Final (1)

Investment
Embracing
Shari’ah Principles

JSE – September 2006

Please refer to the Legal Disclaimer

Contents

1. What is Islamic Finance?

2. Development of Islamic Fund Management

3. The Oasis Experience in Islamic Fund
Management


What is Islamic Finance?


Features of Islamic Finance

• Partnership - sharing Risk & Reward
• discourage debt & situations of credit default
• Real Assets back every transaction
• discourage financial hybrids and derivatives

• Avoids investing in ‘the sins’
• e.g. pork, alcohol, tobacco, gambling, etc.

A low risk investment alternative

• Speculation avoidance
• no derivatives etc.

• Debt avoidance
• reduced interest rate risk

• Asset backed investments
• endure bear markets


Development of
Islamic Finance


Support & growth of Islamic finance

• Gordon Brown pledged support for the
growth of Islamic finance
• Sukuk market had grown to $41 billion*
- Expect $9 bil new sukuk’s in next 6 months*

• Western Institutions are getting involved
- ₤3.3 billion for Dubai Ports project - underwritten
by Barclays Capital

* source: Financial Times (July 2006)


Growth in Islamic financial institutions

• Fastest growing global financial sector

300
250
Institutions

200 + 55% growth
150
100
50
0
1997 2006

• In more than 75 countries (Bahrain & Malaysia the largest hubs)
• Total assets exceed $250 billion and are growing at 15% a year

Source: Institute for International Research, Institute for Islamic Banking & Finance
Please refer to General Council of Bank and Islamic Financial Institutions, IMF (F&D 2005)
the Legal Disclaimer

Reasons for growth in Islamic finance

• Strong demand for these products
• modern investment products facilitate greater choice
• low risk investment alternative avoids:
 increased market volatility
 high-risk speculative activity
 greater potential to erode capital

• Growth in wealth & education of investors
• particularly in oil rich & industrialized countries
• increased wealth facilitates improved education


Fostering growth in Islamic finance

REGULATION

CREDIBLE
BENCHMARKS

SPECIALISATION
Foundation for AND CO-
universal OPERATION
application
Promoting ENHANCED
accountability and PRODUCT
transparency
Increased participation
of service providers


Regulation and transparency

The Islamic Finance Framework provides:

REGULATION TRANSPARENC
Y

• Highest global standards • Reporting performance, etc.
• Increased credibility • Promotes accountability

Foundation for universal application of
GLOBAL FUND MANAGEMENT OPERATION

Regulatory and institutional standards

Saudi
1985 Organisation of the Islamic Conference (Islamic Fiqh Academy) Arabia
Accounting and Auditing Organisation of Islamic Financial
1989 Bahrain
Institutions (AAOIFI)
Saudi
1999 Islamic Corporation for Economic Development Arabia
General Council for Islamic Banks and Financial Institutions
2001 Bahrain
(GCIBFI)
2002 Islamic Financial Services Board (IFSB) Malaysia

2002 Islamic International Rating Agency (IIRA) Bahrain

2002 International Islamic Financial Market (IIFM) Bahrain

2002 Liquidity Management Centre Bahrain

• Collaboration with regional regulatory bodies
• Aligning regulatory standards globally
• Co-operating with world governing institutions (IMF, IOSCO, WB)

Product Innovations in Islamic Finance

• Islamic mutual funds (diversified across asset classes)

• Equity investment products

• Sukuks (Islamic bonds)

• Real estate investment products

• Islamic hedge funds

• Short term investment instruments

• Takaful (Islamic insurance)


Growth in Islamic Mutual Funds

• Islamic equity fund assets grew ± 25% between 1997 to 2003
• Total of 330 listed Islamic Investment Funds*

• Products include:
• Equity funds
• Real estate and property funds
• Murabaha funds (contract for purchasing asset by bank at cost +
profit)
• Commodity funds
• Leasing funds

* source: Eurekahedge.com

Oasis experience
in Islamic Fund Management


At Oasis regulation is KEY…

• Highest form of European Regulation - (UCITS)
• Regulatory Oversight
• Irish Financial Services Regulatory Authority (IFSRA)
• South African Financial Services Board (FSB)
• Johannesburg Stock Exchange (FTSE/JSE)
• South African Reserve Bank (SARB)
• Institutes & Affiliations
• CFA Institute (Global)
• Dublin Funds Industry Association (Ireland)
• Institute of Retirement Funds (South Africa)
• Association of Collective Investments (South Africa)


… as is its Shari’ah regulation …

External regulation
• Accounting & Auditing Organization for Islamic Institutions
(AAIOFI)
• International Association for Islamic Economics (IAIE)
• Islamic Financial Services Board (ISFB)
• General Council for Islamic Banks & Financial Institutions (GCIBFI)

Internal regulation
• Independent Shari’ah Advisory Board


… and investment skills are KEY KEY KEY!

• Tremendous growth in Islamic finance has resulted
in a dearth of Shari’ah fund management skills

• Oasis has honed its Shari’ah investment skills over
the last nine years – evidence of its success may be
gauged from its performance

• Developed infrastructure to invest in any geographic
region


The Crescent product range of Oasis

• South African Products

Equity  Property  Balanced 

• Global Products

Equity  Property 


Oasis Crescent Equity Fund - Performance

Aug 98 YTD Since
to 1999 2000 2001 2002 2003 2004 2005 2006 Inception
Dec 98 July Cum Ann
Oasis
Crescent
Equity 15.5 79.9 12.5 52.6 18.1 20.1 26.9 34.6 15.8 899.1 33.3
Fund*
FTSE / JSE
All Share (19.9) 70.8 0.4 32.6 (8.3) 16.1 25.5 47.3 17.0 319.1 19.6
Index
Ave
General
Equity (21.7) 50.7 (3.5) 21.5 1.6 22.6 38.6 36.9 12.0 262.8 16.6
Fund

* # 1 since inception to July 2006

Source: S&P Micropal


Oasis Crescent Equity Fund - Performance

Sortino Sharpe Info

Ratio Rank Ratio Rank Ratio Rank

Oasis Crescent
5.2 1 2.6 1 2.0 2
Equity Fund
FTSE-JSE All Share
Index/ Average 0.9 5 0.6 14 0.4 9
Competitor (Info)

Source Data: S&P Micropal & Bloomberg; Since inception to July 2006


Oasis Crescent Equity Fund - Value Add

R100 Investment in the Oasis Cresent Equity Fund
(Inception to July 2006)
1,200

1,000 R 999.1
Oasis Crescent Equity Fund
800 FTSE/JSE All Share
Average General Equity Fund
Rands

600

400 R 419.1
R 362.8

200

-
Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06

Source: S&P Micropal; August 98 – July 2006


Oasis Crescent Equity - Performance

Oasis 899.1
900
FTSE/JSE All Share Index

700
Overall
96 months
Return (%)

500
Bear Bull
41 months 55 months 319.1
300

100
(0.4) 4.6 6.0

(4.0)
(100)

Source: S&P Micropal; August 98 –July 2006


Crescent Global Equity Fund – Ratings


Crescent Global Equity Fund – Ratings

Risk/Reward Miscellaneous 3 year 5 year
Vs Benchmark 3 Year 5 Year 10 Year Stnd Deviation 9.8 12.5
1
Sharpe Ratio 1.9 1.0
Alpha 5.5 10.5 -
Sortino Ratio 4.3 1.7
Beta 1.0 0.8 -
R-squared (%) 82.5 81.4 -
Tracking Error 4.1 5.9 -
Info Ratio 1.6 1.8 -
Excess Return 6.6 10.5 6.1

Ratings at of 2006-07-31
Morningstar Overall 3 Year 5 Year 10 Years

Rating 4* 4* 4* -

Risk - 1.1 1.8 -

Return - 15.8 11.2 -

Investments Rated 135 135 95 -

Crescent Global Equity Fund - Performance

YTD Since
Dec Inception
2001 2002 2003 2004 2005 2006
2000
(Aug)
Cum Ann

Crescent Global
0.0 (2.0) (0.7) 33.4 21.7 11.5 16.8 105.7 13.4
Equity Fund

(21.5
Dow Jones IM Index (0.3) (19.2) 30.2 10.6 10.1 7.6 7.8 1.3
)

(19.5
MSCI World Index 1.6 (16.5) 33.8 15.2 10.0 9.9 27.2 4.3
)

Source: S&P Micropal; Dec 2000 – Aug 2006


Crescent Global Equity Fund - Performance

Sortino Sharpe Information Ratio

Ratio Ranking* Ratio Ranking* Ratio Ranking*

Crescent Global Equity Fund 1.22 8th 0.98 7th 1.42 10th

Dow Jones IM Index / Average
(0.15) 269th 0.01 264th 0.46 127th
Global Equity Fund (Info ratio)

MSCI World Index / Average
0.10 137th 0.22 125th (0.30) 191st
Global Equity Fund (Info ratio)

Source: S&P Micropal; Dec 2000 – Jul 2006


Crescent Global Equity Fund - Value added

2.3
Crescent Global Equity Fund
$2.0m n
2.0 MSCI World Index
Average Global Equity Fund
1.8
$ Millions

1.5

1.3 $1.2m n
$1.1m n
1.0

0.8

0.5
Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06

Source: S&P Micropal; Dec 2000 – Jul 2006


Crescent Global Equity Fund – Performance

105 97.7
OASIS Overall
85 MSCI Index 68 months

65
Return (%)

45
Bear Bull
30 months 38 months 23.9
25

3.1 2.8
5

(1.7) (3.6)
(15)

Source: S&P Micropal; Dec 2000 – Aug 2006


Listing of first Shari’ah
compliant property fund

OASIS CRESCENT PROPERTY FUND
Listed on Alt-X in November 2005


Social contribution - Crescent Fund Trust

A charitable trust uses Non-Permissable Income (NPI) to
develop and promote:
Dermatology Unit

Health Care: Red Cross Children’s Hospital


Social contribution - Crescent Fund Trust

Education: As Salaam
• An initiative which aims to help
communities accelerate the
education and training of the
youth through self help


The future of Islamic Finance

• Young rapidly growing sector
• Opportunities are great
• The demand is in place
• The regulatory framework is in place
• Prolific development of product
• Products are innovative, highly regulated and transparent
• The lower risk proposition is attractive
• Attractive proposition for a global audience


Legal Disclaimer

Past performances are not necessarily an indication of future
performances. No guarantees are provided. Any calculations made
are approximations, meant as guidelines only, which you must
confirm before relying on them and also at the time of finalising any
transaction. Oasis will therefore not be held responsible for any
inaccuracies in calculations supplied. All the information appearing
on the slides is provided without a representation or warranty
whatsoever, whether express or implied. Oasis makes no
representation or warranties about the correctness or the suitability
of any products or service that appear nor the soundness of any
general advice offered. Oasis shall not be responsible and disclaims
all liability for any loss, liability, damage (whether direct, indirect,
special or consequential) or expense of any nature whatsoever,
which may be suffered as a result of or which may be attributable,
directly or indirectly, to the use of, or reliance upon any information,
links or service provided, or any actions and/or liability for
consequential or incidental damages. Oasis Asset Management and
Oasis Crescent Capital Management are authorised Financial
Services Providers.


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