​The Capital Market Authority urges those willing to invest in investment funds authorized by CMA to review the terms and conditions of the funds. These terms and conditions, are applied on all authorized investment funds and explain the contractual relationship between the Fund Manager (Authorised person) and the investor. In addition to that, they help investors to take good and sound investment decisions.

According to the Investment Funds Regulations and the Real Estate Investment Funds Regulations, CMA obliges the fund manager to produce the terms and conditions that will form the contract between the fund manager and the Unit holder. Unit-holders shall indicate their agreement to the terms and conditions by signing a copy thereof. The regulations also emphasized that any material changes to the terms and conditions must be notified to unit-holders by sending a summary of those changes to all unit-holders at least sixty (60) calendar days in advance of the effective date of the changes.

CMA requires specific information to be included in the terms and conditions of the fund such as: name of the fund, address, a website that includes information on the fund and its manager, currency of the fund and major risks as well as the fees and charges, a list of the Board members’ names…etc.

The Authority emphasized that Audited financial statements must be provided by the investment Funds Managers (Authorised persons by CMA) to unit-holders on request and without charge as part of their discloser. According to Article 36 of the Investment Funds Regulations, the fund manager must prepare financial statements for an investment fund at least twice annually. Financial statements must be prepared and audited in accordance with the standards issued by the Saudi Organization of Certified Public Accountants (SOCPA).

An investment fund is defined as “a joint Investment channel designed to invest funds on behalf of investors and give them the opportunity to participate in the profits operated by the fund manager for a certain fee.” According to the CMA Annual Book, the number of investment funds that invest in the local stock market by the end of last year reached 60 Funds representing 43.5 percent of the total funds licensed by the authority to invest in the stock markets. As for the value of the funds’ assets invested in the local stock market by the end of last year, it reached 17.4 billion riyals, thus capturing 62.3 percent of the total value of assets invested in stocks.