This portfolio is managed by professionals investing in the Saudi market with capital of $1 million. It is diversified across various industries like banks, telecom, insurance, etc. Geopolitical changes in the Arab world and natural disasters affected market performance. The portfolio exceeded a 17% return. Key factors considered in stock selection were earnings multipliers, risk levels, and diversification. Dividends received totaled $53,832.50. As of April 11, the portfolio value grew to $1,091,847.50, an 8.88% gain. Some original stocks were then sold and replaced to shift the portfolio to comply with Islamic principles.

1. Executive Summary
262 Portfolio
This Portfolio is managed by professional experts in investing in the
Saudi market, this investment has a capital of one million. As all modern
portfolios in the world this portfolio is based on the concept of
diversification. Our portfolio is limited to only stock in common and
does not deal with bonds for two reasons. The first one is the maturity of
the portfolio where we have less than four months. The second reason is
that the Saudi market which we are investing in have few choices of
bonds to invest in (about four companies only).
The return of our portfolio exceeded 17% and we think that is an
excellent return if we took all factors that affected the market in that time.
There were some factors that disturbed both the markets and individuals
about of the future of the region and its stability. Starting with the
geopolitical changes in the Arab world ( Tunisia , Egypt, Libya, Bahrain,
Syria and Yemen) which affected the Saudi market a lot and made some
of the investors to be uncertain about their capitals..Another factor was
the Japanese crisis when a huge Tsunami hit them and damaged some of
their nuclear plants which caused a great fear and danger to the Japan
and its neighboring countries.
Finally we are very confident about this investment because we expect
it to outgrow the Saudi economy which is expected to grow by 15% this
year as Moody's expects.
In the begging of our portfolio formation we (as in group members)had
to deiced on to invest either in stocks or bonds or both of them , but since
we are investing in the Saudi market we only took stock in common.
Because there is not a lot of bonds in the Saudi market and the maturity
of our portfolio is about four months. The main problem we had was
geopolitical changes in the Arab world and its effect on the economy. The
capital of our portfolio was about 0ne million Saudi Riyal; our goal in
this portfolio is to make a high return. With these factors on the table we

2. did our research in choosing our portfolio elements, we emphasized on
the following sectors.
Stocks have historically had high risk and high returns among stocks are
a portfolio's "heavy hitter," offering the greatest potential for growth.
Stocks hit home runs, but also strike out. The volatility of stocks makes
them a very risky investment in the short term. But investors that have
been willing to ride out the volatile returns of stocks over long periods of
time generally have been rewarded with strong positive returns. To
reduce a lot of that risk we used a popular method in investing called
Diversification , With a diversified stock portfolio, risk is reduced
because different stocks rise and fall independently of each other. On a
broader scale, combinations of different investment assets may well
cancel out each other’s fluctuations in price, reducing the overall risk.
In our portfolio it was diversified into different industries in the Saudi
market as in the
following graph. Industries The Percentage
Banks 25%
Telecom 12%
ustries Insurance 8%
Industrial Investment 10%
Banks
Cement 15%
Telecom Petrochemical 27%
Insurance Building and Construction 3%
Industrial Investment
Cement
Petrochmical
Bulding & Construction
After we had picked the industries and its percentage now we come to the
stocks in that industry. We saw the Earning multiplier (The estimated
price-earnings ratio adjusted for the current level of interest rates) for the
stocks and made our decision on that two. Another important thing was
the level of risk that we can accept, in this situation we were a risk averse
( an investor who requires greater return in exchange for greater risk) so
we were looking for a beta for the portfolio that is around 1 in this case it
would be a positively correlated.

3. The Table Bellow Shows the earning Multiplier for the stocks we
bough,
Price to book and the book value:
Company PE P/B Book Value
Riyadh Bank 13.06 1.26 19.49
Samba Bank 10.45 1.82 28.26
Med Gulf 10.12 2.20 13.36
National 14.69 2.34 18.28
Industrialization
Saudi Telecom 7.84 1.38 26.73
Num of Price at Beta of
Company Beta shares buying Total weight portfolio
Riyadh Bank 1.05 4800 $24.20 $116,160.00 0.12 0.12
Samba Group 1.35 2450 $51.50 $126,175.00 0.13 0.17
National 0.93 3000 $33.20 $99,600.00 0.10 0.09
Sabic 14.53 2.59 40.26
Saudi Cement 14.38 2.81 22.03
Yamamh Cement 12.84 2.67 23.40
Sahara Petrochemical 22.22 1.94 12.88
Saudi Steel Pipe co 17.90 1.57 16.31
ALABDULLATIF CO 14.45 1.95 13.90
To being buying we thought that a capital of one million would be
suitable to start with. Our investment concept is to put any profit or
dividend aside and keep investing the capital only.

4. Industrialization Co
Saudi Telecom 0.58 3300 $36.20 $119,460.00 0.12 0.07
Med Gulf Insurance 1.3 3000 $27.00 $81,000.00 0.08 0.11
ALABDULLATIF CO 0.59 4000 $25.00 $100,000.00 0.10 0.06
Saudi Cement
Company 0.58 1500 $50.00 $75,000.00 0.07 0.04
Yamamah Saudi
Cement 0.76 1500 $50.50 $75,750.00 0.08 0.06
Sabic 1.02 1500 $96.75 $145,125.00 0.14 0.15
Sahara Petrochemical 1.51 1600 $19.10 $30,560.00 0.03 0.05
Saudi Steel Pipe co 1.13 1600 $21.25 $34,000.00 0.03 0.04
Total $1,002,830.00 1.00 0.95
We entered the market on Wednesday the fifth teen of March 2011 the
index of the Saudi market at that day was 5606 point, in the following
table we will see the stock that we bought and all the information you
need to know, after that will take a brief look at how to calculate the beta
for a company. (In the CD with the report)
The Dividends that was paid out:
The Stock The Dividend Num of stock The total
Riyadh Bank 1.30 4800 6240
Samba Group 1.65 2450 4042.5
Yamamah Cement 4.00 1500 6000
Saudi Cement 4.00 1500 6000
Saudi Telecom 3.00 3300 9900
Med Gulf 1.25 3000 3750
Insurance
ALABDULLATIF 1.00 4000 4000
Sabic 3.50 1500 10500
Saudi Steel 1.50 1600 2400
Pipe co
The total dividend was 52832.5 Saudi Riyal, and there was some shares
that were a bonus share by National Industrialization Co, The bonus
was 10% of the stocks that we owned, so we got 300 shares and sold it
right away (sticking to our concept), the price of the share that day was
33.90 and we sold it with that price.
The cash from the bonus share is= 33.90 * 300=10170 Saudi Riyals, so
the sum of the cash that was received is about 63000 and is held aside
Num Price Gain
of at Price Loss
Company shares buying Total today Total today GainLoss %

5. Riyadh Bank 4800 $24.20 $116,160.00 26 $124,800.00 8,640.00 7.44
Samba Group 2450 $51.50 $126,175.00 $55.75 $136,587.50 10,412.50 8.25
National
Industrialization 3000 $33.20 $99,600.00 $35.00 $105,000.00 5,400.00 5.42
Saudi Telecom 3300 $36.20 $119,460.00 $38.70 $127,710.00 8,250.00 6.91
Med Gulf
Insurance Co 3000 $27.00 $81,000.00 $30.00 $90,000.00 9,000.00 11.11
ALABDULLATIF 4000 $25.00 $100,000.00 $27.20 $108,800.00 8,800.00 8.80
Saudi Cement
Company 1500 $50.00 $75,000.00 $53.00 $79,500.00 4,500.00 6.00
Yamamah Saudi
Cement 1500 $50.50 $75,750.00 $54.25 $81,375.00 5,625.00 7.43
Sabic 1500 $96.75 $145,125.00 $107.25 $160,875.00 15,750.00 10.85
Sahara
Petrochemical 1600 $19.10 $30,560.00 $23.60 $37,760.00 7,200.00 23.56
Saudi Steel
Pipe co 1600 $21.25 $34,000.00 $24.65 $39,440.00 5,440.00 16.00
Total $1,002,830.00 $1,091,847.50 89,017.50 8.88%
The Portfolio at the end of the market in Monday the eleventh of
April
Buying Price
Today Price
The Difference between the buying price and Today Price
***Transactions***
12 April
The Portfolio at the end of the market in Tuesday the twelve of April

6. Num of Price at Beta of
Company Beta shares buying Total Weight Portfolio
AL- Rajhi 1.06 1857 $76.00 $141,132.00 0.14 0.14
National
Industrialization Co 0.93 3000 $33.20 $99,600.00 0.10 0.09
Saudi Industrial
Investment Group 1.28 6510 $25.30 $164,703.00 0.16 0.20
ALABDULLATIF CO 0.59 4000 $25.00 $100,000.00 0.10 0.06
Saudi Cement Company 0.58 1500 $50.00 $75,000.00 0.07 0.04
Yansab 1.33 3182 $51.57 $164,095.74 0.16 0.21
Sabic 1.02 1500 $96.75 $145,125.00 0.14 0.14
Saudi Steel Pipe co 1.13 1600 $21.25 $34,000.00 0.03 0.04
Saudi Telecom 0.58 3300 $36.20 $119,460.00 0.11 0.07
Total $1,043,115.74 1 0.986975227
Sold the Following Stocks (Riyadh Bank- Samba Group- Med Gulf INS
-Yamamah Cement- Sahara Petrochemical)
Bought the following Stocks (AL Rajhi Bank - Saudi Group –Yansab)
Selling
1- Riyadh Bank- Samba Group: These are one of the biggest banks in
Saudi Arabia, The objective of these two Banks are to provide a full
range of banking and investment services. They have posted us nearly 8%
of gain of each stock; we have our expectation that it cannot give a higher
return. The portfolio mangers diced to change the route into becoming an
Islamic Portfolio and that were the reasons to sell.
2-Med Gulf Insurance: The activity of the company is Carrying out all
Classes of Cooperative insurance business and all related activities
including reinsurance, agencies representations or brokerage. The stock
has posted us nearly 11% gains for the portfolio. Med Gulf, while still
listed as a good stock to own at the moment, looks to pause (and possibly
retreat slightly). We may return to the stock later if we are not changing
our portfolio into an Islamic portfolio.
3- Yamamah Saudi Cement: The company activity is Manufacturing of
Ordinary Portland Cement Sulphate Resistant Cement. We had thought
that stock would have made a larger move with the effects of it became
the biggest producer in the country. However, this did not happen as we
had hoped as the company was not able to capture as much business and
revenue as it should have so we decided to sell.

7. 4- Sahara Petrochemical Company: The Company activity is to
Develop own builds and operates with others through various operation
companies in petrochemicals industries especially Propylene,
Polypropylene, Ethylene and mixed polyethylene industries. We are
removing the stock for one reason. We have seen that 24% of gains is a
wonderful gain and above what we expected and we are not sure that the
stock will continue increasing.
BUYING
1- AL Rajhi Bank: The objectives of the bank are represented in
practicing banking and investment activities As (Islamic law).The Rajhi
bank after the last quarter became the biggest Saudi bank in the current
assets and in the current deposits has a huge cash position, and a
tremendous growth rate and a large profit margin. From these information
we diced to buy the stock.
2- The Saudi Industrial Investment Group (SIIG): is considered one
of the leading companies in the field of developing an industrial base in
Saudi Arabia, particularly the petrochemical industry, in the 10th of April
the company announced that it will merge with The National
Petrochemical Company (PetroChem) this project will be owned by SIIG.
The SIIG have been showing excellent revenue increases and profit
increases. Recent announcements by management have made us believe
that the stock will continue this trend for at least the next three quarters.
Before a week the company announced that the merger will be delayed to
a further day noticed later.
3- Yansab: The activity of the company is to produce ethylene,
propylene, ethylene glycol, low leaner density polyethylene, high density
polyethylene, polypropylene, MTBE, butane and BTX. Yansab in its first
quarter of year 2011 it announced that it had made 177% profit more than
the first quarter in year 2010. Yansab is owned 51% by Sabic and the
profit for Sabic increased by 42% than year 2010. The forecasted P/E
ratio shows that it has been undervalued, the stock (Yansab) has been
acting well for a while and we have decided to buy it.
As you can see the diversification of the portfolio has changed, the
change was because of the excellent profit that the petrochemical industry
have made the last quarter.

8. Industries
Banks
Telecom
Industrial Investment
Cement
Petrochemical
Building and Construction
As you can see the beta for the portfolio have increased a little bide, it
have grown from .95 to .98.
The Portfolio at the end of the market in Wednesday the 25th of May
Num Price Gain
of at Price Loss
Company shares buying Total today Total today GainLoss %
AL- Rajhi 1857 $76.00 $141,132.00 $75.75 $140,667.75 464.25- 0.33-
National
Industrialization 3000 $33.20 $99,600.00 $41.70 $125,100.00 25,500.00 25.60
Saudi Industrial
Investment Group 6510 $25.30 $164,703.00 $23.75 $154,612.50 10,090.50- 6.13-
ALABDULLATIF 4000 $25.00 $100,000.00 $27.70 $110,800.00 10,800.00 10.80
Saudi Cement
Company 1500 $50.00 $75,000.00 $64.25 $96,375.00 21,375.00 28.50
Yabsab 3182 $51.57 $164,095.74 $48.50 $154,327.00 9,768.74- 5.95-
Sabic 1500 $96.75 $145,125.00 $107.25 $160,875.00 15,750.00 10.85
Saudi Steel Pipe co 1600 $21.25 $34,000.00 $26.20 $41,920.00 7,920.00 23.29
Saudi Telecom 3300 $36.20 $119,460.00 $36.30 $119,790.00 330.00 0.28
Total $1,043,115.74 $1,104,467.25 61,351.51 5.88%
The cash from the dividend is = 63000 Saudi Riyal
The cash from capital gain from last transaction is = 48732 Saudi Riyal

9. At the end of in Wednesday 25 of May 2011 we diced to sell all of our
portfolio, we started with a capital of 1002830 SR and finished with
1175083 SR. Our Return was 17.25%.
Final we would like to thanks Professor Fayez Tayem for his support and
his guidance which was very helpful for us to finish our report , he was
always available to answer our questions and encourage us to implement
the different conspectus that we study