Gulf Regulatory News (GIF)

12 September 2016

Qatar Investment Fund Plc ('QIF' or 'the company')

Annual Report for the year ended 30 June 2016

London-listed Qatar Investment Fund plc (LSE: QIF) invests in Qatar and the Gulf Cooperation Council (GCC) region, with exposure to economic growth in the area. QIF invests in companies on the Qatar Exchange, with a possible allocation of up to 15% in other listed companies in the GCC.

Qatar:

· Qatar and other GCC markets were hit by the continuing fall in oil prices

· Non-hydrocarbon sector now 65% of Qatar GDP, expected to rise to 69% by 2017

· FTSE Russell upgrading Qatar from frontier to emerging market in September 2016

· Qatar committed to diversifying the economy and investing in infrastructure. US$200bn infrastructure investment ahead of the 2022 FIFA World Cup

Qatar Investment Fund plc:

· Share price fell 18.2% compared to the Qatar Exchange which fell 18.9%. Net asset value of the fund fell 20.8%

· Shareholders received a dividend per share of 4.0c

· The Board proposes to pay a dividend of 4.0c per share for the period to end June 2016.

· Loss for the year $37.9m

Discount management and proposed tender offer:

· Shareholders to vote on second graduated tender offer later in 2016

Holdings as of 30th June 2016:

· At 30 June 2016 QIF was invested in 23 companies, 19 in Qatar and 4 in the UAE

· Banks & financial services and industry remain the largest weightings

Nick Wilson, Chairman of Qatar Investment Fund plc, commented:

"During the 12 months the entire GCC region was hit by lower oil prices and bearish sentiment and Qatar was no exception. Despite these headwinds Qatar has not only grown its economy 3.7% in 2015 but has continued to make remarkable progress in diversifying the economy away from oil and gas. In 2011 the non hydrocarbon economy was 42% of GDP, that figure is now 65% and continues to rise.

"We expect Qatar to continue to grow at around 3.7% in 2016 and 2017. This, coupled with a rising population and a government commited to infrastructure development off a solid fiscal base, adds up to an enviable macro-economic outlook for investors."

ENDS

For further information please contact:

Nick Wilson

Chairman

Qatar Investment Fund plc

01624 622 851

William Clutterbuck

Maitland

0207 379 5151

Chairman's Statement

On behalf of your Board, I am pleased to present your Company's ninth Annual Report and Financial Statements for the year to 30 June 2016.

During the twelve months, your Company's Net Asset Value per Share ("NAV") fell by 20.85% to US$1.2138 which compares with a fall of 18.98% in the Qatari stock market (Qatar Exchange Index) and a fall of 14.21% in the MSCI Emerging Markets Index. Following a narrowing of the discount at which the shares trade to NAV, the shares fell from US$1.2600 to US$1.03125, a fall of 18.15%. Shareholders received a dividend of 4.0c per share with an ex-dividend date of 17 December 2015.

Results

Results for the year under review showed a loss of US$37.95m (2015:US$22.65m profit) generated from fair value adjustments, realised gains and dividend income. This is equivalent to basic earnings per share (loss) of (30.03) cents (2015:15.31 cents gain).

The continuing fall in hydrocarbon prices pressured shares on the Qatar Exchange during the first half of the financial period despite continued growth in the non-hydrocarbon sector. At the end of the period we had a total of 23 holdings, 19 of which were in Qatar and 4 in the United Arab Emirates. Banking and financial services remains our largest sector with a 43.3% exposure.

The Company's Ongoing Charges (formerly Total Expense Ratio) rose to 1.77% from 1.66 % in the previous year. The charges were calculated in accordance with the methodology recommended by The Association of Investment Companies. The increase was largely attributable to the reduction in the net asset value of the Company resulting in those fixed costs being spread over a smaller asset base following the 14% tender offer and an active buy back strategy.

Managing the Discount between the share price and NAV

Discount management remains a priority for the Board and we continued to make use of the authority granted by shareholders to buy back the Company's shares. During the period a total of 2,102,373 shares were bought back to be held in Treasury and 890,509 shares were cancelled, as they had been held in Treasury for 12 months. The board works with the Investment Manager and the broker to raise the profile of the Company, giving frequent interviews to the financial press in order to raise the profile of the Company with institutional and private investors. An extensive roadshow was carried out in June 2016 visiting existing shareholders and potential investors.

Proposed Tender Offer

As announced on 13 April 2015, the Board will give shareholders the opportunity to vote for the second graduated tender offer with the tender offer size a function of the average discount during the twelve-month period prior to the tender offer date, as set out in the table below. Under this Board proposal, the maximum size of the tender offer would therefore be capped at 15%. Further details will be provided later in 2016.

Proposed Dividend

For the year ended 30 June 2016, dividends received from our investee companies were significantly lower than in the previous year. This was due to dividends received from some of our top holdings being reduced in order to conserve capital.

Whilst your Company has pursued a progressive dividend policy, it is the Board's intention this year to recommend to shareholders a maintained dividend of 4.0c per share, partly financed by a small transfer from distributable reserves. As a result of the loss reported for the 2016 year, the dividend, if approved by shareholders, will not be covered by profits for 2016, and accordingly will be paid out of retained earnings.

If the discount test described above is triggered, the dividend proposed will be payable on the post tender offer share capital with a record date and payment date after such tender offer. Subject to shareholder approval at the forthcoming Annual General Meeting, the dividend will be paid after the tender offer. Further details on the ex-date , record date and payment date will be made in due course.

Post Balance Sheet events

There have been no post balance sheet events.

Outlook, risks and uncertainties

The Qatari economy slowed during the period with 2015 GDP growth of 3.7%. With the non-hydrocarbon sector now accounting for over 65% of real GDP, the impact of lower hydrocarbon prices is likely to be ameliorated. Our investment adviser believes that near to long-term growth prospects should remain healthy driven by a strong infrastructure pipeline, strong fiscal spending and supportive demographics.

There are, of course, risks to investors. The Board believes these principally fall in the following categories; geopolitical events, market risks, investment and strategy risks, accounting, legal and regulatory risks, operational risks and financial risks. Information on each of these is given in the Business Review section of this Annual Report.

Looking to the future, the Board is confident that the Company is invested in companies with good prospects listed on the Qatar Exchange and elsewhere in the GCC region. The Company offers international investors one of the few practical ways to gain investment exposure to Qatar's vigorous economy.

The Board views the future of the Company with confidence and firmly believes that continued growth in the non-hydrocarbon Qatari economy combined with improving demographics will lead to significant improvements in corporate profitability.

Annual General Meeting

I look forward to welcoming shareholders to our ninth Annual General Meeting on 17 November 2016, which will be held at 11.00 am, at the Company's registered office at Millennium House, 46 Athol Street, Douglas, Isle of Man.

Nicholas Wilson

Chairman

9 September 2016

Business Review

The following review is designed to provide information primarily about the Company's business and results for the year ended 30 June 2016. It should be read in conjunction with the Report of the Investment Manager and the Investment Adviser on pages 7 to 18 which gives a detailed review of the investment activities for the year and an outlook for the future.

Investment Objective and Strategy

The Company's investment objective is to capture, principally through the medium of the Qatar Exchange (formerly the Doha Securities Market), the opportunities for growth offered by the expanding Qatari economy by investing in listed companies or companies soon to be listed. The Company may also invest in listed companies, or pre-IPO companies, in other Co-operation Council for Arab States of the Gulf (GCC) countries.

The Company applies a top-down screening process to identify those sectors which should most benefit from sector growth trends. Fundamental industry and company analysis, rather than benchmarking, forms the basis for both stock selection and portfolio construction.

The Company's investment policy is on pages 19 to 21.

Performance Measurement and Key Performance Indicators

In order to measure the success of the Company in meeting its objectives and to evaluate the performance of the Investment Manager, the Directors take into account the following key performance indicators:

Returns and Net Asset Value

At each quarterly Board meeting the Board reviews the performance of the portfolio versus the Qatar Exchange (QE) Index (local benchmark) as well as the net asset value, income, share price and expense ratio for the Company.

Discount/Premium to Net Asset Value

On a weekly basis, the Board monitors the discount/premium to net asset value. The Directors renew their authority at the annual general meeting in order to be able to make purchases through the market where they believe they can assist in narrowing the discount to net asset value and where it is accretive to net asset value per share.

On 9 August 2016 the Company announced the details of its annual share buy-back programme which will expire on 12 November 2016. Pursuant to, and during the term of this share buy-back programme, the Company may purchase ordinary shares provided that:

1) the maximum price payable for an ordinary share on the London Stock Exchange is an amount equal to the higher of:

a. 105 per cent. of the average market value of the Company's ordinary shares as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which such share is contracted to be purchased; and

b. In order to benefit from the exemption laid down in Article 5(1) of

Regulation (EU) No 596/2014, the Company will not purchase shares at a price higher than the higher of the price of the last independent trade and the highest current independent purchase bid on the trading venue where the purchase is carried out; and

2) the aggregate number of ordinary shares which may be acquired on behalf of the Company in connection with this share buy-back programme shall not exceed 19,321,909 ordinary shares.

Due to the limited liquidity in the ordinary shares, a buy-back of ordinary shares pursuant to the share buy-back programme on any trading day is likely to represent a significant proportion of the daily trading volume in the ordinary shares on the London Stock Exchange (and is likely to exceed the 25% limits of the average daily trading volume as laid down in Article 5(1) of Regulation (EU) No 596/2014 and as such the Company will not benefit from this exemption).

It is expected a further announcement will be made following the 2016 annual general meeting with details of the 2016/2017 share buy-back programme.

A Board member is responsible for close monitoring of our share price, and working with our broker to buy back shares when we believe appropriate so as to manage any discount to net asset value. 

Yield

The Board monitors the dividend income of the portfolio and the amount available for distribution and considers the impact on the Company's annual dividend policy of future progressive dividend payments, subject to the absence of exceptional market events.

Principal Risks and Uncertainties

The Board confirms that there is an on-going process for identifying, evaluating and managing or monitoring the key risks to the Company. These key risks have been collated in a risk matrix document which is reviewed and updated on a quarterly basis by the Directors. The risks are identified and graded in this process, together with the policies and procedures for the mitigation of the risks.

The key risks which have been identified and the steps taken by the Board to mitigate these are as follows:

Market

The Company's investments consist of listed companies. There are no investments in companies soon to be listed. Market risk arises from uncertainty about the future prices of the investments. This is commented on in Note 15 on pages 62 to 66.

Investment and Strategy

The achievement of the Company's investment objective relative to the market involves risk. An inappropriate asset allocation may result in underperformance against the local index. Monitoring of these risks is carried out by the Board which, at each quarterly Board meeting, considers the asset allocation of the portfolio, the ratio of the larger investments within the portfolio and the management information provided by the Investment Manager and Investment Adviser, who are responsible for actively managing the portfolio in accordance with the Company's investment policy. The net asset value of the Company is published weekly.

Accounting, legal and regulatory

The Company must comply with the provisions of the Isle of Man Companies Acts 1931 to 2004 and since its shares are listed on the London Stock Exchange, the UK Listing Authority's Listing Rules and Disclosure and Transparency Rules ("UKLA Rules"), a breach of company law could result in the Company and/or the Directors being fined or the subject of criminal proceedings. A breach of the UKLA Rules could result in the suspension of the Company's shares. The Board relies on its Company Secretary and advisers to ensure adherence to company law and UKLA Rules. The Board takes legal, accounting or compliance advice, as appropriate, to monitor changes in the regulatory environment affecting the Company.

From 3 July 2016 the Company must comply with the Market Abuse Regulation (MAR) which contains prohibitions for insider dealing and market manipulation, and provisions to prevent and detect these.

Operational

Disruption to, or the failure of, the Investment Manager, the Investment Adviser, the Custodian or Administrator's accounting, payment systems or custody records could prevent the accurate reporting or monitoring of the Company's financial position. Details of how the Board monitors the services provided by the Investment Manager and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal control section of the Corporate Governance Report on pages 24 to 30.

Financial

The financial risks faced by the Company include market price risk, foreign exchange risk, credit risk, liquidity risk and interest rate risk. Further details are disclosed in Note 15 on pages 62 to 66.

Report of the Investment Manager and Investment Adviser

Regional Equity Market Overview

Source: Bloomberg

In the 12 months to 30 June 2016, returns from all the GCC markets were negative, characterized by steep market volatility. The GCC index (Bloomberg GCC200) fell 20.2%, weighed down by lower oil prices, continued regional geopolitical tensions and concerns about global economic growth. In the latter half of CY2015, global equity markets received a twofold blow from the surprise devaluation of the Chinese yuan and an extended slump in global oil prices which continued into Q1 2016. Moreover, the normalization of the interest rates in the US, announced in December 2015, increased volatility across global equity markets. Following the US rate hike, four GCC economies (Saudi Arabia, UAE, Bahrain and Kuwait) also raised their policy rates. The Qatari market, which was the best performing market in the GCC last year, clocked in a dismal performance, with losses only behind the Saudi market, which was the worst performing market in the region.

The drop in oil prices late last year weighed on the performance of equity markets during H2 2015. All the GCC indices dropped during this period, with Saudi Arabia reporting the highest fall of 23.9%, followed by Dubai and Oman which were down 22.9% and 15.9%, respectively. Qatar fell 14.5% during H2 2015.

The drop in oil prices has negatively impacted the fiscal balances of GCC countries. For the first time in 15 years, Qatar is expected to report a fiscal deficit, estimated at 4.8% of GDP, at about QAR 46.5 billion in FY 2016. Several GCC nations have also announced reforms, including cuts in fuel subsidies and conservative spending plans to face the challenging environment.

The oil price decline continued into the early part of this calendar year after the UN lifted sanctions over Iran, leading to additional pressure on the already over supplied oil market. As a result, GCC stock markets tumbled early this year and oil prices dropped below the US$ 30 level. However, the introduction of the Saudi National Vision 2030, expectations of continued infrastructure spending in Qatar and a recovery in oil prices subsequently generated optimism towards regional equity markets. Brent crude oil recovered to touch US$ 50 per barrel in the Q2 2016 following supply disruptions in Nigeria and Canada caused by unrest and wildfires, respectively.

During H1 2016, the performance of GCC markets was mixed. Bahrain posted a 8.0% decline, followed by Saudi Arabia and Qatar falling 6.0% and 5.2%, respectively. On the other hand, Oman, Dubai and Abu Dhabi markets gained 6.9%, 5.1% and 4.4% respectively, during the period.

Despite reporting dismal performance last year, the Qatar market has shown resilience compared to other GCC peers over a two year time frame. For the period ending 24 months till June 2016, the Qatari market fell 14.0% and was the second best performer after Abu Dhabi (down 1.2%). During this period, the price of a barrel of Brent crude fell 55.8%. Over the same period, the Saudi market fell 31.7%, Kuwait 23.0%, and the Bahrain and Dubai markets dropped 21.7% and 16.0%, respectively.

The Investment Adviser believes that the underperformance of the Qatar market over 2015-16 is overdone and it will bounce back and perform well over the medium to long term, driven by strong macroeconomic fundamentals and its superior growth prospects. The Qatari government is committed to continue its large infrastructure investment spending programme and the non-oil sector is posed for a robust growth over the next few years.

Quarterly Performance of Regional Markets

Source: Bloomberg

Outlook: Positives Overweigh Concerns

The long term growth prospects of the Qatari economy remain positive, underpinned by infrastructure spending of c.US$200 billion ahead of the 2022 FIFA World Cup, in line with the Qatar National Vision (QNV) 2030. QNV focuses on the country's diversification policy to transform the Qatari economy from hydrocarbon dependence to a non-hydrocarbon economy. Results are already visible: the share of non-hydrocarbon GDP has grown from 41.9% in 2011 to 63.8% at the end of 2015. This is expected to rise to 68.9% by the end of 2017.

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting % Share of Non-hydrocarbon sector in Nominal GDP (Qatar)

Despite the fact that Qatar is expected to report a fiscal deficit for the first time in 15 years (about 4.8% of GDP), the 2016 budget also shows a commitment to long-term development with allocation to major projects growing by 3.8% to QAR90.8 billion. The majority of capital expenditure is allocated for the infrastructure, health and education sectors, representing over 45.0% of total budgeted expenditure.

Qatar's spending cuts were modest in comparison to other GCC nations and it is better positioned to withstand low oil prices than GCC peers. Qatar's budget deficit for 2016 is one of the lowest in the GCC.

Moreover, FTSE Russell confirmed that Qatar Exchange would be upgraded to Secondary Emerging Market (EM) from Frontier Market (FM) status in two equal tranches, first in September 2016 and second in March 2017.

In the first tranche, Qatar would be removed from the FM Index and a 50.0% tranche would be included to the EM Index, resulting with a weight of c0.6% and estimated inflows of ~US$602 million. In the second tranche, Qatar's representation in the EM Index would increase to c1.2%. This should mean Qatar experiencing passive inflows of about ~US$1,204 million in the all-emerging index.

Brexit Impact on GCC

The historic decision by the UK to quit the European Union is expected to have a short term impact on the GCC nations, particularly in the currencies and financial markets.

Sterling weakness could have both positive and negative effects on the GCC economies. Currency weakness, for example, may significantly impact tourist flows to the Gulf.

Moreover, the uncertainly caused by Brexit might delay the US Fed raising interest rates. As a result of these low interest rates, GCC governments could accelerate capital raising from international bond markets.

However, the Investment Adviser believes that the impact of Brexit would be minimal on GCC equities as their earnings prospects are not strongly related. Thus, the Investment Adviser expects equities to recover gradually as their movements are fundamentally linked to domestic factors and oil prices.

Strong economic growth should continue to support Qatari banking sector

In the past few years, the size of the Qatari banking sector has not only expanded but its activities and services have also diversified. Increased involvement by the government through the Qatar Central Bank (QCB) in regulating, directing and controlling sector activities have made it better organised, effective and competitive.

However, the banking industry in Qatar has faced headwinds recently, leading to a tighter liquidity. Loan growth has outstripped deposit growth as lower oil and gas revenues have led to a decline in public sector deposits, causing a tightening of liquidity and driving banks to raise funds abroad. This has also led to a rise in interbank rates and the cost of funding. Additionally, Qatar Interbank Offered Rates (QIBOR) has risen sharply over the past year.

Given the current liquidity situation, QCB has delayed the deadline for the compliance with the 100% loan to deposit (LDR) ratio until 2018. Banks are also in negotiation with the regulators to amend the LDR formula to include long term wholesale funds.

Despite the effect of low oil prices, the Qatari banking system is robust due to its overall credit profile which remains consistent with an "Aa2" rating (by Moody's). This rating was awarded on account of expected persistent growth, high wealth levels, lower vulnerability to the oil price, coupled with prudent fiscal policy when compared to its GCC peers.

According to a study by Global Investment House (based on banks under coverage), during Q1 2016 the profitability of Qatar's banking sector grew 1.7% YoY compared to a 0.7% drop across GCC region banks. On an annual basis, Kuwait and the UAE banks saw profits falling 10.1% and 7.7%, respectively, while Saudi Arabia's bottom-line increased 6.6% YoY in the first quarter of 2016. On a sequential basis, average profitability of GCC banks expanded 6% QoQ, with Saudi Arabia leading the rise (up 13.9% QoQ), followed by Qatar at 13.3%.

Qatari banks managed to maintain the highest lending growth at 16% YoY, compared to the GCC average of 8.7%. The strong rise in lending growth was driven by an increase in public sector spending in relation to government-backed initiatives prior to the FIFA World Cup 2022. Total assets of the GCC banks expanded 5.6% YoY in Q1 2016, with Qatar witnessing the strongest growth of 11.8%, followed by the UAE and Saudi Arabia with total assets growth of 6.8% and 2.2%, respectively. However, provision for bad debts rose sharply for Qatari banks during Q1 2016.

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting GCC banking sector credit growth

Over the longer term, as per the QCB's data, in the 21 months to March 2016, Qatar's lending growth remained robust, up 26.6%, followed by Saudi Arabia and Oman. Qatar also registered the highest credit growth in FY 2015 compared to its GCC peers.

Despite strong credit growth, the asset quality of Qatari banks remained good, driven by prudential regulation and the sizeable proportion of high quality government-related loans. The asset quality of Qatari banks is expected to be supported by healthy operating environment and a robust regulatory regime.

According to the latest QCB data, total credit extended by Qatari banks remained good with total loans increasing by 4.6% between December 2015 and June 2016 and 13.2% YoY in June 2016. Private sector loan growth was relatively slower at 1.7% during first six months of 2016, while public sector growth was robust at 9.9%. However, in FY 2015, public sector loan growth was slower (1.6%) compared to the private sector (23.4%). Strong loan growth in the public sector could be attributed to the awarding and execution of large infrastructure projects. Total deposits grew 5.1% during first six months of 2016. Consequently, the banking sector's loans-to-deposit ratio (LDR) stood at 115% at the end of June 2016, compared to 116% at the end of December 2015.

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting Pick up in public sector loan growth

Public sector credit growth is expected to remain strong due to the fact that the domestic economy has substantial funding needs for FIFA World Cup 2022 related construction and long term infrastructure spending in line with the Qatar National Vision 2030. Additionally, a steady rise in population should bode well for consumer sector loan growth.

Despite on-going concerns about global economic growth, lower oil prices and regional unrest, Qatar's economic growth is expected to remain healthy on the back of sizeable reserves, strong commitment by the government to infrastructure spending and a steady rise in population leading to consumption growth. The Investment Adviser believes that the Qatari banking sector would be a long term beneficiary of this with the considerable opportunities highlighted above.

GCC to introduce VAT in 2018

Low oil prices, shaving off about 20.0% of the combined 2015 GDP in the MENA region, have strengthened the case for implementing alternative avenues for raising revenues for the GCC governments.

GCC government officials recently confirmed that the Gulf countries are to introduce a unified VAT of up to 5.0% from 2018. According to the IMF, a VAT rate of 5.0% could generate revenues in the range of 2.0% of GDP. VAT implementation would be simultaneous across all the GCC nations.

Health, education and social services as well as essential food items and certain financial services would be exempt from the tax.

The Investment Adviser believes that the introduction of VAT would primarily affect the consumer and telecom sectors. Luxury clothing, jewellery and watches would be an obvious target for VAT, along with cigarettes, fuel and cars.

Macroeconomic Update

According to the Ministry of Development Planning and Statistics (MDPS), the Qatari economy continued to grow in Q4 2015, with GDP rising 4.0% compared to Q4 2014. The non-hydrocarbon sector GDP grew 7.4%, mainly driven by

expansion in construction, finance, utilities and trade sectors. Lower oil prices meant the hydrocarbon sector was GDP flat with marginal growth of 0.7%.

Going forward, the Investment Adviser believes that Qatar's real GDP growth is set to continue, driven by strong growth in the non-hydrocarbon sector, as investment spending remains strong. According to Institute of International Finance (IIF), Qatar is expected to remain the fastest growing economy in the MENA region in 2016 and 2017, growing by 3.7% and 3.8%, respectively. Underpinned by preparation to host the FIFA 2022 World Cup, the non-hydrocarbon sector expansion is expected to be at around 6.0%, while the hydrocarbon growth is expected to be around 1.4% in both 2016 and 2017.

Qatar's population grew 2.3% between December 2015 and June 2016, to 2.48 million. Population growth is expected to remain strong in coming years, as large project spending related to the 2022 FIFA World Cup continues to attract expatriates. Thus, steady growth in population and high levels of personal consumption is expected to continue to encourage the domestic consumer and services sector companies.

Recent Developments

QSE entitled to receive applications for listing

Qatar Stock Exchange (QSE) is now the official entity to receive the applications for public offerings, listings and admissions to trading. The move should make it easier for issuers processing their applications.

Qatar First Bank (QFB) plans to list on the QSE by April 2016

QFB listed its shares on the QE on 27 April 2016. QFB, is the first independent Shari'ah compliant financial institution based in Qatar.

QCB to issue new guidelines for insurance sector

There is huge scope for insurance sector growth arising from the low level of insurance penetration in Qatar. Qatar Central Bank (QCB) and Qatar Financial Centre Regulatory Authority (QFCRA) have upgraded their guidelines for Qatar's booming insurance sector. Qatar's insurance sector attracted premiums of QAR7.8 billion in 2015. This is expected to reach QAR8.23 billion and QAR8.58 billion in 2016 and 2017, respectively.

Hotel projects worth US$7 billion in pipeline

Middle East Economic Digest (MEED) estimates that around 65 hotels are currently being built or are planned, with a total investment of around US$7 billion.

Qatar sets a limit of 5% for shareholders of listed banks

According to the latest regulation set by the Qatar Central Bank and the Qatar Financial Markets Authority, investors must limit their holdings in Qatari banks and financial firms to 5.0% of the company's capital or 10.0% with a central bank waiver. However, shareholders who exceed the limit, have five years to comply.

Qatar raised US$ 9 billion of Eurobonds

Launching the Middle East's biggest ever bond issue, Qatar issued US$ 9 billion of Eurobonds with three different maturities in order to fill the budget deficit gap left by falling oil and gas revenues. This was the first sale in four years from Qatar and the size of the offer was almost double the US$ 5 billion that the analysts had predicted.

Qatar issued US$ 3.5 billion in five-year notes at 120 bps over US Treasuries, US$ 3.5 billion in ten-year bonds at 150 bps over US Treasuries and US$ 2 billion of 30-year paper at a 210 bps over US Treasuries.

FIFA World Cup 2022 stadiums to cost up to US$ 10 billion

Qatar is expected to spend up to US$ 200 billion on wider infrastructure required to host the FIFA World Cup 2022. Qatar's 2022 World cup stadium construction costs are expected to be US$ 8 -10 billion.

Rayyan Water to be listed on QE by the end of 2016

Rayyan Water, the largest local supplier of bottled water in Qatar, plans an IPO by the end of 2016. Rayyan is aiming to list half of its shares. Rayyan would only be the third new listing on QSE since 2010.

Rayyan's other interests include contracting, cement, general sponsorship and trading.

QCB sets new guidelines for foreign bank currency holdings

The QCB issued a circular regarding new maximum limits on open positions that a bank can hold in foreign currency, to limit the risks of foreign currency open positions.

According to the circular, the maximum limit for dollar open positions - surplus and deficit - is set at 25.0% of capital and reserves, while the limit for all other currencies is set at 5.0%. The aggregate open position for all foreign currencies is set at 30.0% of bank capital and reserves. Banks have been given a 12-month grace period to comply with the new regulations.

Qatar's share in the total value of planned GCC projects stood at 8.57%

According to MEED, Qatar accounts for an 8.57% share in the total value of the pipeline projects planned in the GCC (as of May 2016), which amounted to US$ 2,000 billion.

Saudi Arabia led the GCC region in terms of the value of projects in the pre-execution stage, with 38.9% of the total value, followed by the UAE with 34.8%. Kuwait, Oman and Bahrain accounted for an 8.22%, 6.48% and 2.97% share, respectively of the total value.

Scrapping of fuel subsidies likely to be a positive trigger for Qatari economy

Given the need for fiscal consolidation, Qatar scrapped gasoline and diesel subsidies from May 2016, as the nation is set to register a deficit this year after more than a decade of budget surpluses.

However, according to the Institute of International Finance, removal of subsidies is seen to be a positive sign for the Qatari economy, given that the subsidies create a deadweight loss as low fuel prices lead to higher consumption at the expense of reduced exports.

RasGas signs new deal with French energy company EDF

Recently, RasGas through Ras Laffan Liquefied Natural Gas Company - 3 (RL 3) has entered into a new sales and purchase agreement (SPA) with French energy company EDF to supply 2 million tons of liquefied natural gas (LNG) per annum from 2017. This new agreement is in addition to existing contracts signed between RasGas and EDF group subsidiaries supplying up to 4.6 million tons per annum to Edison in Italy and up to 3.5 million tonnes annually to EDF Trading in Belgium.

Valuations

Source: Bloomberg, Prices as of 30 June 2016

Despite volatile market conditions and oil prices fluctuations, the Qatari market and Qatari companies will remain attractive to investors on the back of strong economic fundamentals, healthy non-hydrocarbon sector growth and large fiscal buffers.

Moreover, the Qatari market remains attractive to investors due to compelling valuations and healthy dividend yields.

Corporate Profitability

Net profit calculation for the 12 months to 30 June 2016 is based on restated net profit numbers.

*Banking & Financial Services sector excludes QFBQ as it was listed in FY 2016 and financials for prior periods are unavailable for calculations.

Source: Qatar Exchange

For the 12 months to 30 June 2016, net profits of the Qatar Exchange (QE) listed companies declined by 14.8% compared to the 12 months to 30 June 2015. This decline was mainly driven by the fall in net profits of the industrial, real estate and transportation sectors. Weaker oil prices affected the performance of the industrial sector. However, banks & financial services, insurance, services & consumer goods, and telecom sectors reported a rise in net profits.

The 43 companies listed on the QE reported an overall net profit of QAR 40.9 billion (US$11.2 billion) for the year ended 30 June 2016, compared to QAR48.0 billion (US$13.2 billion) reported for the year ended 30 June 2015. The real estate sector reported a massive decline in net profit (down 62.7%) due to a one-off gain recorded during the 12 months to 30 June 2015. Excluding one-off gain related to Barwa Real Estate, the net profit of the 43 listed companies would have declined 9.7% for the year ended 30 June 2016.

During the 12 months to 30 June 2015, net profit of Barwa Real Estate grew 300%, as the company reported substantial profit from the sale of properties. Moreover, the decline in profits for the period ended 30 June 2016 of the real estate sector widened further by the fall in net profits of United Development Company and Mazaya Qatar, which recorded a drop of 32.1% and 34.4%, respectively. The banking & financial services sector net profit growth stood at 0.5%, mainly driven by the rise in profits of listed Qatari banks (net profit at Qatari listed banks increased 1.1% during the period). The banking & financial services sector heavyweight, Qatar National Bank, reported an 8.7% rise in net profit. Industrial sector net profit declined 24.1% due to a poor performance by the sector heavyweight, Industries Qatar. Net profit at Industries Qatar fell 32.7% in the 12 months to 30 June 2016, due to weaker product prices. Gulf International Services also reported a 72.3% drop in its net profit. The Transportation sector net profit declined by 4.1%. Net profit of the Telecom sector increased substantially by 84.6%, led by a sharp rise in net profit at Ooredoo QSC. The services & consumer goods sector reported a 2.6% gain in the net profit during the period, as Qatar Fuel Company, reported a 9.5% rise in its net profit.

Looking ahead, the Investment Adviser believes that earnings growth in Qatari listed companies would improve and does not expect any adverse shocks. Increasing infrastructure spending, growing population, stable oil prices and robust growth in the non-hydrocarbon sectors would likely prove to be key positives for domestic companies especially in the banking, real estate, consumer and transportation sectors.

Net profit growth of the Company's top 5 holdings (in QAR '000)

Source: Qatar Exchange

Company Update

QIF's dividend adjusted NAV fell 18.3% from June 2015 to June 2016, while the Qatar Exchange index fell 19.0% during the same period. The outperformance was driven by portfolio companies including Ooredoo (up 1.6%), Qatar Electricity & Water (down 8.8%), Qatar Islamic Bank (down 11.0%) and Qatar National Bank (down 12.9%). Additionally, the investment manager removed Doha bank (down 33.6%) from the portfolio and did not held Vodafone (down 35.7%) for most of the year until it bottomed-out in Q1 2016, which further contributed to the outperformance. As at 30 June 2016, the QIF share price was at a 15.0% discount to NAV. Dividend returns were down from US$10m in 2015 to US$5.5m in 2016.

Industry Allocation

QIF remains overweight in the Qatar banking sector (including financial services) at 43.3% of NAV (Q1 2016: 43.1%) compared to QE weighting of 38.1%. Qatar National Bank is QIF's largest holding (18.4% of NAV). The Qatari banking sector has a strong record of robust growth and the Qatar Central Bank data shows 2016 (YTD till June 2016) credit growth of 4.6%, mainly driven by public sector (up 9.9%). The Investment Adviser believes that this sector should benefit from government's infrastructure development plans.

Industrials remain the second largest exposure at 26.8% (Q1 2016: 27.6%), mainly in Industries Qatar (10.8% of NAV). Exposure to Gulf International Services remained stable at 6.2% of NAV, while exposure to Qatar Electricity and Water reduced from 7.9% in Q1 2016 to 7.5% at the end of Q2 2016.

QIF re-entered the Services and Consumer Goods sector in Q2 2016 with an exposure of 1.8% of NAV. Exposure to the telecom sector increased from 6.1% in Q1 2016 to 6.9% at the end of Q2 2016.

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting QIF's allocation by sector as at 30 June 2016:

Portfolio Breakdown Top 5 Holdings

Source: Bloomberg, Qatar Insurance Company

At the end of June 2016, the top five investments on the company constituted 53.5% of NAV, down from 58.4% as at 30 June 2015. The top 10 holdings represent 79.2% of QIF's NAV (83.4% as at 30 June 2015).

Country Allocation

At 30 June, QIF had 23 holdings: 19 in Qatar and 4 in UAE (Q1 2016: 21 holdings: 18 in Qatar and 3 in UAE). UAE holdings stood at 5.6% of NAV from 3.8% as at 31 March 2016. Cash was 0.7% of NAV (Q1 2016: 3.3%).

Qatar remains the Investment Manager's favoured market in the GCC region on account of its significant investment plans by the government, stable political environment, sizeable hydrocarbon reserves and increasing non-hydrocarbon sector growth.

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting QIF's Allocation by Country as at 30 June 2016:

Qatar National Bank (18.4% of NAV)

Established in 1964, Qatar National Bank (QNB) is a high quality proxy stock for Qatari economic growth, given its strong ties with the public sector and access to state liquidity. QNB is a dominant state-owned participant in the banking sector and plays an important role in the development of the Qatari economy and in funding key infrastructure projects. The government is strongly committed to support QNB, thus enhancing its economic importance. The largest shareholder in QNB is the Government of Qatar, through the Qatar Investment Authority (QIA), with a 50% equity stake. QNB is the largest bank in Qatar and MENA, with total assets of QAR 692.0 billion (US$190.1 billion) as at 30 June 2016. For the H1 2016, QNB reported 11.8% rise in net profit to QAR 6.2 billion (US$1.7 billion) compared to H1 2015. In June 2016, QNB completed the acquisition of 99.81% stake in Finansbank in Turkey and is well positioned to benefit from the rapid expansion of the domestic economy. Moreover, in June 2016, QNB raised US$2.75 billion from capital boosting perpetual notes which is considered to be the single largest issue in the MENA region. With the recent inclusion of Finansbank, QNB Group, subsidiaries and associate companies, operate in more than 30 countries, through more than 1200 branches, supported by over 4,300 ATMs and employing around 27,300 staff.

Industries Qatar (10.8% of NAV)

Industries Qatar is a holding company with interests in petrochemicals via 80% owned Qatar Petrochemical Co., fertilizers via 75% owned Qatar Fertilizer Co., steel via a wholly owned subsidiary Qatar Steel Co. and fuel additives via 50% owned Qatar Fuel Additives Co. For H1 2016, IQCD's net profit stood at QAR 2.0 billion, against QAR 2.4 billion in H1 2015, largely due to reduced total revenue and lower share of results from joint ventures driven by deflation in product prices across all operating segments, most notably in the fertilizer and fuel additive segments. However, the company reported improved sales volumes and operating costs on account of ongoing cost optimisation initiatives.

Masraf Al Rayan (10.0% of NAV)

Masraf Al Rayan (MARK) was incorporated as a Qatari Shareholding Company under Qatar Commercial Company law on 4th January 2006. It is licensed by the Qatar Central Bank and began commercial operations in October 2006. The bank has three main business divisions mainly retail banking, wholesale banking and private banking. Besides this the bank offers investment banking and treasury products. Presently MARK has a total of 11 branches in strategic locations around Qatar, and a total of 62 ATMs. At the end of June 2016, the bank's financial assets stood at QAR 64.3 billion (US$17.7 billion). During H1 2016, the bank reported 5.3% rise in net profit to QAR 1,050.9 million (US$288.7 million).

Qatar Electricity & Water Co. (7.5% of NAV)

Qatar Electricity and Water Company (QEWC) is the first private sector company in the region, engaged in the generation of electricity and desalinated water. Established in 1990, as a Qatari shareholding company, the state of Qatar and its affiliates own approximately 52% of the share capital. QEWC is the second largest utility company in North Africa and the Middle East, with a market share above 60% of electricity and above 79% of the water in Qatar. In 2013, QEWC along with Qatar Petroleum International Limited and Qatar Holding Company established Nebras Power Company to invest globally in new and existing power generation and water desalination projects. In H1 2016, QEWC's net profit stood at QAR 791.3 million, 7.3% higher when compared to H1 2015 on account of a rise in electricity and water revenue. Robust growth in the next few years is expected due to capacity expansion in both electricity and water business. Approximately around 2,400 MW of electricity addition along with ~ 200 MiGD of water desalination is planned in the next few years.

Qatar Islamic Bank (6.9% of NAV)

Qatar Islamic Bank (QIB) is Qatar's first Islamic financial institution that follows Shari'a principles. Established in 1982, the bank commands over 40.0% share of Islamic sector and over 11.5% share of the overall banking sector (FY 2015). The bank has over 30 branches in Qatar and has international presence through affiliates namely QIB - UK in London, Arab Finance House in Lebanon, Asian Finance Bank in Malaysia, and QIB Sudan. Apart from core businesses, the bank has core holdings in QInvest (Investment bank; QIB subsidiary), Beema (Islamic Insurance Company), Al Jazeera Finance (Islamic Consumer Finance) and Aqar (Real Estate Investment and Development). As at the end of June 2016, its financing assets stood at QAR 96.6 billion (US$26.5 billion). In H1 2016, the bank's net profit (before deducting expense on Sukuk capital) grew 17.9% to QAR 1,055.3 million (US$289.9 million).

Epicure Managers Qatar Limited Qatar Insurance Company S.A.Q.

9 September 2016 9 September 2016

Investment Policy

Investment Objective

The Company's investment objective is to capture, principally through the medium of the Qatar Exchange, the opportunities for growth offered by the expanding Qatari economy by investing in listed companies or companies soon to be listed. The Company may also invest in listed companies, or pre-IPO companies, in other GCC countries.

The Company applies a top-down screening process to identify those sectors which should most benefit from sector growth trends. Fundamental industry and company analysis, rather than benchmarking, forms the basis of both stock selection and portfolio construction.

Assets or companies in which the Company can invest

The Company was established to invest primarily in quoted Qatari equities. The Company invests in listed companies on the Qatar Exchange in addition to companies soon to be listed.  The Company may also invest in listed companies, or pre-IPO companies, in other GCC Countries.

Whether investments will be active or passive investments

In the ordinary course of events, the Company is not an activist investor, although the Investment Adviser will seek to engage with investee company management where appropriate.

Holding period for investments

In the normal course of events, the Company expects to be fully-invested, although the Company may hold cash reserves pending new IPOs or when it is deemed financially prudent. Although the Company is a long term financial investor, it will actively manage its portfolio.

Spread of investments and maximum exposure limits

The Company will invest in a portfolio of investee companies with restrictions in place to ensure a spread of investments and to ensure that there are maximum exposure limits in place (see investment guidelines under Investing Restrictions).

Policy in relation to gearing and derivatives

Borrowings will be limited, as at the date on which the borrowings are incurred, to 5% of NAV. Borrowings will include any financing element of a swap. The Company will not make use of hedging mechanisms.

The Company may utilise derivative instruments in pursuit of its investment policy subject to:

· such derivative instruments only being utilised in respect of investments listed on the Saudi Arabian stock exchange;

· such derivative instruments being designed to offer the holder a return linked to the performance of a particular underlying listed equity security;

· a maximum underlying equity exposure limit of 15 per cent of NAV (calculated at the time of investment); and

· a policy of entering into derivative instruments with more than one counterparty in relation to an investment, where possible, to minimise counterparty risk.

Policy in relation to cross-holdings

Cross-holdings in other listed or unlisted closed-ended investment funds that invest in Qatar or other countries in the GCC region will be limited to 10% of NAV at any time (calculated at the time of investment).

Investing Restrictions

The investing restrictions for the Company are as follows:

(i) Foreign Ownership Restrictions

Investments in most Qatar Exchange listed companies by persons other than Qatari citizens have an ownership restriction, wherein the law precludes persons other than Qatari citizens from acquiring a certain proportion of a company's issued Share Capital. It is possible that the Company may have problems acquiring stock if the foreign ownership interest in one or more stocks reaches the allocated upper limit. This may adversely impact the ability of the Company to invest in the local Qatari market and in other GCC markets.

(ii) Investment Guidelines

The Company has established certain investment guidelines. These are as follows (all of which are to be calculated at the time of investment):

· No single investment position in a QE Index constituent may exceed the greater of: (i) 15% of the NAV of the Company; or (ii) 125% of the constituent company's index capitalisation divided by the index capitalisation of the QE Index, as calculated by Bloomberg (or such other source as the Directors and Investment Manager may agree);

· No single investment position in a company which is not a QE Index constituent may exceed 15% of the NAV of the Company;

· No holding may exceed 5% of the outstanding shares in any one company; and

· The Company may hold up to a maximum of 15% of its NAV outside Qatar, within the GCC region, including investment in P-Notes or swaps structured financial products for investment in companies listed on the Saudi Arabian stock exchange.

(iii) Conflicts Management

The Investment Manager, the Investment Adviser, their officers and other personnel are involved in other financial, investment or professional activities, which may on occasion give rise to conflicts of interest with the Company. The Investment Manager will have regard to its obligations under the Investment Management Agreement to act in the best interests of the Company, and the Investment Adviser will have regard to its obligations under the Investment Adviser Agreement to act in the best interests of the Company, so far as is practicable having regard to their obligations to other clients, where potential conflicts of interest arise. The Investment Manager and the Investment Adviser will use all reasonable efforts to ensure that the Company has the opportunity to participate in potential investments that each identifies which fall within the investment objective and strategies of the Company. Other than these restrictions set out above, and the requirement to invest in accordance with its investing policy, there are no other investing restrictions.

Returns and Distribution Policy

The Company's investment objective is to achieve capital growth. In accordance with the annual dividend policy the Company paid a dividend for the year ended 30 June 2015. The quantum of the dividend is calculated based on a proportion of the dividends received during the year, net of the Company's attributable costs. Any undistributed income will be set aside in a revenue reserve in order to facilitate the Company's policy of future progressive dividend payments. This policy will be subject to the absence of exceptional market events.

Life of the Company

The Company currently does not have a fixed life but the Board considers it desirable that the Shareholders should have the opportunity to review the future of the Company at appropriate intervals. Accordingly, at the annual general meeting of the Company in 2018, a resolution will be proposed that the Company ceases to continue in existence. Shareholders holding at least 51% of the ordinary shares must vote in favour of this resolution for it to be passed. If the resolution is not passed, a similar resolution will be proposed at every third annual general meeting thereafter. If the resolution is passed, the Directors will be required to formulate proposals to be put to Shareholders to reorganise, unitise or reconstruct the Company or for the Company to be wound up.

Report of the Directors

The Directors hereby submit their annual report together with the audited consolidated and Company financial statements of Qatar Investment Fund plc (formerly Epicure Qatar Equity Opportunities plc) (the "Company") for the year ended 30 June 2016.

The Company

The Company is incorporated in the Isle of Man and has been established to invest primarily in quoted equities of Qatar and other Gulf Co-operation Council countries. The Company's investment policy is detailed on pages 19 to 21.

Results and Dividends

The results of the Company for the year and its financial position at the year- end are set out on pages 41 to 50 of the financial statements.

The Directors manage the Company's affairs to achieve capital growth and the Company has instituted an annual dividend policy. The quantum of the dividend is calculated based on a proportion of the dividends received during the year, net of the Company's attributable costs. Any undistributed income will be set aside in a revenue reserve in order to facilitate the Company's policy of future progressive dividend payments. This policy will be subject to the absence of exceptional market events.

For the year ended 30 June 2015, the Directors declared a dividend of US$4,741,915 (4.0c per share) which was approved by Shareholders and paid by the Company in January 2016.

Directors

Details of Board members at the date of this report, together with their biographical details, are set out on page 31.

Director independence and Directors' and other interests have been detailed in the Directors' Remuneration Report on pages 35 and 36.

Creditor Payment Policy

It is the Company's policy to adhere to the payment terms agreed with individual suppliers and to pay in accordance with its contractual and other legal obligations.

Gearing Policy

Borrowings will be limited, as at the date on which the borrowings are incurred, to 5% of NAV (or such other limit as may be approved by the Shareholders in general meeting). The Company will not make use of any hedging mechanisms or leveraged derivative instruments.

There were no borrowings during the year (2015: US$ nil).

Donations

The Company has not made any political or charitable donations during the year (2015: US$ nil).

Adequacy of the Information Supplied to the Auditors

The Directors who held office at the date of approval of this Directors' Report confirm that, so far as each is aware, there is no relevant audit information of which the Company's auditors are unaware; and each Director has taken all steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information

Statement of Going Concern

The Directors are satisfied that the Company and the Group have adequate resources to continue to operate as a going concern for the foreseeable future and have prepared the financial statements on that basis.

Independent Auditors

KPMG Audit LLC has expressed its willingness to continue in office in accordance with Section 12 (2) of the Companies Act 1982.

Annual General Meeting

The Annual General Meeting of the Company will be held on 17 November 2016 at the Company's registered office.

A copy of the notice of Annual General Meeting is contained within this Annual Report. As well as the business normally conducted at such a meeting, Shareholders will be asked to renew the authority to allow the Company to continue with share buy-backs.

The notice of the Annual General Meeting and the Annual Report are also available at www.qatarinvestmentfund.com.

Corporate Governance

Full details are given in the Corporate Governance Report on pages 24 to 30, which forms part of the Report of the Directors.

Substantial Shareholdings

As at the date of publication of this annual report, the Company had been notified, or the Company is aware of the following significant holdings in its Share Capital.

The above percentages are calculated by applying the Shareholdings as notified to the Company or the Company's awareness to the issued Ordinary Share Capital as at 30 June 2016.

On behalf of the Board

Nicholas Wilson

Chairman

9 September 2016

Corporate Governance Report

Compliance with Companies Acts

As an Isle of Man incorporated company, the Company's primary obligation is to comply with the Isle of Man Companies Acts 1931 to 2004. The Board confirms that the Company is in compliance with the relevant provisions of the Companies Acts.

Compliance with the Association of Investment Companies (AIC) Code of Corporate Governance

The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and this statement describes how the Company applies the principles identified in the UK Corporate Governance Code which is available on the Financial Reporting Council's website: www.frc.org.uk. The Board confirms that the Company has complied throughout the accounting period with the relevant provisions contained within the UK Code.

The Board of the Company has considered the principles and recommendations of the AIC 2014 Code of Corporate Governance (AIC Code) by reference to the AIC Corporate Governance Guide for investment Companies (AIC Guide). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to QIF plc.

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Corporate Governance Code), will provide better information to shareholders.

The Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK Corporate Governance Code, except as set out below.

The UK Corporate Governance Code includes provisions relating to:

• the role of the chief executive

• executive directors' remuneration

• the need for an internal audit function

For the reasons set out in the AIC Guide, and as explained in the UK Corporate Governance Code, the Board considers these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions, with the exception of portfolio management, risk management and service provider performance management, are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.

Directors

The Directors are responsible for the determination of the Company's investment policy and strategy and have overall responsibility for the Company's activities including the review of the investment activity and performance.

All of the Directors are non-executive. Save for Leonard O'Brien, the Board considers each of the Directors to be independent of, and free of any material relationship with, the Investment Manager and Investment Adviser.

The Board of Directors delegates to the Investment Manager through the Investment Management Agreement the responsibility for the management of the Company's assets in GCC securities in accordance with the Company's investment policy and for retaining the services of the Investment Adviser. The Company has no executives or employees.

The Articles of Association require that all Directors submit themselves for election by Shareholders at the first opportunity following their appointment and shall not remain in office longer than three years since their last election or re-election without submitting themselves for re-election.

The Board meets formally at least 4 times a year and between these meetings there is regular contact with the Investment Manager. Other meetings are arranged as necessary. The Board considers that it meets regularly enough to discharge its duties effectively. The Board ensures that at all times it conducts its business with the interests of all Shareholders in mind and in accord with Directors' duties. Directors receive the relevant briefing papers in advance of Board and Board Committee meetings, so that should they be unable to attend a meeting they are able to provide their comments to the Chairman of the Board or Committee as appropriate. The Board meeting papers are the key source of regular information for the Board, the contents of which are determined by the Board and contain sufficient information on the financial condition of the Company. Key representatives of the Investment Manager attend each Board meeting. All Board and Board Committee meetings are formally minuted.

Board Composition and Succession Plan

Objectives of Plan

· To ensure that the Board is composed of persons who collectively are fit and proper to direct the Company's business with prudence, integrity and professional skills

· To define the Board Composition and Succession Policy, which guides the size, shape and constitution of the Board and the identification of suitable candidates for appointment to the Board.

Methodology

The Board is conscious of the need to ensure that proper processes are in place to deal with succession issues and the Nomination Committee assists the Board in the Board selection process, which involves the use of a Board skills matrix.

The matrix incorporates the following elements: finance, accounting and operations; familiarity with the regions into which the Company invests; diversity (gender, residency, cultural background); Shareholder perspectives; investment management; multijurisdictional compliance and risk management. In adopting the matrix, the Nomination Committee acknowledges that it is an iterative document and will be reviewed and revised periodically to meet the Company's on-going needs.

The Nomination Committee monitors the composition of the Board and makes recommendations to the Board about appointments to the Board and its Committees.

Directors may be appointed by the Board, in which case they are required to seek election at the first AGM following their appointment and triennially thereafter. Directors who are not regarded as independent are required to seek re-election annually. In making an appointment the Board shall have regard to the Board skills matrix.

A Director's formal letter of appointment sets out, amongst other things, the following requirements:

· bringing independent judgment to bear on issues of strategy, performance, resources, key appointments and standards of conduct and the importance of remaining free from any business or other relationship that could materially interfere with independent judgement;

· having an understanding of the Company's affairs and its position in the industry in which it operates;

· keeping abreast of and complying with the legislative and broader responsibilities of a Director of a company whose shares are traded on the London Stock Exchange;

· allocating sufficient time to meet the requirements of the role, including preparation for Board meetings; and

· disclosing to the Board as soon as possible any potential conflicts of interest.

The Board authorises the Nomination Committee to:

· recommend to the Board, from time to time, changes that the Committee believes to be desirable to the size and composition of the Board;

· recommend individuals for nomination as members of the Board;

· review and recommend the process for the election of the Chairman of the Board, when appropriate; and

· review on an on-going basis succession planning for the Chairman of the Board and make recommendations to the Board as appropriate.

The Plan will be reviewed by the Board annually and at such other times as circumstances may require (e.g. a major corporate development or an unexpected resignation from the Board). The Plan may be amended or varied in relation to individual circumstances at the Board's discretion.

Board Committees

The Board has established the following committees to oversee important issues of policy and maintain oversight outside the main Board meetings:

· Audit Committee

· Remuneration Committee

· Nomination Committee

· Management Engagement Committee

Throughout the year the Chairman of each committee provided the Board with a summary of the key issues considered at the meeting of the committees and the minutes of the meetings were circulated to the Board.

The committees operate within defined terms of reference. They are authorised to engage the services of external advisers as they deem necessary in the furtherance of their duties, at the Company's expense.

Audit Committee

The Board has established an Audit Committee made up of at least two members and comprises Paul Macdonald, Nicholas Wilson and Neil Benedict. The Audit Committee is responsible for, inter alia, ensuring that the financial performance of the Company is properly reported on and monitored. The Audit Committee is chaired by Paul Macdonald. The Audit Committee normally meets at least twice a year when the Company's interim and final reports to Shareholders are to be considered by the Board but meetings can be held more frequently if the Audit Committee members deem it necessary or if requested by the Company's auditors. The Audit Committee will, amongst other things, review the annual and interim accounts, results announcements, internal control systems and procedures, preparing a note in respect of related party transactions and reviewing any declarations of interest notified to the Committee by the Board each on six monthly basis, review and make recommendations on the appointment, resignation or dismissal of the Company's auditors and accounting policies of the Company. The Company's auditors are advised of the timing of the meetings to consider the annual and interim accounts and the auditors shall be asked to attend the audit committee meeting where the annual audited accounts are to be considered. The Audit Committee chairman shall report formally to the Board on its proceedings after each meeting and compile a report to Shareholders on its activities to be included in the Company's annual report. At least once a year, the Audit Committee will review its performance, constitution and terms of reference to ensure that it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

The terms of reference for the Audit Committee are available on the Company's website www.qatarinvestmentfund.com.

Significant Issues

During its review of the Company's financial statements for the year ended 30 June 2016, the Audit Committee considered the following significant issues, in particular those communicated by the auditor during their reporting:

Completeness, Valuation, Existence and Ownership of Investments

The valuation of investments is undertaken in accordance with the accounting policies, disclosed in note 3.3 to the financial statements. The audit includes independent confirmation of the existence of all investments from the Company's custodian. All investments are considered liquid and quoted in active markets and have been categorised as Level 1 within the IFRS 13 fair value hierarchy and can be verified against daily market prices. The portfolio is reviewed and verified by the Manager on a regular basis and management accounts including a full portfolio listing are prepared each month and circulated to the Board. The Company uses the services of an independent Custodian HSBC Bank Middle East Limited to hold the assets of the Company. The investment portfolio is reconciled regularly by the Manager and a reconciliation is also reviewed by the Auditor.

Remuneration Committee

The Company has established a Remuneration Committee. The Remuneration Committee is made up of at least two members from amongst the non-executive Directors identified by the Board as being independent. Its members are Neil Benedict (Chairman), Nicholas Wilson and Paul Macdonald. The Remuneration Committee normally meets at least once a year and at such other times as the chairman of the Remuneration Committee shall require. The Remuneration Committee reviews the performance of the Directors and sets the scale and structure of their remuneration and the basis of their letters of appointment with due regard to the interests of Shareholders. In determining the remuneration of Directors, the Remuneration Committee seeks to enable the Company to attract and retain Directors of the highest calibre. No Director is permitted to participate in any discussion of decisions concerning their own remuneration. The Remuneration Committee reviews at least once a year its own performance, constitutions and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

The terms of reference for the Remuneration Committee are available on the Company's website www.qatarinvestmentfund.com

Nomination Committee

The Company has established a Nomination Committee which shall be made up of at least two members and which shall comprise all Independent Directors. The Nomination Committee comprises Nicholas Wilson (Chairman), Neil Benedict and Paul Macdonald. The Nomination Committee meets at least once a year prior to the first quarterly Board meeting and at such other times as the Chairman of the committee shall require. The Nomination Committee is responsible for ensuring that the Board members have the range of skills and qualities to meet its principal responsibilities in a way which ensures that the interests of Shareholders are protected and promoted and regularly review the structure, size and composition of the Board. The Nomination Committee shall, at least once a year, review its own performance, constitution and terms of reference to ensure that it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

The Nomination Committee will assess potential candidates on merit against a range of criteria including experience, knowledge, professional skills and personal qualities as well as independence, if this is required for the role. Candidates' ability to commit sufficient time to the business of the Company is also key, particularly in respect of the appointment of the Chairman. The Chairman of the Nomination Committee is primarily responsible for interviewing suitable candidates and a recommendation will be made to the Board for final approval.

Management Engagement Committee

The Company has established a Management Engagement Committee which is made up of at least two members and which shall comprise independent non-executive Directors. The Management Engagement Committee members are Neil Benedict (Chairman), Paul Macdonald and Nicholas Wilson. The Management Engagement Committee will meet at least quarterly and is responsible for reviewing the performance of the Investment Manager and other service providers, to ensure that the Company's management contract is competitive and reasonable for the Shareholders and to review

and make recommendations to the Board on any proposed amendment to or material breach of the management contract and contracts with other service providers.

Board Attendance

The number of formal meetings during the year of the Board, and its Committees, and the attendance of the individual Directors at those meetings, is shown in the following table:

*Not a member of the committee.

The Annual General Meeting was held on 12 November 2015.

Internal Control

The Board is responsible for the Company's system of internal control and for reviewing its effectiveness. Its review takes place at least once a year. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material mis-statement or loss. The Board also determines the nature and extent of any risks it is willing to take in order to achieve its strategic objectives.

The Board has contractually delegated to external agencies, including the Managers, the management of the investment portfolio, the custodial services (which include the safeguarding of the assets), the registration services and the day-to-day accounting and Company Secretarial requirements. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of services offered including the control systems in operation in so far as they relate to the affairs of the Company.

The Board, assisted by the Investment Manager and Investment Adviser, has undertaken regular risk and controls assessments. The business risks have been analysed and recorded in a risk and internal controls report which is regularly reviewed. The Board has reviewed the need for an internal audit function. The Board has decided that the systems and procedures employed by the Managers, including its internal audit function and the work carried out by the Company's external Auditor, provide sufficient assurance that a sound system of internal control, which safeguards Shareholders' investments and the Company's assets, is maintained. An internal audit function, specific to the Company, is therefore considered unnecessary.

The Board confirms that there is an on-going process for identifying, evaluating and managing the Company's principal business and operational risks that have been in place for the year ended 30 June 2016 and up to the date of approval of the annual report and financial statements.

Accountability and Relationship with the Investment Manager, the Custodian and the Administrator

The Statement of Directors' Responsibilities is set out on page 32.

The Board has delegated contractually to external third parties, including the Investment Manager, the Investment Adviser, the Custodian and the Administrator, the management of the investment portfolio, the custodial services (which include the safeguarding of the assets), the day to day accounting, company secretarial and administration requirements. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of the services provided, including the control systems in operation in so far as they relate to the affairs of the Company.

The Investment Manager, the Investment Adviser and the Administrator ensure that all Directors receive, in a timely manner, all relevant management, regulatory and financial information. Representatives of the Investment Manager and the Administrator attend each Board meeting enabling the Directors to probe further on matters of concern.

Continued Appointment of the Investment Manager

The Board considers the arrangements for the provision of investment management and other services to the Company on an on-going basis. The Board reviews investment performance at each Board meeting and a formal review of the Investment Manager (and Investment Adviser) is conducted annually. As a result of their annual review, NAV performance has been found to be satisfactory and it is the opinion of the Directors that the continued appointment of the current Investment Manager (and Investment Adviser) on the terms agreed is in the interests of the Company's Shareholders as a whole.

Relations with Shareholders

The Chairman is responsible for ensuring that all Directors are made aware of Shareholders' concerns. The Shareholder profile of the Company is regularly monitored and the Board liaises with the Investment Manager to canvass Shareholder opinion and communicate views to Shareholders. The Company is concerned to provide the maximum opportunity for dialogue between the Company and Shareholders. It is believed that Shareholders have proper access to the Investment Manager at any time and to the Board if they so wish. All Shareholders are encouraged to attend annual general meetings. Together with the Investment Manager and Investment Adviser, regular investor presentations are held to promote a wider following for the Company.

Viability statement

The Board makes an assessment of the longer term prospects of the Company beyond the timeframe envisaged under the going concern basis of accounting having regard to the Company's current position and the principal risks it faces.

The Company is a long term investment vehicle and the directors, therefore, believe that it is appropriate to assess its viability over a long term horizon. The Board considers that assessing the Company's prospects over a period of five years is appropriate given the nature of the Company and the inherent uncertainties of looking out over a longer time period. The directors believe that a five year period appropriately reflects the long term strategy of the Company and over which, in the absence of any adverse change to the regulatory environment, they do not expect there to be any significant change to the current principal risks and to the adequacy of the mitigating controls in place.

On behalf of the Board

Nicholas Wilson

Chairman

9 September 2016

Board of Directors

Nicholas Wilson (Non-Executive Chairman)

Nicholas Wilson has over 40 years of experience in hedge funds, derivatives and global asset management. He has run offshore branch operations for Mees Pierson Derivatives Limited, ADM Investor Services International Limited and several other London based financial services companies. He is a director of EPE Special Opportunities PLC and until recently was chairman of Alternative Investment Strategies Limited. He is a resident of the Isle of Man.

Paul Macdonald (Non-Executive Director)

Paul Macdonald qualified as a chartered accountant in 1979. He worked for Pilkington plc for sixteen years, the last seven of these in Germany. In Germany he was Managing Director for Pilkington Deutschland GmbH (holding company) and Managing Director of both Flachglas AG (glass manufacturer) and Dahlbusch AG (property and holding company). For the last fourteen years Paul has been active in the private equity market and has been successful in developing a number of companies covering a number of industries including Sirona Beteiligungs GmbH (Germany), a leveraged buy-out from Siemens. He is currently the Geschäftsführer for Helvetica Deutschland GmbH and a Director of Helvetica Services GmbH and Helvetica Construction GmbH. Paul is a Non-Executive Director of PME African Infrastructure Opportunities plc.

Leonard O'Brien (Non-Executive Director)

Leonard O'Brien is Managing Director of the Salamander Fiduciary Services Group, which consists of Salamander Associates Limited and its two wholly owned subsidiaries. Len has had many years of experience in the fiduciary services industry including the Silex Trust Group, the Stonehage Financial Services Group and Barclays Bank. During this time he has served on the boards of trust companies in the British Virgin Islands, Jersey and Cayman Islands and has acted as a Membre de Direction of Barclays Bank (Suisse) SA, Geneva. Len qualified as a Chartered Accountant with KPMG in 1996. Len is also a Director of the Investment Manager.

Neil Benedict (Non-Executive Director)

Neil Benedict is based in the USA with over thirty years' experience of financial markets. He was formerly a Managing Director at Salomon Brothers, where he was Head of International Capital Markets, and, prior to that, the founder and head of the worldwide Currency Swaps group. Neil was also a Managing Director at Dillon Read and helped establish their Tokyo office. He is currently a Managing Director of Intelligent Edge Advisors, a New York advisory firm. Neil is a fellow member of the Institute of Chartered Accountants in England and Wales.

Statement of Directors' responsibilities in respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year, which meet the requirements of Isle of Man company law. In addition, the Directors have elected to prepare the Group and Parent Company financial statements in accordance with International Financial Reporting Standards.

The Group and Parent Company financial statements are required by law to give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group and Parent Company for that period.

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

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether they have been prepared in accordance with International Financial Reporting Standards;

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Parent Company and to enable them to ensure that its financial statements comply with the Companies Acts 1931 to 2004. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing the Directors' Report, the Corporate Governance Report and the Directors' Remuneration Report that comply with that law and those regulations.

The Directors confirm that they have complied with the above requirements in preparing the Annual Report and financial statements.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation governing the preparation and dissemination of financial statements may differ from one jurisdiction to another.

DTR Compliance statement

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

· that in the opinion of the Directors, the Annual Report and Accounts taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's performance, business model and strategy; and

· the Business Review, Report of the Investment Manager and Investment Adviser and the Report of the Directors include a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

On behalf of the Board

Nicholas Wilson

Chairman

9 September 2016

Audit Committee Report

An Audit Committee has been established in compliance with the FSA's Disclosure and Transparency Rule 7.1 and the UK Corporate Governance Code consisting of independent Directors. Its authority and duties are clearly defined within its written terms of reference. Paul Macdonald is Chairman of the Audit Committee, which also comprises Mr Nicholas Wilson and Mr Neil Benedict.

The Committee meets at least two times a year.

.

The Committee's responsibilities, which were discharged during the year, include:

• monitoring and reviewing the integrity of the interim and annual financial statements and the internal financial controls;

• reviewing the appropriateness of the Company's accounting policies;

• making recommendations to the Board in relation to the appointment of the external auditors and approving their remuneration and terms of their engagement;

• reviewing the external Auditor's plan for the audit of the Company's financial statements;

• developing and implementing policy on the engagement of the external auditors to supply non-audit services;

• reviewing and monitoring the independence, objectivity and effectiveness of the external auditors;

• reviewing the arrangements in place within the Administrator and Investment Manager/Adviser whereby their staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters insofar as they may affect the Company;

• performing the annual review of the effectiveness of the internal control systems of the Company;

• reviewing the terms of the Investment Management Agreement;

• considering annually whether there is a need for the Company to have its own internal audit function; and

• review the relationship with and the performance of the Custodian, the Administrator and the Registrar.

The Audit Committee does not award any non-audit work. The full Board has to approve any non-audit work and this includes confirmation that in all such work auditor objectivity and independence is safeguarded.

Owing to the nature of the fund's business, with all major functions being outsourced and the absence of employees, the Audit Committee do not feel it is necessary for the Company to have its own internal audit function. This situation is re-evaluated annually.

KPMG Audit LLC was re-appointed as auditor at the last AGM on 12 November 2015. The Audit Committee considered the experience and tenure of the audit partner and staff and the nature and level of services provided. The Audit Committee receives confirmation from the auditor that they have complied with the relevant UK professional and regulatory requirements on independence. The Company's Audit Committee meets representatives of the Administrator, who report as to the proper conduct of the business in accordance with the regulatory environment in which the Company, the Administrator, and the Investment Manager/Adviser operate. The Company's external auditor also attends this Audit Committee meeting at its request and reports if the Company has not kept proper accounting records, or if it has not received all the information and explanations required for its audit.

The Audit Committee also monitors the risks to which the Company is exposed and makes recommendations as to the mitigation of these risks. This task is facilitated by using an extensive risk matrix that enables the committee to make a quantitative analysis of the individual risks and to highlight those areas where risk is high or increasing.

This report was reviewed and approved by the Board on 9 September 2016.

Paul Macdonald

Chairman of the Audit Committee

9 September 2016

Management Engagement Committee Report

A Management Engagement Committee has been established in accordance with good corporate governance. Neil Benedict is chairman of the committee, which also comprises Paul Macdonald and Nicholas Wilson.

The function of the Management Engagement Committee is to monitor the performance of all the Company's service providers and in the particular the performance of the Investment Manager/Investment Adviser.

The performance of the Investment Manager/Investment Adviser is formally reviewed annually at the end of the Company's financial year. The Management Engagement Committee meets quarterly prior to the quarterly Board meetings and the chairman of the Management Engagement Committee monitors the performance periodically during the intervening periods.

As regards the Investment Manager/Investment Adviser, the Committee:

· monitors and evaluates the investment performance both in absolute terms and also by reference to peer group analysis prepared by the Investment Manager/Adviser and by the Company's broker;

· reviews the performance fee structure to ensure that it does not encourage excessive risk and that it rewards demonstrable superior performance; 

· investigates any breaches of agreed investment limits and any deviation from the agreed investment policy and strategy; 

· reviews the standard of any other services provided by the Investment Manager;

· evaluates the level and effectiveness of any marketing support provided by the Investment Manager, including but not limited to, their input into quarterly reports, handling investor relations and website monitoring and development;

· assesses the level of fees charged by the Investment Manager and how these fees compare with those charged to peer group companies; 

· compares the notice period on the Investment Management Agreement with industry norms; 

· considers any other issues on the appointment of the Investment Manager.

As regards the other service providers to the Company, the Committee:

· monitors the terms on which they are retained and compares them to market rates;

· examines the effectiveness of the services provided;

· makes recommendations to the Board where changes are warranted.

At its most recent meeting, the Management Engagement Committee concluded that the performance of the Investment Manager/Investment Adviser had been satisfactory. The Investment Manager had adhered to the investment policy and policy limits.

The Committee was satisfied with the current performance of the Company's other service providers.

Neil Benedict

Chairman of the Management Engagement Committee

9 September 2016

Directors' Remuneration Report

This report meets the relevant rules of the Listing Rules of the Financial Services Authority and describes how the Board has applied the principles relating to Directors' remuneration. An ordinary resolution to receive and approve this report will be put to the Shareholders at the forthcoming Annual General Meeting.

Role of the Remuneration Committee

The role and make-up of the Remuneration Committee is more fully discussed on page 27.

The committee held two formal meetings during the year, during which it addressed all the matters under its remit.

Consideration by the Directors of Matters relating to the Directors' remuneration

As the Board is comprised entirely of non-executive Directors the Board as a whole consider the Directors' remuneration but it has appointed its Remuneration Committee to consider matters relating thereto.

Remuneration Policy

The Company's Articles of Association limit the basic fees payable to the Directors to £200,000 per annum in aggregate. Subject to this overall limit it is the Company's policy that the fees payable to the Directors should reflect the time spent by the Board on the Company's affairs and the responsibilities borne by the Directors and should be sufficient to enable candidates of high calibre to be recruited. The Directors are also entitled to receive reimbursement of any expenses incurred in relation to their appointment.

The policy is for the Chairman of the Board and Chairman of the Audit Committee to be paid a higher fee than the other Directors in recognition of their more onerous roles and more time spent.

In the year under review the Directors' fees were paid at the following annual rates: the Chairman £47,500 plus £10,000 with respect to the work involved in the share buy-back programme, the Chairman of the Audit Committee £32,500, the other Directors £30,000.

Directors' and officers' liability insurance cover is in place in respect of the Directors.

Reappointment

It is the Board's policy that non-independent Directors stand for re-election every year and independent Directors stand for re-election every three years.

Directors' fees

The fees expensed (including additional payments) by the Company in respect of each of the Directors who served during the year, and in the previous year, were as follows:

Expenses totalling US$116,385 (2015: US$103,184) were incurred by the Directors and reimbursed during the year.

No other remuneration or compensation was paid or payable by the Company during the period to any of the Directors.

Director independence

Except for Leonard O'Brien, the Board considers each of the Directors to be independent of, and free of any material relationship with, the Investment Manager and Investment Adviser.

Directors' and Other Interests

Leonard O'Brien is a Director of the Investment Manager.

Save as disclosed above, none of the Directors had any interest during the year in any material contract for the provision of services which was significant to the business of the Company.

Director holdings in Company:

Subsequent to 30 June 2016, Nicholas Wilson acquired a further 7,000 shares.

For and on behalf of the Board

Neil Benedict

Chairman of the Remuneration Committee

9 September 2016

Report of the Independent Auditors, KPMG Audit LLC, to the members of Qatar Investment Fund plc

Opinions and conclusions arising from our audit

1. Our opinion on the financial statements is unmodified

We have audited the financial statements of Qatar Investment Fund plc for the year ended 30 June 2016 which comprise the Consolidated and Parent Company Income Statements, the Consolidated and Parent Company Statements of Comprehensive Income, the Consolidated and Parent Company Balance Sheets, the Consolidated and Parent Company Statements of Changes in Equity and the Consolidated and Parent Company Statements of Cash Flows and the related notes. In our opinion the financial statements:

· give a true and fair view of the state of the Group's and Parent Company's affairs as at 30 June 2016 and of the Group's and Parent Company's loss for the year then ended;

· have been properly prepared in accordance with International Financial Reporting Standards; and

· have been properly prepared in accordance with the provisions of the Companies Acts 1931 to 2004.

2. Our assessment of risks of material misstatement

In arriving at our audit opinion above on the financial statements, the risk of material misstatement that had the greatest effect on our audit was as follows:

Carrying amount of quoted equity investments

Refer to page 27 (Significant Issues identified by the Audit Committee), note 3.3 (accounting policy for financial assets at fair value through profit or loss) and note 15 (financial risk disclosures relating to financial instruments).

· The risk: The Group's quoted equity investment portfolio makes up 98.7% of total assets (by value) and is considered to be the key driver of the Group's capital and revenue performance. We do not consider these investments to be at high risk of significant misstatement, or to be subject to a significant level of judgment, because they comprise liquid, quoted investments. However, due to their materiality in the context of the financial statements as a whole, they are considered to be the area which had the greatest effect on our overall audit strategy and allocation of resources in planning and completing our audit.

· Our response: Our procedures over the completeness, valuation, ownership and existence of the Group's quoted equity investment portfolio included, but were not limited to:

· documenting and assessing the processes in place to record investment transactions and to value the portfolio;

· agreeing the valuation of 100% of portfolio investments to independent externally quoted prices; and

· agreeing 100% of portfolio investment holdings to independently received third party confirmations from the custodian.

3. Our application of materiality and an overview of the scope of our audit

Materiality is a term used to describe the acceptable level of precision in financial statements. Auditing standards describe a misstatement or an omission as 'material' if it could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. We identify a monetary amount as 'materiality for the

financial statements as a whole' based on this criteria and apply the concept of materiality in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming our opinion on them.

The materiality for the financial statements as a whole was set at US$1,400,000. This has been determined with reference to a benchmark of Group total assets (of which it represents 1%). Total assets, which is primarily composed of the Group's investment portfolio, is considered to be the key driver of the Group's capital and revenue performance and, as such, we consider it to be one of the principal considerations for members of the Company in assessing the financial performance of the Group.

We agreed with the Audit Committee to report to it all corrected and uncorrected misstatements we identified through our audit with a value in excess of US$70,000, in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.

Our audit of the Group was undertaken to the materiality level specified above and was all performed at the head office of the administrator, Galileo Fund Services Limited, in the Isle of Man.

4. We have nothing to report on the disclosures of principal risks

Based on the knowledge we acquired during our audit, we have nothing material to add or draw attention to in relation to:

· the corporate governance report on pages 24 to 30 concerning the principal risks, their management, and, based on that, the directors' assessment and expectations of the group's continuing in operation; or

· the statement of Going Concern on page 23 and the disclosures in note 3.1 concerning the use of the going concern basis of accounting.

5. We have nothing to report in respect of the matters on which we are required to report by exception

Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified other information in the annual report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading.

In particular, we are required to report to you if:

· we have identified material inconsistencies between the knowledge we acquired during our audit and the directors' statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's performance, business model and strategy; or

· the Audit Committee Report does not appropriately address matters communicated by us to the Audit Committee.

Under the Companies Acts 1931 to 2004 we are required to report to you if, in our opinion:

· proper books of account have not been kept by the Parent Company and proper returns adequate for our audit have not been received from branches not visited by us; or

· the Parent Company's balance sheet and income statement are not in agreement with the books of account and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

• the Directors' statements set out on pages 23 and 29 in relation to going concern and longer term viability; and

• the part of the Corporate Governance Report on pages 24 to 30 relating to the Company's compliance with the nine provisions of the 2010 UK Corporate Governance Code specified for our review.

Respective responsibilities of Directors and Auditor

As explained more fully in the Directors' Responsibilities Statement set out on page 32, the Directors are responsible for the preparation of financial statements that give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

An audit in accordance with ISAs (UK and Ireland) involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

The risks of material misstatement detailed in the section of our report titled "Our assessment of risks of material misstatement", are those risks that we have deemed, in our professional judgement, had the greatest effect on: the overall audit strategy; the allocation of resources in our audit; and directing the efforts of the engagement team. Our audit procedures relating to these risks were designed in the context of our audit of the financial statements as a whole. Our opinion on the financial statements is not modified with respect to any of these risks, and we do not express an opinion on these individual risks.

Materiality is a term used to describe the acceptable level of precision in financial statements. We identify a monetary amount of 'materiality for the financial statements as a whole' based on our judgement as to the quantitative amount of a misstatement or an omission that could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. The concept of materiality is applied both in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in our report.

When planning and performing the audit, materiality is used in evaluating the risk of material misstatement for each financial statement caption, and therefore the extent and persuasiveness of audit evidence required by us. In turn, materiality will also define the level of precision applied to individual audit procedures.

Materiality is also used in the calculation of the quantitative level below which individual misstatements are considered to be clearly trivial and do not need to be reported to those charged with governance or corrected. If, in the specific circumstances of the entity, there is one or more particular classes of transaction, account balances or disclosures for which misstatements of lesser amounts than materiality for the financial statements as a whole could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements, we also determine the materiality level or levels to be applied to those particular classes of transaction, account balances or disclosures.

When evaluating the effect of identified misstatements on the audit, and of uncorrected misstatements on the financial statements, we request that misstatements are corrected and then apply judgement in identifying whether an uncorrected

misstatement or omission is material. To do so we make reference to the monetary amount of 'materiality for the financial statements as a whole' determined when planning the audit. The materiality determined when planning the audit does not necessarily establish an amount below which uncorrected misstatements, individually or in the aggregate, will always be evaluated as immaterial. We also consider the impact of misstatements on individual account balances or classes of transaction.

Furthermore, the qualitative circumstances related to some misstatements may cause us to evaluate them as material even if they are below the relevant quantitative materiality level. Similarly, the circumstance related to some misstatements (for instance those relating to classification or presentation) may cause us to evaluate them as not material to the financial statements as a whole even if they are above the relevant quantitative materiality level.

Whilst an audit conducted in accordance with ISAs (UK and Ireland) is designed to provide reasonable assurance of identifying material misstatements or omissions it is not guaranteed to do so. Rather the auditor plans the audit to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements does not exceed materiality for the financial statements as a whole. This testing requires us to conduct significant audit work on a broad range of assets, liabilities, income and expense as well as devoting significant time of the most experienced members of the audit team, in particular the engagement partner responsible for the audit, to subjective areas of accounting and reporting.

This report is made solely to the Company's members, as a body, in accordance with Section 15 of the Companies Act 1982. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Simon Nicholas

Responsible Individual

For and on behalf of KPMG Audit LLC

Statutory Auditor

9 September 2016

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man

IM99 1HN

Consolidated Income Statement

The Directors consider that all results derive from continuing activities.

Consolidated Statement of Comprehensive Income

Company Income Statement

Company Statement of Comprehensive Income

Consolidated Balance Sheet

The financial statements were approved by the Directors on 9 September 2016 and signed on their behalf by:

Paul Macdonald Leonard O'Brien

Director Director

Company Balance Sheet

The financial statements were approved by the Directors on 9 September 2016 and signed on their behalf by:

Paul Macdonald Leonard O'Brien 

Director Director

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity

Consolidated Statement of Cash Flows

Company Statement of Cash Flows

Notes to the Consolidated Financial Statements

1 The Company

Qatar Investment Fund plc (formerly Epicure Qatar Equity Opportunities plc) (the "Company") was incorporated and registered in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004 on 26 June 2007 as a public company with registered number 120108C.

Pursuant to an Admission Document dated 25 July 2007 there was an original placing of up to 171,355,000 Ordinary Shares, with Warrants attached on the basis of 1 Warrant to every 5 Ordinary Shares. Following the placing on 31 July 2007, 171,355,000 Ordinary Shares and 34,271,000 Warrants were issued. The warrants expired on 16 November 2012.

The shares of the Company were admitted to trading on the AIM market of the London Stock Exchange ("AIM") on 31 July 2007, when dealings also commenced.

As a result of a further fund raising in December 2007, a further 76,172,523 Ordinary Shares were issued, which were admitted for trading on AIM on 13 December 2007.

On 4 December 2008, the Share Premium arising from the placing of shares was cancelled and the amount of the Share Premium account transferred to Retained Earnings.

The shares of the Company were admitted to trading on the Main Market of the London Stock Exchange on 13 May 2011.

In the year ended 30 June 2016, the Company purchased 2,102,373 (2015: 890,509) of its Ordinary Shares for a total value of US$2,339,545 (2015:US$1,168,628) to be held in treasury. 890,509 shares had been repurchased in the year ended 30 June 2015 for treasury but had been held for over a year and were therefore cancelled in the current financial year. The buy-backs are effected through retained reserves.

On 7 December 2015 the Company completed a tender offer at a price of US$1.3004 per share (previous offer US$1.4859 per share). Under the offer 19,333,165 shares were cancelled (previous offer 15,477,601 shares) with US$25,140,848 being paid to participating shareholders (previous offer US$22,998,167).

The shareholders approved a dividend of 4.0 cents per share on 12 November 2015 (previous dividend 3.5 cents per share); this was paid to shareholders on 13 January 2016.

The Company's agents and the Investment Manager perform all significant functions. Accordingly, the Company itself has no employees.

Duration

The Company currently does not have a fixed life but the Board considers it desirable that Shareholders should have the opportunity to review the future of the Company at appropriate intervals. Accordingly, at the annual general meeting of the Company in 2018 a resolution will be proposed that the Company ceases to continue in existence.

2 The Subsidiary

The Company has the following subsidiary company:

Epicure Qatar Opportunities Holdings Limited is a wholly owned subsidiary of the Company, and was incorporated in the British Virgin Islands on 4 July 2007 under the provisions of the BVI Companies Act 2001, as a limited liability company with registration number 1415393. The principal activity of the subsidiary is holding investments on behalf of the Company.

3 Significant Accounting Policies

The consolidated financial statements of the Company for the year ended 30 June 2016 comprise the Company and its subsidiary, Note 2, (together referred to as the "Group").

3.1 Basis of presentation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and Isle of Man Companies Act 1931 to 2004. The financial statements have been prepared under the historic cost convention, as modified by the revaluation of financial assets held at fair value through profit or loss and investments in and amounts due from subsidiary which are stated at fair value.

The accounting policies applied in these financial statements are the same as those applied in the Group's consolidated financial statements as at the year ended 30 June 2015.

These consolidated financial statements have been prepared on the going concern basis, as the Board of Directors has a reasonable expectation that the Group and Company have the resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of information relating to present and future conditions, including the date of the next continuation vote for the Company (as described in the Investment Policy), future projections of profitability, cash flows and capital resources.

The Group's principal activities, investment objective and strategy and principal risks and uncertainties are described in the Chairman's Statement, Business Review, Investment Policy and Corporate Governance Report.

The Group's approach to capital management is described in note 10. The Group's objectives, policies and processes for managing credit, foreign exchange, liquidity and market risk along with the are described in Note 26 of the financial statements.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise its judgement in the process of applying the Group's accounting policies. The financial statements do not contain any critical accounting estimates.

3.2 Basis of consolidation

Subsidiaries

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries and subsidiary undertakings). Control is achieved where the Company has power over an investee, exposure or rights to variable returns and the ability to exert power to affect those returns.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised gains or losses arising from intra-group transactions, are eliminated in full in the consolidated financial statements.

3.3 Financial assets at fair value through profit or loss

Investments are designated at fair value through profit or loss on initial recognition. The Group invests in quoted equities and quoted convertible bonds for which fair value is based on quoted market prices. The quoted market price used for financial assets held by the Group is the current bid price ruling at the year-end without regard to selling prices.

Purchases and sales of investments are recognised on trade date - the date on which the Group commits to purchase or sell the asset. Investments are initially recorded at fair value, and transaction costs for all financial assets and financial liabilities carried at fair value through profit and loss are expensed as incurred.

Gains and losses (realised and unrealised) arising from changes in the fair value of the financial assets are included in the income statement in the year in which they arise.

3.4 Foreign currency translation

The Qatari Riyal is the currency of the primary economic environment in which the entity operates ("the functional currency").

The US Dollar is the currency in which the financial statements are presented ("the presentational currency").

Monetary assets and liabilities denominated in foreign currencies as at the date of these financial statements are translated to Qatari Riyal at exchange rates prevailing on that date. Income and expenses are translated into Qatari Riyal based on exchange rates on the date of the transaction. All resulting exchange differences are recognised in the income statement at the exchange rate prevailing on the balance sheet date. Items of income and expense are translated at exchange rates on the date of the relevant transactions or an average rate. Components of equity are translated at the date of the relevant transaction and not retranslated. All resulting exchange differences are recognised in other comprehensive income.

3.5 Dividend income

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

3.6 Segment reporting

The Group has one segment focusing on maximising total returns through investing in quoted securities in Qatar and the GCC region. No additional disclosure is included in relation to segment reporting, as the Group's activities are limited to one business and geographic segment.

3.7 Cash and cash equivalents

Cash and cash equivalents comprise cash deposited with banks and bank overdrafts repayable on demand.

3.8 Investments in and amounts due from subsidiary

Investments in and amounts due from subsidiary in the Company balance sheet are stated at fair value.

3.9 Treasury shares

In accordance with shareholder authority shares continue to be bought back to be held in Treasury in order to manage the discount between share price and NAV.

3.10 Future changes in accounting policies

A number of new standards, amendments to standards and interpretation are not yet effective for year ended 30 June 2016, and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the measurement of the amounts recognised on the Company's financial statements; however, IFRS 9, Financial Instruments ("IFRS9") may change the classification of financial assets. This is first effective for accounting periods beginning on or after 1 January 2018.

There are no other standards, interpretations or amendments to existing standards that are not yet effective that would be expected to have a significant impact on the Company.

4 Net Asset Value per Share

The net asset value per share as at 30 June 2016 is US$1.2138 per share (30 June 2015: US$1.5336) based on 117,273,702 (30 June 2015: 138,709,240) Ordinary Shares in issue as at that date.

5 Fair Value Hierarchy

IFRS 13 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

All the Group's investments are classed as level 1 investments.

All financial assets and liabilities not stated at fair value in the financial statements are categorised as level 2 in the fair value hierarchy.

6(a) Financial assets at fair value through profit or loss

Group

30 June 2016: Financial assets at fair value through profit or loss; all quoted equity securities.

Group

30 June 2015: Financial assets at fair value through profit or loss; all quoted equity securities:

6(b) Investments and amount due from subsidiary

The amount due from the subsidiary is subject to interest on the aggregate principal amount drawn down from 1 January 2011, at the US prime rate per annum. All loan repayments made by the subsidiary will first be deducted from the outstanding loan interest before being applied to the principal balance. The loan is secured by fixed and floating charges over the assets of the subsidiary and is repayable on demand.

7 Commission rebate

In previous years the Company received 50% brokerage commission rebates for all trades done through its Qatar brokers. However, during this year the Company changed its Qatar broker to take advantage of more competitive commission rates. For the year ended 30 June 2016 the Group received US$Nil (2015: US$281,829).

8 Charges and Fees

Investment Manager's fees

Annual fees

The Investment Manager was entitled to an annual management fee of 1.25% of the Net Asset Value of the Group, calculated monthly and payable quarterly in arrears. The Investment Management Agreement was subject to termination on 31 October 2013 with a revised agreement coming into effect from 1 November 2013. The revised agreement sees the annual fee reduce to 1.05% of the net asset value of the Company further reducing to an annual fee of 1.0% of the net asset value of the Company from 1 November 2015.

Annual management fees for the year ended 30 June 2016 amounted to US$1,722,189 (30 June 2015: US$2,408,770) and the amount accrued but not paid at the year-end was US$356,885 (30 June 2015: US$556,692).

Performance fees

The performance fee structure is based upon the relative performance of the Company against the performance of the QE Index. The performance fee is payable by reference to the increase in Adjusted Net Asset Value per Ordinary Share in excess of the Target Net Asset Value per Ordinary Share (Opening Net Asset Value per Ordinary Share adjusted by the movement on the Qatar Exchange Index) over the course of a Performance Period.

The Investment Manager is entitled to a performance fee in respect of a Performance Period only if the Adjusted Net Asset Value per Ordinary Share at the end of the relevant Performance Period, after excluding dividends paid and received, exceeds the Target Net Asset Value per Ordinary Share..

If the performance test is met, the performance fee will be an amount equal to 15% of the amount by which the Adjusted Net Asset Value per Ordinary Share at the end of the relevant Performance Period exceeds the Target Net Asset Value per Ordinary Share multiplied by the time weighted average of the number of Ordinary Shares in issue in the Performance Period together, if applicable, with an amount equal to the VAT thereon.

In any Outperformance Period which follows any one or more Underperformance Periods, the performance fee payable shall be calculated by multiplying X minus Y by 15% (where X is the increase in the Adjusted Net Asset Value per Ordinary Share at the end of the relevant Outperformance Period above the Target Net Asset Value per Ordinary Share for that Performance Period and Y is the aggregate of the Shortfall Returns for the previous Underperformance Periods) and multiplied by the time weighted average of the number of Ordinary Shares in issue in the Performance Period. If X minus Y is a negative figure, no performance fee shall be payable.

If the Adjusted Net Asset Value per Ordinary Share at the end of the relevant Performance Period is higher than the Target Net Asset Value per Ordinary Share but is less than the Opening NAV, any accrued performance fee will be withheld and shall not be payable and will only become payable in the event that the Target Net Asset Value per Ordinary Share and the Opening NAV is exceeded in respect of a subsequent Performance Period. For the avoidance

of doubt, in the event that the Target Net Asset Value per Ordinary Share and the Opening NAV is exceeded in respect of a subsequent Performance Period, all accrued but unpaid performance fee(s) in respect of previous Performance Periods will become due and payable.

If there has been a Shortfall Return in respect of a Performance Period and performance fees have been accrued but withheld in respect of one or more prior Performance Periods, the accrued but withheld performance fees will be reduced by treating the prior Performance Period(s) and the current Performance Period as one Performance Period and calculating any performance fee due over that aggregated period. For the avoidance of doubt, in the event that the Target Net Asset Value per Ordinary Share and the Opening NAV is exceeded in respect of a subsequent Performance Period, all accrued but unpaid performance fee(s) in respect of previous Performance Periods will become due and payable.

The Investment Manager will not be entitled to such part of any performance fee to which it would otherwise be entitled if:

(i) payment of such part of any performance fee would cause the aggregate performance fee in respect of a Performance Period, excluding any accrued but unpaid performance fee in respect of previous Performance Periods, to exceed 1.5% of the Net Asset Value of the Company at the end of the relevant Performance Period (or, in the case of the any Performance Period of less than a year, 1.5% multiplied by the number of days in that Performance Period divided by 365); or

(ii) payment of such part within the Performance Period would have caused the performance test or Opening NAV not to be met.

Performance fees accrued but not paid during the year ended 30 June 2016 amounted to US$nil as the performance target was not reached (30 June 2015: US$nil).

The Investment Manager is responsible for the payment of all fees to the Investment Adviser.

Investment Management Agreement definitions

Administrator and Registrar fees

The Administrator is entitled to receive a fee of 12.5 basis points per annum of the net asset value of the Company between US$0 and US$100 million, 10 basis points of the net asset value of the Company above US$100 million.

This is subject to a minimum monthly fee of US$15,000, payable quarterly in arrears.

The Administrator assists in the preparation of the financial statements of the Group and provides general secretarial services.

The Administrator may utilise the services of a CREST accredited registrar for the purposes of settling share transactions through CREST. The cost of this service will be borne by the Company. It is anticipated that the cost will be in the region of £12,000 per annum subject to the number of CREST settled transactions undertaken.

Administration fees paid for the year ending 30 June 2016 amounted to US$261,255 and US$33,061 for additional services (30 June 2015: US$308,041 and US$38,837 respectively). Outstanding Administration fees at the year end amounted to US$56,320 (30 June 2015: US$75,059).

Custodian fees

The Custodian is entitled to receive fees of US$7,200 per annum and US$25 per processed transaction from the Company.

In addition the Custodian is entitled to receive fees of 8 basis points per annum in respect of Qatari securities held by the Group and 10 basis points per annum in respect of non-Qatari, GCC securities held by the Group and $45 per settled transaction (Qatar)/$50 per settled transaction (GCC excluding Qatar). From 1 March 2013 the custodian agreed to a 25% reduction in custodian fees relating to the Qatari market.

Custodian and sub-custodian fees for the year ending 30 June 2016 amounted to US$139,116 (30 June 2015: US$176,008) and the amount accrued but not paid at the year-end was US$5,615 (30 June 2015: US$11,016).

9 Cash and Cash Equivalents

10 Share Capital

During the year to 30 June 2016 the Company repurchased 2,102,373 (2015: 890,509) Ordinary Shares, to be held in treasury, at a cost of US$2,339,545 (2015: US$1,168,628) and cancelled 890,509 (2015: 3,793,272) Ordinary Shares in treasury which had been held for more than one year. The Ordinary Shares held in treasury have no voting rights and are not entitled to dividends.

On 7 December 2015 the Company completed a tender offer at a price of US$1.3004 per share (30 January 2015: US$1.4859 per share). Under the tender offer 19,333,165 shares (30 January 2015: 15,477,601) were repurchased and cancelled.

During the year US$114,983 tender expenses were deducted from equity.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the Group. The Board manages the Group's affairs to achieve Shareholder returns through capital growth rather than income, and monitors the achievement of this through growth in net asset value per share.

Group capital comprises Share Capital and Reserves. Neither the Company nor its subsidiary is subject to externally imposed capital requirements. The Company also has an active share buyback program.

11 Reserves - Group

*Exceptional expenses related to tender offer

The capital redemption reserve is created on the cancellation of shares equal to the par value of shares cancelled. This reserve is not distributable.

12 Earnings per Share

Basic and diluted earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.

13 Other payables and accrued expenses

Group

Company

14 Taxation

Isle of Man taxation

The Company is resident for taxation purposes in the Isle of Man by virtue of being incorporated in the Isle of Man and is technically subject to taxation on its income but the rate of tax will be zero. The Company is required to pay an annual corporate charge of £250 per annum.

The Company became registered for VAT from 1 February 2011.

Qatar taxation

It is the intention of the Directors to conduct the affairs of the Company so that it is not considered to be either resident in Qatar or doing business in Qatar.

Qatar does not impose withholding tax on dividend distributions by Qatari companies to non-residents.

Capital gains made by the Company on disposal of shares in Qatari companies will not be subject to tax in Qatar.

There is no stamp duty or equivalent tax on the transfer of shares in Qatari companies.

Kuwait taxation

Since 1 January 2009 dividends paid on behalf of holdings in Kuwait have withholding tax deducted at 15%.

15 Financial instruments

The Group's activities expose it to a variety of financial risks: market price risk, foreign exchange risk, credit risk, liquidity risk and interest rate risk.

Market price risk

The Group's strategy for the management of investment risk is driven by the Group's investment objective. The main objective of the Group is to capture the opportunities for growth offered by the expanding Qatari economy by investing in listed companies or companies soon to be listed. This will be principally through the medium of the Qatar Exchange.

All investments present a risk of loss of capital through movements in market prices. The Investment Manager and Investment Adviser moderate this risk through a careful selection of securities within specified limits. The Investment Manager and the Investment Adviser review the position on a day to day basis and the Directors review the position at Board meetings.