AlAhli Saudi Small and Mid-Cap Equity Fund
Contents
A. Investment Fund Information ... 2
B. Fund Performance ... 2
C. Fund Manager... 6
D. Custodian ... 7
E. Auditor ... 8
F. Financial Statements ... 8
AlAhli Saudi Small and Mid-Cap Equity Fund A. Investment Fund Information
1. Investment Objective
AlAhli Saudi Small and Mid-Cap Equity Fund investment objective is to generate long-term capital growth through investing primarily in Saudi small and mid-Cap companies in the Saudi equity market in accordance with the Shariah guidelines issued by the Shariah Board.
2. Investment Policies
The Fund may invest in ETFs, local IPO's and Rump Offerings whenever possible.
Surplus cash may be invested in Shariah compliant Murabaha transactions and/or funds.
The Fund may also have a limited exposure to Sukuk.
3. Distribution of income and gain policy
Income and dividends will be reinvested in the Fund. No income or dividends will be distributed to Unitholders.
4. The fund's reports are available upon request free of charge.
B. Fund Performance
1. The following table shows a comparison of the following data for the last three years:
Net assets value at the end of each financial year.
Net assets value per unit at the end of each financial year.
Highest and lowest net asset value per unit for each financial year.
The number of units in issue at the end of each financial year.
Expense ratio.
Year 2016 2015 2014
AUM* 83,453,282.09 95,888,010.57 96,188,922.14
NAV per Unit* 1.52 1.48 1.48
Highest Price* 1.52 2.21 2.37
Lowest Price* 1.13 1.47 1.64
Number of Units 55,017,373.33 64,849,627.86 64844,155.47
Income Distribution - - -
Fees and Expense ratio 2.12% 2.18% 2.00%
* In Saudi Riyal
2. Total return for 1 year, 3 years and 5 years:
Period Year 3 Years 5 Years
Total return 2.59% -2.91% 8.20%
3. Annual total return for the fund since its launch:
Year 2016 2015 2014 2013 2012 2011 2010 2009
Return % 2.59 -23.29 16.30 36.63 18.57 5.34 13.83 44.76
Benchmark % 3.19 -22.04 7.72 36.58 24.67 7.61 9.34 39.95
4. Actual fees and fund expenses paid by the investment fund during the year:
Fees and Expenses Percentage of NAV
Management Fee Expense 1.81%
Audit Fee Expense 0.03%
Fund Admin Fee Expense 0.17%
CMA Fee Expense 0.01%
Tadawul Fee Expense 0.01%
Shariah Audit Fee Expense 0.03%
Fund Board Fee Expense 0.02%
Expense Ratio 2.12%
5. Material Changes:
The year under review was a volatile year for oil where oil witnessed three significant price swings.
The first leg was a sharp correction of more than 20% to the bottom; the second leg was a
recovery to $51 by mid-year. Lastly, oil traded sideways and ended the year in the mid-$50s after OPEC and non-OPEC members agreed to cut production. These huge swings played a role in the market’s volatile performance.
To soften the impact of the oil price drop during the year, a number of government initiatives were announced beginning of the year of 2016 in order to increase government revenue and reduce the budget deficit going forward i.e. increase in gas prices, energy prices and water prices.
These initiatives impacted company margins and were expected to impact the consumer hence having an adverse effect on a number of company’s sales, to counter the impact on margins and sales, several initiatives were taken by the companies to enhance efficiencies and increase competitiveness. Later in the year the government announced vision 2030 with the goal of diversifying the countries income over the coming years. The announcement took time to absorb
and it was clear that certain companies would benefit in the medium to long term
6. Exercising of voting right
COMPANY DATE OF AGM SUBJECT OF VOTING
ALDREES 3/2/2016
BoD Report, Consolidated financial statements, auditors report, distribution of cash dividend, runmeration of directors, discharge of members of BoD, Vote on recommendation of BoD to appoint the external auditors, Vote on related party trasnactions
ARABIAN CEMENT 4/3/2016
BoD Report, Consolidated financial statements, auditors report, distribution of cash dividend, runmeration of directors, discharge of members of BoD, Vote on recommendation of BoD to appoint the external auditors
NATIONAL SHIPPING 4/6/2016 BoD Report, Consolidated financial statements, auditors report, distribution of cash dividend, runmeration of directors, discharge of members of BoD
SAUDI CERAMIC 4/12/2016
BoD Report, Consolidated financial statements, auditors report, distribution of cash dividend, runmeration of directors, discharge of members of BoD, Vote on recommendation of BoD to appoint the external auditors, Vote on related party trasnactions
SAUDI CATERING 5/5/2016
BoD Report, Consolidated financial statements, auditors report, BoD recommendation on 6/5/2016,3/8/2015,20/10/2015, 3/3/2015 to distribute of cash dividends, Authorizing BoD to distrubute half yearly dividends or quarterly dividends, runmeration of directors, discharge of members of BoD, Vote on recommendation of BoD to appoint the external auditors, Vote on related party trasnactions
HAMMADI 5/29/2016
BoD Report, Consolidated financial statements, auditors report, distribution of cash dividend, remuneration pay, Discharge of members of the BoD, vote on internal auditor, Dividend approval, BoD compensation vote, BoD members selection, Vote on deals with related parties
UM ALQURA 5/30/2016
BoD Report, Consolidated financial statements, auditors report, remuneration of directors, discharge of members of BoD, Vote on recommendation of BoD to appoint the external auditors, Approval of new contracts, Vote on related party transactions
CITY CEMENT 5/31/2016
BoD Report, Consolidated financial statements, auditors report, distribution of cash dividend, runmeration pay, Discharge of members of the BoD, vote on internal auditor, BoD compensation vote,
SAHARA 6/5/2016 BoD Report, Consolidated financial statements, auditors report, remuneration pay, Discharge of members of the BoD
APPC 7/28/2016 Vote on bonus shares, Vote on BoD member DALLAH 10/18/2016 Vote on BoD members
YAMAMAH STEEL 11/20/2016 BoD member selection, change on the company bylaws
BUPA 12/20/2016 Vote on BoD members, Vote on committee, change on the company bylaws MOUWASAT 12/26/2016 Vote on BoD members, Vote on committee, Vote on related parties
transaction
7. Fund Board Annual Report:
The Board of Directors consists of the following members, who were appointed by the fund manager and approved by the Capital Market Authority:
1. Mohammed Abdullah Al-Ali Chairman of the Fund’s Board of Directors
2. Mohammed Jafar Saqaf non-independent member
3. Dr. Abdulrauof Solaiman Banajah independent member
4. Alaaeldden Riyad Sami independent member
The Fund's Board of Directors held three meetings during 2016. The following is a summary of the key decisions approved and the matters discussed by the Fund’s Board of Directors:
Fund’s performance review: the underperforming the benchmark by 0.51%.
The fund board approved appointing KPMG Al Fozan & Partners as an external auditor.
The fund board approved changes to the Terms & Conditions in the cut-off time to subscribe to the Fund will be on the Dealing Day before or at 10:00 AM, instead of 11:00 AM.
Risks related to the funds; including: liquidity, market, operational risks.
Ensuring fund’s compliance to all applicable rules and regulations.
The effects of the updated Investment Funds Regulations on the fund.
C. Fund Manager
1. The Fund Manager is NCB Capital Company.
Address: King Saud Road, P.O. Box 22216, Riyadh 11495, Kingdom of Saudi Arabia, Tel: +966 920000232 Fax +966 114060049 Website: www.ncbc.com 2. Sub-manager / investment adviser
None
3. Investment activities
On the back of the different government initiatives and announcements throughout 2016 (increase in gas prices, energy prices and water prices, vision 2030), the fund witnessed some changes to stock selection and sector allocation to limit any adverse effects to performance and gain from positive changes to the economy that are expected to directly affect certain companies.
4. Fund’s performance
The AlAhli Saudi Mid and Small Cap Equity Fund appreciated by 2.59% underperforming the benchmark by 60bps in 2016.
5. T&C’s Material changes made
The Fund Manager has made certain revisions to the terms and conditions of the Fund. The main change in the terms and conditions relate to change in the borrowing right, rebate language, name of the Fund and the auditors from Ernst & Young to KMPG to KPMG Al Fozan & Partners.
6. The fund does not invest substantially in other investment.
7. No special commissions were received by the fund manager during 2016
D. Custodian
1. NCB Capital is the Custodian to the Fund.
Address: King Saud Road, P.O. Box 22216, Riyadh 11495, Kingdom of Saudi Arabia, Tel: +966 920000232 Fax +966 114060049 Website: www.ncbc.com
2. Custodian’s duties and responsibilities
The custodian shall be held responsible to the fund manager and unitholders for any losses caused to the investment fund due to the custodian fraud, negligence, misconduct or willful default.
The custodian shall be responsible for taking custody and protecting the fund's assets on behalf of unitholders, and taking all necessary administrative measures in relation to the custody of the fund's assets.
3. Custodian’s opinion
NCB Capital Co. hereby confirms that we Issued, transferred and redeemed the units in accordance with the provision of the IFR and Fund T&Cs.
NCB Capital Co. hereby confirms that we valued and calculated the Unit price in accordance with the provisions of IFR, Fund T&Cs and Information Memorandum.
NCB Capital Co. hereby confirms that we have not breached any of the Investment Restrictions, Limitations and borrowing powers applicable to IFR.
E. Auditor
1. KPMG Al Fozan & Partners is the Auditor of the fund
Saudi Arabia, Jeddah, Zahran Business Center, Prince Sultan Street,
Tel: +966 12 6989595 Fax: +966 12 6989494 Website: www.kpmg.com/sa
2. Auditor’s opinion:
The financial statements have been prepared and audited in accordance with SOCPA standards.
F. Financial Statements
