AlAhli Saudi Trading Equity Fund's investment objective is to achieve long-term capital growth and income distribution by investing in GCC equity markets with good profit growth potential in accordance with Shariah guidelines issued by the Fund's Shariah Committee. The Fund may also invest in mutual funds that invest in the Saudi or GCC markets. The fund manager has exercised the voting right, for more details see the Annex "Exercise of the voting right".
The board of directors consists of the following members, who are appointed by the fund manager and approved by the capital market authority. As a result, the fund manager sought to increase cash levels until better earnings prospects became clearer. The fund was 205 basis points below the benchmark.
S ﺭنﺜ!SAﻻﺍ The fund does not invest substantially in other investment funds. By participating in Amlak International's Initial Public Offering for real estate financing, while AlAhli Capital is the IPO manager, the fund's board approval was obtained. The custodian will be liable to the fund manager and the unit owner for any loss caused to the investment fund due to the custodian's fraud, negligence, misconduct or willful default.
The custodian is responsible for custody and protection of the assets of the fund on behalf of the unitholders and for taking all necessary administrative measures in relation to the safekeeping of the assets of the fund. The Fund Manager acknowledges that the responsibilities of the depositary do not include ensuring compliance by the Fund Manager with the contents of subparagraphs (a,b,c) of paragraph (d-3) of Appendix 5 of the Investment Fund Regulations “IFR”. ﻕﻭﺪﻨﺻ ﻲﻠﻫﻷﺍ ﻞﺧﺪﻟﺍﻭ ﻮﻤﻨﻠﻟ ﻲﺠﻴﻠﺨﻟﺍ. AlAhli GCC Growth and Income Fund (the “Fund”) is an open-ended Sharia compliant investment fund managed by NCB Capital Company (the “Fund Manager”), a subsidiary of The National Commercial Bank (the “Bank”) , for the benefit of the Unitholders of the Fund.
The Fund was created according to Article 30 of the Investment Fund Regulation (Regulations) issued by the Capital Market Authority (CMA). The Fund has been established with the objective of providing investors with long-term capital growth through investments in GCC capital markets companies in accordance with Shariah guidelines issued by the Fund's Shariah Board. The terms and conditions of the Fund were initially approved by the Saudi Central Bank (SAMA) and subsequently approved by the CMA through their letter dated 18 Dhul Hijjah 1429H (corresponding to 16 December 2008).
The Fund is governed by the Regulations in terms of decision number dated 3 Dhul Hijja 1427H (corresponding to 24 December 2006) as amended by the Decision No.
BASIS OF ACCOUNTING
BASIS OF MEASUREMENT
FUNCTIONAL AND PRESENTATION CURRENCY
CHANGES IN FUND’S TERMS AND CONDITIONS There is no change in the terms and conditions of the Fund during 2020
CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued) Fair value estimation (continued)
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES (continued) 3 Financial assets and liabilities (continued)
When assessing whether the contractual cash flows are solely payments of principal and commissions, 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 at amortized cost unless it has classified liabilities at FVTPL.
Financial assets at FVTPL are initially recognized on the trade date, which is the date on which the Fund becomes a party to the contractual terms of the instrument. The Fund removes a financial asset from the balance sheet when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction that involves substantially all the risks and rewards of ownership of the financial asset are transferred. or in which the Fund does not transfer or retain substantially all the risks and rewards of ownership and does not retain control over the financial asset. Any commission on such transferred financial assets created or retained by the Fund will be recognized as a separate asset or liability.
The Fund enters into transactions in which it transfers assets included in its statement of financial position but retains all or substantially all of the risks and rewards of the transferred assets or a portion thereof. If all or substantially all risks and rewards are retained, the transferred assets are not derecognised. The Fund derecognises a financial liability when its contractual obligations are fulfilled, 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. A provision is recognized when the Fund has a present legal or constructive obligation as a result of past events, it is possible that an outflow of resources involving economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. . The fund is open for subscription and redemption of units on any Saudi business day.
SIGNIFICANT ACCOUNTING POLICIES (continued) 6 Units in issue
Management fee expense is recognized in the statement of comprehensive income as the related services are rendered. Accrued expenses and other payables are initially recognized at fair value and subsequently measured at amortized cost using the effective commission rate method. The Fund Manager has assessed that the amendments have no significant impact on the Fund's financial statements.
Standards/Interpretations and Amendments Amendments to IFRS 3 - Definition of an enterprise Amendments to IAS 1 and IAS 8 - Definition of Equipment. Amendments to IFRS 9, IAS 39 and IFRS 7 – Reform of interest rate benchmarks – Phase 1 7.12 Standards issued but not yet effective. Below you will find an overview of the standards that have been issued but are not yet in force on the date of publication of the Fund's annual accounts.
Effective from periods beginning on or after the following date Amendments to IFRS 16 COVID-19 – Related rent. The above amended standards and interpretation contributions are not expected to have a significant impact on the fund's accounts. Furthermore, on 1 March 2021, the Capital Markets Agency issued certain amendments to the investment association regulations and a glossary of defined terms used in the Capital Markets Authority's regulations and rules.
The fund manager is currently in the process of evaluating any consequences of these changes on the fund's accounts.
INVESTMENTS
RELATED PARTY TRANSACTIONS AND BALANCES
RELATED PARTY TRANSACTIONS AND BALANCES (continued) Transactions with related parties
FINANCIAL RISK MANAGEMENT 1 Financial risk factors
Price risk is the risk that the value of the Fund's financial instruments will fluctuate due to changes in market prices caused by factors other than fluctuations in foreign currencies and commission rates. The price risk arises mainly from uncertainty about the future prices of financial instruments held by the Fund. The Fund Manager aims to manage credit risk by monitoring credit exposures, limiting transactions with specific counterparties and continuously assessing the creditworthiness of counterparties.
At the statement of financial position date, the Fund's maximum exposure to credit risk is represented by the carrying amount of cash and cash equivalents, which represent cash at bank with a local bank that has a Moody's A3 credit rating and receivables others. Liquidity risk is the risk that the Fund may not be able to generate sufficient cash resources to fully repay its obligations when due, or may do so only on terms that are materially unfavorable. The terms and conditions of the Fund provide for the subscription and redemption of units on each Saudi business day and, therefore, it is exposed to the liquidity risk of meeting redemptions of unitholders on these days.
The Fund Manager monitors liquidity requirements by ensuring that sufficient funds are available to meet any obligations as they arise, whether through new subscriptions, liquidation of the investment portfolio or by taking short-term loans from the facilities obtained by the Fund Manager. The Fund manages its liquidity risk by investing primarily in securities that it expects to be able to liquidate within a short period of time. Operational risk is the risk of direct or indirect loss arising from a variety of causes related to the processes, technology and infrastructure that support the Fund's activities either internally or externally at the Fund's service provider and from external factors other than credit, liquidity , currency and market risks such as those arising from the legal and regulatory requirements.
The fund's objective is to manage operational risks to balance limiting financial losses and damage to its reputation with achieving the investment objective of generating returns for unitholders. However, the Government of the Kingdom of Saudi Arabia (the “Government”) has managed to control the outbreak to date, primarily due to the unprecedented but effective measures taken by the Government, after which the Government has ended the lockdowns and taken phased measures towards normalization. Therefore, the fund remains aware of both the micro- and macro-economic challenges posed by COVID-19, the nascent effects of which may be felt for some time, and closely monitors its exposures.
LAST VALUATION DAY
The primary responsibility for developing and implementing controls over operational risks rests with the Risk Management Team. Recently, a number of COVID-19 vaccines have been developed and approved for mass distribution by various governments around the world. The government has also approved a vaccine, which is currently available to healthcare workers and certain other categories of people, and will be available to the masses in general during 2021.
Despite the fact that there are some uncertainties about the COVID-19 vaccine, such as how long the immunity lasts, whether the vaccine will prevent transmission or not, etc.;.
APPROVAL OF THE FINANCIAL STATEMENTS
