Foresight Sust Regulatory News (FSF)

THE FAMILY SHARI'AH FUND LIMITED

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

Final Results for the year ended 31 December 2010

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 2010.

These results, the financial timetable, the full investing policy and the latest monthly investment manager's report are also available on the Fund's website (www.familyshariahfund.com).

The financial statements and the notice of the AGM (which is expected to be held on15 June 2011) will be sent to shareholders prior to 31 May 2011.

Included within these final results is the Company's current investing policy as required by the AIM Rules.

For further information, please contact:

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.

The Company's investing policy, as defined by the AIM Rules, is available on the Company's website at www.familyshariahfund.com/investing_policy.html.

CHAIRMAN'S STATEMENT

FOR THE YEAR DECEMBER 31, 2010

It is my privilege to present the report and accounts of The Family Shari'ah Fund Limited (the "Fund") for the year ended December 31, 2010, being the second full accounting year of operations. During the year the Fund recorded a net loss of US$54,307 and the net asset value of the Fund decreased from US$ 28,235,279 to US$ 28,180,972.

The signs of economic recovery which were evident by the end of 2009 generally continued on a global basis in 2010. However, the disparity between those economies which enjoyed relatively sound public finances and those which had over borrowed became more apparent, as exhibited by the financial crises which engulfed some of the peripheral Eurozone countries, during the summer. Furthermore, towards the end of the year, doubts arose about the ability of the United States to maintain its 2010 economic recovery with continuing high levels of consumer and public sector debt and evidence of rising inflation.

On a more positive note, the corporate sector proved that it is generally on a more sound footing with some of the cycle leading sectors, in particular, showing improved results. Interest rates remained low and while equities showed a marked rise in the first half of the year, significant volatility returned as the concerns on sovereign risk, rising inflation and the possibility of global growth stagnating became apparent.

The overall aim of the Investment Manager for the Fund in 2010 was to increase the portion of the Fund's assets which were invested in longer term assets whilst minimising the potential volatility. The Investment Manager had determined that the most appropriate way of achieving this was to focus on Private Equity and Real Estate assets. In this regard, I am pleased to report that the proposals to amend the asset allocation limits for the Fund as set out in last year's Annual Report were approved at the Fund's Annual General Meeting held on June 15, 2010.

Over the year the Investment Manager deployed around 21% of the Fund's assets into other asset classes, thereby reducing the cash and equivalent assets of the Fund from 37% to 16% by the year end. The majority of this deployment was invested in Real Estate related assets which were acquired at attractive valuations and which also provide significant cash income. However, as these assets were booked towards the end of the year the full ongoing income benefit of these investments has yet to be recorded in the annual accounts.

Expenses were also a focus of attention and I am pleased to report that these were reduced by 11% compared to 2009. I am also delighted to report that the Investment Manger has very generously waived all of the management fee due from the Fund in 2011 for which I extend my thanks on behalf of the Board of Directors and the Shareholders.

Thus, while it is disappointing to have to record a small loss for 2010, much progress has been made during the course of 2010 and absent any further major market dislocations, I believe that we can look forward to achieving the aims of the Fund with confidence.

Together with my fellow Directors, I would like to thank the Shareholders for their continued support and the members of the Shari'ah Supervisory Board for their efforts and also those teams of professionals at the Investment Manager and other firms for their continued hard work.

Peter Robinson

Chairman

April 28, 2011

Manama, Kingdom of Bahrain

THE FAMILY SHARI'AH FUND LIMITED

DIRECTORS' REPORT

DECEMBER 31, 2010

The Directors present their report and audited financial statements for The Family Shari'ah Fund Limited (the "Fund") for the year ended December 31, 2010.

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, 2010, the Fund had notification that the following shareholders had an interest of 3% or more of the Fund's issued share capital:

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, 2010

The statement of financial position as at December 31, 2010 and statement of comprehensive income for the year ended December 31, 2010 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:

Directors' Interests

The Directors do not have any shareholdings in the Fund or any options over shares in the Fund as at December 31, 2010. 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:

Corporate Governance Statement

Whilst the Fund is not subject to the Combined 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 AIM Companies as published by the Quoted Companies Alliance (as far as such guidelines are appropriate to a fund 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, Christopher Dixon and Dr. Reinhard Klarmann. The Remuneration Committee comprises of Peter Robinson, 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;

• 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 Christopher Dixon

Date: April 28, 2011

THE FAMILY SHARI'AH FUND LIMITED

AUDIT COMMITTEE REPORT

DECEMBER 31, 2010

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, 2010, together with the external auditors and Investment Manager to discuss the audited accounts for 2009, interim accounts for June 2010 and the internal and reporting systems.

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 annual report.

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

Peter Robinson

Chairman of the Audit Committee

Date: April 28, 2011

Manama, Kingdom of Bahrain

THE FAMILY SHARI'AH FUND LIMITED

REMUNERATION AND NOMINATION COMMITTEE REPORT

DECEMBER 31, 2010

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, 2010 and discussed the rotation policy and remuneration of the Directors and the Chairman of the Board.

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 28, 2011

Manama, Kingdom of Bahrain

THE FAMILY SHARI'AH FUND LIMITED

INVESTMENT MANAGER'S REPORT

DECEMBER 31, 2010

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 long-term capital appreciation from a Shari'ah compliant, diversified, investment portfolio characterised by a moderate level of risk.

For 2010, the net asset value of the Fund, net of all fees decreased by $54,307.

The Investment Manager was of the view that the global macro picture was improving in 2010 due to central banks interventions and demand stabilization. However the volatility seen in the liquid markets combined with the dislocation in the illiquid market meant a shift in the asset allocation from liquid to Illiquid asset class. Based on the recommendation of the Investment Manager, an investment policy statement change has been approved by the Board of Directors and Shareholders in 2010. This announcement approved an increase in the percentage of the Fund's assets held in Real Estate from 15% to 30% and in Private Equity from 15% to 20%. However, the broader limit of illiquid asset class being 50% of the total fund has been kept the same.

The Investment Manager started the year with 36.8% of the Fund's assets allocated to cash (comprising of cash and murabaha receivables) and finished the year with an allocation of 16.1% to cash.

The decrease in cash was through an increase of investments in Public Equity by 3.5%, in Real Estate by 14.4%, in Alternative Investments by 3.5%, in Private Equity by 1.8% and a decrease of investments in Sukuks by 2.5%.

As far as the activity during the year, the Investment Manager maintained its allocation in Sovereign and Quasi-Sovereign Sukuks and played tactically the Dubai Sovereign Sukuk market and generated double digit returns. On the Public Equity, the Investment Manager switched part of the Fund's passive exposure to an active high dividend equity manager. In addition, it played tactically the equity markets by adding exposure after the sell-off in May and monetizing this position in November.

The Investment Manager participated in six Private Equity transactions in 2010 of which five were based in South Korea and one in the US.

The Investment Manager added Real Estate as a new asset class in the portfolio. The objective of the Real Estate program is to identify yielding US real estate assets with target yields of 8% or more and potential for capital appreciation. The Investment Manager concluded 9 Real Estate deals in 2010.

The Investment Manager added Alternative Investments as a new asset class in the portfolio. The Alternative Investments class comprise of a Shari'ah compliant Murabaha structure secured by real estate with a maturity of three years and a yield of 10.6% per annum.

In summary, the Investment Manager has taken advantage of the dislocation in the market to deploy more than 21% of the Fund's cash in a diversified pool of longer term opportunities. We are confident that these opportunities will provide the overall portfolio with a combination of stable income stream and capital growth over the mid to long term.

For 2011, the Investment Manager believes that economic recovery will continue. However the risks of high US unemployment, crisis in some of the peripheral Eurozone countries, tightening in the emerging markets and geopolitical risks in the Middle East might hinder this recovery and provide volatility throughout the year. Therefore, the Investment Manager will continue the strategy used in 2010, and take the longer term view of deploying capital in the private market and maintain a cautious and flexible approach in the public markets.

__________________________

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, 2010

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

___________ ___________

Member Member

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 2010 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.

Auditors' 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 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 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 2010, its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

28 April 2011

Manama, Kingdom of Bahrain

___________________ ___________________

Peter Robinson Christopher Dixon

Chairman Director

1 ACTIVITIES

The Family Shari'ah Fund Limited (the "Fund") is a Shari'ah-compliant multi-asset class investment company. 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, 4th 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.

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 mentioned 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, 2010 were approved by the Directors on April 28, 2011.

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 Accounting standards, interpretations and amendments therein issued but not yet effective

The following standards are not expected to have a material effect on the financial position or performance of the Fund when adopted/applied:

Ø IAS 32, 'Financial Instruments: Presentation - Classification of Rights Issues'

Ø IFRIC 14, 'Prepayments of a minimum funding requirement (Amendment)'

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

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

The amended standard is effective for annual periods beginning on or after January 1, 2011. It clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduced a partial exemption of disclosure requirements for government-related entities. The Fund does not expect any impact on its financial position or performance. Early adoption is permitted for either the partial exemption for government-related entities or for the entire standard.

Ø IFRS 9, 'Financial instruments: Classification and measurement'

IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual periods beginning on or after January 1, 2013. In subsequent phases, the IASB will address classification and measurement of financial liabilities, hedge accounting and derecognition. The completion of this project is expected in 2011.

The Fund is evaluating the first phase of IFRS 9 and will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture. However, the management does not expect any significant impact on adoption of the changes brought in by the above phase of IFRS 9.

Improvements to IFRSs (issued in May 2010)

The IASB issued Improvements to IFRS, an omnibus of amendments to its IFRS standards. The amendments have not been adopted as they become effective for annual periods on or after either July 1, 2010 or January 1, 2011.

Ø IFRS 3, 'Business Combinations'

Ø IFRS 7, 'Financial Instruments: Disclosures'

Ø IAS 1, 'Presentation of Financial Statements'

Ø IAS 27, 'Consolidated and Separate Financial Statements'

Ø IFRIC 13, 'Customer Loyalty Programmes'

The Fund expects no impact from the adoption of the amendments on its financial position or performance.

3 ACCOUNTING POLICIES (continued)

3.2 Changes in accounting policy and disclosures

New and amended standards and interpretations

The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations adopted in the year commencing January 1, 2010:

Ø IFRS 2 Share-based Payment: Group Cash-settled Share-based Payment Transactions effective January 1, 2010

Ø IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended) effective July 1, 2009 including consequential amendments to IFRS 7, IAS 21, IAS 28, IAS 31 and IAS 39

Ø IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items effective July 1, 2009

Ø IFRIC 17 Distributions of Non-cash Assets to Owners

Ø Improvements to IFRS (May 2008)

Ø Improvements to IFRS (April 2009)

Improvements to IFRS

In May 2008 and April 2009, the IASB issued an 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 did not have any impact on the financial position or performance of the Fund.

Issued in April 2009

Ø IFRS 8 Operating Segments: clarifies that segment assets and liabilities need only be reported when those assets and liabilities are included in measures that are used by the chief operating decision maker. The adoption of the amendment had no impact on the Fund's segment disclosure, as the existing external segmental disclosures are more consistent with the internal reporting provided to the chief operating decision makers.

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

Issued in May 2008

Ø IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

Issued in April 2009

Ø IFRS 2 Share-based Payment

Ø IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

Ø IAS 1 Presentation of Financial Statements

Ø IAS 7 Statement of Cash Flows

Ø IAS 17 Leases

Ø IAS 34 Interim Financial Reporting

Ø IAS 36 Impairment of Assets

Ø IAS 38 Intangible Assets

Ø IAS 39 Financial Instruments: Recognition and Measurement

Ø IFRIC 9 Reassessment of Embedded Derivatives

Ø IFRIC 16 Hedge of a Net Investment in a Foreign Operation

3 ACCOUNTING POLICIES (continued)

3.3 Significant accounting policies

a) Murabaha receivables

Murabaha receivables comprise commodity murabaha receivables.

Murabaha receivables are sales on deferred terms. The Fund arranges a murabaha transaction by buying a commodity (which represents the object of the murabaha) and then resells this commodity to the murabeh (beneficiary) after computing a margin of profit over cost. The sale price (cost plus the profit margin) is repaid in instalments by the murabeh over the agreed period.

Where the income is quantifiable and contractually determined at the commitment of the contract, the income is recognised on an effective profit rate basis over the period of the contract.

b) Due from and due to broker

Amounts due from and due to broker represents receivables for securities sold and payables for securities purchased respectively, that have been contracted for but not yet settled or delivered on the statement of financial position date.

c) 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 fluctuation 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 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.

3 ACCOUNTING POLICIES (continued)

3.3 Significant accounting policies (continued)

c) Financial instruments (continued)

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.

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 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.

d) Accrued expenses

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

e) 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 is included in the statement of comprehensive income.

f) Dividend income

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

g) 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.

3 ACCOUNTING POLICIES (continued)

3.3 Significant accounting policies (continued)

h) 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.

i) Share capital

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

j) 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 annual general meeting of shareholders.

k) Fees and commissions

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

l) 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

This represents 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 revised investment policy of the Fund.

The fair values of financial instruments are as follows:

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 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 31 December 2010 and 2009, there have been no transfers between Level 1 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:

The Fund's exposure analysed by geographic region and industry sector as at December 31, 2010 and 2009 is as follows:

Geographic region

Industry sector

5 OTHER ASSETS

6 RELATED PARTY TRANSACTIONS AND BALANCES

Parties are considered to be related if one party has the ability to control the other party or exercise 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.

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

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

6 RELATED PARTY TRANSACTIONS AND BALANCES (continued)

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

7 OTHER PAYABLES AND ACCRUALS

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:

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.

8 SHARE CAPITAL (continued)

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, 2010 and 2009.

9 GENERAL AND ADMINISTRATION EXPENSES

10 COMMITMENTS

The Fund does not have any commitments except as disclosed in note 12(c).

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, 2010:

The table below shows categories of the Fund's financial assets and financial liabilities at December 31, 2009:

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 balance 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" as at December 31, 2010 and 2009. During the year, the Fund employed custodians whose credit rating ranges from "A-1" to "A". 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, 2010 and 2009 is as follows:

The Fund's investment in quoted debt securities comprises of counterparties with high credit rating ranging from "AAA" to "A-" as at December 31, 2010 and 2009.

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:

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$ 963,236 (2009: US$ 402,675), whilst all other variables held constant.

A decrease by 5% 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.

12 RISK MANAGEMENT (continued)

(b) Market risk (continued)

(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 exposed to profit rate risk on the quoted debt investments at fair value through profit or loss.

The following table demonstrates the sensitivity of the statement of comprehensive income to reasonably possible changes in profit rates, with all other variables held constant:

(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 Fund's monetary assets and liabilities are denominated in the base currency, US Dollars, and therefore the Fund is 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 has a capital commitment to two related party unquoted funds TFO Shari'ah Co-Investment Fund SPC ("SPECO"), and TFO Real Estate Co-Investment Program ("RECO"), both representing a portfolio of assets. The uncalled capital commitments as at the statement of financial position date amounted to US$ 0.5 million to SPECO and US$ 2.6 million to RECO (2009: US$ 0.05 million to SPECO and Nil to RECO). The capital call depends upon investment opportunities identified by the related party fund and is expected to be called within one year. 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 balance with bank)

·; Public equity (comprising of investments in equity funds, publicly quoted equities, ETF 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 underlying investments in real estate)

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

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

There has been one transaction in the 'Alternative investments' during the year. In addition, during the year the Fund committed US$ 8 million to the real estate segment.

Financial information about the remaining segments for the year ended December 31, 2010 and December 31, 2009 was as follows:

13 SEGMENT REPORTING (continued)