2013

Annual Report
1
 Nurturing
our future

2 3
 Contents

Chairman’s Message  9

Social Investment Approach  12

Corporate Governance  24

Investment Objectives and Principles  31

(Presidential Decree)

Asset Allocation 35

Investment Approach  39

Risk Management  53

Board Of Directors  58
Advisory Council
Fiscal Committee

Financial Results  62

4 5
 “In 2013, the Fundo Soberano
de Angola (also referred
to as the FSDEA or Fund)
underwent a period of
significant development.
We are extremely pleased
to have developed
solid foundations
for governance,
transparency and
accountability. I
personally extend my
gratitude to the whole
team of the Fund for their
collective dedication to the
establishment of a robust
platform for the future
activities of the FSDEA.”

6 7
 Chairman’s Message

In 2013, the Fundo Soberano de Angola (also referred to as the FSDEA or Fund) underwent a
period of significant development. We are extremely pleased to have developed solid foundations for
governance, transparency and accountability. I personally extend my gratitude to the whole team of the
Fund for their collective dedication to the establishment of a robust platform for the future activities
of the FSDEA. The policies that have been ratified to regulate the activity of the Fundo Soberano de
Angola will strengthen the confidence of the international markets, the domestic business community
and, most importantly, that of the Angolan citizens.

Since its inception, the Fundo Soberano de Angola has had an active Advisory Council, which
comprises the Minister of Finance and the heads of the macroeconomic authorities of the State. The
purpose of the Council is to advise the President of the Republic on key regulatory and governance
issues related to the Fund and its investment strategy. It played a fundamental role in the development
of the FSDEA’s investment policy and management rules, which were ratified during the first half of
2013.

In parallel, the FSDEA adheres to the voluntary framework for governance set out by the International
Forum of Sovereign Wealth Funds (IFSWF), the association which convenes similar institutions to
define common approaches. This framework defines the principles of governance, accountability
arrangements and conduct recommended for SWFs that seek to operate on a prudent and sound
basis, known as the Santiago Principles. FSDEA is a member of IFSWF and operates in accordance
with these principles. In November 2013, Deloitte & Touche was appointed by the President of the
Republic to audit the financial statements of the Fundo Soberano de Angola on an independent basis.
The opinion of the auditor is available to the public and this procedure shall be undertaken on an annual
basis, as required by the management rules of the Fund. The certification of the auditor also enables
the FSDEA’s financial statements to be included in the General State Accounts, which is subject to the
oversight of the Parliament.

In addition to the annual report, the Government is provided with detailed quarterly reports on the
operations and investments of the Fund. These reports are subject to prior approval by the Fiscal
Committee of the FSDEA, which was appointed by the Ministry of Finance during the last quarter of
2013. The task of this body is to ensure that the Fund complies with all relevant legislation that governs
its operations and internal activities. This work has been vital to the alignment of the FSDEA internal
procedures with the relevant regulations that apply to the State’s autonomous funds.
The ultimate priority of the Angolan Sovereign Wealth Fund in 2013 was to set the structure, the
platform, and the most suitable conditions for conducting prudent investments. The strategy of the
Fund which is to develop an internationally diversified portfolio with a significant contribution to the
financial and social welfare of the nation, was ratified in June 2013 by the President of the Republic.
Now, we count on your support in implementing this strategy to ensure the achievement of the policy
objectives of FSDEA and nurture the future of the citizens of Angola.

JOSÉ FILOMENO DE SOUSA DOS SANTOS

Chairman of the Board of Directors

8 9
 “Since the end of the
civil unrest in 2002, the
improvement in the social
conditions of Angola’s
citizens has been a constant
priority for the Government.
Significant progress has been
made in the provision of
health services and
education, with public
expenditure in the social
sphere doubling between
2011 and 2013.”

10 11
 SOCIAL INVESTMENT APPROACH
Since the end of the
civil unrest in 2002,
Significant progress has been
made in the provision of health
services and education, with public
the improvement in expenditure in the social sphere
the social conditions doubling between 2011 and 2013. It
of Angola’s citizens reached 34 percent of the General
State Budget, of which 8.9 percent
has been a constant was allocated to education, 5.3
priority for the percent to health and 11 percent to
Government. social security.
The social development of Angola
is intricately linked to its economic
growth, and correlated to the
spending power of its citizens.
World Bank statistics indicate
GNI PER CAPITA
Angola Middle Income
12
that the gross national income
(GNI) per capita grew from
USD950 in 2004 to USD5010
in 2013, which supports the view
that the measures undertaken
by the Government have made
an undeniable economic impact.
Today, the evolution of the GNI
per capita of Angola has reached
the level of middle-income
countries and is above most of the
other Sub-Saharan nations.
In FSDEA’s policy, the strong
correlation between social
and commercial investment is
Sub-Saharan Africa (developing only)
evidenced by the allocation of
7.5percent of the Fund’s capital to
social development projects and
socially responsible projects.
It also reflects the FSDEA’s
strategic emphasis on attaining
socio-economic returns in
tandem with financial returns.
The social development and
socially responsible investments
of the FSDEA align with the
Government’s strategy to promote
education, alleviate poverty and
provide access to basic public
services.
Figure 1 Source: World Bank
SOCIAL IMPACT STRATEGY
The Board has chosen to
focus the Fund’s efforts on key
areas of development and to
work with clear basic principles
from the outset.
NAVIGATION PRINCIPLES
The social investment
initiatives eligible for support
by the endowment of the
Fund must share the following
five “Navigation Principles”:
The strategy for the development of the Fund’s social investments will be guided by an objective
assessment of the impact of the funds allocated.
The five priority sectors identified are:
• Training and education
• Access to healthcare services
• Access to electricity
• Access to water
• Autonomous income generation
LOCAL EMPOWERMENT ABILITY
Local government representatives and civil
leaders should be involved in recommending the
The work should be attributed to the most able
partners for the implementation of the initiatives,
priorities for the social programs and participate with preference to domestic organizations that
in the implementation of the initiatives. demonstrate an international standard of
SOCIAL IMPACT FIRST
operation with foreign technical support
wherever necessary.
This aspect highlights the need to foster social
impact combined with opportunities for income SUSTAINABILITY
generation for the target citizens. The initiatives should be economically,
environmentally and socially autonomous.
COMPLEMENTARITY
The social initiatives must complement the DIVERSIFICATION
strategic objectives of public expenditure The initiatives should complement the
executed by the central and provincial Government’s strategy to expand the economy
governments. beyond its current dependency on the
marketing of crude oil.
13
14 15
TARGET SEGMENTS
Whereas the country still
faces many challenges in the
social sphere today, FSDEA
has identified three priority
population segments for
the purposes of the impact
assessment. These are
considered to be the most
vulnerable groups in the
aftermath of the civil unrest
that Angola has experienced.
These segments are:
16
WOMEN WAR VETERANS
GENDER BREAKDOWNS IN ANGOLA Table 1 Source: Ministério da Familia e Mulher - MINFAMU 2009
The social impact program will specifically
focus on women to redress the latent gender
Although statistics on the number of war
veterans in Angola are scarce, four decades
imbalance in the country. More than 90 percent of civil unrest indicate that there are many
of women work in Angola. However, they thousands. Reintegrating back into civilian life INDICATOR MALE FEMALE
are under-represented in public and private after years of military service proves challenging
institutions, and demonstrate lower literacy rates for many of these veterans and their living Labour force participation 76% 90%
than men. Targeting women in regards to access conditions are often dire. Consequently, the
to education, healthcare and autonomous Fund will target autonomous income generation
Literacy rates 83% 54%
income generation is vital. for this segment, particularly for individuals in
rural areas, where their situation is even more
YOUNG PEOPLE precarious than in the urban centers. Parliament Seats Balance 63% 37%
With a fertility rate of six children per woman,
Cabinet Balance 70% 30%
the population pyramid reflects the expanding
demographic scenario of Angola, in which more
than 40 percent of its citizens are under 14
years of age. Nurturing this segment is essential
to future generations of Angolans. FSDEA
extends its social efforts to vocational training, POPULATION DISTRIBUTION FOR ANGOLA (2012) Figure 2
healthcare, access to water and sanitation to
support Angola’s youth, whenever possible.
MALES
FEMALES
POPULATION IN MILLIONS
17
NURTURING OUR FUTURE –
THE PILOT PROGRAMS
Improving the quality of
education is one of the
Government’s main priorities.
One of the Fund’s first pilot
initiatives – which may be
replicated nationwide – is
aimed at supporting a modern
education program that
focuses on improving the
quality of learning for children
who live in vulnerable socio-
economic circumstances.
The initiative is called Kamba
Dyami and was initially
launched in 2011.
18
KAMBA DYAMI DEVELOPING SKILLS
Kamba Dyami is part of the ‘One Laptop
per Child’ (OLPC) project which promotes
The social investment approach of the Fundo
Soberano de Angola will play a key role in
computer-based learning across a growing providing the necessary skills to the next
number of schools in the most economically generation of Angolans, in order to enable them
challenged areas of the world. Kamba Dyami is
a working partnership with the Salesian Schools
to participate in the nation’s growing economy.
This investment is vital to secure career
of Dom Bosco. opportunities for the next generation in a world
that is increasingly reliant on modern technology
The FSDEA supports this initiative by
supplying laptops and developing teaching
– Angola’s future economic success depends
on the nurturing and development of a skilled
and maintenance capacity. Beyond simple workforce that can manage and adapt to these
financial assistance, the Fund’s involvement changing requisites.
includes the support of curriculum updates and
teacher training programs. Children are drawn Since 2002, Angola has made significant
to new technology, so the vital component for improvements in education. According to
the success of this program has been enabling the International Human Development Index,
teachers to further promote computer-based
learning in more Salesian schools throughout
Angola’s adult citizens spend an average of 4.7
years at school. This puts Angola ahead of many
Angola. other Sub-Saharan nations, including many that
have enjoyed longer periods of stability, growth
SOCIAL INTEGRATION IN and investment.
RURAL AREAS
In 2013, a pilot plan was launched in the Bungo
municipality of the Uíge Province to support
civil registration, the development of sustainable
farming and the creation of micro-businesses.
The program aims to create an agricultural
value chain that supports the production
and marketing of goods such as vegetable
crops. Beyond encouraging family farming,
the initiative aims to promote access to the
Government programs of free civil registration
and promotion of entrepreneurship, and to
enable small farmers in rural areas access to
formal markets for agricultural products. This
initiative will benefit around 3,000 families over
three years and create 15 micro-businesses.
19
FUTURE LEADERS OF ANGOLA –
AN EDUCATION PROGRAM
As the economy of Angola
grows into becoming the
third largest on the continent,
it is essential for the next
generations to nurture the
required skills to meet the
expected demand that will
follow suit.
20
Today, all economic sectors across the country
demand skilled and accomplished professionals.
In parallel, Angola’s demographic progress
demonstrates potential – approximately 50
percent of the population is aged below 15 years,
which boosts the prospects for this generation
–, whilst revealing a need for increased access
to the digital world, training programs and good
health services.
Nevertheless, we observe that many young
Angolan citizens cannot compete with
expatriate candidates for middle- and senior-
level positions at the international organizations
based in our country. Most positions offered by
these organizations are still held by expatriates.
The hidden cost of this phenomenon is the
lack of knowledge transfer to young Angolans.
Various international studies indicate that
expatriate workers are less effective than
domestic employees in sharing practical
knowledge. This fact hampers career prospects
for Angola’s youth significantly.
Some of the reasons proposed for this issue are:
SOFT SKILLS
Some of the soft skills required are not
embedded in our education, institutional culture
and vocational training programs;
INFORMAL LABOR
A significant part of our working population
operates in the informal market and
shows limited mobility due to inadequate
communication and literacy skills;
ACADEMIC CERTIFICATION
The domestic standard of academic certification
is regarded less favorably than those of more
mature nations;
VOCATIONAL TRAINING
Vocational training is not deemed as important
as academic experience. Whereas many
Angolan youths rightfully aspire to tertiary
education, the facts indicate that adequate
vocational training and experience at the
institutional level remains scarce in our domestic
labor market.
FUTURE LEADERS OF ANGOLA –
SCHOLARSHIP PROGRAM
To boost the employability of
young Angolan professionals
in a labor market that
is increasingly open to
international competition,
the Fund has established
an international university
scholarship program.
The initiative focuses on financial literacy and
international business and is co-organized
with one of Switzerland’s leading universities:
the Zurich University of Applied Sciences
(ZHAW).
The selection process was independently
managed by the university and consisted of
a case study assessment and mathematical
and oral exams with its professors. The
academic program was designed exclusively
for Angolan youths and consists of modules
in the subjects of asset management, fixed
income, equity analysis, portfolio theory of
investment, application of quantitative methods
in investment management, use of research
methods, alternative investments, structured
products, advanced financial statement analysis,
and portfolio management. It also includes
seminars on applied simulation of portfolio
management and investment and places a
significant emphasis on the soft skills required for
professional asset management for commercial
purposes.
This exclusive program has 45 participants
located in Zurich, Switzerland, and shall last
six months. The graduates will access global
expertise and gain a deep understanding of
successful industries worldwide and acquire
a deep understanding of the key factors
influencing the success of the international
financial industry, becoming future knowledge
leaders in Angola. The 45 participants will
contribute decisively to expand the prosperity,
construction and economic development of our
country.
21
 “The FSDEA committed to
implement the Santiago
Principles during its
first three years of activity,
according to paragraph 5 of
Article 6 of the Management
Regulations of the Fund. The
most recent self-assessment
indicates that 83 percent of
the 24 principles have been
implemented.”

22 23
 CORPORATE GOVERNANCE
The Fundo Soberano The FSDEA operates within
the scope of the indirect State
de Angola is an administration. It manages its
institution under the budget and revenues, and practices
indirect administration acts independently from the State,
without prejudice to the powers of
of the State. Despite supervision and oversight of the
following the State’s Head of State (i.e. the President of
strategy it has its own the Republic) and the origination
of its capital from the General
legal personality and State Budget.
administrative and
financial autonomy. Large structural projects are within
the scope of FSDEA’s investments
activity:
• Development of large structural
projects;
• Constitution and subscription of
capital or shareholdings in the
capital of holding companies
or commercial companies,
headquartered in the Republic
of Angola or abroad;
• Creation or subscription of
equity shareholdings in private
investment funds and public
companies constituted under
the applicable domestic
legislation, and the structuring of
the required financing for them.
24
Unlike countries where SWFs are
managed by the Central Bank, in
the case of Angola, the mandate of
FSDEA is materially different from
that of the Central Bank:
• FSDEA is assigned with the task
of applying the surplus of the
Financial Strategic Oil Reserve
of the State to increase national
wealth by protecting the Fund’s
capital, maximizing its returns in
the long term and developing
infrastructure projects that
benefit the citizens of Angola.
• Central Bank of Angola is
responsible for the custody of
the foreign exchange reserves of
the State, the control of inflation,
the exchange rate management,
the promotion of domestic
economic growth, and the
regulation and supervision of the
Angolan banking industry.
The above activities should
be made with reference to the
principles of protection of capital
and maximization of returns
(paragraph 1 of Article 2 of
the FSDEA Investment Policy,
approved by Presidential Decree
No. 107/13 (28 June). The following
risks must be safeguarded:
• Market
• Credit
• Manager
• Interest rate
• Liquidity
• Operational
• Legal and tax
• Uneven investment
performance
• Return uncertainties arising
from the use of derivatives and
systemic
Besides FSDEA, there
are other funds within the
scope of the indirect State
administration, such as the
Credit Guarantee Fund,
created by Presidential
Decree No. 78/12 (4 May),
the Road Fund restructured
by Presidential Decree No.
42 /11 (7 March), the Motor
Guarantee Fund created by
Presidential Decree No 10/09
(13 July), amongst others.
Unlike FSDEA, these autonomous State funds The FSDEA comprises three bodies, namely:
are exempt from the obligation to audit and the Board of Directors, the Advisory Board
publish their financial statements. Authority and the Fiscal Committee (n°1 of Article 5 of
is usually assigned to the Minister of Finance the Organic Statute of FSDEA, approved by
to supervise their accounting obligations, Presidential Decree No. 89/13, 19 June).
and the supervision of the execution of their
policy objectives is attributed to the minister Under Article 6 of the Statutes of FSDEA, the
responsible for their sector of operation. Due Board of Directors is the executive body that is
to the fact that FSDEA’s activity focuses on the responsible for all acts of administration of the
Fund and the autonomous execution of its tasks.
increase of State wealth, which is managed by
the Ministry of Finance and the assets of the
FSDEA are part of the General State Account,
Throughout the course of its operations, the
Board of Directors must provide all information
the Fund also provides regular information
about investments executed and any other data
about its financial operations to the Minister of
Finance.
about the Fund’s activities requested by public
bodies with relevant powers for that purpose, as
well as to submit its annual report (Article 7 of
But unlike other autonomous State funds, the
FSDEA is subject to the direct supervision of the Organic Statute of FSDEA) for approval
the President of the Republic (Articles 5, 19 by the President of the Republic, after review by
the Minister of Finance.
and 26 of Presidential Decree No. 48/11 of 9
March, which creates the Angola Sovereign
The Advisory Board is, under Article 9 of the
Wealth Fund). This aspect derives from Law No.
Organic Statute of FSDEA, the official body
02/13 (7 March), through which the Parliament
for assistance and counsel of the President of
approves the General State Budget for the
the Republic, assisting the Head of State in the
year 2013 and assigns the management of the
orientation of the investment policy of the Fund
Strategic Financial Oil Reserve to the President
and issuing opinions on policies, the annual
of the Republic.
investment strategy and periodic progress
reports. It is chaired by the Finance Minister and
Based on the principle of specialization and
includes the Minister of Planning and Territorial
within the scope of its accountability for the
Development, the Minister of Economy and the
indirect State administration, the President of
Governor of the Central Bank. The composition
the Republic attributes the policy, regulations
of the Advisory Board enables an alignment
and managerial powers over the annual cash
surplus of the Strategic Financial Oil Reserve, between the investment decisions of the Fund,
to the FSDEA. This is based on the specialized the national development programs and other
focus on financial sector required for activities medium term measures of macroeconomic
that extend beyond the national borders, and policy.
the substantial reporting necessary to guarantee
the fiscal discipline demanded from state
financial administration.
25
 In accordance with Article 10
of the Statutes of FSDEA,
the Fiscal Committee is the
body that accounts for the
internal supervision of the
activities and operation of the
Fund. It is responsible for the
following:
26
Overseeing the management and compliance to the rules that
1 regulate the activities of the Fund;
2 Certifying the value of the assets held by the Fund;
Supervising the assets of the Fund or those managed by it, such
3 as bank deposits, goods or any others;
Examining the accounts and verifying whether the valuation
4 criteria used by the Fund leads to a correct assessment of the
assets and profits;
Issuing opinions on the Fund’s financial reports (i.e. the quarterly
5
reports on current operations, the annual report and the
financial statements);
Communicating any irregularities brought to its attention to the
6
relevant Authorities.
The activity of the Board of Directors of
FSDEA encompasses the provision of regular
information to the Government, either for final
approval or for the purpose of recordkeeping.
For example, it is the faculty of the President
of the Republic, after the consultation of the
Advisory Board, to approve the key instruments
of strategic management of the Fund, namely:
• Annual and multi-annual business plans
• Annual budgets and multi-annual planning
• Investment policy
• Annual report
• Financial statements prepared by the Board
of Directors (Article 7 of the Organic Statute
of FSDEA).
In accordance with Executive Decree No. 190/95
(8 September), the FSDEA should provide the
accounts to the Ministry of Finance quarterly.
This obligation also comes from Article 6 of the
Management Regulation of FSDEA, approved
by Presidential Decree No. 108/13 (28 June).
And, pursuant to that order, until the last day
of the month subsequent to the quarter, the
Fund must send to the Ministry of Finance the
following documents for final appraisal by the
President of the Republic:
• Statement of revenues based on the sources
of funds
• The statement of budget execution
• Bank statements
• Reconciliation of bank statements
• Detailed budgetary and financial execution
within the period.
The Fiscal Committee of FSDEA is responsible The FSDEA committed to implement the
for monitoring and certifying the preparation Santiago Principles during its first three years
and content of the financial statements, as of activity, according to paragraph 5 of Article
well as the provision of the information to the
Ministry of Finance by the Board of Directors.
6 of the Management Regulations of the Fund.
The most recent self-assessment indicates
that 83 percent of the 24 principles have been
In addition to the function of the Fiscal implemented. Recently, FSDEA has become
Committee, the accuracy of the accounts that a member of the International Forum of
FSDEA provides to the State and general
public is further certified by an external and
Sovereign Wealth Funds (IFSWF) to reaffirm
its commitment to governance, investment
independent annual audit, required under
Article 19 of Presidential Decree No. 48/11 (9
March). The auditor is appointed by the Head
proficiency and accountability recommended to
similar institutions.
of State, to whom it reports the result of the The regulatory and policy milestones achieved
work performed. In accordance with Article 27 by the Fund in 2013 such as the publication
of Presidential Decree No. 48/11, the opinion of of its audited results for 2013, combined with
the auditor and the financial statements of the its IFSWF membership, will strengthen the
FSDEA must be published in the newspaper
with the highest circulation in the country.
FSDEA’s commitment to comply with local
and international regulations governing its
operations and investment activities.
The oversight of the FSDEA is not limited to
the Government, it extends, albeit indirectly,
to the Parliament. Under the terms of Article
58 (on the General State Accounts) and that
of the Act No. 15/10 (14 July), Law of the
General State Budget, all of the reports of the
implementation of programs, the investment
and the financing of public companies, as well
as the use or application of grants from services,
institutes and autonomous funds of the State
(such as the FSDEA) must be integrated in the
General State Accounts.
Further to complying with the above legal
provisions, enacted by the Angolan State,
the Fund also adheres to supranational rules
that govern the activities of sovereign wealth
funds, such as the Santiago Principles and the
Linaburg-Maduell Index, developed in 2008 to
rate transparency in respect to the operations of
sovereign wealth funds.
27
 “When looking for
investments that generate
financial returns that are
sustainable in the long term,
the Angola Sovereign Fund
will have an important role
in promoting the socio-
economic development of
Angola through wealth
creation for the Angolan
people.”

28 29
 INVESTMENT OBJECTIVES AND PRINCIPLES
(PRESIDENTIAL DECREE)

The investment objectives

enacted by the Government Promote, foster and support the development of
through Presidential Decree infrastructure and industry in the Republic of Angola and
107/13 (28 June) are as
follows:
1 abroad, in particular the development of infrastructure in
sectors considered strategic in the short term;

Increase the nation’s wealth by maximizing returns and

2 minimizing risks;

Create additional sources of wealth for the Republic of Angola,

3 through a strategic and responsible allocation of State Reserves

for the benefit of current and future generations;

Contribute to an efficient fiscal policy that supports the long-

4 term interests of the citizens of the Republic of Angola;

Protect the economy of the Republic of Angola against

5 unforeseen negative events.

30 31
 “Presidential Decree
107/13 defines a long-term
asset allocation strategy
and is subject to review
by the Executive, which
considers the evolution
of domestic and foreign
economic environment
and determines the most
recommended policy to
generate reservations and
additional assets for the State
that benefits Angolan
citizens.”

32 33
 ASSET ALLOCATION
Investment decisions are to
be guided by the allocation
limits for specific asset classes
and industries defined in
Presidential Decrees 107/13.
34
The pre-assessment of risk for portfolio
investments of the Fund must comply with the
following governing principles:
• Protection of capital
• Maximization of long-term returns
• Development of infrastructure for the benefit
of Angolan citizens
Protection of capital is to be achieved through
investing in low-risk assets, which may include
fixed income and cash instruments in regulated,
mature markets and issuances by sovereigns,
large corporations and financial institutions
as well as other securities issued in regulated
markets with substantial levels of liquidity. This
principle will support the preservation of the
immediate value of the reserve of the State
attributed to the Fund and ensure the partial
availability of the same to protect the nation
against any future adverse events.
Over time, approximately one third of
the Fund’s portfolio will be allocated to
long-term investments that bear potential
to generate higher returns, following the
principle of maximizing long-term returns and
developing infrastructure projects. This kind of
allocation includes investments in commercial
infrastructure, agriculture, mining, private equity,
real estate and other allocations in emerging
markets, with particular focus on Angola and
Sub-Saharan Africa. The latter investments
also support the policy objective of creating
additional sources of wealth and employment
opportunities for the citizens of the Republic of
Angola.
An additional allocation shall be made for
social development projects (SDP) and
socially responsible investments (SRI). These
investments may be governed by the same
objectives and principles as other investments,
but must consider social, ecological and
sustainability criteria, particularly those that
promote the protection of the environment and
support local communities.
Due to the fact that petroleum-related income
is the main source of funding for the State
Budget and, indirectly, that of the Angolan
sovereign wealth fund, FSDEA’s portfolio
allocation to assets that are correlated to the
volatility of the crude oil market is limited. This
seeks to meet the policy objective of reducing
the risks inherent in the current generation of
state foreign exchange reserves by the State.
Currently, the marketing of crude oil alone
accounts for the largest volume of exports and
economic output of the country, despite the fact
that its market price remains subject to variables,
which are beyond the exclusive influence of the
Angolan State.
Based on these objectives and principles,
Presidential Decree 107/13 defines a long-term
asset allocation strategy, which is subject to
reviews by the Government, that takes into
consideration all developments in domestic
and foreign economic circumstances to
determine the most sensible policy that could
generate additional reserves and assets for the
State and benefit the Angolan citizens, via the
management of the Board of Directors.
35
 “By allocating funds to
various asset classes, the
Angolan Sovereign Wealth
Fund aims to diversify
current sources of revenue
for the State and national
economic output. In
accordance with these
criteria, the proportion of
investments in assets that
represent a high correlation
with proceeds of the oil
industry is limited.”

36 37
 INVESTMENT APPROACH

Presidential Decree 107/13

determined the maximum
Investments in liquid
long-term limits within which
the asset allocation strategy of 1 asset and debts 2 Private equity

the actual investments must

conform. Asset allocation limits
are applied to the following asset
classes and industries: Agriculture and
3 mining 4 Real estate

Investment in Distressed asset

5 infrastructure 6 opportunities

BRICs and frontier

7 markets 8 Commodities

Social Development

9 Projects and Socially

Responsible Investments

38 39
 GLOBAL INVESTMENT ENVIRONMENT GLOBAL INVESTMENT ENVIRONMENT

The basic requirements for
diversification and analysis
of market risk aspects
are also imposed by the
implementation of the asset
allocation strategy determined
by Presidential Decree 107/13.
These include:
Reduction of the current dependence on the 2013 proved a challenging
marketing of crude oil: FSDEA has a policy
objective to create alternative sources of wealth
investment environment in
for Angola. The economy of Angola has gained developed and emerging
substantially from the oil sector, with oil-related markets. They include:
revenue accounting for a high proportion
of economic output. By allocating funds to
various asset classes, the Angolan Sovereign
Wealth Fund aims to diversify current sources
of revenue for the State and national economic
output. In accordance with these criteria,
the proportion of investments in assets that
represent a high correlation with proceeds of the
oil industry is limited.
The year wrapped up with a strong bull market
in developed market equities, with a rise of
29 percent on the S&P500. Europe saw the
beginning of a slow recovery in the second
quarter while fixed income markets reacted
strongly to the mid-year announcement by the
US Federal Reserve (the Fed) that it would be
tapering its quantitative easing policy. Emerging
markets experienced synchronized outflows
in the second half of the year with the MSCI
Emerging Markets Index down 5 percent for
the year and the JPM Emerging Markets Bond
Index returning 6.5 percent.

Currency strategy: the Fund must be mainly

denominated in US dollars. Given that the
FSDEA is funded from US dollar-denominated
oil revenues, this ensures that the Fund takes
limited currency risk. Unhedged exposure to
other currencies shall be restricted.

Support of regional economies: the purpose of

investing in infrastructure projects is the pursuit
of the yields adjusted to such sectors through
investment in ventures with attested feasibility.
Such allocations are focused on the domestic
market and other economies of Sub-Saharan
Africa, to ensure the achievement of a functional
geographic diversification for the exposure to
this sub-asset class within the portfolio.

40 41
UNCERTAINTY AND LIQUIDITY
The first half of 2014 saw significant investor
uncertainty over the pace of tightening in the
US, compounded by poor data in the first
quarter from the extreme temperatures during
the Northern winter. Current consensus and
recent data flow suggest that the market expects
US bond yields to rebound in anticipation of
higher policy rates in 2015, but this is unlikely
to happen until tapering has ended and the
US economy is on a sustained upswing. Fed
Chairwoman Janet Yellen has been clear that
US monetary policy will lag the economic curve
and the general dovish stance within the Fed
means caution with regards to any shifts in
policy.
Liquidity is expected to continue to buoy
the markets with the European Central Bank
(ECB) and Bank of Japan (BoJ) remaining
accommodative, providing liquidity at a time
when the US is withdrawing it by winding up its
asset purchase program. In light of the relatively
stronger growth in the UK and the still-inflating
housing boom, the Bank of England (BoE)
is expected to increase rates by year-end. In
contrast with the US, two-year UK yields have
been steadily increasing.
EUROPEAN RECOVERY
On the whole the European recovery continues,
albeit at a slow pace and with some concern
regarding the strength of the banking sector.
The European Banking Authority has begun
its 2014 review of banks’ Asset Quality Review
(AQR), analyzing how the assets of 124 major
EU banks would hold up under various adverse
economic scenarios and financial shocks. The
results, expected in October 2014, will provide
momentum for more fragile banks to address
42
vulnerabilities and strengthen capital ratios. For GROWTH
banks to pass the test, they have to maintain The focus on emerging markets increased in
GDP GROWTH RATES IN DEVELOPING MARKETS (% CHANGE) Figure 3 Source: IMF World Economic Outlook - October 2013
a common Tier 1 capital buffer of at least 5.5 the last decade as those economies grew in size
percent of risk-weighted assets. Banks that fail and at rates significantly beyond the advanced
the asset-quality review are given six months to economies of North America, Europe and
raise new capital before losses are imposed on developed Asia. In the last decade, Sub-Saharan
their investors. Africa has been at the forefront of this rapid
GDP growth, with growth rates amongst the
Despite some criticism that the AQR lacks highest and most sustained globally. 2013 saw
a tougher downside scenario, the overall economic growth in Sub-Saharan Africa (SSA)
consequence of the tests is that European banks of 4.9 percent. According to the IMF (Apr
are forced to recapitalize and strengthen their 2014) this will rise to around 5.5 percent in 2014.
bases, thereby improving the financial sector’s These figures are even more favorable when
ability to deal with shocks and providing impetus South Africa is excluded, with SSA growth rates
for the European recovery. In the meantime, projected at 6.8 percent (in 2014). The ‘frontier
European periphery countries have returned Africa’ growth rate, currently 6 percent per year,
to the capital markets and are showing signs of is expected to outpace even frontier Asia by
improvement. 2016, making it the fastest-expanding region in forecast period
the world and a favorable place for sustainable
EMERGING MARKETS investments from an economic perspective.
China is experiencing a slowdown but is
still expected to retain growth of around 6
percent. In general, investors remain cautious
about emerging markets, especially given the Developing Asia Sub-Saharan Africa Latin America and the Caribbean
currency crises surrounding Turkey, Argentina
and South Africa, among others. The Ukraine/
Russia crisis that began early 2014 hasn’t been
resolved, putting pressure on emerging market
performance. These developments have had
the effect of widening the opportunity set
in emerging markets as these markets have
generally been undervalued and oversold since
early 2013.
AFRICA INVESTMENT
ENVIRONMENT
Enticing African growth rates attract yield-
seeking investors with a considerably better
outlook for Sub-Saharan Africa than North
Africa.
43
FOREIGN DIRECT INVESTMENT
Shadowing the growth rates, foreign direct investment (FDI) trends indicate a greater shift
INVESTOR SENTIMENT ABOUT OVER 16% OR MORE RETURNS IN
towards SSA, while investment in Latin America has stagnated and FDI into developing Asia EMERGING MARKETS
has declined significantly from a peak in 2011. SSA is often referred to as the next frontier
for investment and foreign investors are increasingly moving from the traditional emerging
markets of the BRICs to the new economies of SSA. Last year’s inflows of FDI were mainly in
CEE
commodities, telecoms, financial services, retailing and transport.
Russia/CIS
MENA
FOREIGN DIRECT INVESTMENT IN DEVELOPING Figure 4 Source: IMF World Economic Outlook – October 2013
MARKETS (USD BILLION) Sub-Saharan Africa
India
Latin America
China
YIELD
As recently as 2012, China and Latin America
were perceived as offering the highest potential
for exceptional returns, with 90 percent of
Chinese private equity investors believing that
returns of greater than 16 percent per annum
could be achieved. However, a number of
factors – a changing global economy, concerns
Developing Asia Sub-Saharan Africa Latin America and the Caribbean
over a slowdown in China and the impact of
a reduction, and eventual end, of quantitative
easing in the US – have affected investor
appetite for these traditional emerging market
regions. Investors now consider SSA to have the
highest return potential of emerging markets
with 64 percent of investors believing returns of
16 percent or greater could be achieved in SSA
private equity.
44
DOWNSIDE
Although the IMF cautioned that various trends
– such as slowed growth in supportive emerging
markets, tighter global financial conditions, rising
fiscal imbalances and difficult security conditions
– pose a downside risk, our outlook remains
positive.
Across the region, governments have stepped
up investment spending. Public investment
in most countries in the region – for example,
Ethiopia, Ghana, Namibia, Niger, Nigeria,
South Africa, Tanzania, Uganda, and Zambia
– continues to be geared toward basic
infrastructure such as power generation, roads
and port facilities, all of which remain critical
to improving competitiveness in the region.
Growth in 2013 was, therefore, underpinned by
large investments in infrastructure, mining and in
Figure 5 Source: EMPEI
2012 SURVEY
2013 SURVEY
maturing investments. The infrastructure sector
is relatively shielded from global financial trends
and even domestic events.
With domestic demand on the rise due to
higher household purchasing power, low-income
countries with low exports appear to be immune
to global financial conditions. These factors have
sparked a growing interest in agribusiness. The
agricultural sector currently accounts for around
25 percent of Africa’s GDP and more than 60
percent of employment.
Regional stability is now greater across the
region, allowing the substantial potential of
SSA to be released. The region includes a total
population of more than 900 million people,
the vast majority of whom, in contrast to the
developed world, are under 25 years of age.
SSA also includes much of the world’s remaining
available land and natural resources.
45
 NATIONAL INVESTMENT OUTLOOK
Angola is Africa’s second-largest oil producer.
Unsurprisingly, oil production is the main sector
of the economy, accounting for about 47
percent of total GDP, 95 percent of all exports
and 79.5 percent of fiscal revenues.
Within the last decade, the Angolan economy
witnessed its highest annual growth in both
GDP and GDP per capita, 22.5 and 18.55
respectively, in 2007. As an oil-dependent
economy, the Republic of Angola is, however,
vulnerable to oil price volatility in the global
market. This is seen in the sharp decline in the
annual growth rate of both GDP and GDP per
capita from those high 2007 levels to 2.45 and
-0.9 percent respectively.
The economy grew by 5.1 percent in 2013, below
the expected rate of 7.1 percent. The trend from
2010 onwards indicates that the economy is
gradually regaining from the shock of the global
financial crises with both the GDP and GDP per
capita trending upwards again, although not at
the pre-2008 rate.
Other additional sources of revenue, in Angola,
derive from the non-oil energy, agriculture,
fisheries, manufacturing and construction
industries. The biggest non-oil contributors are
46
wholesale and retail sales which account for
21 percent of total output, and agriculture and
fisheries (10 percent); construction (7.7 percent),
manufacturing (6 percent) and diamonds (1 per
cent). Growth is projected to reach 3.9 percent
in 2014 and 5.9 percent in 2015 as major public
infrastructure investment reignites.
The macroeconomic stability plan brought
inflation down from more than 100 percent in
2002 to 8.8 percent in 2013; built up reserves to
USD18billion, contained external debt at around
13 percent of GDP, and allowed the effective
peg of the kwanza to the dollar.
As shown in Figure 6 below, despite the high
fluctuation in the growth rate of GDP and
GDP per capita in the country, consumer price
inflation has been trending downward. Though
the rate of decrease in the inflation rate slowed
somewhat since 2006, when it reached 13.3
percent, the 2013 figure shows that the country
was able to curtail inflation to single digits.
Some research reports that Angola’s monetary
policy in 2013 focused on ensuring inflation and
exchange rate stabilisation and resilience to
external shocks.
47
 NATIONAL INVESTMENT OUTLOOK
THE TRENDS IN ANGOLA INFLATION AND OFFICIAL EXCHANGE RATE Figure 6

The golden graph in Figure 6 shows the
country’s official exchange rate with the US
dollar. It shows that Angola’s currency, the
Kwanza (AOA), has, on average, experienced
a continual depreciation with respect to the US
dollar with a little fluctuation between 2005 and
2010. Supported by the accumulation of foreign
reserves, the exchange rate remained stable over
the last three years.
Market interest rates have decreased
significantly. The lending interest rate fell from
97 percent in 2002 to its lowest of 12.5 percent in
2008 to 15.8 percent in 2013. Though the spread
between lending and deposit rates from 2006
has reduced significantly compared to its 2002-
2005 value, it remains high (i.e. 8.4 percent).
Due to the high inflation in 2002, the real
interest rate – despite the high lending rate –
was negative, at -18.6 percent. The significant
decrease in the rate of inflation, however,
increased the real interest rate from this negative
value to its maximum over the period of 35
percent in 2005. Since then there have been
fluctuations in the real interest rate around the
average value of 5.9 percent.
The unemployment rate in Angola has remained
relatively low by African standards, fluctuating
from 7.3 percent (2005-2007) to 7.6 percent
(2009-2011).
Overall, Angola’s macro-economic environment Inflation, consumer prices (annual %)
has significantly improved compared to
pre-2010 periods but the economy remains Official exchange rate
largely dependent on oil, hence vulnerable to (LCU per US$, period average)
international market prices.
The investment prospects in Angola are mainly
in crude oil, mineral reserves, a growing middle
class and an improving macro-economic policy
environment. Several factors, however, hinder
foreign investment inflows – income inequality,
skills shortages, underdeveloped infrastructure,
currency risk, country risk and bureaucracy THE ANGOLAN INTEREST RATE TREND Figure 7
– and make corporations oriented by
independent macro-economic data and policy
analysis more difficult to attract. Nonetheless, 120
further investment opportunities exist in the
agriculture, mining, manufacturing, services and
other sectors, which remain unredeemed or 100
provisioned by the import of goods and services.
80
60

40

20

0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
-20

-40

Real interest rate (%) Interest rate spread (lending rate minus deposit rate, %)
Deposit interest rate (%) Lending interest rate (%)
48 49
 “A key priority of the
Fundo Soberano de Angola
in 2013 was to attain the
structure, the framework,
and the recommended
settings for execution of
prudent investments
on behalf of the
State.”

50 51
 RISK MANAGEMENT

A key priority of the Fundo
Soberano de Angola in 2013
was to attain the structure,
the framework, and the
recommended settings
for execution of prudent
investments on behalf of the
State.
This endeavour culminated with the approval of
three complementary legal acts to Presidential
Decree 48/11 of 9 March by the President of the
Republic, at the end of the first semester of the
year.
Presidential Decree 107/13 of 28 June (PD
107/13) defines the strategy and objectives for
the establishment of the framework for the
efficient risk management within the scope of
powers of the Board of Directors of the Fund. In
parallel, the Presidential Decree 89/13 of 19 June
(i.e. the Statutes of the Fund) establishes the
general principles, methodologies, organizational
aspects and supervisory functions for risk
management. These legal acts, combined
with the management rules of FSDEA (i.e. the
Presidential Decree 108/13 of 28 June), set the
general principles that the Fund should apply in
order to protect its capital and maximize returns,
with due caution. Decisions of the Board must
comply with the three mentioned legal acts
and be based on a disciplined and intelligent
assessment of the risks involved. The Fund
advocates an independent risk management,
compliance with regulations and current
legislation, regular audits, and accountability of
its executives.

Since risk management is a practice that involves the entire organization, all employees are directly or
indirectly involved in the risk management process, which follows a defined risk management process,
outlined in the following graph.

Risk Identification

Risk Measurement

Risk Controls

Risk Measurement

Streering and
limitation

52 53

ASSET CLASS
1 Investments in Liquid Assets and Debt
2 Private equity
3 Agriculture and Mining
4 Real Estate
5 Investment in Infrastructure
6 Investments in Distressed Asset Opportunities
7 BRICS and Border Markets
8 Commodities
9 Social Development Projects and Socially Responsible Investments
Table 2
Paragraph 4 of Article 6 of the investment
policy of the FSDEA enacted by PD 107/13
determines the maximum long-term allocation
limits of the Fund’s portfolio to specific asset
classes and industries. For prudential reasons the
asset allocation strategy applied by the Board
54
of Directors must comply with the provisions of
Article 6 of the PD 107/13. The asset allocation
strategy follows the provisions of that legal
act under the interpretation that individual
investments of the Fund are targeted to enable
portfolio exposure to different asset classes
For the development of the Diversification from crude oil marketing Currency strategy (Article 9 of the Investment
MAXIMUM ALLOCATION asset allocation strategy, (Investment Policy, paragraph 5 of Article 7) Policy) The portfolio must mainly be
The FSDEA has the objective to create new denominated in US dollars, because the
Articles 7 - 9 of the Investment sources of wealth for Angola. The economy FSDEA is funded from State foreign exchange
100 percent policy attribute various of Angola has gained substantially from the reserves and bears the objective of investing
oil sector, with oil-related revenue accounting both domestically and abroad. This rule levels
assessment criteria of market for some 47 percent of economic output. the currency risk of the various investment
10 percent risk factors and the national By allocating funds to various asset classes, operations of the Fund held domestically and
economy, among which the diversification in both invested wealth and outside the country. The allocation to other
10 percent economic output is targeted. In accordance with currencies must be hedged against the US dollar
following are highlighted: this, only 5 percent of the FSDEA’s investments or limited to a volume of less than 5percent of
may be allocated to assets with a high the portfolio
10 percent correlation to the crude oil market.
The Risk Management Policy of the FSDEA
30 percent defined in PD 107/13 Article 10 outlines all risks
that the FSDEA’s investments (“Portfolio”)
will be exposed to and assigns the mandatory
5 percent aspects of such monitoring to the Board.
2.5 percent
5 percent
7.5 percent
and industries. The table below reflects the
asset allocation limits defined by paragraph 4 of
Article 6 of the Investment Policy, as interpreted
by the Board of Directors.
55
OVERVIEW OF OBJECTIVES AND RISKS
Reference
Objective / Risk Overview of Reference
(PD 107/13)
“The Sovereign Fund of Angola is designed to
Article 10.1 Diversification
be a diversified portfolio”
“… such factors include fluctuations in interest
rates, the financial performance of companies
Article 10.3a Market risk in which FSDEA had made a common stock
investment, and investments in economic
environments in which there is deflation.”
“… risk that the issuers of the securities/ bonds,
Article 10.3b Credit risk that compose the portfolio, do not comply with
their payment obligations…”
“…Managers appointed may exceed or may not
Article 10.3c Manager risk achieve the objectives assigned to them by the
Board of Directors…
“Economic policies and changes may affect
Article 10.3d Interest rate risk interest rates, or may cause great fluctuations in Implementation of appropriate hedging strategies to
the prices of the assets included in the portfolio…” manage portfolio risk, including the use of derivatives.
“In turbulent economic times, the lack of liquidity funds to cash investments, using short-term deposits,
Article 10.3e Liquidity risk
can continue indefinitely”
“…depends on contractual agreements and is
subject the different national regulations which
Article 10.3f Legal and tax risk may result in the unexpected taxation of the
investments…or in temporary lack of availability
or loss of invested resources…”
Table 3
The FSDEA adopts the LIMITS OF EXPOSURE TO ASSETS
AND INDUSTRIES, AS PROVIDED IN
following approaches to PD 107/13
manage the risks inherent in its In the medium term the proportion of the value
activities: of each asset class and the industry exposure
Proposed Approach
must comply with the limits defined by the
investment policy enacted by the Government.
Despite the fact that decisions on individual
Invest in a diversified Portfolio based upon the long- investments are attributed to the Board, their
term asset allocation strategy, as outlined above. This exercise of such powers must observe the
should include the diversification between different asset
strategy and considerations outlined in the
classes, geographic areas, asset risks and maturities.
legal acts, which regulate the activity of the
Fund. In this context, regular monitoring of the
Determine the appropriate risk management strategy investments of each asset manager hired by the
for each asset class, taking into account the several Fund is essential to ensure full compliance with
exposures to market risk. the asset allocation enacted by PD 107/13.
These strategies should include the key principles
of regular monitoring and the corresponding risk
GEOGRAPHIC DIVERSIFICATION OF
mitigation strategy implementation, when required.
INVESTMENTS DEFINED IN PD 107/13
The investment policy of the Fund clearly
Detailed credit risk analysis at the investment execution defines the limits and stages of development of
date, including a cash-flow and business analysis, and a its portfolio, which should be observed by the
review of the rules to analyze the capital structure.
Board of Directors:
Regular monitoring of managers compliance between 1. Maximum of 50 percent of the portfolio
the investments performed and the mandated allocated to one market
strategies. Selection of managers that present a high 2. Maximum of 10 percent of the portfolio
performance, using pre-determined selection criteria,
allocated to one investment, except for
such as proven track record and experience in main
allocations to investments funds
asset classes, and satisfactory risk/investment controls.
3. Maximum of 70 percent of portfolio allocated
to non-traditional or illiquid assets with long-
Monitoring of Portfolio exposure to interest rate risk. term yields.
Additionally, the following procedures are being
developed to manage different types of risk
Manage portfolio’s liquidity risk by allocating sufficient identified by PD 107/13:
Market risk: Regular calculation of value
liquid money market funds and highly-traded short term
securities. at risk (VaR) for securities with confidence
intervals between 95 percent and 99 percent,
with maximum risk tolerances for certain asset
Receive appropriate legal and tax advice for all relevant
classes. Illiquid asset risks must be assessed at
investment jurisdictions to be considered. Ensure that
least semi-annually, with assessment of relevant
legal and tax risks are minimized prior to investing in
accordance with the most appropriate risk mitigation market factors to develop proactive response
strategies”. to risks.
Credit risk: Limitations in investments in debt
to a maximum of 20 percent in non-investment
grade debt as determined by leading credit
rating agencies or from internal/independent
analysis where unrated.
Manager risk: The assessment of the risk
managers is undertaken by comparing
the performance achieved versus the
contractually defined benchmarks for
measuring results. Additionally, a qualitative
analysis of performance is carried out against
the assumptions of the investment policy to
ensure alignment of the manager and portfolio
composition in accordance to the provisions of
PD 107/13.
Interest rate risk: Regular monitoring of the
portfolio risk to interest rate/yield curve changes.
Liquidity risk: A minimum of 30 percent of
portfolio must remain invested in short-term and
liquid securities, enabling its full settlement in
less than three months.
Legal and tax risk: The ongoing assessment
of FSDEA’s compliance with the legal acts that
regulate its activity at the national level and the
internal directives and regulations is ensured by
a specific department and regular exercise of
internal audit.
Operational risk: In addition to internal
monitoring of prudential management ratios,
the Fiscal Committee of the Fund, appointed by
the Ministry of Finance, determines the use of
controls and prudential principles applicable to
FSDEA’s activity, mainly in aspects relevant to
the provision of information to the Government
on the implementation of the business plan and
the annual budget and the quarterly application
of the state capital under the management of
the Board of Directors.

Design appropriate operational systems and practices

“Is the risk of losses resulting from the inadequacy
appropriate for each investment asset class. Ensure
Article 10.3g Operational risk or lack of internal organization, processes, human
relevant expertise, specific to each role, is employed in
capital, and systems”
each area (e.g. investment, compliance, risk).

Derivatives should be used primarily for hedging.

“…prices of derivatives contracts are influenced
not only by spot prices, but also by future
Article 10.3j Derivatives risk
expectations, which are beyond the control of the
manager.”
Regular monitoring of the derivatives value and
coverage and a proactive approach to managing the
outstanding position are performed in order to limit the
adverse market positions.

56 57
 Board of Directors
José Filomeno de Sousa dos Santos
Chairman of the Board of Directors

Artur Carlos Andrade Fortunato

Member of the Board of Directors

Hugo Miguel Évora Gonçalves

Member of the Board of Directors

Advisory Council
Armando Manuel
Minister of Finance

Abraão Pio dos Santos Gourgel

Minister of Economy

Job Graça
Minister of Planning and Territorial Development

José de Lima Massano

Governor of the National Bank of Angola

Fiscal Committee
João Boa Francisco Quipipa
Chairman of the Fiscal Committee

Emanuel Maria Maravilhoso Buchartts

Member of the Fiscal Committee

Dilma Rosa Neto Semedo

Member of the Fiscal Committee

58 59
 “The Fund aims to
promote, foster and
support the investment in
the development of projects
in sectors considered
as strategic domestically
and abroad.”

60 61
 FINANCIAL RESULTS
This document presents the
financial statements of the
Fundo Soberano de Angola
for the 2013 accounting year.
CHARACTERIZATION OF THE FSDEA
In 2011 the Fundo Petrolífero
(i.e. Oil Fund) was established
by Presidential Decree 48/11
of 9th of March, to manage
the Financial Strategic Oil
Reserve for Infrastructure.
62
During the period under review, the Fund was
in its establishment phase, thus transactions
linked to investments were relatively low, having
occurred primarily at the end of the year.
Thus, this report details the financial information
regarding the aforementioned circumstances.
The amounts are expressed in thousands of
Kwanza (i.e. kAOA), unless noted otherwise.
Its Board of Directors was appointed in March
2012 and started its activities by formulating
the institution’s operational strategy. During
the second half of October 2012, the Fund
established its headquarters and was publicly
denominated “Fundo Soberano de Angola” (i.e.
Angolan sovereign wealth fund) or “FSDEA”.
In July 2013, the Board of Directors was altered
and a new Chairman of the Board, who had
been an Executive Director until such time, was
appointed to chair the Fund. A new Executive
Director was also appointed and the existing
Executive Director maintained his Board
position, totalling three (3) Members of the
Board of Directors of the FSDEA.
The financial statements for the period between
July 16, 2012 (date of installation of the Fund)
and December 31, 2012 correspond to a period
in which the Fund was still in the constitution
phase. The effective start of operations of the
Fund took place during the year 2013. The
differences between the financial information
of the year 2013 and that of the period of July
16, 2012 to December 31, 2012 reflect these
dissimilar contexts.
Concurrently, 17 Angolan staff members were
gradually recruited and have been contributing
towards the implementation of the strategy
enacted by the President of the Republic.
The development of their tasks included
the support of experienced advisors for the
evaluation of investment projects, study of the
policies and regulations for investment activity,
definition of organizational systems and internal
information and development of a disciplined
approach to risk management.
63
ANALYSIS OF FINANCIAL INDICATORS NET ASSETS DETAIL AS OF DECEMBER 31, 2013 Figure 8

SUMMARY OF FINANCIAL INDICATORS Table 4

Amounts in AOA

• •
2013 2012

BALANCE SHEET 357,013,264 3,096,681 CASH ON HAND BONDS AND SECURITIES

64% 11%
Cash on hand 228,717,868 1,501,572

• •
Short-term Investments 29,287,259 97,043

Bonds and Securities 39,047,590 0 FIXED ASSETS SHORT TERM INVESTMENTS

17% 8%
Other Amounts 21,525 1,054

Fixed Assets 59,939,022 1,497,012

OWN FUNDS 356,503,310 1,833,815

Initial Capital Endowments 362,995,970 3,520,007

Net Income -6,492,659 -1,686,192

Total Liabilities 509,954 1,262,866 NET INCOME COMPOSITION AS OF DECEMBER 31, 2013 Figure 9

ACTIVITY

Financial Margin -116,520 -6,028

Exchange Gain (Loss) -2,234,425 -2,888

• •
Financial Advisory Cost -32,305 -26,960

Operating Costs 2,382,751 1,650,210

EXCHANGE GAIN OPERATING COSTS
Non-Operating Gain (Loss) -40,467 -106 (LOSS) 2,382,751
-2,234,425
Net Income -4,806,468 -1,686,192

OPERATIONS

Nº of Employees
RATIOS
17 11 • FINANCIAL MARGIN
-116,520 •
NON OPERATING GAIN
(LOSS)
-40,467

•
Fixed Assets to Equity Ratio 16.81% 81.63%
FINANCIAL ADVISORY COST
Financial Autonomy (Total Assets) -32,305 -26,960 -32,305

64 65
RISK
According to the structure
defined by Presidential
Decree No. 89/13, the Fund
holds a Board of Risk and
Compliance Management,
which has the task to analyze
and monitor the risks inherent
to the operations of the same,
as provided in Article 10
of Presidential Decree No.
107/13.
In 2013 the operations related to investment
were residual, so the procedures associated with
the risk analysis were not at all applicable. To
minimize operational risk, the Fund established
internal control procedures related to the various
areas.
FINANCIAL ANALYSIS
In the financial year 2013, the impact of the ANALYSIS OF THE BALANCE SHEET ITEMS
The financial structure of the Balance Sheet as of December 31, 2013 is comprised as shown below.
risks inherent to the Fund’s activity is reflected
primarily in exchange readjustments registered
on the main balance sheet items. These
exchange adjustments arise almost entirely COMPOSITION OF OWN EQUITY (AMOUNTS IN THOUSANDS OF AOA) Figure 10
of assets held by the Fund denominated in
dollars, which notably include deposits in foreign
currency and investments. 356,503,310.33
509,953.51

Own Equity Total Liability

NET ASSETS DETAIL AS OF DECEMBER 31, 2013 (AMOUNTS IN THOUSANDS OF AOA) Figure 11

228,717,868

59,939,022
39,047,590
29,287,259
21,525

Cash on Short-term Bonds and Other Fixed

Hand Investments Securities Amounts Assets

66 67
 As evidenced in the previous graph, the financial SHORT TERM INVESTMENTS AND INCOME STATEMENT ELEMENTS
structure of the balance sheet of the Fund is BONDS AND SECURITIES The composition of the net income reflects the operations undertaken by the Fund during the year
mostly composed of Equity. The amount as Estas These items represent the term deposits 2013, summarized by the development of set-up activities, and treasury management of the liquidity
of December 31, 2013 (356. 503.310 AOA) made with banks and the total of investments derived from the partial transference of the FSDEA’s initial capital by the State. Therefore, the
represents the total net capital, which includes of the portfolio in form of bonds and securities, determined Net Result has the following decomposition:
the amount of the initial capital allocation and respectively. As mentioned, the investment
the results achieved during 2012 and 2013. activities of the Fund were residual in 2013, and
in December 31, 2013 the total of bonds and
The Total Liabilities amounting to securities of the Fund’s portfolio were composed ORIGENS DE RECURSOS (MONTANTES EM MILHARES DE AOA) Table 5
509.953.514,68 AOA, represent a residual of US Treasury Bonds (AOA 9.76189 million)
proportion (0, 14percent) relatively to the and an allocation to an open/end securities fund
sources of the resources, and it roughly consists (29,285,700 tAOA). Amounts in thousands of AOA
in fiscal requirements, suppliers of goods and
services, and liabilities related to the fulfilment of OTHER AMOUNTS AMOUNTS
the principle of specialization. This item includes prepaid expenditure and INCOME STATEMENT 2013 2012
The resources have the following application:
other advances.
Financial Margin -116,520 -6,028
Cash on hand – 228.717.868 tkAOA (64%) FIXED ASSETS
On December 31, 2013 the fixed assets of the Income from Money Market Investments 9,512 109
Short-term investments – 29.287.259 tkAOA Fund comprised: Funding Interest Costs 126,032 6,137
(8%)
• Financial Assets: 58.571.400 tkAOA Exchange Gain (Loss) -2,234,425 -2,888
Bonds and Securities – 39.047.590 tkAOA
(11%) • Tangible Assets (gross amount): 242.247 Financial Advisory Costs 32,305 26,960
tkAOA
Other amounts – 21.525 tkAOA (0,01%) Financial Intermediation Results -2,383,250 -35,876
• Intangible Assets (gross amount): 1.605.786
Fixed assets – 59.939.022 tkAOA (17%) tkAOA Operating Costs 2,382,751 1,650,210

Employee Costs 246,407 104,048

• Depreciation and accumulated
CASH ON HAND amortization: 480.411 tkAOA Third Party Supplies and Services 1,675,389 1,525,632
This item represents cash on hand and amounts
deposited in domestic and international banks. The item “Financial assets” is the advance Other Taxes and Tariffs 4,252 692
The Fund has no obligation with respect to made by the Fund for the establishment of
Depreciation and Amortization 456,636 24,094
minimum cash reserves requirements. the entity “FSDEA - Africa Investment (LP)
Limited”, which is a vehicle for investment in Other Gains (Losses) 67 -4,256
commercial infrastructure, which was in the
process of constitution on December 31. Operating Gain (Loss) -4,766,001 -1,686,086

Non-Operating Gain (Loss) -40,467 -106

Loss before Corporate Tax -4,806,468 -1,686,192

Net Income for the Year/Period -4,806,468 -1,686,192

68 69
FINANCIAL MARGIN
This item is the result of the income obtained
from treasury management (9,512 kAOA) and
financing costs for liquidity (126,032 tAOA),
correspondent to financial costs incurred from
an overdraft facility contracted by the Fund on a
current account, in order to ensure the required
funding for its operations, prior to the receipt
of the first installment of its initial capital, which
took place only on 16 October 2013.
EXCHANGE GAIN/LOSS
This caption includes mainly the effects of
monetary revaluation of assets and liabilities
denominated in foreign currency, taking into
account the average exchange rate published
by the Central Bank of Angola as of December
31, 2013, relative to hypothetical outcomes. It
also includes exchange differences incurred in
operations executed during the year.
FINANCIAL ADVISORY COSTS
This section mainly registers financial expenses
and charges related to bank fees incurred by the
Fund.
70
OTHER COSTS AND OPERATIONAL EXTERNAL SUPPLIES AND SERVICES
INCOME This item constitutes the bulk of the structural
COMPOSITION OF THIRD PARTY SUPPLIES AND Figure 12
Operating costs and revenues broadly represent costs borne by the Fund and incorporates the SERVICES RELATING TO THE YEAR 2013
structural expenses borne by the Fund in the following items:
course of its development of its activities, for
which the main items are the following:
•
  • Communications expenses;
EMPLOYEE COSTS
• Water and Energy; CONSULTING
This item represents the total charges incurred
87%
with the staff of the Fund and is divided by the • Transport, Travel and Accommodation;
employees and the members of the executive
•
and the supervisory bodies. • Publications, Advertising;
• Security, Maintenance and Repairs; OTHER THIRD PARTY
OTHER TAXES AND TARIFFS
This item represents the charges of indirect SUPPLIES
• Audits, Consulting and Other Specialized
taxes and fees borne by the Fund and basically 5%
Technical Services;
consists of value added taxes and administrative
•
fees. • Insurance;
• Rents; OTHER SPECIALIZED
DEPRECIATION AND
TECHNICAL SERVICES
AMORTIZATION • Other Third Party Materials and Supplies 6%
This item represents the amount of the
•
depreciation and amortization of tangible and
As noted, the bulk of supplies and
intangible assets listed in the balance sheet of
outsourced services correspond to expenses TRANSPORTS, TRAVELS AND
the Fund, calculated based on the estimated
with Consultancy and Other Specialized ACCOMMODATION
useful lives of the respective assets, which in turn
Technical Services, arising from the ongoing 2%
correspond to depreciation rates similar to those
implementation and installation process of the
which are defined in the Presidential Decree No.
Fund.
177/10, of August 13. Exceptions are benefits
on third parties’ real estate, whose depreciation
base was the period of the lease (five years).
NON-OPERATING INCOME
This item, essentially, registers corrections
derived from operations during the period that
ended December 31, 2012.
71
FINANCIAL STATEMENTS
The preparation and dissemination of the financial statements of FSDEA are the responsibility of the Board of Directors. These are materialized in the
Balance Sheet, the Income Statement, the Statement of Changes in Equity and Statement of Cash Flows.

BALANCE SHEETS AT 31ST OF DECEMBER 2013 AND 2012 Table 6 INCOME STATEMENT Table 8

For the fiscal year ended December 31, 2013 and for the period from July 16, 2012 - (Date of constitution of the Fund - and December 31, 2012).
Amounts in thousands of AOA
Note 2013 2012
ASSETS Amounts in thousands of AOA
Cash on Hand 3 228,717,868 1,501,572
Nota 2013 2012
Short-term investments 4 29,287,259 97,043
FINANCIAL MARGIN (116,520) (6,028)
Money Market Investments 29,287,259 97,043
Bonds and Securities 5 39,047,590 0 Income from financial instruments 9,512 109
Held for Trading 29,285,700 0 Money Market Investments Return 11 9,512 109
Held to maturity 9,761,890 0
(-) Financial Costs (126,032) (6,137)
Other Amounts 6 21,525 1,054
Funding Interest Costs 11 (126,032) (6,137)
Fixed Assets 59,939,022 1,497,012
Exchange Loss 11 (2,234,425) (2,888)
Financial Fixed Assets 7 58,571,400 0
Tangible Fixed Assets 7 204,649 189,290 Financial Advisory Costs 11 (32,305) (26,960)
Intangible Fixed Assets 7 1,162,973 1,307,722 FINANCIAL INTERMEDIATION GAIN (LOSS) (2,383,250) (35,876)
Total Assets 357,013,264 3,096,681
(-)Operating Costs (2,382,751) (1,650,210)

Employee Costs 12 (246,407) (104,048)

Table 7 External Supplies and Services 13 (1,675,389) (1,525,632)

Other Taxes and Tariffs (4,252) (692)

Note 2013 2012 Depreciation and Amortization 7 (456,636) (24,094)
LIABILITIES 509,954 1,262,866 Other Gains (Losses) (67) 4,256
Other Liabilities 8 509,954 1,262,866
OTHER OPERATING INCOME AND EXPENSES (2,382,751) (1,650,210)
Own Equity 356,503,310 1,833,815
Initial capital endowment 9 489,052,500 0 OPERATING INCOME (4,766,001) (1,686,086)

Unrealized Initial capital endowment 9 (130,496,540) 0 NON-OPERATING INCOME (40,467) (106)

Reserves and Funds 9 4,440,010 3,520,007 LOSS BEFORE INCOME TAX (4,806,468) (1,686,192)
Retained Earnings 9 (1,686,192) 0
NET INCOME (LOSS) (4,806,468) (1,686,192)
Net Income for the year (4,806,468) (1,686,192)
Total Liabilities and Own Equity 357,013,264 3,096,681

72 73
STATEMENTS OF CHANGES IN EQUITY

CHANGES IN EQUITY STATEMENT Table 9 CASH FLOWS STATEMENT Table 10

(For the fiscal year ended December 31, 2013 and for the period from July 16, 2012 - date of constitution of the Fund - and (For the fiscal year ended December 31, 2013 and for the period from July 16, 2012 - date of constitution of the Fund - and
December 31, 2012). December 31, 2012).

Amounts in thousands of AOA

Amounts in thousands of AOA
2013 2012

Unrealized Cash Flow of Financial Margin (118,092) 109

Initial Capital Reserves and Retained
Initial Capital Net Income Total Proceeds from Financial Instruments 7,940 109
Endowment Funds Earnings
Endowment
Reception from Money Market investment 7,940 109
Payments of Financial Costs (126,032) 0
Balance as of 16 July 2012 - - - - - -
Payments of Funding Interest Costs (126,032) 0
Cash Flow of results of Foreign Exchange 35,504 28
Contribution by owners - - 3,520,007 - - 3,520,007
Payment of Financial Advisory Costs (32,305) 0
CASH FLOW FROM FINANCIAL INTERMEDIATION (114,893) 137
Net Income for the period - - - - (1,686,192) (1,686,192)
Payments of Operating Costs (1,763,341) (1,381,521)
Balance as of 31 December Cash Flow of other assets and liabilities (20,471) 0
- - 3,520,007 - (1,686,192) 1,833,815
2012
PROCEEDS AND PAYMENTS OF OTHER INCOME AND OPERATIONAL COSTS (1,783,812) (1,381,521)
Net Income carried forward from CASH FLOW FROM OPERATIONS (1,898,705) (1,381,384)
- - - (1,686,192) 1,686,192 -
previous years
Cash flow from short-term investments (29,188,657) (97,043)
Contribution by owners - - 920,003 - - 920,003 Cash flow from investments in Bonds and Securities (39,047,577) 0
CASH FLOW FROM INVESTMENTS IN FINANCIAL INTERMEDIATION (68,236,234) (97,043)
Initial Capital Endowment 489,052,500 (130,496,540) - - - 358,555,960 Cash flow from investments in fixed assets (59,854,799) (537,092)
CASH FLOW FROM FIXED ASSETS (59,854,799) (537,092)
Net income for the period - - - - (4,806,468) (4,806,468) CASH FLOW FROM INVESTMENTS (128,091,033) (634,135)
Proceeds from contributions by owners 920,003 3,520,007
Balance as of 31 December
489,052,500 (130,496,540) 4,440,010 (1,686,192) (4,806,468) 356,503,310 Proceeds from initial capital endowment 358,555,960 0
2013
CASH FLOW FROM FINANCING WITH OWN FUNDS 359,475,963 3,520,007
CASH FLOW FROM FINANCING 359,475,963 3,520,007
CHANGES IN CASH 229,486,225 1,504,488
EXCHANGE RATE ADJUSTMENT OF ASSETS AND LIABILITIES DENOMINATED IN
(2,269,929) (2,916)
FOREIGN CURRENCY
CASH BALANCE AT BEGINNING OF FISCAL YEAR 1,501,572 0
CASH BALANCE AT END OF FISCAL YEAR 228,717,868 1,501,572

74 75
 NOTES OF
THE FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN THOUSANDS OF KWANZA – TKAOA, UNLESS OTHERWISE STATED)
The Fundo Soberano de
Angola (hereinafter also
referred to as “Fund” or
“FSDEA”), whose present
denomination was established
by Presidential Decree No.
89/13, June 19, was created by
Presidential Decree No. 48/11,
of March 9, then under the
name Fundo Petrolífero (Oil
Fund).
76
The Board of Directors of the Fund was
appointed on March 16, 2012 and in May 2012
submitted the budget for the foundation of the
Fund to the Government, which approved it in
June 2012.
On July 16, 2012, the installation of the Fund
took place simultaneously with the receipt
of the first installment of the funding for its
constitution and foundation, which amounted to
36,349,985 United States dollars, corresponding
to 3.520.007 kAOA.
On October 17, 2012, the Republic of Angola
officially launched the FSDEA (i.e. Angolan
sovereign wealth fund) with an initial allocation
of USD 5 billion, equivalent to 489.052.500
kAOA, which was fully subscribed by the
Republic of Angola, as indicated in Note 9.
The Fund aims to promote, foster and support
the investment in the development of projects
in sectors considered as strategic domestically
and abroad. The Fund will allocate about half
of its initial allocation of capital to alternative
investments, particularly in the sectors of
agriculture, mining, infrastructure and real
estate, with specific emphasis on the hotel
industry in Angola and other African markets.
The remainder of the Fund’s portfolio will be
allocated to fixed income securities and treasury
applications, issued by states and supranational
institutions, global and emerging equities, as well
as other alternative investments in emerging
markets worldwide.
Currently, the Fund is focused on the
establishment of regional investment vehicles
for infrastructure and hotel investments in sub-
Saharan Africa, with the aim of promoting the
development and growth of the economies of
the region.
The Fund will dedicate a maximum of 7.5
percent of its assets to social development
projects and investments in social responsibility
in the areas of education, income generation,
health and access to energy and drinking water
out of the national grid.
The financial statements of the period between
July 16, 2012 (date of installation of the Fund)
and December 31, 2012 correspond to a time
during which the Fund was in the installation
process. Its operations started effectively in
2013. The differences between the financial
statements of the year 2013 and those of the
period between July 16, 2012 and December 31,
2012 reflect these disparate contexts.
77
PRESENTATION BASIS AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
The financial statements
of the Fund consider
principle of continuation
of its operations and are
prepared in accordance with
the accounting principles
of the Plano Contabilístico
das Instituições Financeiras
or CONTIF (i.e. the
Angolan Chart of Accounts
for Financial Institutions),
pursuant to Instruction No.
9/2007, of September 19,
issued by the Central Bank of
Angola.
78
PRESENTATION BASIS
The CONTIF aims to standardize the
bookkeeping and financial disclosures to
international practice, through gradual
convergence to the International Financial
Reporting Standards (IFRS).
The financial statements of the Fund on
December 31, 2013 and 2012 are expressed
in Kwanza, and the assets and liabilities
denominated in other currencies have been
converted to local currency using the exchange
rate published by the National Bank of Angola
on those dates. On December 31, 2013 and
2012, the exchange rates of Kwanza (AOA) to
United States Dollar (USD) and to Euro (EUR)
were as follows:
ACCOUNTING POLICIES
Accrual-based accounting
Income and expenses are registered according
to the period of duration of operations that they
refer to. Based upon the accrual basis principle,
2013 2012
1 USD 97,619 95,826
1 EUR 134,386 126,375
Table 11
they are recorded when generated, regardless of
the time of their effective payment or receipt.
Foreign currency transactions
Transactions in foreign currency are recorded
in accordance with the principles of the
“multi-currency” system. This means that
each transaction is being recorded against the
respective currencies. Assets and liabilities
denominated in foreign currencies are converted
to the Kwanza average exchange rate published
by the Central Bank of Angola on the balance
sheet date. Costs and income relating to
exchange differences, realized or potential, are
recorded in the income statement in the year
they occur.
The allocation of the Initial Capital was
converted to Kwanzas at the exchange rate
published by the Central Bank of Angola on
the respective dates, during which the partial
allocations of the initial capital of the Fund were
made.
Tangible and intangible assets
Intangible assets are recorded at acquisition
cost and essentially correspond to constitution
expenses and improvements in third party
properties.
The execution of expenses corresponds mainly
to those incurred during the start-up and
establishment phase of the Fund, in particular
the payment of consultancy projects, amortized
linearly over 3 years. The benefits on third
parties’ real estate are amortized linearly in
five years, based on the duration of the lease
contract.
Tangible fixed assets are recorded at acquisition
cost and depreciated on a straight-line method
according to the estimated useful lives of the
respective assets, which in turn correspond to
depreciation rates similar to those which are
defined in Presidential Decree No. 177 / 10 of
August 13.
The estimated useful lives of the most
significant tangible assets of the Fund are
between 4 and 8 years.
Financial assets
On December 31, 2013, the balance of the
caption “Financial Assets” refers to an advance
made by the Fund for the establishment of
the entity FSDEA Africa Investment (LP)
Limited, which is wholly owned by the Fund. The
constitution of the latter entity had not been
completed by the end of the period.
Securities portfolio
Given the characteristics of the securities and
the intention at the time of their acquisition, they
are classified under the following categories:
held to maturity, held for trading and available
for sale.
Securities held to maturity
This classification includes securities for
which the Fund has the intent and ability
to maintain them until their maturity date.
Securities classified under this item comprise
non-derivative financial assets with fixed or
determinable payments and fixed maturity date.
Securities classified under this item are valued
at their acquisition cost, plus income earned by
the fluency of their deadlines (including accrual
of interest and premium/ discount against
income). The Fund recognizes any profits or Taxes on profits
losses incurred on the date of maturity for the Under Presidential Decree No. 48/11, of March
difference between the amount received by that 9, the Angolan Sovereign Wealth Fund benefits
date and its respective book value. from the exemptions of taxes and contributions,
whatever their title or nature, ordinary or
On December 31, 2013, the total of the portfolio extraordinary, national, regional, municipal or
of securities held to maturity of the Fund local, present or future, provided by law and
consisted of US Treasury bonds. applicable to the State and its departments,
agencies and institutes and being particularly
Securities held for trading applicable tax exemptions in place of any
Securities held for trading are acquired with the income taxes, wealth taxes and stamp duties.
purpose of being actively and frequently traded.
Securities held for trading are initially recognized
at acquisition cost, including costs directly
attributable to the acquisition of the asset.
Subsequently those are measured at fair value,
being the respective profits or losses from the
valuation recognized in the income statement.
On December 31, 2013, the whole of the trading
securities portfolio of the Fund consisted of an
application in an open variable liquidity fund.
Securities available for sale
Securities available for sale are exchangeable
securities that might be negotiated and which
do not fit in one of the other categories.
They are recorded at the beginning at
acquisition cost, and subsequently valued at fair
value. Variations in the fair value are recorded
against equity under the item “Potential results
- Adjustments to Fair Value in Financial Assets
Available for Sale” and the gains are recognized
in the income statement in the subsequent sale
of the asset.
79
CASH ON HAND SHORT – TERM INVESTMENTS

THIS ITEM CONSISTS OF THE FOLLOWING: Table 12 THIS ITEM CONSISTS OF THE FOLLOWING: Table 13

On December 31, 2013, the balance of this item 2012

2013 2012 (not audited) includes three term deposits of 100.000.000 2013
(not audited)
USD each (corresponding to an equivalent of
9.761.900 kAOA each), with maturities of 14,
Money market investments
Foreign currency National currency Total Total
(in thousands) (in thousands) (kAOA) (kAOA) 21 and 42 days and annual remuneration rates In United States Dollar
of 0.20 percent, 0.20 percent and 0.25 percent
Cash respectively. These term deposits, constituted Term deposits 29,285,700 97,043
National currency 831 831 428 under the management agreement entered
29,285,700 97,043
into between the Fund and the Northern
Foreign currency Trust Corporation (Note 3), were contracted In local currency 1,559 -
In United States Dollar 4 - 374 41 with Mizuho Bank Ltd (two term deposits,
corresponding to a total value of 200.000.000 29,287,259 97,043
In Euros - 8 -
USD) and Société Générale SA (a term deposit
831 1,213 469 of 100.000.000 USD).
Bank deposits
National currency 183,392 183,392 253,300
In United States Dollar
Euroclear Bank SA/NV 1,638,845 - 159,982,425
Northern Trust Corporation 700,005 - 68,333,800 BONDS AND SECURITIES
Other Entities 2,248 - 219,409 1,248,805
2,341,098 - 228,535,634 1,248,805
In Euros (18) - (2.370) (1.002)
ON DECEMBER 31, 2013, THIS ITEM CONSISTS OF THE FOLLOWING: Table 14

183,392 228,716,665 1,501,103

On December 31, 2013, this item includes an
184,222 228,717,868 1,501,572 amount of 300.000.000 USD (corresponding to
Liquidity Funds 29,285,700 an equivalent of 29.285.700 kAOA) concerning
an application at an open variable liquidity fund
Deposits in financial institutions held by the Fund are not remunerated. On November 29, 2013, a contract with Northern Trust Corporation for global 29,285,700 managed by Northern Trust Global Investments
custody services for the investments of the Fund was entered into by the FSDEA, in accordance with the investment policy of the Fund, outlined on Limited, with the ability to be settled at any time.
Bonds
Presidential Decree No. 107/13 of June 28.
Treasury bonds in a foreign currency Additionally, on December 31, 2013, there was
entry amounting to 99.999.894 USD at this item
In United States Dollar 9,761,890
(corresponding to an equivalent of 9.761.8900
39,047,590 kAOA) corresponding to American Treasury
bonds, with a residual maturity of 20 days and
annual remuneration of 0.004percent.

80 81
OTHER AMOUNTS TANGIBLE AND INTANGIBLE ASSETS Table 16

These items show the following movements during the fiscal years 2013 and 2012:

On December 31, 2013, the value of prepaid 2013

Table 16
expenses corresponds almost entirely to the
deferral of costs payable to the entity SunGard
Balance on 01-01-2013 Disposals, sales and Period Net fixed asset
Acquisitions
2013 2012 (not audited) Net fixed asset value others Amortization value
Data Systems Inc. for providing services to the
Fund.
Tangible fixed assets
Prepaid expenses 21,129 1,054
Furniture, tools and equipments 189.290 47.695 880 (31.456) 204.649
Other prepaid amounts 396 -
189.290 47.695 880 (31.456) 204.649
21,525 1,054 Intangible fixed assets

Software 77.930 173.904 - (41.130) 210.704

TANGIBLE ASSETS
Improvement in third party
245.781 106.527 - (56.046) 296.262
properties
Set-up expenses 984.011 - - (328.004) 656.007
1.307.722 280.431 - (425.180) 1.162.973
On December 31, 2013, the FINANCIAL ASSETS
On November 29, 2013, FSDEA contracted
balance of the item “financial On December 31, 2013, the balance of the item
“financial assets” records an advance made by Quantum Global Investment Management AG
1.497.012 328.126 880 (456.636) 1.367.622
assets” records an advance the Fund for the establishment of the entity to act as its Investment Manager with respect to
made by the Fund for the FSDEA Africa Investment (LP) Limited, which moneys and properties, which may be attributed
from time to time by the Fund. The contract Table 17
establishment of the entity is wholly owned by the Fund. The constitution of
the latter entity had not completed by the end encompasses all investments and reinvestments On December 31, 2013, the net balance of intangible assets primarily relates to expenditures incurred during the start-up and establishment of the
FSDEA Africa Investment of the period. made with such moneys, properties and the Fund, such as payment of expenses for consultancy projects in the amount of 656.007 kAOA, and improvements in third party properties, totaling
(LP) Limited, which is wholly proceeds thereof, as well as the earnings and 296.262 kAOA.
profits arising thereof. The management of
owned by the Fund. The The Fund shall execute its investments in
infrastructure, in accordance with its investment the entity FSDEA Africa Investment (LP)
constitution of the latter entity policy, through this entity. Due to the fact Limited will be executed by Quantum Global 2012 (not audited)
had not completed by the end that the activity of FSDEA Africa Investment Investment Management AG, under the
Balance on 01-01-2013 Disposals, sales and Period Net fixed asset
agreement signed on November 29, 2013 Acquisitions
of the period. Limited (LP) had not started by December 31,
2013, the entire advance from the Fund to this between the parties.
Net fixed asset value others Amortization value
Tangible fixed assets
entity was registered as cash held at financial
institutions.
Furniture, tools and equipments - 195.749 - (6.459) 189.290

- 195.749 - (6.459) 189.290

Intangible fixed assets

Software - 78.719 - (789) 77.930

Improvement in third party

- 262.627 - (16.846) 245.781
properties
Set-up expenses - 984.011 - - 984.011
- 1.325.357 - (17.635) 1.307.722

- 1.521.106 - (24.094) 1.497.012

82 83
OTHER LIABILITIES
THIS ITEM CONSISTS OF THE FOLLOWING:
On December 31, 2013, under the item “Service
providers” the amount of 205.586 kAOA was
recorded, corresponding to expenses related to
pending payments of consulting projects, whose
services were provided by the entities Quantum
Global Capital Advisors AG and Stampa QG.
Tax related liabilities
Retained taxes - third parties
Creditor related liabilities
OWN FUNDS
The allocation for constitution and installation
Table 18
of the Fund was carried out in two installments.
The first of these installments was done on July
16, 2012 (date of installation of the Fund), with
an amount of 36.350 mUSD corresponding to
2013 2012 (not audited)
an equivalent of 3.520.007 kAOA, while the
second installment was done on August 7, 2013,
with an amount of 9.448 mUSD corresponding
23,163 - to an equivalent of 920.003 kAOA.
23,163 -
According to Presidential Decree No. 107/13
of 28 June, the Fundo Soberano de Angola is
owned exclusively by the Angolan State, and
the total initial allocation of capital amounts
to USD 5bn equivalent to a counter-value of
489.052.500 kAOA. On December 31, 2013,
there was an amount of 1.350.000 mUSD of the
initial allocation of capital of the Fund, which
remained, outstanding, equivalent to a counter-
value of 130.496.540 kAOA (Note 15).

Service providers 145,696 1,190,821

Table 19
Other providers 325,954 72,045 On December 31, 2013 and 2012, this item had the following composition:

471,650 1,262,866
Administrative and commercial The Fund recorded under “initial capital
liability 2013 2012 (not audited) endowment” the entire initial capital allocation
Personnel - salary and other compensation amounting to 5.000.000 mUSD, corresponding
Initial endowment 489.052.500 - to an equivalent of 489.052.500 kAOA. As
Vacation and allowance 15,141 - mentioned above, on December 31, 2013
Tax payables by third parties (130.496.540) -
there was an amount of 1.350.000 mUSD,
15,141 -
358.555.960 - which remained, outstanding, equivalent to a
509,954 1,262,866 counter-value of 130.496.540 kAOA, which on
Reserves and funds
December 31, 2013 was recorded in the accounts
Contributions by owners 4.440.010 3.520.007 as a deduction from total equity of the Fund,
under the item “Unrealized initial endowment”.
4.440.010 3.520.007

Retained earnings (1.686.192) -

Vacation and holiday pay (4.806.468) (1.686.192)

356.503.310 (1.686.192)

84 85
BALANCE PER CURRENCY RESULT OF FINANCIAL INTERMEDIATION

ON DECEMBER 31, 2013 AND 2012, THE BALANCE SHEET BY CURRENCY HAS Table 20 Table 22

THE FOLLOWING STRUCTURE

In 2013, the balance of the caption “Funding

31-12-2013 2013 2012 (not audited)
interest costs” corresponds almost entirely
National currency Foreign currency Total to interest costs arising from the use of an
overdraft facility extended to an account held
Income from financial instruments
Cash on hand 184.222 228.533.646 228.717.868
at domestic financial institution. The FSDEA Money market investments:
Term deposits - 58.572.959 58.572.959
subscribed to this overdraft facility to secure the
Bonds and securities - 9.761.890 9.761.890 funds required by its current operation until the Interest recieved 9.512 109
Other assets - 21.525 21.525 date of the first partial realization of the initial
Fixed assets capital allocation of the Fund, which occurred Financial costs
- Financial fixed assets - 58.571.400 58.571.400 on 16 October 2013. On 31 December 2013, this
- Tangible assets - 204.649 204.649 overdraft facility was terminated. Funding interest costs: (126.032) (6.137)
- Intangible assets - 1.162.973 1.162.973
The item “Financial Advisory Costs” mostly Financial margin (116.520) (6.028)
- 59.939.022 59.939.022
reflects costs related to fees and bank charges.
Total Assets 184.222 356.829.042 357.013.264 Exchange gain (loss)
Other Liabilities - 509.954 509.954
- 509.954 509.954 Exchange rate adjustment in assets and liabilities
(2.269.929) (2.916)
in foreign currency
Total Liabilities - 509.954 509.954
Own Equity - 356.503.310 356.503.310
Spot and forward operations 35.504 28

(2.234.425) (2.888)
Table 21
Financial advisory costs (32.305) (26.960)

31-12-2012 (not audited) (2.383.250) (35.876)

National currency Foreign currency Total
Cash on hand 253.727 1.247.845 1.501.572
Term deposits - 97.043 97.043
Other asset 1.054 - 1.054
Fixed assets
- Tangible assets - 189.290 189.290
- Intangible assets - 1.307.722 1.307.722
- 1.497.012 1.497.012
Total Assets 254.781 2.841.900 3.096.681
Other Liabilities - 1.262.866 1.262.866
- 1.262.866 1.262.866
Total Liabilities - 1.262.866 1.262.866
Own Equity - 1.833.815 1.833.815

86 87
STAFF SUPPLIES AND THIRD PARTY SERVICES

Table 23 Table 24

Employees of the Fund are included in the The balance of “Consulting” is composed mostly
Social Security system. The Fund does not 2013 2012 (not audited) by the costs of specialized services rendered 2013 2012 (not audited)
attribute payments into a retirement plan for old by external entities, among which stands out
Mangement
age, disability or survivors to its staff and their the development and implementation of Audit, consulting and other specialized services
respective families. Annual salaries 135.222 66.739 information technology systems.
Consulting 1.452.819 1.180.476
As provided in Article 21 of Presidential Decree Social security expense 12.276 6.970
No. 48/11 of March 9, the remuneration of the Audit 9.746 -
147.498 73.709
Board of Directors and the Supervisory Board
Other specialized services 107.800 116.604
of the Fund is be set by executive order of the Fiscal comittee
Minister of Finance. 1.570.365 1.297.080
Annual salaries 3.250 -
The Supervisory Board of the Fund was Transportation, travel and accomodation 36.353 15.087
3.250 -
appointed in November 8, 2013, and officially
took office on December 10, 2013. Rents 14.574 118.544
Employees
Insurance 10.055 753
Annual salaries 87.235 24.178
Security, maintenance and repairs 9.553 5.131
Social security expense 8.425 6.161
Other external suppliers 9.379 24.474
95.660 30.339
Publications and advertising 8.563 63.317
246.407 104.048
Other services provided 7.741 329

Communications 6.906 898

Water and electricity 1.900 19

1.675.389 1.525.632

88 89
RISK MANAGEMENT
According to Article 10 of
Presidential Decree No.
107/13 of 28 June, the Fund
aims to hold a diversified
investment portfolio, and yet
at an early stage, all of the
Fund’s investments shall bear
assets with very low risk in a
cash management/liquidity
portfolio without financial
leverage.
90
Over time, and in accordance with the
guidelines of the defined asset allocation,
the Fund may invest up to 55percent of its
investments portfolio in asset classes with higher
potential returns over a longer investment
horizon, with recourse to a maximum financial
leverage of three times its equity value.
According to Article 10 of Presidential Decree
No. 107/13, of June 28, the assets of the Fund’s
portfolio are also subject to the following risks:
MARKET RISK
The value of assets held by the Fund may vary
due to numerous external factors. Such factors
include, among others, changes in interest rates,
the financial performance of specific companies
in which the Fund holds securities and an
economic environment where deflation occurs.
To manage market risk, the Fund uses the ratio
indicator value at risk (Value at Risk - “VaR”) to
estimate the maximum potential loss in function
of a given time horizon and a given confidence
interval. Since the measurement of Value at Risk
is only applicable in normal market conditions,
stress tests that enable the evaluation of
portfolios under extreme market conditions,
such as economic shocks and disruptions are
executed, using retrospective and prospective
scenarios.
In the case of variable income investments,
monitoring of market risk is done through the
Program Value-of-Risk B Va/R), which measures
the risk generated by the difference between
the composition of the theoretical portfolio and
the portfolio composition of the entity at a given
date.
CREDIT RISK
This is the risk when issuers of securities/ bonds
which may form part of the Fund’s portfolio
fail to meet their obligations to pay capital and
interest of their responsibilities to the Fund.
Any acquisition of private debt securities is
subject to the rules defined and regulated,
based on a single policy for the management of
credit risk established or approved by the Board
of Directors, taking into account the analysis
of their own internal analysts, ratings issued
by credit rating agencies or recommended by
external investment managers.
MANAGER RISK
This risk is based on the possibility that external
appointed investment managers may not
exceed or achieve the objectives that are
assigned to them by the Board of Directors
of the Fund. Continuous monitoring of the
composition of the portfolios of external
appointed investment managers must prevent
unintended distortions that deviate from the
desired investment strategy.
INTEREST RATE RISK
Changes and economic policies may affect
interest rates, which can cause large variations
in asset prices of the Fund’s portfolio, with
significant impact on their profitability.
LIQUIDITY RISK
This is the risk that the Fund, even in situations
of market stability, may not be able, if necessary,
to exercise the redemption of a large volume
of units invested in a particular fund. In times
of economic pressure, this lack of liquidity may
persist indefinitely.
To reduce liquidity risk, substantial positions in
fixed income securities issued by members of
G3 are held.
TAX AND LEGAL RISKS UNCERTAINTIES OF RETURN
The Investments are dependent on contractual
arrangements and subject to the differing
The uncertainties of return are associated with
investments in real estate, private markets and
national regulations which may result on the one opportunities in impaired assets.
hand in an unexpected taxation of the Fund’s
RISK ARISING FROM THE USE OF
investments and on the other hand in temporary
unavailability or loss of resources invested, due DERIVATIVES
to the dispute, the liquidation or unexpected Although the recourse to the derivatives market
foreign investment restrictions or prohibitions is limited to transactions whose sole purpose
applicable to the business of the Fund. is the coverage of their assumed positions, the
Fund is not completely free of risks inherent in
The appropriate structure of the Fund’s this market, since prices of derivative contracts
investments must endeavor to get the benefit are not influenced only by spot prices, but also
of sovereign immunity for tax purposes in the
jurisdiction where the Fund invests as well as
by future expectations, which are beyond the
control of the manager. Therefore, the derivative
safeguard the rights and prerogatives of the transactions may cause losses to the Fund.
state entities.
SYSTEMIC RISK
OPERATIONAL RISK Systemic risk arises from changes in the general
Operational risk is the risk of loss resulting from political and economic environment, and these
inadequacy or failure of the internal organization, can affect all investments. By its nature, this risk
processes, people and systems, including third cannot be reduced through diversification of the
party services or services entrusted to external investment policy of the Fund.
service providers.
Operational risk can be managed by proper
segregation of activities (between the
investment activities, recording, settlement and
communication), by the existence of internal
rules and processes to ensure flawless execution
and by preparing accurate reports of the
activities of the Fund. Operational risk can also
be managed through monitoring of investments,
risks and employees by an adequate system
of decisions, opinions and controls including a
continuity plan for effective business.
NON-UNIFORM PERFORMANCE OF
INVESTMENTS
The risk of non-uniform performance of
investments is more significant in the context of
broader markets, including, for example, cases
of differences of returns by industry, geographic
region or type of security.
91
SUBSEQUENT EVENTS
Between December 31, 2013 and the date of
approval of the financial statements of the Fund,
the amount of the initial capital allocation that
was outstanding at the end of the year 2013 (i.e.
1.350.000.000 USD) was realized. Therefore, on
the date of approval of the financial statements
of the Fund, its full initial capital allocation
(5,000,000,000 USD) was realized.
92
The initial capital allocation that was outstanding
on December 31, 2013 (1.350.000.000 USD)
was paid in three installments by the Angolan
State. The first installment, amounting to
500.000.000 USD was executed on May 19,
2014. The second installment, also amounting to
500.000.000 USD, was carried out on June 20,
2014, and the third installment, of 350.000.000
USD, was completed on June 27, 2014.
93
 FUNDO SOBERANO DE ANGOLA

Metrópolis, Ground Floor-Mezzanine info@fsdea.ao

217-221 Kwamne N’Krumah Road www.fundosoberano.ao
Caixa Postal 6869 - Luanda
Republic of Angola

94