Risk Disclosures

Investing involves significant risk, including the possible loss of the entire amount invested. The value of investments and the income derived from them may fluctuate sharply, and clients may not get back the amount originally invested. This document summarises the principal risks of which clients should be aware before engaging Arkan Capital Advisors ("Arkan", CMA License 23-09871). It is not exhaustive and does not replace the detailed risk disclosures provided in your client agreement and suitability documentation.

Saudi and global equity markets are subject to volatility driven by macroeconomic cycles, geopolitical events, currency movements, monetary policy decisions, and commodity prices, in particular oil. The Tadawul All Share Index (TASI) has historically shown elevated correlation to crude-oil prices and to global emerging-market sentiment. Single-stock prices can decline materially in short periods, and may not recover.

Holdings of sukuk, money-market instruments and structured products are exposed to the risk that the issuer or a counterparty fails to meet its obligations. Credit risk also extends to brokers, custodians and clearing houses that hold assets or settle transactions on your behalf. We mitigate this risk through diversification, the use of regulated counterparties, and ongoing monitoring of issuer credit quality.

Certain investments — including small-cap equities, parallel-market (Nomu) listings, private placements and certain sukuk — may not be readily convertible to cash without a material price impact, particularly in stressed market conditions. Redemption terms of funds and structured products may include lock-up periods, gates or notice periods. Suitability and liquidity profile are assessed prior to onboarding under CMA rules.

Investments denominated in currencies other than the Saudi Riyal carry currency risk; adverse exchange-rate movements may reduce returns when converted back into SAR. While the SAR is pegged to the US Dollar, the peg is a policy decision and is not legally guaranteed. Fixed-income and sukuk holdings are exposed to profit-rate risk: changes in prevailing rates affect their market value inversely.

Portfolios with significant exposure to a single sector, issuer or geographic market are more vulnerable to adverse developments specific to that exposure. We construct portfolios with diversification commensurate with your stated investment objectives, but clients who request concentrated exposures accept the associated risks.

For Shariah-screened mandates, ongoing eligibility of portfolio constituents may change as a result of corporate actions, changes in business activity or financial ratios. Where a holding becomes non-compliant, it is divested in an orderly manner. Any incidental non-permissible income identified during purification is donated to charity in accordance with rulings issued by our independent Shariah board. Shariah-screening methodologies differ across scholars and providers, and reasonable differences of opinion exist.

Where strategies use leverage, derivatives or hedging instruments, losses can exceed the initial amount invested in the relevant position and may amplify market moves. Derivative exposures introduce additional counterparty, basis and roll risks. Such strategies are used only where explicitly agreed in writing and consistent with the mandate's risk profile.

Investment activities are subject to operational risks including system failures, human error, third-party service disruptions, and cyber incidents. Arkan maintains a documented business-continuity plan, segregated production environments, continuous monitoring, and an incident-response programme aligned with SAMA and CMA guidance.

Changes in laws, regulations, accounting standards or tax treatment (including Zakat, VAT, capital-gains, withholding, and listing rules) in Saudi Arabia or abroad may adversely affect the value of investments or their after-tax return. Clients are responsible for their own tax position and should seek independent tax advice where appropriate.

Any historical performance figures, model portfolios or back-tested returns shown on the Services or in our materials are illustrative only. Past performance is not a reliable indicator of future results, and there is no assurance that any investment objective will be achieved.

Arkan maintains a Conflicts of Interest Policy approved by the Board. Where a conflict cannot be avoided through organisational arrangements, it is disclosed to the affected client in a clear, fair and non-misleading manner before the relevant service is provided. Arkan does not accept third-party inducements that would impair its duty to act in the best interests of clients. A copy of the policy is available on request.