Blom Saudi IPO Fund Annual Fund Report 2017 Mohamadiya Area, Al-Oula Building 3rd Floor, King Fahd Road, Riyadh 11482, Saudi Arabia P.O. Box 8151 Tel: +966 11 4949555 Fax: +966 11 4949551 www.blom.sa Blom Saudi IPO Fund Arabia is a public fund managed by Blominvest Saudi Arabia ( BSA ). BSA is a Joint Stock company with a capital of SAR 245 million paid in full under CR 1010254040 date 24/07/1429 H issued from Riyadh, Saudi Arabia. BSA is licensed by the Saudi Capital Market Authority under number 37-08094 to offer the services of Dealing as Principle, Agent, Underwriting, Managing, Arranging, Advising and Custody in Securities Business.
Contents Investment Fund Information... 3 Fund Performance... 4 Fund Expenses... 4 Fund Manager... 7 Custodian... 8 Auditor... 9 Financial Statements... 9 2
Investment Fund Information Fund Name Blom Saudi IPO Fund Benchmark Blom Ideal Ratings IPO Islamic Index Investment Objectives and Policies The Fund s objective is long-term capital development attained by Investing mainly in Shariah-Compliant Initial Public Offerings of Saudi Companies as well as Shariah-Compliant Saudi Companies that have been listed in the Saudi Stock Exchange for 3 years or less. The fund s performance will be measured against Blom Ideal Ratings IPO Islamic Index in order to give investors an indication of the Fund s performance. Investment Policies: Blom Saudi IPO Fund will invest primarily in Initial Public Offerings and rights issues of Saudi companies which have been listed for 3 years or less, the Fund may also invest in newly listed companies in the Saudi market (listed for 3 years or less). The Fund manager may also invest in other mutual funds similar to the objectives of the Fund, as well as public money market funds licensed by the Capital Market Authority. The Fund s investments will be concentrated in Shariah-complaint IPOs in addition to rights issues and shares of companies listed on Tadawul for less than 3 years. The Fund s investment strategy will try to incorporate as many sectors as available in the investment universe. In addition to the restrictions highlighted in the IFR, the fund will adhere to the following investment limitations at all possible times; Investment Type Minimum Maximum IPOs, newly listed companies and rights issues 25% 100% Cash and money market funds 0% 75% Mutual Funds similar to the Fund s objectives 0% 30% The Fund will adopt an active investment strategy based on continuously altering positions of the Funds investment. This is will be done by studying the companies financial statements and the historical movement since inception, comparing that to the industry and the market, as well as studying the behavior of the newly listed companies in previous periods and then building a portfolio by defining the size of each investment and reviewing the result regularly to ensure commitment to investment limitations as well as the investment strategy. Distribution of income and gain policy Dividends and/or income are reinvested in the Fund not paid out or distributed to investors. The Fund Reports are available upon request free of charge at Blominvest Saudi Arabia website: www.blom.sa 3
Fund Performance 2015 2016 2017 NAV at year-end (SAR) 101,005,368 57,555,305 15,819,174 NAV/unit at year-end (SAR) 1,001.07 977.48 937.10 Lowest NAV (SAR) 993.36 851.16 918.62 Highest NAV(SAR) 1,120.89 1,030.60 982.33 Units at year-end 100,897.13 58,881.09 16,880.97 Distribution/ unit - - - Expense Ratio 1.25% 1.79% 2.57% 1 year Since Inception Total Return -4.14% -6.29% 2015 2016 2017 Annual Total Return 0.15% -2.36% -4.14% Fund Expenses Fee Type Amount Pct. Of average NAV Management Expense SAR 355,727 1.48% Custody/Admin Expense SAR 120,000 0.50% Audit Expense SAR 45,000 0.19% Fund Board Expense SAR 37,500 0.16% Shariah Board Expense SAR 30,000 0.12% Other Expense SAR 31,675 0.13% Total SAR 619,902 1.10% The Fund Manager did not elect to waive or rebate any fees. The measures of performance have been consistently applied. Material changes that occurred during the period and that affected the performance of the fund. No Material changes occurred during 2017 Exercise of annual voting rights 4
Issuer name date of GA Subject Decision Saudi Co for hardware 24/12/2017 Updating the work of the Audit committee. Agree Updating the work list of the Nominations and Remuneration Committee. Agree Updating the policies that will make the person qualified to join the Board of directors. Agree Remuneration police to the Board of director, its committees and executive management. Agree Fund board meeting Board Resolution dated 01/08/2017 Discussion Topics a. Performance review of the Fund. b. Approval of the financial statements (year-end 2016) c. Changes to the Terms and Conditions to reflect the amended IFR. d. Compliance with IFR (specifically investment limitations). Resolutions a. The board approved the performance of the fund. b. The board approved the financial statements (year-end 2016). c. The board approved the change of Terms and Conditions to reflect the change in the amended IFR. d. The board approved the suggested method of monitoring investment limitations and urged implementation. Board Resolution dated 06/11/2017 Discussion Topics a. Potential conflict of interest. b. Review of resolutions made on the first BOD meeting in 2017. c. Fund performance. d. CMA letter regarding the delay announcing of the funds prices on Tadawul. e. Forward-looking strategy for the funds. Resolutions a. Board discussed membership in other mutual funds managed by Blominvest and found no conflict. b. The board approved steps taken to avoid future delays in posting funds prices as well as the consequences of such delays, the board also requested that the compliance team must closely monitor the matter. 5
Fund Manager Fund Manager BLOMINVEST Saudi Arabia, with its registered office at Al Oula Building, 3rd floor, King Fahad Road, Riyadh, P.O. Box 8151, Riyadh 11482, Saudi Arabia. Names and addresses of sub-manager and/or investment adviser The Fund Manager did not appoint a sub-manager or investment advisor Investment activities during the period The Fund s performance in a general sense was impacted negatively by the limited listings during 2017, and for the majority of the year the fund manager maintained more or less the minimum permitted equity exposure of 25%, over-weighing names with attractive valuations (biggest convictions were MEPCo and Yamama Steel) and actively reshuffling to capture said value. The Fund Manager opted not to invest in Nomu Parallel Market (except for one which was eventually withdrawn) as the listings did not meet our investment criteria; this has contributed positively to the performance of the Fund relative to comparable IPO Funds during 2017. The fund manager anticipates that the improved market and economic conditions of 2018 could prompt more listings in the main market, but remains skeptical of the immediate performance post listing expecting to be very selective. Investment fund s performance during the period YTD The Fund ended the year down -4.14% vs a drop of -11.82% for the benchmark. Since Inception The Fund ended 2017 down -6.28 % vs -44.4% for the benchmark. 1,200.00 1,100.00 1,000.00 900.00 800.00 700.00 600.00 500.00 400.00 NAV Ideal Ratings Details of any material changes made during the period 6
No material changes took place during the period. Any other information that would enable unitholders to make an informed judgment about the fund s activities during the period. Investment Breaches: The funds exposure to equities dropped below 25% on 3 instances during 2017; During January (Average 21.6%),June (Average 22.8%) and December (22.9%). Noting that the prospectus sets 25% as the minimum equity exposure permitted. Saudi Marketing Co. Was completely divested from the fund on the 8th day post its 3rd year anniversary. As per the prospectus, equity investment are expected to be limited to securities listed for less than 3 years. Investment fund invests substantially in other investment funds The fund invested in 3 money market funds: Fund Name Fund Manager % exposure at year-end Al Murabih Fund Albilad Capital 9.06% Ashmore GCC Diversified Trade Fund Ashmore Capital 9.22% Jadwa Saudi Riyal Murabaha Fund Jadwa Capital 9.19% The Fund manager did not receive any special commission during 2017. Other data and other information required to be included in this report. Not Applicable 7
Custodian Custodian Saudi Fransi Capital Head Office Kingdom of Saudi Arabia P.O. Box: 23454 Riyadh 11426. website: www.sfc.sa 8
Auditor & Financial Statements Auditor Ernst & Young Al Faisaliah Office Tower l King Fahad Road l P.O. Box 2732 l Riyadh 11461, Saudi Arabia. 9