic.com.sa
Page 2 of 2
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MEFIC SAR MURABAHA FUND Semi Annual Performance Report As of 30 June 2017 Fund Board of Directors FUND OBJECTIVE The main objective of the fund is to achieve capital increase and the provision of liquidity through investment in low-risk Murabaha based trade transactions that are compliant with Shariah principles and achieve a return above the benchmark SIBOR 3 months. MONEY MARKET REVIEW During 1H17, interest rates in Saudi Arabia gradually corrected from the high’s of 2016 amid increased liquidity in the system and reduced government borrowings. The three month Saudi Interbank Offered Rate (SAIBOR) fell from 2.03% at the start of 2017 to stabilize at 1.79%. Improving Macro’s and Bond inflows (Oct’16 of USD 17.5bn & USD 9bn in Apr’17) have helped create excess liquidity in the system, with banks excess reserves to total assets reaching a high of 5% in mid’17 from average of 2% in FY16. Further, with excess liquidity in the market, banks have reduced pressure on their ADRs allowing them to offer low term deposit rates of 0.8-1% (from 3-4% in FY16). Regarding debt, the Kingdom continued to tap into the international bond market with a USD 9bn Islamic bond issued in April’17 with maturities ranging from 5 to 10 years. Further, the Kingdom continued its local debt issuance, after a hiatus of nearly 3 quarters, issuing a SAR 17bn Islamic bond in July’17 (with the order book reaching SAR 51bn). On the global front, the Fed continued its hawkish stance on the base rate, raising the Fed Funds Rate by 25bps in Mar’17 & Jun’17, respectively. As Saibor was already trading at a premium to the Fed funds rate compared to its historical average (spread of 1.4% compared to historical average of 0.83%), the impact on Saibor for both rate hikes were limited. However, the variance between both rates are now back to their historical levels; hence, expectations of a further rate hike (3 rate hikes projected by the Fed for FY17; 2 undertaken) is likely to keep pressure on the money market rates in the Kingdom. FUND PERFORMANCE TABLE
Page 1 of 2
Name
1 Year
3 Years
5 Years
0.22
0.23
0.26
Beta
0.72
0.59
0.77
Correlation
0.79
0.77
0.62
Information Ratio
2.12
1.68
1.24
R/R Ratio
3.65
2.72
2.32
R-Square
0.43
0.15
0.12
Sharpe Ratio
1.30
1.40
1.09
Tracking Error
0.04
0.04
0.06
Treynor Ratio
0.08
0.10
0.09
Standard Deviation
FUND FINANCIAL STATEMENTS The audited financial statements for the fund have been prepared & uploaded on the Tadawul Website, within the specified time frame, in compliance with the IFR. BOARD MEETING DISCUSSION – KEY TAKEAWAYS o o o o o o o
The fund performance has been reviewed and it was realised that our Murabaha fund has achieved the second highest performance amongst peer 2016 with a performance 2.8% & in the third position YTD. It was mentioned to the Fund Board that in the category we have been amongst the top performing managers for the last four years. The asset under management has increased to SAR 531mn. With regards to the implementation of the recently announced IFR regulations, Money market funds must have a foreseen average of the date of maturity not exceeding (120) calendar days. As per the new regulations, the fund manager is required to have at least 10% of the fund invested in securities that have a maturity period of less than/equal to (7) days or liquidity equaling at least 10% of the fund’s NAV. When the regulations are implemented in May’17, all the funds throughout the Kingdom will be affected in a similar manner. It is confirmed to the Fund Board, in accordance the Article 13 of IRF, that the Fund has no conflict of interest.
Page 2 of 2
Top Ten Holdings
B
Name of Stock
Fee Details
% Holding in the stock
Name
% of Total NAV
i Sukuk Investment 1
6.77%
i Management Fees
ii Sukuk Investment 2
4.84%
ii Other Fees
0.5% 0.0%
iii Murabaha Investment 1
4.81%
iii Total Expenses Ratio
0.5%
iv Murabaha Investment 2
4.81%
v Murabaha Investment 3
4.78%
vi Murabaha Investment 4
4.13%
C
vii Murabaha Investment 5
3.84%
Amount
%
Profit Distribution
Nil
0.00%
D
Dealing Expenses in the Fund
Nil
0.00%
5,153,284.08
0.98%
Nil
0.00%
viii Murabaha Investment 6
3.84%
E
Fund Manager Investment in the Fund
ix Sukuk Investment 3
3.03%
H
Fund Borrowing %
x Sukuk Investment 4 * Stock holdings as at June 30, 2017
2.97% G
Fund & Index Performance (2017)
F
Standard Measure of Risk
i Standard Deviation – Fund
0.41%
YTD
Benchmark
Alpha
ii Standard Deviation -Benchmark
0.02%
2.44
1.2
1.24
** the information in based on the first half year 2017
Annex 5 A
Investment fund information i Name of the Fund
MEFIC SAR MURABAHA FUND To provide capital increase and liquidity through investment in low risk money market instruments which are shariah compliant and provide a return above 3 month SAIBOR Terms & Conditions Available on Tadawul Website No Distribution of Dividend Fund Annual Financial Report as of 31 Dec 2016 is available on Tadawul website and available on request to investors at free of charge
ii Investment Objective iii Policy & Procedure iv Distribution of Income & Gain Policy v Statement of Fund Report B Fund Performance Table
1 Year 2.79%
Return
Annual Return
NAV Unit Price NAV High NAV Low Number of Units Expense Ratio Income distribution
2011 0.80%
3 Year 2.15% 2012 1.16%
2013 1.6%
5 Year 2.02% 2014 2.3%
2015 1.39%
Inception 1.68% 2016 2.80%
1H 2017 2.44%
2013 86,838,046 103.08 103.08 101.43 842,395 0.51% 0.00%
2014 361,810,636 105.47 105.48 103.07 3,430,437 0.51% 0.00%
2015 570,959,702 106.94 106.94 105.47 5,338,989 0.51% 0.00%
2016 292,987,318 109.94 109.94 106.94 2,664,906 0.51% 0.00%
2014 826,260 0 0.5%
2015 2,359,443 524 0.5%
2016 2,157,684 1,528 0.5%
1H 2017 1,190,523 0 0.5%
C Fund Fees and Expenses
Management Fee Other Expense Total Expense Ratio
Page 1 of 2
1H 2017 524,238,607 111.27 111.27 109.94 4,711,208 0.50% 0.00%
MEFIC Murabaha SAR Fund ‐ June 30, 2017 اﻟﺘﻘﺮﻳﺮ اﻟﻨﺼﻒ ﺳﻨﻮي ﻟﺼﻨﺪوق ﻣﻴﻔﻚ ﻟﻠﻤﺮاﺑﺤﺔ ﺑﺎﻟﺮﻳﺎل اﻟﺴﻌﻮدي D Fund Manager Information
Name & Address Investment Activities Investment Fund Performance Material Changes
MEFIC Capital, 7758 King Fahed Road Olaya Riyadh 12333 MEFIC Capital is an Authorized Person regulated by CMA with License # 37-060209. MEFIC Capital’s investment management business focuses on the management of public-listed funds, private placements, and real estate funds. MEFIC offers broad range of investment products to meet the varying investment needs and risk profiles of both institutional and retail investors. As at 31-Dec-2016, MEFIC had assets under management (AUM) of SAR 2.2bn, and MEFIC funds outperformed benchmarks during the period under review.
The fund generated an annualized return of 2.44% as compared to benchmark return of 1.2%, Aplha of 1.24% None
E Custodian Information
Name & Address Custodian Responsibilites Custodian Opnion
MEFIC Capital, 7758 King Fahed Road Olaya Riyadh 12333 All necessary administrative measures regarding custody of assets; Taking custody & protecting fund assets MEFIC verifies that the below have been done in accordance with IFR & Funds’ Terms and Conditions 1. Issuance, transfer and redemption of the units 2. Valuation and calculated the NAV price of units 3. Not breached any of the investment restrictions, limitations and borrowing powers
F Auditor Information
Name & Address
Auditor Opinion
BDO Dr. Mohamed Al-Amri & Co. P.O. Box 8736, Riyadh 11492, Kingdom of Saudi Arabia The financial statements have been prepared and audited in accordance with SOCPA standards, the Investment Funds Regulations, the fund's terms and conditions 1. Financial statements give a true and fair view of the net income and the net gains or losses of the investment fund’s assets in that accounting period; T 2. True and fair view of the financial position of the investment fund at the end of the period.
mefic.com.sa
Page 2 of 2
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MEFIC SAR MURABAHA FUND Semi Annual Performance Report As of 30 June 2017 Fund Board of Directors FUND OBJECTIVE The main objective of the fund is to achieve capital increase and the provision of liquidity through investment in low-risk Murabaha based trade transactions that are compliant with Shariah principles and achieve a return above the benchmark SIBOR 3 months. MONEY MARKET REVIEW During 1H17, interest rates in Saudi Arabia gradually corrected from the high’s of 2016 amid increased liquidity in the system and reduced government borrowings. The three month Saudi Interbank Offered Rate (SAIBOR) fell from 2.03% at the start of 2017 to stabilize at 1.79%. Improving Macro’s and Bond inflows (Oct’16 of USD 17.5bn & USD 9bn in Apr’17) have helped create excess liquidity in the system, with banks excess reserves to total assets reaching a high of 5% in mid’17 from average of 2% in FY16. Further, with excess liquidity in the market, banks have reduced pressure on their ADRs allowing them to offer low term deposit rates of 0.8-1% (from 3-4% in FY16). Regarding debt, the Kingdom continued to tap into the international bond market with a USD 9bn Islamic bond issued in April’17 with maturities ranging from 5 to 10 years. Further, the Kingdom continued its local debt issuance, after a hiatus of nearly 3 quarters, issuing a SAR 17bn Islamic bond in July’17 (with the order book reaching SAR 51bn). On the global front, the Fed continued its hawkish stance on the base rate, raising the Fed Funds Rate by 25bps in Mar’17 & Jun’17, respectively. As Saibor was already trading at a premium to the Fed funds rate compared to its historical average (spread of 1.4% compared to historical average of 0.83%), the impact on Saibor for both rate hikes were limited. However, the variance between both rates are now back to their historical levels; hence, expectations of a further rate hike (3 rate hikes projected by the Fed for FY17; 2 undertaken) is likely to keep pressure on the money market rates in the Kingdom. FUND PERFORMANCE TABLE
Page 1 of 2
Name
1 Year
3 Years
5 Years
0.22
0.23
0.26
Beta
0.72
0.59
0.77
Correlation
0.79
0.77
0.62
Information Ratio
2.12
1.68
1.24
R/R Ratio
3.65
2.72
2.32
R-Square
0.43
0.15
0.12
Sharpe Ratio
1.30
1.40
1.09
Tracking Error
0.04
0.04
0.06
Treynor Ratio
0.08
0.10
0.09
Standard Deviation
FUND FINANCIAL STATEMENTS The audited financial statements for the fund have been prepared & uploaded on the Tadawul Website, within the specified time frame, in compliance with the IFR. BOARD MEETING DISCUSSION – KEY TAKEAWAYS o o o o o o o
The fund performance has been reviewed and it was realised that our Murabaha fund has achieved the second highest performance amongst peer 2016 with a performance 2.8% & in the third position YTD. It was mentioned to the Fund Board that in the category we have been amongst the top performing managers for the last four years. The asset under management has increased to SAR 531mn. With regards to the implementation of the recently announced IFR regulations, Money market funds must have a foreseen average of the date of maturity not exceeding (120) calendar days. As per the new regulations, the fund manager is required to have at least 10% of the fund invested in securities that have a maturity period of less than/equal to (7) days or liquidity equaling at least 10% of the fund’s NAV. When the regulations are implemented in May’17, all the funds throughout the Kingdom will be affected in a similar manner. It is confirmed to the Fund Board, in accordance the Article 13 of IRF, that the Fund has no conflict of interest.
Page 2 of 2
