DAWOOD ISLAMIC FUND

DAWOOD ISLAMIC FUND

FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED MARCH 31, 2013 (Un-Audited) DAWOOD ISLAMIC FUND CONTENTS

Corporate Information 2

Directors' Report 3

Statement of Assets & Liabilities 4

Income Statement 5

Statement of Comprehensive Income 6

Distribution Statement 7

Cash Flow Statement 8

Statement of Movements in Unit Holders' Fund 9

Notes to the Financial Statements 10

1 DAWOOD ISLAMIC FUND CORPORATE INFORMATION

Management Company Dawood Capital Management Limited 5B Lakson Square Building #1 Sarwar Shaheed Road Karachi - 74200 Tel: (92-21) 3562-1002-7 Fax: (92-21) 3562-1010 E-mail: [email protected] Website: www.edawood.com

Board of Directors Ms. Shafqat Sultana Chairperson Miss Tara Uzra Dawood Chief Executive Officer Ms. Charmaine Hidayatullah Director Mr. Mohammad Izqar khan Director Mr. Ansar Hussain Director Mr. Tahir Mehmood Director Syed Farhan Abbas Director

Chief Financial Officer & Company Secretary Mr. Waris Jamil

Audit Committee Mr. Ansar Hussain Chairman Mr. Tahir Mehmood Member Syed Farhan Abbas Member

Trustee 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

Auditors Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants

Tax advisor Mazher Associates A-1/E-3, Faiza Avenue, Karachi

Legal Advisor Bawaney & Partners 404, 4th Floor, Beaumont Plaza 6-cl-10 Beamount Road, Karachi 75530 Telephone: (92-21) 3565-7658/9, 3565-7674 Fax: (92-21) 35657673 Email: [email protected]

Registrars F.D. Registrar Services (SMC-Pvt.) Ltd. Office# 1705, 17th Floor Saima Trade Tower. A, I.I. Chundrigar Road, Karachi. 74000

Banker: AlBaraka Bank Pakistan Limited Habib Metropolitan Bank Limited

32 DAWOOD ISLAMIC FUND DIRECTORS' REPORT FOR THE NINE MONTHS ENDED MARCH 31, 2013

It gives me immense pleasure to present on behalf of the Board of Directors of Dawood Capital Management Limited ("DCM"/"the Company"), the Management Company of Dawood Islamic Fund ("DIF-S"/"the Fund"), the financial statements for the Quarter ended March 31, 2013.

Economic Outlook During the period July-March 2013 the country's economic indicators witnessed continuous improvement especially on the monetary front. The inflation figure during the third quarter of FY13 continued to decline to a nine month average of 8.0%. While the State Bank of Pakistan continued to reduce the policy rate in the first half of the year to 9.50% from 12%, status quo prevailed during the third quarter. With the decline in the policy rate the T-bills and PIBs auction cut offs naturally declined. The T-Bill cut off rates declined by a total of 2.46%, 2.49% and 2.51% for 3, 6 and 12 months respectively. The current cut off rates for 3, 6 and 12 month stand at 9.38%, 9.41% and 9.42% respectively. Cut off rates of PIBs also declined from 12.66%, 13.07% and 13.32% in 3 years, 5 years and 10 years PIBs respectively in July 2012 to 10.39%, 10.93% and 11.42% in December 2012 which was last successful auction during the period under review.

On the external account front foreign exchange continued depleting due to repayment of IMF loans and widening trade deficit. Trading frequency in Corporate Debt Instruments and Sukuks during the period under review remained limited. The overall float of debt securities also declined due to maturity of certain corporate debt instruments.

During the period July-March 2013, the stock market remained bullish. The KMI-30 Index increased from 23,776 points at the beginning of the period to as high as 31,644 points on February 28, 2013 before closing slight lower at 31,599 points as on March 31, 2013 showing an increase of 32.90% during the period under review. On quarterly basis, the KMI-30 Index increased by 8.49% during the last quarter as compared to 15.48% and 6.07% increase in first and second quarter of the current year respectively. The average daily volume during the period under review was 170.64 million shares which increased by 59.5% as compared to the average trading volume of 106.92 million shares in the same period last year.

Fund Strategy The investment strategy devised for the Fund seeks to provide investors with balanced exposure to Shariah based securities including stocks, debt securities and government securities. 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 portfolio management team selects investments using various analytical disciplines such as top-down fundamental research and quantitative screens in the light of the country's macro indicators. In particular, the team seeks to include in its portfolios fundamentally strong sectors and companies, while dynamically rebalancing portfolios to benefit from predicted macro trends. Investments are diversified across a mix of sectors and investors are offered an optimized risk/return profile.

Fund Performance As at March 31, 2013, net assets were Rs. 123.28 million as compared to Rs. 253.97 million as at June 30, 2012. The Fund's total income during the period stands Rs. 1.06 million as opposed to income of Rs. 29,88 million in the same period last year. Total income reduced by Rs. 28.81 million mainly due to impairment loss in respect of Invest Capital Investment Bank Limited by Rs. 17.6 million for the nine months period ended March 31, 2013. Total expenses were Rs. 3.47 million as compared to Rs. 6.89 million in the same period last year. Element of Income was Rs. 15.61 million as compared to Rs. 0.19 million in the same period last year. The net income for the nine months period ended March 31, 2013 was Rs. 13.20 million, as compared to Rs. 23.19 million in the same period last year. The Net Assets Value (NAV) of DIF-S per unit increased from Rs.93.96 to Rs.98.84.

Acknowledgement The Directors 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 Advisor for their dedication and hard work and the unit holders for their confidence in the Management.

These condensed interim financial statements are unaudited. Accordingly, the Directors of the Management Company declare that these condensed interim financial statements give a true and fair view of the Fund.

For and on behalf of the Board of Directors

January 29, 2016 Chairperson Karachi 3 DAWOOD ISLAMIC FUND CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES AS AT MARCH 31, 2013

31 March 30 June 2013 2012 Note ------Rupees------(Un-Audited) (Audited) Assets

Bank Balances 4 121,414,030 52,891,628 Investments 5 - 195,961,922 Dividend and Profit Receivable 2,632,403 8,907,041 Security Deposit & Prepayments 2,510,000 2,500,000 Total Assets 126,556,433 260,260,591

Liabilities

Payable to Management Company 745,941 917,910 Payable to Trustee 59,458 57,313 Annual Fee Payable to Securities and Exchange Commission of Pakistan 108,960 303,692 Accrued Expenses and Other Liabilities 6 2,359,531 5,001,700 Total Liabilities 3,273,890 6,280,615

NET ASSETS 123,282,543 253,979,976

UNIT HOLDERS' FUND (as per statement attached) 123,282,543 253,979,976

------Number ------

Number of Units in Issue 1,247,244 2,703,061

------Rupees ------

Net Asset Value per Unit (Face Value per Unit Rs. 100/-) 98.84 93.96

Contingencies and Commitments 7

The annexed notes from 1 to 12 form an integral part of these condensed interim financial statements.

For Dawood Capital Management Limited (Management Company)

Director Chief Executive Officer Director

4 DAWOOD ISLAMIC FUND CONDENSED INTERIM INCOME STATEMENT (UN-AUDITED) FOR THE NINE MONTHS AND QUARTER ENDED 31 MARCH 2013

Nine Months Ended Quarter Ended 31 March, 31 March, Note 2013 2012 2013 2012 ------Rupees------

Income Profit on Sukuks, Musharika and Bank Balances 8 15,307,463 24,327,167 4,267,370 8,099,417 (Loss)/Gain on Sale of Securities - Net (272,627) 410,398 - 199,021 Dividend Income - 1,552,500 - 725,000 (Charge of)/Reversal of Impairment in the Value of Investments Classified as Available for Sale - Net 5.5 (13,967,230) 8,483,318 2,044,654 (760,145) Unrealised Diminution in Value of Investments at Fair Value through Profit or Loss - (4,890,545) - 2,617,615 Total Income 1,067,606 29,882,838 6,312,024 10,880,908

Expenses Remuneration of Management Company 1,720,443 3,787,631 442,574 1,274,895 Sales Tax on Management Fee 275,270 606,017 70,811 203,980 Remuneration of Trustee 525,497 525,996 172,620 174,083 Annual Fee of Securities and Exchange Commission of Pakistan 108,960 239,888 28,029 80,747 Securities Transaction Cost 84,054 201,772 - 82,484 Auditors' Remuneration 322,500 313,750 87,500 76,250 Amortization of Preliminary Expenses and Floatation Cost - 375,000 - 125,000 Bank Charges 4,199 11,323 174 2,980 Printing Charges 16,000 38,800 - 14,300 Worker's Welfare Fund 269,909 473,275 117,142 173,378 Fee and Subscription 150,684 318,657 86,000 102,160 Total Expenses 3,477,516 6,892,109 1,004,850 2,310,257 Net (Loss)/Income from Operating Activities (2,409,910) 22,990,729 5,307,174 8,570,651

Element of Income/(Loss) and Capital Gain/(Loss) Included in Prices of Units Sold Less those in Units Redeemed - Net 15,619,893 199,769 417,214 (75,117)

NET INCOME 13,209,98323,190,498 5,724,388 8,495,534

The annexed notes from 1 to 12 form an integral part of these condensed interim financial statements.

For Dawood Capital Management Limited (Management Company)

Director Chief Executive Officer Director

5 DAWOOD ISLAMIC FUND CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) FOR THE NINE MONTHS AND QUARTER ENDED 31 MARCH 2013

Nine Months Ended Quarter Ended 31 March, 31 March, Note 2013 2012 2013 2012 ------Rupees------

Net Income for the Period 13,209,983 23,190,498 5,724,388 8,495,534

Other Comprehensive Income

Net Unrealized Appreciation/(Depreciation) in the Fair Value of Investments Classified as 'Available for Sale' 5.6 1,674,276 (2,330,369) - 3,369,971

Total Comprehensive Income for the Period 14,884,259 20,860,129 5,724,388 11,865,505

The annexed notes from 1 to 12 form an integral part of these condensed interim financial statements.

For Dawood Capital Management Limited (Management Company)

Director Chief Executive Officer Director

6 DAWOOD ISLAMIC FUND CONDENSED INTERIM DISTRIBUTION STATEMENT (UN-AUDITED) FOR THE NINE MONTHS AND QUARTER ENDED 31 MARCH 2013

Nine Months Ended Quarter Ended 31 March, 31 March, 2013 2012 2013 2012 ------Rupees------Undistributed Income Brought Forward - Realized 478,252 44,234,397 (7,166,263) 34,234,193 - Unrealized (15,130,110) (6,555,174) - (14,063,338) (14,651,858) 37,679,223 (7,166,263) 20,170,855

Net Income for the Period 13,209,983 23,190,498 5,724,388 8,495,534

Final Distribution for the Year Ended 30 June 2012 - Cash Distribution of Rs Nil per Unit (2011: Rs 5.25 per Unit) - (16,101,666) - - - Bonus Units Nil (2011: 158,234 Units of Rs 5.25 per Unit) - (16,101,666) - -

Undistributed Income Carried Forward (1,441,875) 28,666,389 (1,441,875) 28,666,389

Represented By: - Realized (1,441,875) 40,112,112 (1,441,875) 40,112,112 - Unrealized - (11,445,723) - (11,445,723) (1,441,875) 28,666,389(1,441,875) 28,666,389

The annexed notes from 1 to 12 form an integral part of these condensed interim financial statements.

For Dawood Capital Management Limited (Management Company)

Director Chief Executive Officer Director

7 DAWOOD ISLAMIC FUND CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE NINE MONTHS AND QUARTER ENDED 31 MARCH 2013

Nine Months Ended Quarter Ended 31 March, 31 March, 2013 2012 2013 2012 ------Rupees------CASH FLOWS FROM OPERATING ACTIVITIES

Net Income for the Period 13,209,983 23,190,498 5,724,388 8,495,534 Adjustments for: Diminution on Measurement of Investments at Fair Value through Profit or Loss - 4,890,545 - (2,617,615) Gain on Sale of Securities 272,627 (410,398) - (199,021) Element of Income and Capital Gain in Prices of Units Sold Less Those in Units Redeemed (15,619,893) (199,769) (417,214) 75,117 Charge Impairment in the Value of Investments Classified as Available for Sale - Net (13,967,230) (8,483,318) 2,044,654 760,145 Amortisation of Preliminary Expenses and Floatation Costs - 375,000 - 125,000 (16,104,513) 19,362,558 7,351,828 6,639,160 Decrease/(Increase) in Assets Investments 211,330,801 24,757,906 (2,044,654) 16,965,190 Dividend and Profit Receivable 6,274,638 4,308,979 61,099 4,131,616 Security Deposit & Prepayments (10,000) 240,755 10,000 4,079,209 217,595,439 29,307,640 (1,973,555) 25,176,015 (Decrease)/Increase in Liabilities Payable to Management Company (171,969) (436,794) (2,673) 13,468 Payable to Trustee 2,145 (390) (56) 39 Annual Fee Payable to Securities & Exchange Commission of Pakistan (194,732) (82,755) 28,029 80,747 Payable against Redemption of Units - 18,255 - 18,255 Accrued Expenses and Other Liabilities (2,642,169) 942,343 (1,057,186) 473,118 (3,006,725) 440,659 (1,031,886) 585,627 Cash Dividend Paid - (16,101,666) - -

Net Cash Inflow from Operating Activities 198,484,201 33,009,191 4,346,387 32,400,802

CASH FLOWS FROM FINANCING ACTIVITIES

Cash Received on Issue of Units 120,383,200 10,000 8,849,700 - Cash Paid on Redemption of Units (250,344,999) (1,606,412) (16,494,424) (1,419,766) Net Cash Outflow from Financing Activities (129,961,799) (1,596,412) (7,644,724) (1,419,766)

Net Increase in Cash and Cash Equivalents for the Period 68,522,402 31,412,779 (3,298,337) 30,981,036 Cash and Cash Equivalents at Beginning of the Period 52,891,628 69,829,055 124,712,367 70,260,798 Cash and Cash Equivalents at End of the Period 121,414,030 101,241,834 121,414,030 101,241,834

The annexed notes from 1 to 12 form an integral part of these condensed interim financial statements.

For Dawood Capital Management Limited (Management Company)

Director Chief Executive Officer Director

8 DAWOOD ISLAMIC FUND CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND (UN-AUDITED) FOR THE NINE MONTHS AND QUARTER ENDED 31 MARCH 2013

Nine Months Ended Quarter Ended 31 March, 31 March, 2013 2012 2013 2012 ------Rupees------

Net Assets at Beginning of the Year 253,979,976 344,295,691 125,620,093 336,737,117

Issue of 1,256,291 Units (2012: 97 Units) 120,383,200 10,000 8,849,700 -

Redemption of 2,631,488 Units (2012: 15,276 Units) (250,344,999) (1,606,412) (16,494,424) (1,419,766) (129,961,799) (1,596,412) (7,644,724) (1,419,766)

Element of Income and Capital Gain in Prices of Units (15,619,893) (199,769) (417,214) 75,117 Sold Less Those in Units Redeemed - Net

Final Cash Distribution for the Year Ended 30 June 2012: Rs. Nil per Unit (2011: Rs. 5.25 per Unit) - (16,101,666) - -

Net Income for the Period 13,209,983 23,190,498 5,724,388 8,495,534

Other Comprehensive Income 1,674,276 (2,330,369) - 3,369,971 14,884,259 20,860,129 5,724,388 11,865,505

Net Assets at End of the Period 123,282,543 347,257,973 123,282,543 347,257,973

Net Assets Value per Unit 98.84 108.18 98.84 108.18

The annexed notes from 1 to 12 form an integral part of these condensed interim financial statements.

For Dawood Capital Management Limited (Management Company)

Director Chief Executive Officer Director

9 DAWOOD ISLAMIC FUND NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE NINE MONTHS AND QUARTER ENDED 31 MARCH 2013

1. LEGAL STATUS AND NATURE OF BUSINESS

1.1 Dawood Islamic Fund (the 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 5B Lakson Square Building # 1, Sarwar Shaheed Road, Karachi, Pakistan.

1.2 The Fund is an open-ended mutual fund and is listed on the 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 The Fund is categorized as an open ended Shariah Compliant asset allocation scheme. The principal activities of the Fund are to make investment in equity and debts securities which are Shariah Compliant and approved by the Shariah Advisors. Titles to the assets of the Fund are held in the name of Central Depository Company of Pakistan Limited as a Trustee of the Fund.

1.4 The operations of the Fund were suspended from 22 March 2013 to 22 January 2015 by SECP vide order number SCD-SD (Enf.)/KHI/DCML/2013/61 in pursuance to a show cause notice issued on 8 November 2012 for violation of Regulation 38(a) and Regulation 38(n) of the Non-Banking Finance Companies and Notified Entities Regulation 2008 (NBFC Regulations). Further Securities and Exchange Commission of Pakistan (SECP), cancelled the license of DCML to undertake the business of Asset Management Services and Investment Advisory Services and trustees were directed to extinguish / revoke the Fund in the interest of unit / certificate holders.

DCML filed an appeal before the appellant bench of the SECP against the above suspension of the Fund and the cancelation of the license to undertake the business of Asset Management Services and Investment Advisory Services on the grounds that the above actions of the SECP were taken without lawful authority and jurisdiction. Subsequently, on 22 January 2015 the appeal was decided in favour of DCML by the appellant bench.

Based on the above, DCML is authorized and licensed to undertake Asset Management Services and Investment Advisory Services. DCML is taking necessary steps to recommence the operations of the Fund.

1.5 Due to suspension of operations of the Fund from 22 March 2013 to 22 January 2015, DCML was not able to comply with various requirements of the NBFC Rules, NBFC Regulations and other regulatory requirements. SECP vide its letter No. SCD/AMCW/DCML/151/2015 advised DCML to submit documents / information showing Board of Directors approved commitment along with timelines to comply with regulatory non-compliances. The Board is fully committed to comply with the regulatory requirements. The Fund intends to seek SECP's guidance on all outstanding compliance issues to determine a timeline for the resolution of the same.

1.6 Asset Manager Rating (AMR) of Management Company is 'AM3-' (2012: AM3) and that of Fund is A-(f) (2012: A-(f)) rated by Pakistan Credit Rating Agency (PACRA) before suspension of the Fund.

2. BASIS OF PRESENTATION

2.1 Statement of Compliance

These condensed interim financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Ordinance, 1984, the requirements of the Trust Deed, the Non-Banking Finance Companies Rules, the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations) and directives issued by the Securities and Exchange Commission of Pakistan. Wherever the requirements of the Trust Deed, the NBFC Rules, the NBFC Regulations or the directives issued by the SECP differ with the requirements of IFRS, the requirements of the Trust Deed, the NBFC Rules, the NBFC Regulations or the requirements of the said directives shall prevail.

These condensed interim financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the financial statements of the Fund for the year ended 30 June 2012.

10 DAWOOD ISLAMIC FUND

These condensed interim financial statements are unaudited are being circulated to the unit holders as required under the Regulations.

The Directors of the Management Company declare that these condensed interim financial statements give a true and fair view of the Fund.

2.2 Basis Of Measurement

These condensed interim financial statements have been prepared under the historical cost convention except for investments.

2.3Functional and Presentation Currency

These condensed interim financial statements have been presented in Pakistan Rupees which is the functional and presentation currency of the Fund and have been rounded off to the nearest rupee.

3. ACCOUNTING POLICIES

The accounting policies adopted in the preparation of these condensed interim financial statements are consistent with those of previous financial year, except as follows

New and Amended Standards and their Interpretations:

The Fund has adopted the following amendments to IFRSs which became effective for current period:

IAS 1 - Presentation of Financial Statements-Presentation of items of other comprehensive income (Amendment) IAS 12 - Income Taxes- Recovery of Underlying Assets (Amendment)

The adoption of the above amendments did not have any effect on financial statements

31 March 30 June 20132012 4. BANK BALANCES ------Rupees------Note (Unaudited) (Audited)

PLS Savings Accounts 4.1 121,388,540 50,772,352 Current Account 25,490 2,119,276 121,414,030 52,891,628

4.1 This represents savings accounts maintained with various Islamic banks or Islamic division of conventional banks carrying profit rates ranging from 5% to 9% (2012: 5% to 13%) per annum.

31 March 30 June 20132012 5. INVESTMENTS ------Rupees------Note (Unaudited) (Audited) At Fair Value through Profit or Loss

Investment in Listed Equity Securities 5.1 - 38,640,842

Available for Sale Securities

GOP Ijarah – Sukuk 5.2 - 100,020,000 Certificates of Musharika 5.3 - 26,225,355 Unlisted Debt Securities - Sukuks 5.4 - 31,075,725 - 195,961,922

11 DAWOOD ISLAMIC FUND - of NAV Percentage Total Investment Percentage of Percentage Value Diminution Value of Shares of Value - ---Rupees -- ---> ------Cost Market Unrealized <------>------Shares - 5,000 17,500 93,750 42,500 50,000 30,000 10,000 100,000 Number of Shares of Number 1,673 20,000 60,000 45,000 - -- Number of - - - - 1 - - 10,000 7,500 60,000 5,000 1,673 20,000 - - 5,000 10,000 10,000 93,750 42,500 50,000 25,000 25,000 110,000 100,000 2012Period the Period the Issue 2013 As At As Purchases Sales Bonus/at As <-- - -- Name of Investeeof Name July, 01 During During RightMarch, 31 Total as at 31 March 2013 March 31 at as Total Nishat Mills Limited Chemicals Limited Company Fertilizer Fauji Fauji Fertilizer Bin Qasim Limited Qasim Bin Fertilizer Fauji Oil & Gas Limited Refinery Attock Limited Pakistan Shell National Refinery Pakistan Limited Pakistan Refinery National ICI Pakistan Limited Pakistan ICI Pharma and Bio Tech Bio and Pharma Limited Pakistan GlaxoSmithKline Electricity Limited. Company Power Hub Lotte Pakistan PTA Limited PTA Pakistan Lotte Construction and Materials and Construction Limited AKZO Nobel Pakistan Personal Goods Limited Cement Lucky 5.1Securities Equity Listed in Investments 12 DAWOOD ISLAMIC FUND

5.2 Investment in Government Securities

As At Purchased Sold Closing as at Cost 01 July, DuringDuring 31 Mar., 2012 the Period the Period 2013 <------Number of Certificates ------> <- -R u p e e s- -> Investment in Government Securities For a Face Value of Rs. 100,000/= Each

GOP-Ijarah Sukuk 1,000 - 1,000 - -

As At Purchased Settlement Closing as at Carrying Value 01 July, During the During the (Matured) 31 Mar., at 31 Mar., 2012 Period Period 2013 2013 < ------R u p e e s ------>

5.3Certificates of Musharika Investment (COM)

Invest Capital Investment Bank Limited (note 5.3.1 & 5.5) 32,250,000 - 23,625,000 8,625,000 - -

5.3.1 On September 03, 2010, Invest Capital Investment Bank Limited defaulted on redemption of its Certificate of Musharika. Subsequently on December 31, 2010, Dawood Capital Management - the Management Company entered into an agreement for repayment of this COM in 2 monthly installments of Rs. 2.5 million each and further 60 equal monthly installments of Rs. 0.75 million each from February, 2011. Profit on this investment was waived effective from August 29, 2010. On 31 July 2012 the Management Company entered into an agreement for settlement of COM in full and final settlement of the entire outstanding principal amounting to Rs. 31,500,000/- against cash payment of 25% of the outstanding principal amount.

As At Purchased Matured/Sold Closing as at Cost Market Value/ Unrealised Loss/ Percentage of Note 01 July, DuringDuring 31 Mar., as atCarrying Value as at Impairment as atReturn on Total 2012 the Period the Period 2013 31 Mar., 2013 31 Mar., 2013 at 31 Mar., 2013Investment Investment

< ------Number of Certificates ------> < ------R u p e e s ------> < ------% ------> 5.4 Investment in Debt Securities Unquoted Debt Securities Sukuks Engro Fertilizer Limited (06-09-07) 5,000 - 5,000 - - - - K6+1.5 - Pak Elektron Limited (28-09-07) 5.4.1 8,000 - - 8,000 17,280,105 - (17,280,105) K3+1.75 - Kohat Cement Limited (20-12-07) 5,000 - 5,000 - - - - K3+1.8 - Factory Limited (03-12-07) 5.4.2 9,815 - - 9,815 44,403,512 - (44,403,512) K3+1 - Maple Leaf Cement Factory Limited (31-03-10) 368 - 368 - - - - K3+1 - New Allied Electronics Industries Limited (03-12-07) 5.4.3 1,000 - - 1,000 5,027,500 - (5,027,500) K3+2.2 -

66,711,117 - (66,711,117) - K = KIBOR

5.4.1 Pak Electron Limited (PEL) defaulted on the installment due on 28 December 2011 as per the restructured agreement. Consequently, the security was classified as non-performing by MUFAP on 13 January 2012 and accrual on the same was suspended. Accordingly, a provision of Rs. 17.280 million has been created in line with the SECP’s Circular No. 1 of 2009 read with Circular No. 33 of 2012.

5.4.2 Maple Leaf Cement Factory (MLCF) defaulted on the installment due on 03 September 2011 as per the restructured agreement. Consequently, the security was classified as non-performing by MUFAP on 19 September 2011 and accrual on the same has been suspended. Accordingly, a provision of Rs. 44.40 million has been created in line with the SECP’s Circular No. 1 of 2009 read with Circular No. 33 of 2012.

5.4.3 New Allied Electronics Industries Limited defaulted on its payment of principal and markup due on 27 October 2008. Consequently, the security was classified as non-performing by MUFAP on 09 January 2009 and accrual on the same was suspended. Accordingly, the security has been fully provided in accordance with the SECP’s Circular No. 1 of 2009 read with Circular No. 33 of 2012 and the Board's approved provisioning policy.

13 DAWOOD ISLAMIC FUND

5.5 Break up of impairment (loss)/reversal of impairment loss on investments classified as non-performing are as follows:

31 March 31 March 20132012 ------Rupees------(Unaudited) (Unaudited) Unlisted Debt Securities – Sukuks Kohat Cement Company Limited (1,887,500) 8,017,221 Maple Leaf Cement Factory Limited 3,680,625 11,664 Maple Leaf Cement Factory Limited - Additional 1,840,000 - Pak Electron Limited - PEL - (1,373,267)

Placements Invest Capital Investment Bank Limited (17,600,355) 1,827,700

Total (13,967,230) 8,483,318

5.6 Net Unrealized Diminution in the Value of Investments Classified as ‘Available for Sale’

31 March 30 June 2013 2012 ------Rupees------(Unaudited) (Audited)

Market Value of Securities - 157,321,080 Less: Cost of Securities 66,711,117 237,251,742 (66,711,117) (79,930,662)

Net Impairment at the Beginning of the Year 78,256,386 42,146,458 Impairment Charged/(Reversed) During the Period 13,967,230 36,109,928 Net Impairment at the End of the Period 92,223,616 78,256,386

Add: Realised on Disposal (25,512,499) -

Net Unrealized Diminution in the Market Value of Securities Classified as Available for Sale at the End of the Year - (1,674,276)

Less: Net Unrealized Appreciation in the Market Value of Securities Classified as Fair Value Through Profit or Loss at the Beginning of the Year (1,674,276) (81,932)

Net Unrealized Diminution in the Market Value During the Period 1,674,276 (1,592,344)

5.7 Details of Non Compliant Investments Under SECP Circular No.16 Dated July 07, 2010 are as Follows:

Circular no. 16 dated 07 July 2010 issued by the SECP requires details of investments not compliant with the investment criteria specified by the category assigned to open-end collective investment schemes or the investment requirements of the constitutive documents of the Fund to be disclosed in these condensed interim financial statements of the Fund. Details of such non-compliant investments are given below:

14 DAWOOD ISLAMIC FUND

Value of Type of Investment Value of Investment Percentage of Percentage of Name of Non-Compliant Investment Provision Held Investment Before After Provision Net Assets Gross Assets Provision ------Rupees ------Maple Leaf Cement Factory Limited (03-12-07) SUKUK 44,403,512 (44,403,512) - - - Non-Compliant Investment Due to Credit Rating New Allied Electronics Industries Limited (03-12-07) SUKUK 5,027,500 (5,027,500) - - - Less than Required as per SECP Circular Pak Electron Limited (28-09-07) SUKUK 17,280,105 (17,280,105) - - - No.7 of 2009

At the time of purchase/investment, the Sukuks were in compliance with the investment requirement of the Constitutive Documents and investment restriction parameters laid down in NBFC Regulations or NBFC Rules. However, subsequently they were defaulted or downgraded to non investment grade or became non-compliant with investment restrictions parameters laid down in NBFC Regulations or NBFC Rules and with the requirements of Constitutive Documents. 31 March 30 June 20132012 6. ACCRUED AND OTHER LIABILITIES ------Rupees------Note(Unaudited) (Audited)

Audit Fee Payable 347,500 329,800 Payable against Purchase of Securities - 21,778 Dividend Payable to Unit Holders 6,015 6,015 Charity Payable - 1,286,328 National Clearing Company of Pakistan - 1,463,804 Worker's Welfare Fund 6.1 1,514,920 1,245,011 Other Payable 491,096 648,964 2,359,531 5,001,700 6.1. WORKERS’ WELFARE FUND

Through the Finance Act, 2008, an amendment was made in section 2(f) of the Workers' Welfare Fund Ordinance, 1971 (the WWF Ordinance) whereby the definition of 'Industrial Establishment' has been made applicable to any establishment to which West Pakistan Shops and Establishment Ordinance, 1969 applies. As a result of this amendment, it is alleged that all Collective Investment Schemes (CISs) / mutual funds whose income exceeds Rs.0.5 million in a tax year have been brought within the scope of the WWF Ordinance thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In this regard, a constitutional petition has been filed by certain CISs through their trustees in the Honourable High Court of Sindh (SHC), challenging the applicability of WWF to the CISs, which is pending adjudication.

In August 2011, the Lahore High Court (LHC) issued a judgment in response to a petition in similar case whereby the amendments introduced in WWF Ordinance through Finance Acts, 2006 and 2008 have been declared unconstitutional and therefore struck down. However, during March 2013, the SHC larger bench issued a judgment in response to various petitions in similar cases whereby the amendments introduced in the Workers’ Welfare Fund Ordinance, 1971 through Finance Act, 2006 and 2008 respectively (Money Bills) have been declared constitutional and overruled a single-member Lahore High Court (LHC) bench judgment issued in August 2011.

Further, in May 2014, the Honourable Peshawar High Court held that the impugned levy of contribution introduce in the Ordinance through Finance Act,1996 and 2009 lacks the essential mandate to be introduce and passed through Money Bill under the constitution and, hence, the amendments made through the Finance Act are declared as ‘Ultra Vires’.

As the matter relating to levy of WWF is currently pending in the SHC, the Management Company, as a matter of prudence, has decided to retain and continue with the provision for WWF amounting to Rs.1.514 million in

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these financial statements. Had the provision not been made, the net asset value per unit of the Fund would have been higher by Rs. 1.21.

The Finance Act 2015 has excluded Mutual Funds and Collective Investment Schemes from the definition of ‘industrial establishment’ subject to WWF under WWF Ordinance, 1971. Accordingly, no provisions for WWF is made from 1 July 2015 onwards. However, provisions made till 31 March 2013 has not been reversed as the above lawsuit is pending in the SHC

7. CONTINGENCIES AND COMMITMENTS

There were no contingency and commitment as at 31 March 2013.

8. PROFIT ON SUKUKS, MUSHARIKA AND BANK BALANCES 31 March 31 March 20132012 ------Rupees------(Unaudited) (Unaudited)

Profit on Sukuks 5,265,290 18,057,196 Profit on Bank Balances 10,042,173 6,269,971 15,307,463 24,327,167

9. TRANSACTIONS WITH CONNECTED PERSONS

Related parties/connected persons comprise of the following as at 31 March 2013:

Dawood Capital Management Limited-Management Company Central Depository Company of Pakistan Limited Dawood Family Takaful Limited Directors and officers of Management Company

Remuneration payable to the management company and trustee is determined in accordance with the provisions of the NBFC Regulation, 2008 and the trust deed respectively. Details of transactions with related parties and balances with them at the year end are as follows:

The transactions with related parties are in then normal course of business, at contracted rates and terms determined in accordance with market rates.

Details of transactions and balances at year end with related parties/connected persons, other than those which have been disclosed elsewhere in these financial statements, are as follows:

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For the Nine Months Ended For the Year Ended 31-Mar-13 30-Jun-12 (Un-Audited) (Audited) (Units) (Rupees) (Units) (Rupees)

Units Sold to: Management Company Dawood Capital Management Limited --92,259 10,000,000

Other Related Parties BRR Guardian Modaraba 448,422 40,000,000 276,778 30,000,000 Dawood Family Takaful Limited 14,574 1,300,000 470,423 50,982,120 Florence Villiers 145,80313,000,000 -- Dawood Global Foundation 21,939 2,100,000 -- First Dawood Investment Bank Ltd and Others Employees Contributory Provident Fund 112,025 10,000,000 54,909 5,000,000 Directors, officers and connect persons of the management company 248,133 22,050,000 1,102 100,000

Units Redeemed by:

Management Company Dawood Capital Management Limited --92,259 10,009,521 Other related parties The Burj Bank Limited 2,628,981 233,613,632 - - Dawood Family Takaful Limited --470,423 50,982,120 Dawood Capital Management Limited --92,259 10,009,521 BRR Guardian Modaraba --276,778 30,028,564 First Dawood Investment Bank Ltd and Others Employees Contributory Provident Fund --79,977 8,663,675 Directors, officers and connect persons of the management company --14,655 1,587,538

Units Held by:

B.R.R Guardian Modaraba 448,422 44,323,847 - - Burj Bank Limied --2,628,981 247,019,417 Dawood Family Takaful Limited - EPF 14,574 1,440,525 - - Dawood Global Foundation 21,939 2,168,501 - - First Dawood Investment Bank Ltd and Others Employees Contributory Provident Fund 166,934 16,500,454 54,909 5,159,275 Directors, officers and connect persons of the management company 249,235 24,635,372 1,102 103,617

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31 March 30 June 20132012 ------Rupees------(Unaudited) (Audited) Balances with Related Parties: Dawood Capital Management Limited Balance as at 01 July 917,910 1,511,614 Remuneration for the Period Including Sales Tax 1,995,713 5,562,368 Reimbursement of Formation Costs - (500,000) Remuneration Paid During the Period (2,167,682) (5,656,072) Balances as at Period Ended 745,941 917,910

Central Depository Company of Pakistan Limited – Trustee Balance as at 01 July 57,313 59,693 Remuneration for the Period 525,497 700,993 Remuneration Paid During the Period (523,352) (703,373) Balances as at Period Ended 59,458 57,313

11. EVENT AFTER BALANCE SHEET DATE

Subsequent to the period end, the operations of the fund were suspended from 22nd March 2013 by SECP vide order number SCD-SD (Enf.)/KHI/DCML/2013/61 in pursuance to a show cause notice issued on 08 November 2012 for violation of Regulation 38(a) and Regulation 38(n) of the Non-Banking Finance Companies and Notified Entities Regulation 2008 (NBFC Regulations). Further SECP, cancelled the license of DCML to undertake the business of Asset Management Services and Investment Advisory Services and trustees were directed to extinguish /revoke the fund in the interest of unit / certificate holders.

The Management Company filed an appeal before the appellant bench of the SECP against the above suspension of the fund and the cancelation of the license to undertake the business of Asset Management Services and Investment Advisory Services on the grounds that the above actions of the SECP were taken without lawful authority and jurisdiction. Subsequently on 22nd January 2015 the appeal was decided in favour of the Management Company by the appellant bench.

Based on the above Management Company is authorized and licensed to undertake Asset Management Services and Investment Advisory Services. The management company is taking necessary steps to recommence the operations of the fund.

11. DATE OF AUTHORIZATION FOR ISSUE

These condensed interim financial statements were approved and authorized for issue on January 29, 2016 by the Board of Directors of the Management Company.,

12. GENERAL

Figures have been rounded off to the nearest Rupee unless otherwise specified.

For Dawood Capital Management Limited (Management Company)

Director Chief Executive Officer Director

18 Sarwar Shaheed Road, Karachi 74200. If undelivered, please return to: BOOK POST 5B Lakson Square Building #1, DAWOOD ISLAMIC FUND ARP Tel: 0300-3626628, 2685783

Trustee: Central Depository Company of Pakistan Limited 5B Lakson Square Building #1, Sarwar Shaheed Road, Karachi 74200 Tel: (92-21) 3562-1002-7 Fax: (92-21) 3562-1010 Email: [email protected] Website: www.edawood.com DAWOOD