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The First Mazoon Fund JIA Quarterly Report for the three months ended March 31, 2005 (Unaudited) Name of the Fund: The First Mazoon Fund Investment Objective The Objective of the Fund is to provide investors with the opportunity to invest in a basket of predominantly blue-chip Omani equities in order to achieve substantial capital gains. Investment strategy The strategy is to identify and invest in the blue chip companies in the secondary market and achieve an above average return. Risk Profile Invest predominantly in blue-chip equities and maintain risk/return profile similar to the market. Porfolio Allocation % of Net assets as on March 31, 2005 Value % of net asssets Banking 619,994 17.3% Investment 748,126 20.8% Services 697,416 19.4% Industrial Insurance Government bonds 535,976 - Foreign investment - 14.9% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Banking Investment Services Industrial Insurance Bonds and other debt instruments 168,900 4.7% 0.0% Cash 216,797 6.0% Trust Account holding 133,289 3.7% GCC Investments Term deposits Other assets/(liabilities) 400,710 69,044 11.2% 0.0% 1.9% 3,590,252 100.0% Net Assets Portfolio Highlights at March 31, 2005 Ten Largest Holdings Issue Shares Rials Omani RO Percentage of Net Assets Bank Muscat 42,462 369,844 10.3% Oman Cement 58,200 355,020 9.9% Ominvest 47,056 272,925 7.6% 169,763 271,621 7.6% 25,035 224,063 6.2% Topaz 100,100 215,215 6.0% DIDIC 52,200 203,580 5.7% Al Khaleej Poly Propylene 48,255 180,956 5.0% Oman International Bank 45,000 174,150 4.9% 128,105 156,288 4.4% 2,423,662 67.6% Al Madina Financial & Investment Services Renaissance Services United Power Five Largest Net Security Purchases during the quarter ended March 31, 2005 Qty Proceeds in RO No purchases were made during the quarter ended March 31, 2005 Five Largest Net Security Sales during the quarter ended March 31, 2005 Qty Proceeds in RO Shell Oman 20,000 117,528 Oman International Bank 20,000 73,704 Raysut Cement 10,000 59,268 United Power 20,000 23,605 Al Maha 4,600 22,358 Performance Data: 6.8% Growth of an Assumed Investment of RO 10,000 10,680 7.8% 10,776 3 months ended 31-Mar-05 3 months ended 31-Mar-04 12 months ended 31-Dec-04 Net Assets 3,590,252 2,661,758 2,994,588 Number of Outstanding Units 2,209,468 2,894,689 2,263,732 1.625 0.920 1.323 22.1% 6.0% 27.9% Expense Ratio: * (Expenses to average NAV) 0.7% 3.7% 3.2% Portfolio Turnover Rate: + 6.0% 6.0% 27.6% 0.5% 8.5% 1.1% Average Annual Total Return (*) 3 months ended March 31, 2005 June 97 to March 31, 2005 (94 months) (*) (*) 5% cash dividend for 1997 added back Units Outstanding, Net Asset Value (NAV), and Ratios: Net Asset Value (NAV) PER UNIT RATIOS Simple Return: + (After tax profit to beginning NAV) (Securities traded to average NAV) Liability Ratio: (Liabilities to NAV) * Annualised + Not annualised Fund Per-Unit Table 3 months ended 31-Mar-05 3 months ended 31-Mar-04 12 months ended 31-Dec-04 PER-UNIT CHANGES IN NAV (Net Asset Value) Investment Income 0.00053 0.00352 0.07892 Net gain / (loss) on investments available for sale 0.30952 0.05747 0.27156 Interest Expenses All Management and Other Expenses Taxation Net After Tax Profit (Loss) Cash Dividends Paid Net Increase (Decrease) in NAV - 0.01087 - 0.29917 - 0.29917 - 0.00827 - 0.05272 - 0.05272 - 0.03917 - 0.31131 - 0.31131 Gain in redemption of units 0.003 - 0.146 NAV at Beginning of Period 1.323 0.866 0.866 NAV at End of Period 1.625 0.920 1.323 0.00241 0.00043 0.002 *Brokerage Commissions and markups Unaudited profit and loss account For the 3 months ended 31 March 2005 and 2004 Notes 3 months ended 31-Mar-05 RO 3 months ended 31-Mar-04 RO 12 months ended 31-Dec-04 RO Dividends 1,160 9,074 177,248 Interest income (debt instruments) - 213 520 Other Income - 894 894 683,872 166,365 614,733 685,032 176,546 793,395 Management fee 11,354 9,266 40,763 Custodian fee Amortisation expenses 1,622 - 1,324 - 5,823 - Auditing and Legal fees 675 2,225 5,901 Directors’ fees and expenses 600 800 3,400 6,462 3,308 10,311 - 32,795 - Total Expenses 24,022 23,926 88,682 Profit before taxation 661,011 152,620 704,713 Taxation - - - Net Profit after tax 661,011 152,620 704,713 - - Income & Gains: Investment Income: Net gain/(loss) on investments available for sale 1 Total Income & Gains Expenses: Interest Expenses Management and other expenses: Other fees and expenses Currency Loss Dividend per unit 4&6 4 - Unaudited consolidated balance sheet at 31 March 2005 Notes 31-Mar-05 RO Assets Intangible assets Investments available for sale Bank balances and cash Receivable/prepaid Dividends receivable Other assets Total Assets 3,7 & 8 5 Balance Sheet as at 31-Mar-04 RO 31-Dec-04 RO - - - 3,304,411 2,683,291 2,895,983 216,797 192,133 8,377 85,619 - 11,741 - 124,032 - 3,606,827 2,887,165 3,028,392 Liabilities Bank loans and overdrafts Payable for securities purchased 211,216 Payable for capital units repurchased Accrued expenses: Management fee & other exp Dividend payable Other liabilities 16,575 - 10,589 3,601 33,804 - 16,575 225,406 33,804 3,590,252 2,661,759 2,994,588 Unit-holders’ funds 3,590,252 2,661,759 2,994,588 Unit capital, at RO 1 par value 2,209,468 2,894,689 2,263,732 3,590,252 2,661,759 2,994,588 1.625 0.920 1.323 Total Liabilities Net Assets (Authorized 10330204 Units, Outstanding Units 2209468 Additional paid-in capital Legal reserve/Taxation Profit and loss account Net Assets Net Asset Value per Outstanding Unit (Net Assets ÷ no units outstanding) Unaudited statement of cash flow for the 3 months period ended 31 March 2005 & 2004 3 months ended 31-Mar-05 3 months ended 31-Mar-04 12 months ended 31-Dec-04 661,011 152,620 704,713 Operating Activities Net profit (loss) before taxation Adjustments for: Interest Income Amortization of Est expense Net unrealised gain on investments Net unrealised loss on investments Interest expense Operating profit(Loss) before working capital changes - - - - - - - - - 661,011 152,620 704,713 (408,428) (430,301) (642,994) 38,413 (1,216) (113,507) (17,229) 157,327 (34,275) 273,767 (121,570) (86,063) 273,767 (121,570) (86,063) - 270,000 322,856 - 270,000 322,856 - - - Redemption of units (65,347) (14,245) (233,509) Net cash used in financing activities (65,347) (14,245) (233,509) DECREASE IN CASH AND CASH EQUIVALENTS 208,420 134,184 3,284 Cash and cash equivalents at the beginning of the year 8,377 5,093 5,093 Cash and cash equivalents at the end of the period 216,797 139,277 8,377 decrease in investment decrease in accounts receivable and prepayments Decrease in accounts payable and accruals Cash used in operations interest paid Net cash from operation activities Investing activities Decrease in bank deposits Interest Income Net cash (used in) from investing activities FINANCING ACTIVITIES Dividends paid The First Mazoon Fund JIA Report for the I Quarter ended March 2005 P O Box 974, Ruwi, Postal Code 112, Oman – Tel: +968 24790614 Fax: +968 24790612 Objective . . The Fund provides investors with the opportunity to invest in a basket of predominantly blue-chip Omani equities in order to achieve substantial capital gains. Performance FMF * Year to Date 22.8% 1 year 53.6% 3 year 126.4% 5 year 127.2% Since inception+ 41.3% * The First Mazoon Fund JIA . MSM 30 Index 26.7% 44.5% 158.0% 75.0% 13.3% Fund Details Manager Intl. Investment Advisor Custodian Launch Date Auditor Current Size Units outstanding Type Listing Subscription/redemption Dealing date Management fee NAV/Unit Market Price Last Dealing price/unit . : : : : : : : : : : : : : : : Gulf Investment Services Co SAOG HSBC Financial Services (ME) Ltd. HSBC Bank Middle East, Oman June 10, 1997 KPMG RO 3.59 million 2,209,468 Semi Open-ended Muscat Securities Market (MSM) Monthly Second Thursday of each month 1.4% per annum RO 1.625 RO 1.880 Bid: RO 1.320 offer: RO 1.373 FMF NAV Vs MSM Index from inception to 31-03-05 P E R F O R M A N C E Base = 100 Market Review and Outlook . Record breaking oil prices continued to drive the underlying economic fundamentals keeping markets buoyant. The Sultanate has announced that the official price for Omani Crude for March’05 was at US$ 47.5 per barrel the highest since the Sultanate started the production of crude. The first quarter of 2005 for the stock market has been the best so far in the current decade with the index appreciating 27 per cent since the beginning of the year. Similar to last year the industry sector index led the rally on a gain of 33 per cent followed by the banking and investment sector on increase of 27 per cent while the service sector recorded a gain of 19 per cent. The up move in the current quarter was also driven by volumes from GCC bigwigs who consider Oman to be cheaper than other GCC markets. Broad Money supply in January 2005 increased 3 per cent whereas the increase in February 2005 was 2.7 per cent (month on month). The surge in liquidity increased the activity and volumes in the market. The forthcoming OMANTEL IPO is likely to substantially improve the market capitalization, depth, breadth and liquidity in the market attracting foreign and GCC investment. The current lofty oil prices and amass liquidity is expected to keep the market buoyant in the coming year. Fund Review . The Investors' Committee at its meeting held on March 09 proposed a cash dividend of 14% and a stock dividend of 14% for FY 2004. Investors responded positively and the fund's units moved from RO 1.220 to an all time high of RO 2.000. The NAV was RO 1.625 at the end of the quarter and was up 22.8% on YTD basis as against the market's gain of 26.7%. The GCC portfolio made impressive gains of over 17.4% for the quarter. Profits were skimmed in most markets and the Fund continues to be overweight in Kuwait. The average NAV during the quarter was RO 1.440 at an average discount of 6.8%. The total number of units redeemed during the quarter was 54,264. TOP 5 Holdings % . Bank Muscat 10.30 Oman Cement 9.89 Ominvest 7.60 Al Madina Fin & Invest Co 7.57 Renaissance Services 6.24 52-week High Low 4390.91 2952.03 MSM 30.Index* RO 2.000 RO 0.740 Market Price+ RO 1.642 RO 0.913 NAV per Unit *Rebased to 1000 on June 01, 2004 + Adjusted for 15% Capital reduction w.e.f. May 1,2004 Contact information: Bharath Rajnarayan – Fund Manager Email: [email protected] Tel: +968 2479-0614 Ext – 119 180 200 140 150 100 100 60 50 20 0 8 9 0 1 2 3 4 5 Mar-9 Mar-9 Mar-0 Mar-0 Mar-0 Mar-0 Mar-0 Mar-0 MSM FMF S ECTORAL ALLOCATION 6.03% A S S E T S 1.92% 4.70% 40.02% 16.93% 30.40% Bank&Inv. Serv. Ind. Bond FD&Cash Oth.Assets GEO GRAPHICAL DISTRIBUTIO N A L L O C A T I O N 3.29% 1.88% 0.78% 5.28% 88.76% OMAN KUWAIT SAUDI UAE T TH HE E FFIIR RSST TM MA AZ ZO OO ON N FFU UN ND D JJO OIIN NT T IIN NV VE ESST TM ME EN NT TA AC CC CO OU UN NT T SSttaatteem meenntt ooff cchhaannggeess iinn U Unniitthhoollddeerrss’’ ffuunnddss ffoorr tthhee tthhrreeee--m moonntthh ppeerriioodd eennddeedd 3311M Maarrcchh 22000055 U Unniitthhoollddeerrss’’ FFuunnddss R RO O BBaallaannccee aatt 11 JJaannuuaarryy 22000044 N Neett pprrooffiitt ffoorr tthhee yyeeaarr U Unniittss rreeppuurrcchhaasseedd aanndd rreeddeeeem meedd dduurriinngg tthhee yyeeaarr 22,,552233,,338844 770044,,771133 ((223333,,550099)) ------------------------- QATAR BBaallaannccee aatt 3311 D Deecceem mbbeerr 22000044 N e t p r o f i t f o r t h e p e Net profit for the perriioodd U Unniittss rreeppuurrcchhaasseedd aanndd rreeddeeeem meedd dduurriinngg tthhee ppeerriioodd BBaallaannccee aatt 3311 M Maarrcchh 22000055 BBaallaannccee aatt 11 JJaannuuaarryy 22000044 N Neett pprrooffiitt ffoorr tthhee ppeerriioodd U Unniittss rreeppuurrcchhaasseedd aanndd rreeddeeeem meedd dduurriinngg tthhee ppeerriioodd BBaallaannccee aatt 3311 M Maarrcchh 22000044 22,,999944,,558888 666611,,001111 ((6655,,334477)) -----------------------33,,559900,,225522 ================== 22,,552233,,338844 115522,,662200 ((1144,,224466)) ------------------------22,,666611,,775588 ================== 1. After initial recognition, investments which are classified "available for sale" are remeasured at fair value. Any gain or loss arising from a change in fair value is included in the statement of income in the period in which it arises. 2. Definition of Ratios NAV = Net Asset Value = The equity value of one unit of the Investment Fund. Calculated by subtracting the liabilities per unit from the assets per unit. Or, by dividing the Net Assets by the number of Outstanding Units. (For close end funs only) The market price at which units trade may be higher or lower than the Net Asset Value. Average Annual Total Return* = Average annual compounded rate of return, calculated on the assumption that all dividends have been reinvested at the time they were distributed. Average Annual Total Return is based on the Net Asset Value at the time of purchase, and does not reflect payment of initial sales charges. Average Annual total return is mathematically defined as follows: (give definition) Simple Return = Calculated by dividing the per unit after tax profit for the period, by the NAV at the beginning of the period. Or, calculated by dividing the sum of the per unit dividends and change in the net asset value during the period, by the NAV at the beginning of the period. (Adjust this definition if necessary to fairly reflect return, where there have been distributions or repurchases of units at a value different from net asset value. Expense Ratio = Per unit, expenses during the period (Interest Expenses + All Management and Other Expenses (except for brokerage commissions and mark ups)), divided by Average NAV for the period. Brokerage Expense Ratio= Per Unit, brokerage commissions and mark ups during the period (Brokerage Commissions + Mark-ups), divided by Average NAV for the period Portfolio Turnover Rate = Per unit, average of the price of assets bought and the price of the assets sold ((Purchases + Sales) ÷ 2), during the period, divided by Average NAV for the period. Liability Ratio = Per unit, liabilities at the end of the period, divided by the NAV at the end of the period. (For Closed-end Funds only) Average Annual Total Return, and Simple Return are based on the dividends paid to unit-holders, and the growth in the Net Asset Value during the period. These Ratios are not based on, or affected by, the price at which the units were purchased in the market, or the price for which units may be sold in the market. 3. Investments available for sale After initial recognition, investments which are classified "available for sale" are remeasured at fair value. Any gain or loss arising from a change in fair value is included in the statement of income in the period in which it arises. Investments can be analysed as follows: 31-Mar-05 Market value RO’ 31-Mar-04 Market value RO’ 31-Mar-05 Cost ** RO’ Percentage of Net Assets Banking 619,994 554,265 486,757 17.3% Investment 748,126 487,475 632,377 20.8% Services 697,416 796,145 517,721 19.4% Industrial 535,976 193,690 419,355 14.9% 2,601,513 2,031,575 2,056,210 72.5% Marketable securities - MSM Marketable securities – Foreign by Sector Total Unquoted and other investments Unquoted Omani shares Bonds & Trust Accounts 400,710 - 318,118 11.2% 400,710 - 318,118 11.2% - - - 0.0% 302,188 651,716 298,857 8.4% 302,188 651,716 298,857 8.4% Total Investments 3,304,411 2,683,291 2,673,185 92.0% 3 months ended 31-Mar-05 RO 3 months ended 31-Mar-04 RO 12 months ended 31-Dec-04 RO Bank Charges 1,265 1,631 6,021 Insurance 3,751 5,966 18,414 MSM Regulatory fee 558 826 3,021 Other Expenses (including Publication, printing & stationery etc) 888 1,888 5,339 6,462 10,311 32,795 Bank Balances and cash Time Deposit 216,797 - 139,277 52,856 8,377 - Total 216,797 192,133 8,377 4. Other fees and expenses Other fees and expenses total 5. Cash and cash equivalents 6. Related Parties, and Holders of 10% Ownership Interests Holders of 10% Ownership Interests of the Investment Manager or the Fund may include companies, individuals, or families. Families are included if the shares or units of the family members total 10% or more of the Investment Manager’s or Fund’s shares or The nature of significant transactions involving related parties of the Investment Manager or the Fund, or holders of10% or more ownership interest in the Investment Manager or Fund, or their family members, and the amounts involved during the period were as follows: 3 months ended 31-Mar-05 3 months ended 31-Mar-04 12 months ended 31-Dec-04 RO RO RO 1,212 - 1,236 - 4,796 - 1,212 1,236 4,796 Brokerage Commission and Mark-ups Broker- Gulf investment Services Co Interest income from HSBC Total * Brokerage commissions and mark-ups paid to related parties and 10% holders are included in the cost of investments purchased and sold. As a result, all commissions and markups are included within Net Investment Gains or Losses. Expense Items Items of expense which were paid to related parties of the Investment Manager or the Fund, or holders of 10% or more ownership interest in the Investment Manager or Fund, or their family members, during the period can be further analysed as follows: 3 months 3 months 12 months ended ended ended 31-Mar-05 31-Mar-04 31-Dec-04 RO RO RO Management fee- GIS 9,246 7,546 33,193 Management fee- HSBC 2,109 1,721 7,570 Custodian fee - HSBC 1,622 1,324 5,823 Bank Charges-HSBC 1,265 1,631 6,020 Total 14,241 12,222 52,606 7. Investments, Purchases & Sales of Securities of Related & Connected Issuers NIL 8. Details of Significant Investments Details of all the reporting fund’s investments, for which either, the reporting fund’s holding represents 10%ormore of the issuer’s sharecapital, or, the reporting fund’s holding exceeds 5% of the market value of the reporting fund’s investment portfolio. % of total market Value Cost % of net value of the Funds' portfolio Qty RO’ RO’ assets Bank Muscat 13.3% 42,462 369,844 271,757 10.3% Oman Cement 12.8% 58,200 355,020 271,212 9.9% 9.9% 47,056 272,925 195,282 7.6% MSM Quoted securities Ominvest Al Madina Fin & Inv Services 9.8% 169,763 271,621 271,621 7.6% Renaissance Services 8.1% 25,035 224,063 147,707 6.2% Topaz 7.8% 100,100 215,215 187,187 6.0% Dhofar Intl. Dev. & Inv. 7.3% 52,200 203,580 165,474 5.7% Al Khaleej Polypropylene 6.5% 48,255 180,956 148,143 5.0% Oman Internationbal Bank 6.3% 45,000 174,150 153,000 4.9% United Power 5.6% 128,105 156,288 106,327 4.4% 87.5% 2,423,662 9. Unit-holders All those Unit-holders of the company who own 10% or more of the fund’s units, whether in their name, orthrough a nominee account,and the number of units they hold are as follows: (Authorized 10330204 Units, Outstanding Units 2209468 31-Mar-05 31-Mar-04 31-Dec-04 No of Units No of Units No of Units Unit-holders: HSBC Financial Services Middle East Ltd, Dubai % 648,277 29.3% 801,729 653,428 27.7% 28.9% Gulf Investment Services Co SAOG % 475,549 21.5% 559,470 475,549 19.3% 21.0% 1,917,710 67.6%