Final Results

RNS Number : 2831C

The Family Shariah Fund Ltd

30 April 2012

 



THE FAMILY SHARI'AH FUND LIMITED

('Family Shari'ah Fund" or the"Fund" or "Company")

Final Results for the year ended 31 December 2011

30 April 2012

The Family Shari'ah Fund Limited, a multi-asset class fund providing investors with exposure to a variety of Shari'ah compliant investments predominantly outside of the GCC region, is pleased to announce its final audited results for the year ended 31 December 2011.

The financial statements and the notice of the Annual General Meeting (which is expected to be held on 22 May 2012) have been dispatched to shareholders today. 

These financial statements and the Company's current investing policy, as defined by the AIM Rules, are also available on the Company's website at www.familyshariahfund.com.

For further information, please contact:

The Family Office	Tel: [phone]
Manoj Ranawat
Religare Capital Markets (Europe) Limited (Nomad and Broker)	Tel: [phone]
David Porter / Richard Thompson

This announcement should be read in conjunction with the Admission Document. Terms defined in the Admission Document have the same meaning when used in this announcement.

Notes to Editors

The Family Shari'ah Fund Limited is the first multi-asset class fund to gain admission to AIM and provides investors with exposure to a variety of Shari'ah Compliant investments predominantly outside of the GCC region.

CHAIRMAN'S STATEMENT

FOR THE YEAR DECEMBER 31, 2011

It gives me pleasure to present the report and accounts of the Family Shari'ah Fund Limited (the "Fund") for the year ended December 31, 2011, being the third full accounting year of operations. During the year, the Fund recorded a net profit of US$ 294,734 and the net asset value of the Fund increased from US$ 28,180,972 to US$ 28,475,706.

The first half of the year was characterised by a modest and gradual recovery in sentiment throughout international financial markets as fears of a global double dip recession receded. However, events such as the supply chain disruption caused by the earthquake in Japan together with political wrangling over borrowing limits in the US meant that caution was still the guiding principle for many investors and under the management of The Family Office, the performance of the Fund was on plan by the end of the second quarter in 2011. 

A very different scenario transpired in the second half of the year. Driven by the crisis in the Eurozone area and weaker macroeconomic indicators throughout the world, there was a major sell off in global equities with almost 30 major markets entering Bear market conditions, defined as a drop of 20% or more. There was a rally in December due to some improvement in the Eurozone and in the macro indicators for the US, but this still left most markets down for the year as a whole.

In response to the increased market volatility, the Investment Manager was active in trading the Fund's liquid assets which helped to minimise the adverse market affects whilst continuing to build the Fund's portfolio of Private Equity and Real Estate investments. As a result, the Fund recorded an overall profit for the year, although it must be born in mind that this due in no small part to the Investment Manager generously waiving their fees for 2011.

I also have to report that since the end of 2011, the Board of Directors of the Fund has received a letter from the Investment Manager recommending that in order to save costs, the Fund be delisted from the Alternative Investment Market in London and further, that significant changes be made to the Fund's investment strategy which may result in the orderly run down of the Funds' assets with the proceeds being returned to the shareholders. The Board has agreed in principle to support these recommendations. The details of these proposals and recommendations will be set out in a circular to all shareholders in due course.

Peter Robinson

Chairman

April 26, 2012

Manama, Kingdom of Bahrain

THE FAMILY SHARI'AH FUND LIMITED

DIRECTORS' REPORT

DECEMBER 31, 2011

The Directors present their report and audited financial statements for The Family Shari'ah Fund Limited (the "Fund") for the year ended December 31, 2011.

Principal Activities

The principal activity of the Fund is to carry on the business of an investment company with the investment objective to provide investors with a diversified pool of Shari'ah compliant assets and consistent risk-adjusted returns over a market cycle via an active and diversified asset allocation programme.  The Fund aims at geographic diversification of investments, predominantly outside the Gulf Cooperation Council ("GCC") and enhances liquidity through trading of the Fund's shares on the AIM market of the London Stock Exchange ("AIM").

Quotation

The Fund was admitted to trading on AIM on July 25, 2008.

Substantial Shareholding

At December 31, 2011, the Fund had notification that the following shareholders had an interest of 3% or more of the Fund's issued share capital:

							No. of Shares	% of Holding
Abdulaziz Almunajem							3,000,000		9.51%
Abdullah Abdullatif Al Fozan							3,000,000		9.51%
Ahmed Abdullah Almunajem							3,000,000		9.51%
Ali Abdullah Almunajem							3,000,000		9.51%
Ibrahim Abdullah Almunajem							3,000,000		9.51%
Saleh Abdullah Almunajem							3,000,000		9.51%
Sumu Al Khaleej Trading Co.							3,000,000		9.51%
Heraymila Investments Limited							2,000,000		6.34%
Abdulwahab Said Al Sayed							1,000,000		3.17%
Goldman Sachs Securities (Nominees) Limited							1,000,000		3.17%
Asasat Investments Company							1,000,000		3.17%
Pershing Nominees Limited							1,000,000		3.17%
							27,000,000		85.59%

THE FAMILY SHARI'AH FUND LIMITED

DIRECTORS' REPORT (continued)

DECEMBER 31, 2011

Review of the Development of the Business

See page 13 for the Investment Manager's report.

Results for the year ended and state of affairs as at December 31, 2011

The statement of financial position as at December 31, 2011 and statement of comprehensive income for the year ended December 31, 2011 are set out on pages 17 and 18, respectively.

Dividend

No dividend was proposed or paid during the year.

Directors

The Directors, who served during the year and to the date of this report, are as follows:

Appointed on

Peter Robinson

15 June 2009

William Morrison*

15 June 2010

Abdulmohsin Al-Omran**

15 June 2011

Christopher Drew Dixon*

15 June 2010

Dr. Reinhard Leopold Klarmann**

15 June 2011

* Retired by rotation and re-elected on 15 June 2010

** Retired by rotation and re-elected on 15 June 2011

Directors' Interests

The Directors do not have any shareholdings in the Fund or any options over shares in the Fund as at December 31, 2011.  None of the Directors were granted or exercised any share options during the year.

Directors' Fees

The total amounts incurred for Directors' fees during the year were as follows:

		2011		2010
		US$		US$
Peter Robinson		20,000		20,000
William Morrison		15,000		15,000
Abdulmohsin Al-Omran		15,000		15,000
Christopher Drew Dixon		15,000		15,000
Dr. Reinhard Leopold Klarmann		15,000		15,000
Total		80,000		80,000

THE FAMILY SHARI'AH FUND LIMITED

DIRECTORS' REPORT (continued)

DECEMBER 31, 2011

Corporate Governance Statement

Whilst the Fund is not subject to the UK Corporate Governance Code, published by the Financial Reporting Council, which is applicable to companies listed on the main market of the London Stock Exchange (the "LSE"), the Directors recognise the importance of sound corporate governance.  The Fund complies with the Corporate Governance Guidelines for Smaller Quoted Companies as published by The Quoted Companies Alliance (as far as such guidelines are appropriate to a company of its size and nature).

The Fund has adopted a code of conduct for its Directors' and key employees' share dealings, which the Directors consider is appropriate for the Fund given its nature as an AIM quoted investment company and as the Fund has no executive Directors and has no share option or incentive schemes.  The Directors comply with Rule 21 of the AIM Rules for Companies as published by the LSE relating to Directors' dealings and, in addition, take all reasonable steps to ensure compliance by the Fund's applicable employees.

The Directors have established an Audit Committee and a Remuneration and Nomination Committee, each with formally delegated roles and responsibilities.  The Audit Committee is comprised of all three of the independent non-executive Directors; Peter Robinson (Chairman), Christopher Dixon and Dr. Reinhard Klarmann.  The Remuneration and Nomination Committee is comprised of Peter Robinson (Chairman), Christopher Dixon and William Morrison.  The Committees meet as often as required but in any event at least once per year.

The Audit Committee is responsible for ensuring that the financial performance of the Fund is properly reported on and monitored and for meeting the auditors and reviewing the reports from the auditors relating to the financial statements and internal control systems.

The Remuneration and Nomination Committee, where appropriate given the size and nature of the Fund and the composition of the Board, reviews the performance of the executive and non-executive Directors and sets and reviews the scale and structure of their remuneration and the terms of their service agreements and letters of appointment with due regard to the interest of shareholders.  No Director is permitted to participate in discussions or decisions concerning his own remuneration.

Shari'ah Supervisory Board

The Shari'ah Supervisory Board is responsible for ensuring that the Fund's activities are in compliance with Shari'ah law.

Statement of Directors Responsibilities in respect of the Financial Statements

The Directors are responsible for the preparation of financial statements for each financial period which present fairly the Fund's state of affairs as at the end of the year and the results of operations for the year then ended.

In preparing those financial statements, the Directors are required to:

•  ensure that the financial statements comply with the Memorandum and Articles of Association of the Fund and International Financial Reporting Standards ("IFRS"), as published by the International Accounting Standards Board;

THE FAMILY SHARI'AH FUND LIMITED

DIRECTORS' REPORT (continued)

DECEMBER 31, 2011

Statement of Directors Responsibilities in respect of the Financial Statements (continued)

•  select suitable accounting policies and then apply them on a consistent basis;

•  make judgments and estimates that are reasonable and prudent;

•  prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Fund will continue in business;

•  present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and

•  provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Fund's financial position and financial performance.

The Directors are responsible for keeping proper accounting records, for safeguarding the assets of the Fund and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

On behalf of the Directors:

___________________                                                               _____________________

Peter Robinson                                                                          Abdulmohsin Al Omran

Date: April 26, 2012

THE FAMILY SHARI'AH FUND LIMITED

AUDIT COMMITTEE REPORT

DECEMBER 31, 2011

The Audit Committee is appointed by the Board from the non-executive Directors of The Family Shari'ah Fund Limited (the "Fund").  The Audit Committee is responsible for ensuring that the financial performance of the Fund is properly reported on and monitored and for meeting the auditors and reviewing the reports from the auditors relating to the financial statements and internal control systems.  It meets at least once a year with the auditors to discuss their remit and any issues arising from the audit.

Composition of the Audit Committee

The members of the Audit Committee are:

Name and Date of Appointment

Peter Robinson (Chairman)         -          May 7, 2008

Christopher Dixon                      -          May 7, 2008

Dr. Reinhard Klarmann               -          May 7, 2008

The Board expects the Audit Committee members to have an understanding of:

·      the principles of, content of, and developments in financial reporting including the applicable accounting standards and statements of recommended practice;

·      key aspects of the Fund's operations including corporate policies, company financing, products and systems of internal control;

·      matters that influence or distort the presentation of the financial statements and key figures; and

·      the principles of, and developments in, company law, sector-specific laws and other relevant corporate legislation.

In addition, the Board expects the Audit Committee members to have an understanding of:

·      the role of internal and external auditing and risk management;

·      the regulatory framework for the Fund's businesses; and

·      environmental and social responsibility and best practices.

Meetings

The Audit Committee is required to meet at least once a year.  The Audit Committee can invite the executive management and senior representatives of the external auditors to attend any of its meetings in full, although it reserves the right to request any of these individuals to withdraw.  Other senior management are invited to present such reports as they are required for the Committee to discharge its duties.  The Audit Committee met twice during the financial year ended December 31, 2011, together with the external auditors and Investment Manager to discuss the audited accounts for 2010, interim accounts for June 2011 and the internal reporting systems.

THE FAMILY SHARI'AH FUND LIMITED

AUDIT COMMITTEE REPORT (continued)

DECEMBER 31, 2011

Overview of the Actions Taken by the Audit Committee to Discharge its Duties

External Auditors

The Audit Committee is responsible for the development, implementation and monitoring of the Fund's policy on external audit.  The policy assigns oversight responsibility for monitoring the independence, objectivity and compliance with ethical and regulatory requirements to the Audit Committee.  The policy states that the external auditors are responsible to the shareholders to express an audit opinion on the Fund's financial statements. The Audit Committee is responsible to the Board of Directors.

Overview

As a result of its work during the year, the Audit Committee has concluded that it has acted in accordance with its terms of reference and has ensured the independence and objectivity of the external auditors.  The Chairman of the Audit Committee will be available at the Annual General Meeting to answer any questions about the work of the Committee.

Approval

The Audit Committee has approved the financial statements for the year ended December 31, 2011.

This report was approved by the Audit Committee and signed on its behalf by:

Peter Robinson

Chairman of the Audit Committee

Date: April 26, 2012

Manama, Kingdom of Bahrain

THE FAMILY SHARI'AH FUND LIMITED

REMUNERATION AND NOMINATION COMMITTEE REPORT

DECEMBER 31, 2011

The Remuneration and Nomination Committee is appointed by the Board from the non-executive Directors of The Family Shari'ah Fund Limited (the "Fund").  The Remuneration and Nomination Committee is responsible for reviewing the performance of non-executive Directors and for setting and reviewing the scale and structure of their remuneration and the terms of their service agreements and letters of appointment with due regard to the interests of Shareholders.  In determining the remuneration of the Directors and Officers of the Fund, the Remuneration and Nomination Committee will seek to attract and retain Board members of the highest calibre.  The Remuneration and Nomination Committee will also meet as required for the purpose of considering new or replacement appointments to the Board.

Composition of the Remuneration and Nomination Committee

The members of the Remuneration and Nomination Committee are:

Name and Date of Appointment

Peter Robinson (Chairman)         -          May 7, 2008

Christopher Dixon                      -          May 7, 2008

William Morrison                        -          May 7, 2008

The Board expects the Remuneration and Nomination Committee members to have an understanding of:

·      key aspects of the Directors' roles and responsibilities and involvement;

·      matters that influence the performance of the Directors; and

·      the principles of Directors' remuneration.

Meetings

The Remuneration and Nomination Committee is required to meet at least once a year.  The Remuneration and Nomination Committee can invite the executive management and senior representatives of the external auditors to attend any of its meetings in full, although it reserves the right to request any of these individuals to withdraw.  The Remuneration and Nomination Committee met once during the financial year ended December 31, 2011 and discussed the rotation policy and remuneration of the Directors and the Chairman of the Board.

THE FAMILY SHARI'AH FUND LIMITED

REMUNERATION AND NOMINATION COMMITTEE REPORT (continued)

DECEMBER 31, 2011

Overview of the Actions Taken by the Remuneration and Nomination Committee to Discharge its Duties

Overview

As a result of its work during the year, the Remuneration and Nomination Committee has concluded that it has acted in accordance with its terms of reference and is satisfied with the conduct of the Directors.  The Chairman of the Remuneration and Nomination Committee will be available at the Annual General Meeting to answer any questions about the work of the Committee.

Approval

The Remuneration and Nomination Committee recommends to the Board that the composition as well as remuneration of the Directors remains unchanged.

This report was approved by the Remuneration and Nomination Committee and signed on its behalf by:

Peter Robinson

Chairman of the Remuneration and Nomination Committee

Date: April 26, 2012

Manama, Kingdom of Bahrain

THE FAMILY SHARI'AH FUND LIMITED

INVESTMENT MANAGER'S REPORT

DECEMBER 31, 2011

We were appointed by the Board of Directors of The Family Shari'ah Fund Limited (the 'Fund') as the Fund's investment manager with the objective of achieving a long-term capital appreciation from a Shari'ah compliant, diversified, investment portfolio characterised by a moderate level of risk.

For 2011, we are happy to report that the net asset value of the Fund, net of all fees increased by US$ 294,734.

The investment manager continued with the same theme that started in 2010 by allocating more capital towards illiquid markets than liquid markets as the risk adjusted return premium on the illiquid markets was higher. In fact, the portfolio manager started 2011 with 16% Cash, 50% invested in liquid markets and 34% in illiquid markets and ended the year with 21% Cash, 34% invested in liquid markets and 45% invested in illiquid markets. 

As for the liquid portfolio, the investment manager traded it tactically as it increased exposure to the market in the first half of the year, reduced exposure in the third quarter of the year and increased exposure in the last quarter of the year.

In summary, considering the high volatility seen in the markets in 2011 where Islamic equity markets oscillated between +12% to -10% during the year, we are happy to report that we did not only preserve capital in this difficult market but managed to generate a return close to 1.05% net of all fees to our shareholders. This positive performance was the result of a diversified asset allocation with low correlation between various asset classes, a robust risk management program and ability to execute rapidly in both liquid and illiquid markets.

Our objective for 2012 is to replicate the results seen in 2011 for our shareholders.

Naji Nehme

On behalf of the Investment Manager

The Family Office Company B.S.C. (c)

THE FAMILY SHARI'AH FUND LIMITED

REPORT OF THE SHARI'AH SUPERVISORY BOARD

DECEMBER 31, 2011

In the name of Allah, The Beneficent, The Merciful

Assalam Alaikum Wa Rahmat Allah Wa Barakatuh

In compliance with the letter of appointment and the Fund's admission document, we are required to submit the following report:

We have reviewed the principles and the contracts relating to the transactions and applications introduced by The Family Shari'ah Fund Limited (the "Fund") during the year.  We have also conducted our review to form an opinion as to whether the Fund has complied with Shari'ah Rules and Principles and also with the specific fatwas, rulings and guidelines issued by us.

The Fund's management is responsible for ensuring that the Fund conducts its business in accordance with Islamic Shari'ah Rules and Principles.  It is our responsibility to form an independent opinion, based on our review of the operations of the Fund, and to report to you.

We conducted our review which included examining, on a test basis, each type of transaction, the relevant documentation and procedures adopted by the Fund.

We planned and performed our review so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Fund has not violated Islamic Shari'ah Rules and Principles.

In our opinion:

(a)  the contracts, transactions and dealings entered into by the Fund during the period that we have reviewed are in compliance with the Islamic Shari'ah Rules and Principles; and

(b)  all earnings that have been realised from sources or by means prohibited by Islamic Shari'ah Rules and Principles have been disposed of to charitable causes.

We beg Allah the Almighty to grant us all the success and straight-forwardness.

Wassalam Alaikum Wa Rahmat Allah Wa Barakatuh

_________________________________                   ______________________________________

Sheikh Nizam Muhammed Saleh Yaquby                 Sheikh Abdul Sattar Abdul Karim Abu Ghuddah

INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF

THE FAMILY SHARI'AH FUND LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of The Family Shari'ah Fund Limited ("the Fund"), which comprise the statement of financial position as at 31 December 2011, and the related statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Board of Directors' Responsibility for the Financial Statements

The Fund's Board of Directors is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.  We conducted our audit in accordance with International Standards on Auditing.  Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.  The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.  In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Fund's Board of Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF

THE FAMILY SHARI'AH FUND LIMITED

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of 31 December 2011, its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

26 April 2012

Manama, Kingdom of Bahrain

THE FAMILY SHARI'AH FUND LIMITED STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2011
			2011		2010
	Note		US$		US$
ASSETS
Balances with bank			5,891,529		4,554,144
Investments at fair value through profit or loss	4		22,581,828		23,785,260
Other assets	5		91,452		102,209
TOTAL ASSETS			28,564,809		28,441,613
LIABILITIES AND EQUITY
LIABILITIES
Due to Investment Manager	6		-		192,467
Other payables and accruals	7		89,103		68,174
TOTAL LIABILITIES			89,103		260,641
EQUITY
Share capital	8		315,500		315,500
Share premium	8		31,234,500		31,234,500
Accumulated losses			(3,074,294)		(3,369,028)
TOTAL EQUITY			28,475,706		28,180,972
TOTAL LIABILITIES AND EQUITY			28,564,809		28,441,613

___________________                                                                           ___________________

Peter Robinson                                                                                       Abdulmohsin Al Omran

Chairman                                                                                              Director

THE FAMILY SHARI'AH FUND LIMITED STATEMENT OF COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31, 2011
			Year ended		Year ended
			December 31,		December 31,
			2011		2010
	Note		US$		US$
INCOME
Net income from investments at fair value
through profit or loss			1,018,469		1,268,640
TOTAL INCOME			1,018,469		1,268,640
EXPENSES
Management fee	6		-		417,318
General and administration expenses	9		723,735		905,629
TOTAL EXPENSES			723,735		1,322,947
NET PROFIT/(LOSS) FOR THE YEAR			294,734		(54,307)
Other comprehensive income for the year			-		-
TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAR			294,734		(54,307)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	8		31,550,000		31,550,000
EARNINGS/(LOSS) PER SHARE (BASIC AND DILUTED - in US$ Cents)			0.93		(0.17)

THE FAMILY SHARI'AH FUND LIMITED STATEMENT OF CHANGES IN EQUITY YEAR ENDED DECEMBER 31, 2011
	Share capital		Share premium				Accumulated losses		Total
	US$		US$				US$		US$
Balance at January 1, 2011	315,500		31,234,500				(3,369,028)		28,180,972
Total comprehensive income
for the year	-		-				294,734		294,734
Balance at December 31, 2011	315,500		31,234,500				(3,074,294)		28,475,706
Balance at January 1, 2010	315,500		31,234,500				(3,314,721)		28,235,279
Total comprehensive loss
for the year	-		-				(54,307)		(54,307)
Balance at December 31, 2010	315,500		31,234,500				(3,369,028)		28,180,972

THE FAMILY SHARI'AH FUND LIMITED STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2011
		Year ended		Year ended
		December 31,		December 31,
		2011		2010
		US$		US$
OPERATING ACTIVITIES
Net profit/(loss) for the year		294,734		(54,307)
Net changes in operating assets and liabilities:
Investments at fair value through profit or loss		1,203,432		(5,867,900)
Other assets		10,757		50,941
Due to Investment Manager		(192,467)		6,476
Other payables and accruals		20,929		(20,990)
Net cash from/(used in) operating activities		1,337,385		(5,885,780)
NET INCREASE/(DECREASE) IN BALANCES WITH BANK		1,337,385		(5,885,780)
BALANCES WITH BANK AT JANUARY 1		4,554,144		10,439,924
BALANCES WITH BANK AT DECEMBER 31		5,891,529		4,554,144
Supplemental information:
Dividends received		598,159		160,485

THE FAMILY SHARI'AH FUND LIMITED

NOTES TO THE FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2011

1    ACTIVITIES

The Family Shari'ah Fund Limited (the "Fund") is a Shari'ah-compliant multi-asset class investment company incorporated on March 5, 2008.  The Fund is a Cayman Islands exempted company and is not registered with the Cayman Islands Monetary Authority ("CIMA").  The Fund invests in a range of Shari'ah-compliant assets, products and investments.  The Fund's strategy is to focus on providing specialised Shari'ah-compliant financial products that appeal to a growing market of investors who desire Shari'ah-compliant economic equivalents to conventional assets and instruments.

The address of the registered office of the Fund is SH Corporate Services Ltd., P.O. Box 61, 4^th Floor, Harbour Centre, George Town, Grand Cayman, KY1, 1102, Cayman Islands.

The investment objective of the Fund is to achieve long-term capital appreciation from a Shari'ah-compliant, diversified, investment portfolio characterised by a moderate level of risk.  The Fund operates under the overriding principle that all investments must be Shari'ah-compliant.  The Fund's investment objectives are therefore devised so as to provide investors with a diversified pool of Shari'ah-compliant assets, consistent risk-adjusted returns over a market cycle via an active and diversified asset allocation programme, geographic diversification of investments and liquidity through trading of the Fund's shares on the AIM market of the London Stock Exchange.

However, subsequent to the statement of financial position date, and after consideration of proposals made by the Fund's Investment Manager, Board of Directors have decided to recommend to the shareholder to delist the Fund's shares from the AIM market of London Stock Exchange.

The activities of the Fund are subject to Islamic Investment Guidelines, as defined from time to time by the Shari'ah Supervisory Board ('SSB').  The SSB consist of two members, as set out on page 3.

The SSB is responsible for:

-     reviewing and approving the "Islamic Investment Guidelines" of the Fund;

-     reviewing the Fund's investments to ensure that they are Shari'ah compliant;

-     reviewing reports from the Investment Manager to ensure adherence to Islamic Investment Guidelines; and

-     advising the Directors on revenue purification and selecting appropriate charities.

The Family Office Company B.S.C. (c), a company incorporated in the Kingdom of Bahrain, is the investment manager of the Fund ("Investment Manager").

The Fund has appointed Apex Fund Services (Ireland) Limited (the "Administrator" or "Apex"), an Irish limited liability company as its administrator.

The financial statements of the Fund for the year ended December 31, 2011 were approved by the Directors on April 26, 2012.

2    BASIS OF PREPARATION

The financial statements of the Fund have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standard Board (IASB).

The financial statements are prepared under the historical cost basis as modified for the measurement at fair value of investments carried at fair value through profit or loss.

The financial statements are presented in United States Dollars (US Dollars) which is the functional currency of the Fund.

3    ACCOUNTING POLICIES

3.1  Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended IFRS effective as of January 1, 2011:

Ø IAS 24, 'Related Party Disclosures (Amendment)'

The IASB has issued an amendment to IAS 24 that clarifies the identification of related party relationships, particularly in relation to significant influence or joint control. The new definitions emphasise a symmetrical view on related party relationships as well as clarifying in which circumstances persons and key management personnel affect related party relationships of an entity. Secondly, the amendment introduces an exemption from the general related party disclosure requirements for transactions with a government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the financial position or performance of the Fund.

Ø IAS 32, 'Financial Instruments: Presentation (Amendment)'

The amendment alters the definition of a financial liability in IAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given prorata to all of the existing owners of the same class of an entity's non-derivative equity instruments, to acquire a fixed number of the entity's own equity instruments for a fixed amount in any currency. The amendment has had no effect on the financial position or performance of the Fund as the Fund has not issued these types of instruments.

Ø IFRS 7, 'Financial Instruments: Disclosures (Amendment)'

These amendments introduced new disclosure requirements for transfers of financial assets, including disclosures for:

-    financial assets that are not derecognised in their entirety; and

-    financial assets that are derecognised in their entirety but for which the entity retains continuing involvement.

The amendments have had no effect on the disclosures made by the Fund as the Fund has not issued these types of instruments.

There are certain other new standards, amendments to standards and interpretations effective January 1, 2011, which are not relevant to the Fund's operations and hence, as a result, have not been adopted by the Fund.

Improvements to IFRSs

In May 2010, the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies, but had no impact on the financial position or performance of the Fund.

Ø IFRS 7 Financial Instruments - Disclosures:

The amendment was intended to simplify the disclosures provided, by reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context. Other amendments add an explicit statement that qualitative disclosures should be made in the context of the quantitative disclosures to better enable users to evaluate an entity's exposure to risks arising from financial instruments.

3    ACCOUNTING POLICIES (continued)

3.1  Changes in accounting policy and disclosures (continued)

Improvements to IFRSs (continued)

Ø IAS 1, 'Presentation of Financial Statements'

The amendment clarifies that an analysis of each component of other comprehensive income may be presented either in the statement of changes in equity or in the notes to the financial statements.

Other amendments resulting from improvements to IFRSs to the following standards did not have any impact on the accounting policies, financial position or performance of the Fund:

Ø IFRS 3, 'Business Combinations'

Ø IFRS 3, 'Business Combinations (Contingent consideration arising from business combination prior to adoption of IFRS 3 (as revised in 2008)';

Ø IFRS 3, 'Business Combinations (Un-replaced and voluntarily replaced share-based payment award)';

Ø IAS 27 Consolidated and Separate Financial Statements

Ø IAS 34 Interim Financial Reporting

Ø IFRIC 19, 'Extinguishing Financial Liabilities with Equity Instruments'

3.2  Accounting standards and amendments issued but not yet effective

Standards issued but not yet effective up to the date of issuance of the Fund's financial statements are listed below. This listing is of standards issued, which the Fund reasonably expects to be applicable at a future date. The Fund intends to adopt those standards when they become effective:

Ø IAS 1, 'Financial Statement Presentation'

The amendments becomes effective for annual periods beginning on or after July 1, 2012 and require that an entity present separately, the items of other comprehensive income that would be reclassified (or recycled) to profit or loss in the future if certain conditions are met (for example, upon derecognition or settlement), from those that would never be reclassified to profit or loss. The amendment affects presentation only, therefore, will have no impact on the Fund's financial position or performance.

Ø IFRS 7, 'Financial Instruments'

The amendment requires additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the Fund's financial statements to understand the relationship with those assets that have not been derecognised and their associated liabilities. In addition, the amendment requires disclosures about continuing involvement in derecognised assets to enable the user to evaluate the nature of, and risks associated with, the entity's continuing involvement in those derecognised assets. The amendment becomes effective for annual periods beginning on or after July 1, 2011. The amendment affects disclosure only and has no impact on the Fund's financial position or performance.

3    ACCOUNTING POLICIES (continued)

3.2  Accounting standards and amendments issued but not yet effective (continued)

Ø IFRS 9, 'Financial Instruments'

IFRS 9 as issued reflects the first phase of the IASB's work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39.

It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.

For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.

It also includes those paragraphs of IAS 39 dealing with how to measure fair value and accounting for derivatives embedded in a contract that contains a host that is not a financial asset, as well as the requirements of IFRIC 9 Reassessment of Embedded Derivatives.

The IASB issued amendments to IFRS 9 that defer the mandatory effective date from January 1,  2013 to January 1, 2015 with early application continuing to be permitted. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets.

The Fund will quantify the effect of adoption of this standard, in conjunction with the other phases, when issued, to present a comprehensive picture.

Ø IFRS 13, 'Fair Value Measurement'

IFRS 13 replaces the fair value measurement guidance contained in individual IFRSs with a single source of fair value measurement guidance. It defines fair value, establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements. It explains how to measure fair value when it is required or permitted by other IFRSs. IFRS 13 does not extend the use of fair value accounting but provides guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs.

IFRS 13 is effective for annual periods beginning on or after January 1, 2013 and earlier application is permitted. The Fund is currently assessing the full impact of this new standard.

Other amendments

Following is the list of standards and interpretations issued but not relevant to the Fund. These amendments will not have any impact on disclosures, financial position or performance when effected at a future date.

Ø IAS 12, 'Income Taxes - Recovery of Underlying assets'

Ø IAS 19, 'Employee Benefits (Revised in 2011)'

Ø IAS 27, ' Separate Financial Statements (as revised in 2011)'

Ø IAS 28, 'Investments in Associates and Joint Ventures Separate Financial Statements  (as revised in 2011)'

Ø IFRS 10, 'Consolidated Financial Statements'

Ø IFRS 11, 'Joint Arrangements'

Ø IFRS 12, 'Disclosure of Interests in Other Entities'

3    ACCOUNTING POLICIES (continued)

3.3  Significant accounting policies                          

a)   Financial instruments

      Classification

Financial assets and financial liabilities are classified as financial assets and financial liabilities at fair value through profit or loss in accordance with IAS 39 "Financial Instruments: Recognition and Measurement". The category of financial assets and financial liabilities at fair value through profit or loss is sub-divided into:

Financial assets and financial liabilities held for trading: Financial assets held for trading include equity securities, investments in managed funds and debt instruments. These assets are acquired principally for the purpose of generating a profit from active trading and short-term fluctuations in price.

Financial instruments designated as at fair value through profit or loss upon initial recognition: These include equity securities and debt instruments that are not held for trading. These financial assets are designated on the basis that they are part of a group of financial assets which are managed and have their performance evaluated on a fair value basis, in accordance with the risk management and investment strategies of the Fund. The financial information about these financial assets is provided internally on that basis to the Investment Manager and to the Board of Directors.

Recognition and Measurement

Investments are initially recognised at cost, being the fair value of the consideration given.  All transaction costs for such instruments are recognised in the statement of comprehensive income.  After initial recognition, these investments are remeasured at fair value with both realised and unrealised gains or losses recorded in the statement of comprehensive income in "net income from investments at fair value through profit or loss". Profit and dividend revenue elements on such investments are included in the same line.

Trade date

All "regular way" purchases and sales of financial assets are recognised on the trade date, i.e. the date that the Fund commits to purchase or sell the asset.

Derecognition of financial instruments

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

(i)     the right to receive cash flow from the asset has expired;

(ii)    the Fund retains the right to receive cash flows from the asset, but has assumed an obligation to pay the cash flows received, in full without material delay to a third party under a 'pass through' arrangement;

(iii)   the Fund has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. 

When the Fund has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Fund's continuing involvement in the asset.

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

3    ACCOUNTING POLICIES (continued)

3.3  Significant accounting policies (continued)

a)   Financial instruments (continued)

      Fair value

Fair value represents the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction.  The fair value of a quoted investment is determined by reference to the market bid price as of the statement of financial position date. The fair value of an unquoted investment is determined by reference to its net asset value (NAV) as calculated by the respective administrator as of the statement of financial position date.

b)   Accrued expenses

Liabilities are recognised for amounts to be paid in the future for services received, whether billed or not.

c)   Functional and presentation currency

      Transactions in foreign currencies are recorded at the rate of exchange prevailing at the date of the transaction.  Monetary assets and liabilities denominated in foreign currencies are retranslated into US Dollars at the rate of exchange prevailing at the statement of financial position date.  Any gains or losses on translation of monetary assets and liabilities are taken to the statement of comprehensive income.

      Translation gains or losses on investments at fair value through profit or loss are included in the statement of comprehensive income in net income from investments at fair value through profit or loss.

d)   Dividend income

Dividend income is recognised when the right to receive the dividend is established.

e)   Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is generally not the case with master-netting agreements, and the related assets and liabilities are presented gross in the statement of financial position.

f)    Provisions

Provisions are recognized when the Fund has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

g)   Share capital

The Fund's shares are classified as equity as the Fund's shares are not redeemable at the option of the shareholders.

h)   Dividend distribution

Dividend distributions are at the discretion of the Fund. A dividend distribution to the Fund's shareholders is accounted for as a deduction from retained earnings. A proposed dividend is recognized as a liability in the period in which it is approved by the shareholders.

3    ACCOUNTING POLICIES (continued)

3.3  Significant accounting policies (continued)

i)    Fees and commissions

Unless included in the effective profit calculation, fees and commissions are recognised on an accrual basis. Legal and audit fees are included within 'general and administration expenses'.

j)    Significant accounting judgements and estimates

Fair value of financial instruments

The preparation of financial statements in conformity with IFRS requires the Directors and management to make estimates and assumptions that affect the amounts in the financial statements and accompanying notes. The use of estimates is principally limited to the determination of fair value of unquoted investments at fair value through profit or loss. The Directors and management believe that the estimates utilised in preparing the financial statements are reasonable and prudent.  However, actual results could differ from these estimates.

      Going concern

The Fund's management has made an assessment of the Fund's ability to continue as a going concern and is satisfied that the Fund has the resources to continue in business for the foreseeable future. Furthermore, the management is not aware of any material uncertainties that may cast significant doubt upon the Fund's ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis.

4    INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

These represent investments in instruments compliant with, or in compliance with, the principles and precepts of Shari'ah as determined by the Shari'ah Supervisory Board.  Investments are made in accordance with the investment policies as laid down in the latest investment policy of the Fund.

The fair values of financial instruments are as follows:

		2011		2010
		US$		US$
Held-for-trading:
Quoted
- Equity securities		4,394,877		7,233,004
- Debt securities		5,300,377		6,919,892
		9,695,254		14,152,896
Designated at fair value through profit or loss:
Unquoted
- Investments in unquoted funds		12,886,574		9,632,364
		12,886,574		9,632,364
Total		22,581,828		23,785,260

Determination of fair value and fair value hierarchy for investments at fair value through profit or loss:

The Fund uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

-     Level 1: quoted prices in active markets for identical assets or liabilities;

-     Level 2: those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and

-     Level 3: those whose inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Fund's quoted equity and debt securities fall under Level 1 category and unquoted investments fall under level 3 category. During the years ended December 31, 2011 and December 31, 2010, there have been no transfers between Level 1, Level 2 and Level 3.

The unquoted investments are valued at their net asset value (NAV) as calculated by the respective administrator as of the statement of financial position date. The Investment Manager considers the use of NAV as a reasonable basis to measure the fair market value.

Refer note 12(b)(i) for the sensitivity analysis on the Level 3 inputs.

4    INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)

The following table shows a reconciliation of all movements in the fair value of level 3 instruments:

		2011		2010
		US$		US$
Balance, beginning of the year		9,632,364		4,026,749
Purchase of investments		3,225,080		6,930,454
Sale of investments		(288,222)		(1,118,064)
Fair value changes included in the statement of
comprehensive income		317,352		(206,775)
Balance, end of the year		12,886,574		9,632,364

The Fund's exposure analysed by geographic region and industry sector as at December 31, 2011 and December 31, 2010 is as follows:

Geographic region

		2011		2010
		US$		US$
United States of America		9,049,256		6,521,584
Cayman Islands		3,346,412		100,000
Luxembourg		2,260,837		5,494,649
Bermuda		2,236,516		2,239,254
Ireland		2,134,040		1,738,354
South Korea		1,307,705		914,029
United Kingdom		1,798,357		1,779,179
China		448,705		317,573
Malaysia		-		2,589,491
Jersey		-		2,091,147
		22,581,828		23,785,260

4    INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)

Industry sector

		2011		2010
		US$		US$
Real Estate and related sectors		7,147,976		4,921,105
Industrial		3,517,982		2,849,115
Government		3,063,861		2,589,491
Biotechnology		1,980,755		2,047,533
Telecommunications		404,073		589,869
Pharmaceutical and Consumer Goods		388,026		378,563
Education		147,369		244,954
Energy		238,106		166,664
Infrastructure		187,368		179,780
Diversified Financials		89,887		-
Health Care		169,846		-
Transportation		57,931		-
Others		5,188,648		9,818,186
		22,581,828		23,785,260

5    OTHER ASSETS

		2011		2010
		US$		US$
Prepayments		53,111		68,835
Profit receivable		38,341		33,374
		91,452		102,209

6    RELATED PARTY TRANSACTIONS AND BALANCES

Parties are considered to be related if one party has the ability to control the other party or exercises significant influence over the other party in making financial or operational decisions.  All transactions with related parties were in the normal course of business.  The Investment Manager and related companies are deemed to be related to the Fund.  Fees incurred with related parties during the year and amounts payable to related parties at the year end are disclosed below.

Nature	Payable to	Basis
Management fee	Investment Manager	1.5% of the net asset value (NAV) of the Fund, calculated monthly as of the last day of each fiscal quarter using the month end net asset value and paid quarterly in arrears. The Investment Manager has waived the management fee for the year ended December 31, 2011.
Performance fee	Investment Manager	This is calculated in respect of each fiscal quarter if the hurdle rate (the Murabaha 3 month return) and a high water mark are met.  The performance fee is equal to 10% of the excess NAV per share over the hurdle rate multiplied by the time weighted average of the number of shares in issue in the fiscal quarter. The Investment Manager has waived the performance fee for the year ended December 31, 2011.
Other fees	Investment Manager	This represents amount reimbursed to the Investment Manager for certain expenses incurred on behalf of the Fund.

Balances and transactions with related parties included in these financial statements are as follows:

		2011			2010
Statement of financial position		US$			US$
Assets:
Investments at fair value through profit or loss*		12,886,574			9,632,364
Liabilities:
Due to Investment Manager		-			192,467
Directors' fees payable (note 7)		20,000			20,000
			Year ended		Year ended
			December 31,		December 31,
			2011		2010
			US$		US$
Statement of comprehensive income:
Net income from investments at fair value through profit or loss*			857,539		(84,556)
Management fee			-		417,318
General and administration expenses			285,156		471,208

* Investments made through investment vehicles that are managed by the Investment Manager.

7    OTHER PAYABLES AND ACCRUALS

		2011		2010
		US$		US$
Shari'ah Supervisory Board fee payable		37,950		16,226
Directors' fees payable (note 6)		20,000		20,000
Audit fee payable		20,139		22,039
Administration fee payable		4,000		4,000
Other payables		7,014		5,909
		89,103		68,174

8    SHARE CAPITAL

The authorised share capital of the Fund was US$ 49,990 divided into 4,999,000 shares of US$ 0.01 each, of which one share was issued for cash at par to the subscriber to the Fund's Memorandum of Association. On March 5, 2008 the subscriber share was transferred to TFO Shari'ah Manager Limited who subsequently transferred the subscribed share to The Family Office Company B.S.C. (c) on March 19, 2008. On July 17, 2008 the Fund's authorised share capital was increased to US$ 2,000,000.

The authorised, issued and paid up share capital of the Fund is as follows:

	2011		2010		2011		2010
	Number of shares		Number of shares		US$		US$
Authorized share capital	200,000,000		200,000,000		2,000,000		2,000,000
Issued and fully paid up	31,550,000		31,550,000		315,500		315,500

The above shares were issued at a par value of US$ 0.01 each and paid up at a premium of US$ 0.99 per share.

The holders of shares are entitled to receive notice to attend and to vote at any general meeting of the Fund.  On a return of assets on liquidation or otherwise, the net assets of the Fund available for distribution among its members shall be applied first in repaying to the holders of the shares.  The shares shall entitle the holders thereof to any dividends that may be declared in respect of their shares.  The shares are not redeemable at the option of the holders.  The Fund shall be entitled to redeem all or any of such shares at such times and in such manner as the Directors shall in their absolute discretion from time to time determine.

The Directors intend to operate an active discount management policy through the use of share buybacks of up to 14.99% of the ordinary shares that were issued upon admission.  The objective is to maintain the price at which the ordinary shares trade in the market at a discount to net asset value per ordinary share of no more than 5%.  In implementing this policy, the Directors will have regard to prevailing market conditions and will undertake share buybacks so long as they believe that it is in the best interests of shareholders as a whole to do so. Any ordinary shares bought back pursuant to the policy will be cancelled.  There was no share buyback during the years ended December 31, 2011 and December 31, 2010.

9    GENERAL AND ADMINISTRATION EXPENSES

		Year ended		Year ended
		December 31,		December 31,
		2011		2010
		US$		US$
Other fees to the Investment Manager (note 6)		168,224		341,122
Commission expenses		107,793		79,804
Directors' fees and expenses		106,812		96,616
Insurance expense		91,895		123,077
Advisory fees		66,672		52,185
Administration fee		48,000		50,400
Audit fee		35,000		35,190
Legal fees		22,984		51,302
Other expenses		76,355		75,933
		723,735		905,629

10   COMMITMENTS

The Fund has a capital commitment to three related party unquoted funds. At December 31, 2011 and December 31, 2010, the following capital commitments remain outstanding:

2011	Total capital		Commitment		Remaining
	commitment		paid		commitment
	US$ millions		US$ millions		US$ millions
TFO Shari'ah Co-Investment Fund SPC	5.5		5.4		0.1
TFO Real Estate Co-Investment Program	8.0		8.0		-
TFO Shari'ah SPD Fund	1.0		1.0		-
	14.5		14.4		0.1
2010	Total capital		Commitment		Remaining
	commitment		paid		Commitment
	US$ millions		US$ millions		US$ millions
TFO Shari'ah Co-Investment Fund SPC	5.5		5.0		0.5
TFO Real Estate Co-Investment Program	8.0		5.4		2.6
TFO Shari'ah SPD Fund	1.0		1.0		-
	14.5		11.4		3.1

The timing of the capital call depends upon investment opportunities identified by the related party funds and is expected to be called within one year.

11   CATEGORIES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

      The table below shows categories of the Fund's financial assets and financial liabilities at December 31, 2011:

		Held-for-trading		Designated at fair value through profit or loss		Items at amortised cost		2011 Total
		US$		US$		US$		US$
Balances with bank		-		-		5,891,529		5,891,529
Investments at fair value through profit or loss		9,695,254		12,886,574		-		22,581,828
Other assets		-		-		38,341		38,341
Total financial assets		9,695,254		12,886,574		5,929,870		28,511,698
Due to Investment Manager		-		-		-		-
Other payables		-		-		89,103		89,103
Total financial liabilities		-		-		89,103		89,103

The table below shows categories of the Fund's financial assets and financial liabilities at December 31, 2010:

		Held-for-trading		Designated at fair value through profit or loss		Items at amortised cost		2010 Total
		US$		US$		US$		US$
Balances with bank		-		-		4,554,144		4,554,144
Investments at fair value through profit or loss		14,152,896		9,632,364		-		23,785,260
Other assets		-		-		33,374		33,374
Total financial assets		14,152,896		9,632,364		4,587,518		28,372,778
Due to Investment Manager		-		-		192,467		192,467
Other payables		-		-		68,174		68,174
Total financial liabilities		-		-		260,641		260,641

12   RISK MANAGEMENT

Risk is inherent in the Fund's activities, but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. The process of risk management is critical to the Fund's continuing profitability. The Fund is exposed to credit risk, market risk and liquidity risk.  The Board of Directors is responsible for overall management of these risks. The Board of Directors has included certain of the risk management activities in the investment management agreement with the Investment Manager. The Investment Manager's objective is to assess, continuously measure and manage the risks of the portfolio, according to the investment objective, the investment policy and the overall risk profile of the Fund.  The nature and extent of the financial instruments outstanding at the statement of financial position date and the risk management policies employed by the Fund are discussed below.

(a)  Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge a financial obligation and cause the other party to incur a financial loss.  The Fund is exposed to credit risk on its balances with bank, quoted debt investments at fair value through profit or loss and other assets.

The Fund has a policy to maintain balances with reputable banks and custodians to minimise the counterparty risk. S&P's long term credit rating of the custodian was "A+" and ''A'' as at December 31, 2011 and December 31, 2010 respectively.  The Investment Manager evaluates counterparty risk for any of the Fund's transactions.  All transactions in quoted securities are settled upon delivery using approved and recognised brokers.

The Fund's maximum credit risk exposure as of December 31, 2011 and December 31, 2010 is as follows:

		2011		2010
		US$		US$
Balances with bank		5,891,529		4,554,144
Investment at fair value through profit or loss
- quoted debt securities		5,300,377		6,919,892
Other assets		38,341		33,374
		11,230,247		11,507,410

The Fund's investment in quoted debt securities comprises of counterparties with credit rating ranging from "AAA" to "BBB" as at December 31, 2011 and December 31, 2010.

The Fund's financial assets are performing and are neither past due nor impaired.

12   RISK MANAGEMENT (continued)

(b)  Market risk

Market risk is the risk that the fair value of future cash flows of financial instruments will fluctuate due to changes in market variables such as equity prices, profit rate and foreign exchange rate.

(i)   Equity price risk

The Fund trades in financial instruments, to take advantage of short-term market movements.  All investments present a risk of loss of capital.  The Fund's investments are susceptible to equity price risk arising from uncertainties about future prices of the instruments.  The Investment Manager moderates this risk through a careful selection of investments and other financial instruments within specified limits.  The maximum risk resulting from financial instruments is determined by the fair value of the financial instruments.  The Fund's overall market positions are monitored on a regular basis by the Investment Manager.

Equity price risk sensitivity

The below table demonstrates the sensitivity for equity investments that are based on indices:

		Change in		Effect on equity and on
Market Indices		equity price		profit/(loss) for the year
				2011		2010
		%		US$		US$
DJ Islamic		+/- 10		+/- 226,084		+/- 549,465
MSCI Europe Islamic		+/- 10		+/- 134,045		-
MSCI Emerging Markets Islamic		+/- 10		+/-  79,359		+/- 173,835

The equity price risk sensitivity for equity investments that are not based on indices is as follows:

A 10% increase in the net asset value of these investments in funds will increase the Fund's net profit by US$ 1,288,657 (2010: US$ 963,236), whilst all other variables held constant.

A decrease by 10% would result in an equal but opposite effect on net profit to the figures shown above, on the basis that all other variables remain constant.

This calculation is based on adjusting the fair values as at the year end.  It is important to note that this form of sensitivity analysis is unrepresentative of the risks inherent in the financial instruments held by the Fund as the measure is a point-in-time calculation, reflecting positions as recorded at that date, which do not necessarily reflect the risk position held at any other time.

(ii)  Profit rate risk

Profit rate risk arises from the possibility that changes in profit rates will affect future cash flows or the fair values of financial instruments.

The Fund is not exposed to profit rate risk as the Fund's balances with bank are not profit bearing; and the quoted debt investments at fair value through profit or loss are at fixed profit rates.

12   RISK MANAGEMENT (continued)

(b)  Market risk (continued)

(iii) Currency risk

Foreign currency risk is the risk that as certain assets of the Fund may be invested in securities and other investments denominated in foreign currencies (i.e. non base currency), the value of such assets may be affected favourably or unfavourably by fluctuations in currency rates.

The table below indicates the currencies to which the Fund had significant exposure at December 31, 2011. The analysis discloses the Investment Manager's best estimate of the effect of a reasonable possible movement of +5% of the currency rate against the dollar with all other variables held constant on the statement of comprehensive income and equity.

		Increase (decrease) in total comprehensive  income and equity
				2011
				US$
EUR				67,023

A decrease by 5% of the currency rate against the dollar would result in an equal but opposite effect on the statement of comprehensive income and equity to the figure shown above, on the basis that all other variables remain constant.

At December 31, 2010, the Fund's monetary assets and liabilities were only denominated in the base                            currency, US Dollars, and therefore the Fund was not exposed to currency risk.

(c)  Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting financial obligations as they fall due. The Fund's quoted securities are considered readily realisable. The Investment Manager monitors the Fund's liquidity position on a daily basis, and a high allocation of cash is maintained within the Fund to ensure that liquidity risk is minimised.  The Fund's constitution does not provide for the redemption of shares at the option of the shareholders and it is therefore not exposed to the liquidity risk of meeting shareholders' redemptions at any point in time.

The Fund's financial liabilities mature within six months from the statement of financial position date. The contractual maturities of financial liabilities based on undiscounted cash flows are the same as the amounts disclosed in note 11 since these financial liabilities do not carry any profit.

13    SEGMENT REPORTING

For management purposes, the Fund is organised into six operating segments as mentioned below. Each segment engages in separate business activities and the operating results are regularly reviewed by the Investment Manager and Board of Directors, for performance assessment purposes and to make decisions about resources allocated to each segment. The Investment Manager is responsible for allocating resources available to the Fund in accordance with the overall business strategies as set out in the revised Investment Policy of the Fund. The segments are as follows:

·    Money market and cash (comprising of balances with bank)

·    Public equity (comprising of investments in equity funds, publicly quoted equities, ETFs tracking Islamic indices, etc.)

·    Private equity (comprising of investments in private placements, investment in private equity funds, etc.) 

·    Islamic income and leasing (comprising of investments in Shari'ah compliant alternatives such as Sukuk, Musharakah, Ijarah etc.)

·    Real estate (comprising of investments in real estate, real estate funds, managed portfolio, etc.)

·    Alternative investments (comprising of investments in hedge funds, Shari'ah compliant wrapper instruments, etc.)

There have been no changes in reportable segments during the year.

13   SEGMENT REPORTING (continued)

Financial information about the segments is as follows:

Year ended December 31, 2011

Money

Islamic

market and

Public

Private

income and

Real

Alternative

cash

equity

equity

leasing

estate

investment

Total

US$

US$

US$

US$

US$

US$

US$

Net income from investments at fair value through profit or loss

-

(67,579)

521,500

228,509

262,413

73,626

1,018,469

At December 31, 2011

Other information:

Segment assets

5,891,529

4,394,877

5,369,849

5,300,377

6,505,518

1,011,207

28,473,357

Year ended December 31, 2010

Money

Islamic

market and

Public

Private

income and

Real

Alternative

cash

equity

equity

leasing

estate

investment

Total

US$

US$

US$

US$

US$

US$

US$

Net income from investments at fair value through profit or loss

-

807,685

146,987

545,511

(231,543)

-

1,268,640

At December 31, 2010

Other information:

Segment assets

4,554,144

7,233,004

4,538,205

6,919,892

4,094,159

1,000,000

28,339,404

13   SEGMENT REPORTING (continued)

The following table analyses the segmental information of investments which form a majority of the total income:

Year ended December 31, 2011

Money

Islamic

market and

Public

Private

income and

Real

cash

equity

equity

leasing

estate

US$

US$

US$

US$

US$

Number of  investments

-

2

1

2

1

Total income

-

(32,893)

521,500

198,449

262,413

Year ended December 31, 2010

Money

Islamic

market and

Public

Private

income and

Real

cash

equity

Equity

Leasing

Estate

US$

US$

US$

US$

US$

Number of  investments

-

4

1

3

1

Total income

-

737,207

146,987

499,150

(231,543)

The Fund's other assets, total liabilities, total equity and expenses are not considered part of the performance of an individual segment.

During the year there were no revenues from transactions within other operating segments.

The following table analyses the Fund's total income per geographical location:

		Year ended		Year ended
		December 31,		December 31,
		2011		2010
		US$		US$
United States of America		122,108		(170,461)
Cayman Islands		27,367		58,751
Luxembourg		16,190		381,114
Bermuda		81,565		152,043
Ireland		(83,769)		426,569
South Korea		536,982		76,485
United Kingdom		67,177		35,947
China		131,133		(26,526)
Malaysia		116,884		148,887
Jersey		2,832		188,487
Bahrain		-		(2,656)
		1,018,469		1,268,640

13   SEGMENT REPORTING (continued)

The following table provides a reconciliation between total segment assets and total assets:

		2011		2010
		US$		US$
Segment assets		28,473,357		28,339,404
Other assets		91,452		102,209
		28,564,809		28,441,613

14   CAPITAL MANAGEMENT

The primary objectives of the Fund's capital management procedures are to ensure that the Fund maintains liquidity in order to support its business and to maximise shareholders' value. The Fund manages its capital structure and makes adjustments to it in light of changes in business conditions and risk characteristics of its activities. No changes in structure were made during the years ended December 31, 2011 and December 31, 2010.

15   FAIR VALUES OF FINANCIAL INSTRUMENTS

Financial instruments comprise financial assets and financial liabilities.  The fair values of all financial instruments are not materially different from their carrying values as of the statement of financial position date.

16   TAXES

There is currently no taxation imposed on income by the Government of the Cayman Islands.  If any form of taxation were to be enacted, the Fund has been granted an exemption therefrom for a period of 20 years from March 18, 2008.  The only tax payable by the Fund on its income is withholding tax applicable to certain investment income. As a result of the above, no tax liability or expense has been recorded in the financial statements.

 

END

 

 

FR IRMATMBITBRT