CONTENTS Corporate Information 1 s Report 2 Statement of Assets & Liabilities 4 Income Statement 5 Distribution Statement 6 Statement of Movement in Unitholders Fund 7 Cash Flow Statement 8 Management Company CORPORATE INFORMATION Dawood Capital Management Limited 1500-A Saima Trade Towers I. I. Chundrigar Road, Karachi 74000 UAN: 111-DAWOOD (111-329-663) PABX: (92-21) 3227-1874 Fax: (92-21) 3227-1912 E-mail: dcm@firstdawood.com URL: www.firstdawood.com/dcm Board of s Mr. Feroze Sayeed-Ud-Deane Chairman (Nominee of BRRGM) Miss Tara Uzra Dawood Chief Executive Officer Mr. Iftikhar Hussain (Nominee of FDIBL) Mr. Nazimuddin Feroz (Nominee of BRRGM) AVM (Retd.) Zulfiqar Ahmed Shah (Nominee of FDIBL) Mr. S. Shabahat Hussain (Nominee of NIT Subject to SECP Approval) Vacant (Under process appointment) Chief Financial Officer Company Secretary Mr. Muhammad Saleem Munshi Mr. Tahir Mehmood Audit Committee AVM (Retd.) Zulfiqar Ahmed Shah Chairman Mr. Iftikhar Hussain Member Vacant (Under process appointment) Notes to the Financial Statements 9 Trustee Auditors Tax Advisor Legal Advisor Registrars Distributors Banker: Rating AMC Rating Central Depository Company of Pakistan Limited CDC House, 99-B, Block-B, S.M.C.H.S., Main Shahra-e-Faisal, Karachi-74400 Ph : (92-21) 111-111-500 Fax : (92-21) 34326020-23 M. Yousuf Adil Saleem & Co., Chartered Accountants Mazhar Associates A-1/E-3, Faiza Avenue Karachi. Bawaney & Partners 404, 4th Floor, Beaumont Plaza 6-cl-10 Beaumont Road, Karachi 75530 Telephone: (021) 3565-7658/9, 3565-7674 Fax: (021) 3565-7673 E-mail: bawaney@cyber.net.pk Gangjees Registrar Services (Pvt.) Limited Room # 516, 5th. Floor, Clifton Centre Kehkashan Clifton, Karachi IGI Investment Bank Ltd. Alfalah Securities (Pvt.) Ltd. Atlas Capital Market (Pvt.) Ltd. BMA Financial Services (Pvt.) Ltd. Dawood Islamic Bank Limied Al Baraka Islamic Bank Limited Habib Metropolitan Bank Limited Standard Chartered Bank (Pakistan) Limited PACRA: 4-Star PACRA : AM4+ 1
DIRECTORS REPORT It gives me immense pleasure to present on behalf of the Board of s of Dawood Capital Management Limited ("DCM"/"the Company"), the Management Company of Dawood Islamic Fund (""/"the Fund"), the un-audited financial statements for the first quarter ended September 30, 2009. is an open end Asset Allocation fund having investment strategy to provide investors with exposure to a range of Shariah based equity securities, debt securities and shortterm Musharika Placements. The Fund's strategy aims to not only preserve investors' capital but also to maximize the value of their investments while providing a stable stream of income. The above factors have improved investment climate considerably, which is also attracting foreign investment. The Foreign Investor Portfolio Investments (FIPI) showed net inflows of US$152.34mn during the period. The aggregate inflows during FY10 in SCRA have reached to a positive level of US$237.32mn as on September 30, 2009. The s wish to express their gratitude to the Securities & Exchange Commission of Pakistan and other regulatory bodies for their valuable support, assistance and guidance during these times of recovery. The Board also thanks the employees of the Asset Management Company, the Trustee and Shariah Advisors for their dedication and hard work and the unit holders for their confidence in the Management. has shown a remarkable performance during this quarter as compared to the same period last year. The Fund's total income during the period stood at Rs. 20.74 million as compared to total loss of Rs. 0.09 million in the same period last year. Total expenses were at Rs. 2.25 million as opposed to Rs. 2.26 million last year. The Net Assets Value (NAV) of increased to Rs. 101.9180 per unit from Rs. 99.5794 per unit as of September 30, 2008. The asset mix for as at September 30, 2009 is given below: For and on behalf of the Board of s, October 23, 2009 Karachi. Chairman During first quarter of the fiscal year i.e. (July-September 2009), KSE-100 index posted a healthy return of 37.18%. The index gained 2,667.69 points to reach its peak at 9,842.16 points and finally KSE 100 index fell 492 points and closed at 9,349.67 points on September 30, 2009. The market capitalization also surged by 8% i.e. to PRs2.27tn as against PRs 2.10tn previously. The upward momentum of stock market is attributable to a number of reasons: a) Positive expectations in July and September monetary policy b) Reversal in oil prices c) Satisfactory law & order situation d) Positive expectation of foreign inflow from IMF as well as from friends of Pakistan e) Improving economic indicators enhancing renewed local and foreign investors' confidence. 2 3
CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES AS AT SEPTEMBER 30, 2009 (Un-Audited) (Audited) September 30, June 30, 2009 2009 Note Assets Investments 5 339,129,632 323,891,898 Dividend and Profit Receivable 7,783,066 9,656,294 Deposit and Other Receivable 4,516,319 4,879,583 Preliminary Expenses and Floatation Cost 1,375,000 1,500,000 Bank Balances 42,357,318 49,577,351 Total Assets 395,161,335 389,505,126 Liabilities Payable to Management Company 1,978,736 1,943,204 Payable to Central Depository Company - Trustee 63,831 59,093 Annual Fee Payable to Securities and Exchange Commission of Pakistan 468,463 376,202 Accrued and Other Liabilities 564,777 387,367 Total Liabilities 3,075,807 2,765,866 NET ASSETS 392,085,528 386,739,260 UNIT HOLDERS FUND (as per statement attached) 392,085,528 386,739,260 Number of Units in Issue 3,847,069 3,787,008 Net Assets Value per Unit (face value per unit Rs.100/-) 101.92 102.12 CONDENSED INTERIM INCOME STATEMENT (UN-AUDITED) Income Profit on Investment in Debt Securities 6,218,169 7,125,238 Profit on Musharika Placements 3,171,301 4,015,425 Capital Gain/(Loss) on Sale of Securities 4,363,465 (5,039,483) Dividend Income 942,400 1,803,580 Profit on Bank Balances 517,230 233,841 Element of (Loss)/Income and Capital (Loss)/Gains in Prices of Units Sold Less Those in Units Redeemed (394,960) 272,091 Appreciation/(Diminution) on Remeasurement of Investments - 'At Fair Value through Profit or Loss' 5,919,227 (8,503,525) Total Income 20,736,832 (92,833) Expenses Remuneration to Management Company 1,456,745 1,595,784 Remuneration of Central Depository Company - Trustee 194,233 212,771 Annual Fee to Securities and Exchange Commission of Pakistan 92,261 106,386 Securities Transactions Costs 255,600 79,753 Auditors' Remuneration 90,000 74,152 Amortization of Preliminary Expenses 125,000 126,027 Fee and Subscription 21,339 47,519 Printing Charges 10,000 10,000 Bank Charges 5,723 6,791 Total Expenses 2,250,901 2,259,183 NET INCOME/(LOSS) FOR THE PERIOD CARRIED FORWARD TO DISTRIBUTION STATEMENT 18,485,931 (2,352,016) BASIC & DILUTED EARNINGS/(LOSS) PER UNIT 4.81 (0.56) 4 s in the absence of Chief Executive of the Company who for the time being is not in the country. 5 s in the absence of Chief Executive of the Company who for the time being is not in the country.
CONDENSED INTERIM DISTRIBUTION STATEMENT (UN-AUDITED) Undistributed Income Brought Forward 21,445,094 38,895,204 Distribution of Bonus Units for the Year Ended June 30, 2009 19,692,439 39,329,264 Income/(Loss) for the Period 18,485,931 (2,352,016) Undistributed Income/(Loss) Carried Forward 20,238,586 (2,786,076) CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS FUND (UN-AUDITED) Net Asset at Beginning of the Period 386,739,260 433,846,373 Amount Received on Issue of 15,937 Units (Sept 30, 2008 : 39,185) 1,574,500 3,888,300 Amount Paid on Redemption of 159,052 Units (Sept 30, 2008 : 174,695) (15,655,751) (17,289,317) 372,658,009 420,445,356 Element of Loss/(Income) and Capital Loss/(Gains) in Prices of Units Sold Less Those in Units Redeemed 394,960 (272,091) Unrealized Surplus/(Deficit) on Re-Measurement of Securities 546,628 (635,272) Net Income/(Loss) for the Period 18,485,931 (2,352,016) Net Assets at the End of the Period 392,085,528 417,185,977 Represented By: Capital Account 384,706,901 418,947,888 Unrealized (Deficit)/Surplus on Re-Measurement of Securities (12,859,959) 1,024,165 Undistributed Income/(Loss) Carried Forward 20,238,586 (2,786,076) 392,085,528 417,185,977 Net Assets Value per Unit 101.92 99.58 6 s in the absence of Chief Executive of the Company who for the time being is not in the country. s in the absence of Chief Executive of the Company who for the time being is not in the country. 7
CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) A. CASH FLOWS FROM OPERATING ACTIVITIES 8 Net Income/(Loss) for the Period 18,485,931 (2,352,016) Adjustments for: (Appreciation)/Diminution on Remeasurement of Investments 'At Fair Value through Profit or Loss' (6,465,855) 9,138,797 Element of Loss/(Income) and Capital Loss/(Gains) in Prices of Units Sold Less those in Units Redeemed 394,960 (272,091) Amortization of Preliminary and Floatation Costs 125,000 126,027 12,540,036 6,640,717 (Increase)/Decrease in Assets Investments (8,225,251) 5,572,242 Dividend and Profit Receivable 1,873,228 (1,425,752) Deposit and Other Receivable 363,264 (466,140) (5,988,759) 3,680,350 Increase/(Decrease) in Liabilities Payable to Management Company 35,532 (69,719) Remuneration Payable to Trustee 4,738 (9,296) Annual Fee Payable to SECP 92,261 (324,279) Accrued Expenses and Other Liabilities 177,410 9,080 309,941 (394,214) Net Cash From Operating Activities 6,861,218 9,926,853 B. CASH FLOWS FROM FINANCING ACTIVITIES Net Payments against Units Redeemed (14,081,251) (13,401,017) Net Cash Used in Financing Activities (14,081,251) (13,401,017) Net Decrease in Bank Balance During the Period (A+B) (7,220,033) (3,474,164) Bank Balance at Beginning of Period 49,577,351 14,112,391 Bank Balance at the End of the Period 42,357,318 10,638,227 s in the absence of Chief Executive of the Company who for the time being is not in the country. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) 1. LEGAL STATUS AND NATURE OF BUSINESS 1.1 Dawood Islamic Fund () was established under a Trust Deed executed on September 13, 2006 between Dawood Capital Management Limited (DCML) as Management Company and Central Depositary Company of Pakistan (CDC) as Trustee. The Securities and Exchange Commission of Pakistan (SECP) approved the appointment of Trustee and granted license to the Management Company of the Fund to act as an Asset Management Company. Registered office of the Management Company is situated at 1500-A, Saima Trade Towers, I.I.Chundrigar Road, Karachi, Pakistan. 1.2 is an open-end mutual fund and is listed on Karachi Stock Exchange. Units are offered for public subscription on a continuous basis. The units are transferable and can be redeemed by surrendering them to the Fund. 1.3 Principal activities of is to make investment in equity and debts securities which are Shariah Compliant and approved by the Shariah Advisors. 1.4 Title to the assets of the Fund are held in the name of Central Depository Company of Pakistan Limited as a Trustee of the Fund. 2. STATEMENT OF COMPLIANCE These condensed interim financial statements have been prepared in accordance with requirements of approved accounting standards as applicable in Pakistan, the requirements of the Companies Ordinance, 1984 (the Ordinance), the Non Banking Finance Companies and Notified Entities Regulations, 2008 (the Regulation), the Non Banking Finance Companies (Establishment and Regulation) Rules, 2003 (the Rules), the Trust deed and directives issued by the SECP. Approved Accounting Standards comprise of such International Financial Reporting Standards (IFRS) as are notified under the provisions of the Ordinance. Wherever, the requirements of the Rules, the Regulations, the Ordinance or directives issued by SECP differ with the requirements of these standards, the requirements of the Regulations, the NBFC Rules, the Ordinance and the said directives take precedence. The disclosures made in these condensed interim financial statements have, however, been limited based on the requirements of the International Accounting Standard 34 "Interim Financial Reporting". These condensed interim financial statements are unaudited and are being circulated to the unit holders as required under the Regulations. 3. BASIS OF MEASUREMENT 3.1 Accounting Convention These condensed interim financial Statements have been prepared under the historical cost convention except certain financial instruments which have been included at fair value. 9
3.2 Functional Currency These condensed interim financial statements are presented in Pak, which is the functional and presentation currency of the Fund. 3.3 Critical Accounting Estimates and Judgments The preparation of condensed interim financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Fund's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience, including expectations of future events that are believed to be reasonable under the circumstances. 4. SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted for the preparation of these condensed interim financial statements are the same as those applied in the preparing of the annual published financial statements of the Fund for the year ended June 30, 2009. 5. INVESTMENTS Held for Trading Investment in Listed Equity Securities 5.1 14% 47,182,767 29,634,518 Available-for-Sale Percentage September 30, June 30, of Total 2009 2009 Note Investments Investment in Debt Securities 5.2 Quoted Debt Securities 1% 3,228,603 3,188,510 Un-Quoted Debt Securities 60% 203,718,262 206,068,870 Placements Certificates of Musharika/ Musharika Placements 5.3 25% 85,000,000 85,000,000 100% 339,129,632 323,891,898 5.1 Investments in Marketable Securities at Fair Value Through Profit and Loss - Held for Trading The holding are in the fully paid ordinary shares/certificates of Rs 10/- each Number of Shares/Certificates Value of Shares/Certificates Percentage in Relation to Total Market Value of Investments Investee Paid-Up Capital Unrealised Appreciations/ (Diminution) Cost Market Value Closing as at Sept., 30, 2009 Bonus/ Right Issue Purchases Sales Opening as at July 01, 2009 Name of Investee Number of Shares % Refinery National Refinery Pakistan Ltd. 25,500 24,212 5,700-44,012 11,018,338 10,124,080 (894,258) 0.06 21.46 Oil & Gas Marketing Companies Shell Pakistan Ltd. 29,625 86,124 37,749-78,000 21,382,596 20,673,900 (708,696) 0.11 43.82 Oil & Gas Exploration Companies Mari Gas Company Ltd. - 51,838 33,838-18,000 2,961,140 4,377,960 1,416,820 0.05 9.28 Oil & Gas Development Corporation Ltd. - 270,000 270,000 - - - - - - - Pakistan Oilfields Ltd. 16,900 115,200 132,100 - - - - - - - Pakistan Petroleum Ltd. - 99,643 99,643 - - - - - - - 2,961,140 4,377,960 1,416,820 9.28 Technology & Communication Pakistan Telecommunication Company Ltd.. 67,000 60,955 127,955 - - - - - - Fertilizers Engro Chemical Pakistan Ltd. 43,500 423,864 442,364-25,000 4,393,460 4,521,500 128,040 0.01 9.58 Fauji Fertilizer Company Ltd. 47,130 62,500 69,630-40,000 4,256,563 4,110,000 (146,563) 0.01 8.71 8,650,023 8,631,500 (18,523) 18.29 Pharmaceuticals GlaxoSmithKline Pakistan Ltd. 34,100 16,650 18,223-32,527 4,093,716 3,375,327 (718,389) 0.02 7.15 Chemical ICI Pakistan Ltd. - 69,588 69,588 - - - - - - - September 30, 2009 48,105,811 47,182,767 (923,044) 10 11
5.3 Certificates of Musharika/Musharika Placements Percentage of Total Investment Percentage of Net Assets Return on Investment Unrealised (Loss)/Gain Sept. 30, 2009 Market Value as at Sept. 30, 2009 Cost/Book Value as at Sept. 30, 2009 Closing as at Sept., 30, 2009 Purchases (Sold) Opening as at July 01, 2009 Number of Certificates % 5.2 Investment in Debt Securities Face Value of Rs.5,000/- Each Quoted Debt Securities Term Finance Certificates Al-Zamin Leasing Modaraba- II 2,000 - - 2,000 3,264,000 3,228,603 (35,397) Min. Expected 1 1.56 Profit 9.50% 3,264,000 3,228,603 (35,397) Un-quoted Debt Securities Sukuks Engro Chemical Pakistan Ltd. 7,000 - - 7,000 35,000,000 34,405,770 (594,230) K6+1.5 9 16.63 Shahmurad Sugar Mills Ltd. * 37 - - 37 34,781,443 34,883,748 102,305 K6+2.25 9 16.86 Pak Elektron Ltd. 8,000 - - 8,000 34,422,964 33,469,759 (953,205) K3+1.75 9 16.17 Kohat Cement Ltd. 5,000 - - 5,000 24,150,000 18,112,500 (6,037,500) K6+1.8 5 8.75 Maple Leaf Cement Factory Ltd. 9,815 - - 9,815 48,188,417 44,658,250 (3,530,167) K6+1.7 11 21.58 House Building Finance Corp. Ltd. 5,000 - - 5,000 25,000,000 23,650,100 (1,349,900) K6+1 6 11.43 New Allied Electronics Ind. (Pvt.) Ltd. 1,000 - - 1,000 5,027,500 - (5,027,500) K3+2.2 0 - Sui Southern Gas Company Ltd. 3,000 - - 3,000 15,000,000 14,538,135 (461,865) K3+0.20 4 7.03 221,570,324 203,718,262 (17,852,062) 224,834,324 206,946,865 (17,887,459) Impairment Loss Charged to Profit & Loss for the Year Ended June 30, 2009 - - 5,027,500 224,834,324 206,946,865 (12,859,959) K = KIBOR * Face Value of Rs.1,000,000/- Percentage September 30, June 30, S. No. Name of Investee Return on Date of of Net 2009 2009 Investment Maturity Assets 1. Al-Zamin Leasing Modaraba 14.56% Aug 31, 2010 12.75% 50,000,000 50,000,000 2. B.R.R. Guardian Modaraba Note (5.3.1) 15.00% Jun 25, 2009 8.93% 35,000,000 35,000,000 85,000,000 85,000,000 5.3.1 B.R.R. Guardian Modaraba has requested to rollover the musharika placements. 6. TAXATION The Fund is exempt from income tax under clause 99 of part 1 of Second Schedule of the Income Tax Ordinance, 2001, subject to the condition that not less than 90% of its accounting income for the year, as reduced by the capital gains whether realized or unrealized, is distributed among its unit holders. The management intends to avail the tax benefit at the year end if there is profit. 7. TRANSACTIONS WITH CONNECTED PERSONS Connected persons comprise of associated undertakings, directors and key management personnel of the Management. Significant transactions with connected persons other than those which have been disclosed elsewhere in these financial statements are depicted below:- Amount of Transactions During the Period Dawood Capital Management Limited - Management Company Remuneration to Management Company 1,456,745 1,595,784 First Dawood Investment Bank Ltd. Return on Musharika Placements - 522,740 BRR Guardian Modaraba Return on Musharika Placements 1,323,287 991,616 12 13
8. DATE OF AUTHORIZATION FOR ISSUE These condensed interim financial statements have been approved and authorized for issue on October 23, 2009 by the Board of s of the Management Company. 9. FIGURES All figures have been rounded off to the nearest Rupee. 14 s in the absence of Chief Executive of the Company who for the time being is not in the country.