The Capital Markets Authority's (“CMA”) approval for the creation of the fund was given in letter number 859 dated Shawal 16, 1428 H (corresponding to October 3, 2007). During the current year, the terms and conditions of the fund were amended to create 'Unit Class D' with effect from 24 February 2020. The fund diversifies its investments in a Shariah compliant portfolio of sovereign, quasi-sovereign and corporate sukuk.
The excess funds available to the Fund from time to time are invested in short-term Murabaha deposits. When dealing with the Unitholders, the Manager regards the Fund as an independent unit of account. The Fund is subject to the Investment Fund Regulations (the “Regulations”) published by Capital Market Authority (“CMA”) on 3 Dhul Hijja 1427 H (corresponding to 24 December 2006), subsequently amended (the “Amended Regulations”) on 16 Sha' ban 1437 H (corresponding to 23 May 2016), which sets out the requirements for all funds within the Kingdom of Saudi Arabia.
The Fund Manager of the Fund is Jadwa Investment Company and administrator and custodian of the Fund is HSBC Saudi Arabia. However, in accordance with the Fund's terms and conditions, the Fund Manager may delegate or assign its duties to one or more of the financial institutions in the Kingdom of Saudi Arabia and overseas. In addition, the Fund Manager has the right to collectively charge all other expenses related to the management of the Fund, including but not limited to audit fees and legal fees subject to limits as set out in the Fund's terms and conditions.
These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) adopted in the Kingdom of Saudi Arabia and other standards and rulings issued by the Saudi Organization for Certified Public Accountants (“SOCPA”) and to comply to the applicable provisions of the Investment Fund Regulations issued by CMA, the Fund's terms and conditions and the Information Memorandum. MANAGED BY JADWA INVESTMENT COMPANY) NOTES TO THE FINANCIAL STATEMENTS.
BASIS OF MEASUREMENT
FUNCTIONAL AND PRESENTATION CURRENCY
USE OF JUDGMENTS AND ESTIMATES
SIGNIFICANT ACCOUNTING POLICIES
MANAGED BY JADWA INVESTMENT COMPANY) NOTES TO THE FINANCIAL STATEMENTS. MANAGED BY JADWA INVESTMENT COMPANY) NOTES TO THE FINANCIAL STATEMENTS.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) c) Special commission income and expense
For the purposes of this assessment, “principal” is defined as the fair value of the financial asset upon initial recognition. When assessing whether the contractual cash flows relate only to principal and interest payments, the Fund takes into account the contractual terms of the instrument. Financial assets are not reclassified after their initial recognition, except for the period after the Fund has changed its business model for managing financial assets.
The fund classifies its financial liabilities according to amortized value, unless it has determined the liabilities according to the fair value of the net profit. Financial assets under the FVTPL are initially recognized on the trade date, which is the date the fund becomes a party to the contractual terms of the instrument. Upon derecognition of a financial asset, the difference between the asset's book value (or the book value allocated to the part of the asset for which recognition was derecognised) and the compensation received (including any newly acquired asset, reduced by the newly assumed obligation) is recognized. in the statement of comprehensive income.
Any interest in such transferred financial assets created or retained by the fund is recognized as a separate asset or liability. The Fund enters into transactions whereby it transfers assets recognized in its statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are retained, the transferred assets are not deducted.
The Fund derecognizes a financial liability when its contractual obligations are settled or canceled or expire. Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Fund has a legally enforceable right to offset the amounts and intends to either settle them on a net basis or realize the asset and settle the liability theirs at the same time. In the absence of a primary market, in the most favorable market for the asset or liability When available, the Fund measures the fair value of an instrument using quoted prices in an active market for that instrument.
The Fund measures instruments quoted in an active market according to the official closing price on the relevant exchange where the instrument is traded. The valuation technique chosen incorporates all the factors that market participants would consider in pricing a transaction. The Fund recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change occurred.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) j) Distributions to the Unitholders
SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED) j) Distributions to Unitholders. MANAGED BY JADWA INVESTMENT COMPANY) NOTES TO THE ACCOUNTS.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) l) Standards issued but not yet effective
INVESTMENTS
RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED) Balances arising from above transactions with related parties are as follows
FINANCIAL INSTRUMENTS BY CATEGORY
RELATED PARTY TRANSACTIONS AND BALANCES (CONT'D) The balances resulting from the above related party transactions are as follows:. MANAGED BY JADWA INVESTMENT COMPANY) NOTES TO THE ANNUAL ACCOUNTS.
FINANCIAL RISK MANAGEMENT Exposure
FINANCIAL RISK MANAGEMENT (CONTINUED)
FINANCIAL RISK MANAGEMENT (CONT'D) a) Market risk (cont'd). MANAGED BY JADWA INVESTMENT COMPANY) NOTES TO THE ANNUAL ACCOUNTS. The sensitivity analysis shows how the net assets (equity) attributable to the Unitholders would have been affected by changes in the relevant risk variable that were reasonably possible on the reporting date. MANAGED BY JADWA INVESTMENT COMPANY) NOTES TO THE ANNUAL ACCOUNTS.
FINANCIAL RISK MANAGEMENT (CONTINUED) b) Credit risk (continued). MANAGED BY JADWA INVESTMENT COMPANY) NOTES TO THE ACCOUNTS. The fund has not set off any financial asset and financial liability in the statement of financial position. The fund has no impairment of financial assets, so no impairment has been given in these accounts.
FINANCIAL RISK MANAGEMENT (CONTINUED) c) Liquidity risk
FINANCIAL RISK MANAGEMENT (CONTINUED) c) Liquidity risk. MANAGED BY JADWA INVESTMENT COMPANY) NOTES TO THE FINANCIAL STATEMENTS.
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT (CONTINUED)
EVENTS AFTER THE END OF THE REPORTING PERIOD
LAST VALUATION DAY
APPROVAL OF THE FINANCIAL STATEMENTS
