UBL New.FH11

TABLE OF CONTENTS

01 Vision, Mission & Core Values 02 Corporate Information

UBL RETIREMENT SAVINGS FUND

03 Fund Information 10 Condensed Interim Statement of Movement in Participants Sub-Funds 04 Directors Report 11 Notes to the Condensed Interim 06 Condensed Interim Statement of Assets & Liabilities Financial Statements

07 Condensed Interim Income Statement

08 Condensed Interim Statement of Comprehensive Income

09 Condensed Interim Cash Flow Statement

UBL ISLAMIC RETIREMENT SAVINGS FUND

17 Fund Information 24 Condensed Interim Statement of Movement in Participants Sub-Funds 18 Directors Report 25 Notes to the Condensed Interim 20 Condensed Interim Statement of Assets & Liabilities Financial Statements

21 Condensed Interim Income Statement

22 Condensed Interim Statement of Comprehensive Income

23 Condensed Interim Cash Flow Statement VISION We will be the leader in the industry by being the first choice investment solution provider, offering investment advisory services, with an international presence; renowned for being client centric, quality conscious and innovative.

MISSION Offer value added products & services while adhering to the highest level of ethical standards.

Attract, develop & retain exceptional talent that shapes our passion for excellence and our commitment to teamwork.

Listen carefully to all our stakeholders and deliver winning solutions.

Be a responsible corporate citizen.

CORE VALUES Respect | Excellence | Customer Focus | Quality | Honesty

01 CORPORATE INFORMATION

BOARD OF DIRECTORS SHARIAH ADVISORY FUNDS UNDER BOARD MANAGEMENT Tariq Kirmani Chairman Maulvi Muhammad Hassaan UBL Liquidity Plus Fund Kaleem Launch Date: 21 June 2009 Mir Muhammad Ali, CFA Member Chief Executive UBL Savings Income Fund Muhammad Najeeb Khan Launch Date: 14 October 2010 Mohammad Asghar Member Director United Growth & Income Fund Launch Date: 2 March 2006 Shabbir Hussain Hashmi CHIEF FINANCIAL Director OFFICER & COMPANY SECRETARY United Stock Advantage Fund Aameer M. Karachiwalla Launch Date: 4 August 2006 Director Rahim Khakiani United Islamic Income Fund Launch Date: 20 October 2007 Ali Sameer REGISTERED OFFICE Director United Composite Islamic Fund 8th Floor, State Life Building Saeed Iqbal Launch Date: 24 December 2006 Director Number 1, I. I. Chundrigar Road, Karachi, Pakistan UBL Capital Protected Fund-I AUDIT COMMITTEE Launch Date: 23 March 2008 CORPORATE OFFICE Shabbir Hussain Hashmi UBL Capital Protected Fund-II Chariman 8th Floor, Executive Tower, Launch Date: 23 May 2010 Dolmen City Building, Block-4, Aameer M. Karachiwalla Clifton, Karachi, Pakistan UBL Retirement Savings Fund Member Tel: (92-21) 35290080-95 Launch Date: 10 May 2010 Fax: (92-21) 35290070 Saeed Iqbal UBL Islamic Retirement Member OPERATIONS OFFICE Savings Fund Launch Date: 10 May 2010 RISK MANAGEMENT 4th Floor, STSM Building, COMMITTEE Beaumont Road, Civil Lines, INVESTMENT PLANS Karachi, Pakistan Ali Sameer UAN: (92-21) 111-825-262 UBL Principal Protected Plan-I Chairman Fax: (92-21) 32214930 Conventional

Mohammad Asghar DATE OF UBL Principal Protected Plan-II Member INCORPORATION OF Conventional Aameer M. Karachiwalla PENSION FUND Member MANAGER Mahana Munafa Plan Conventional & Islamic Mir Muhammad Ali, CFA Incorporated in Pakistan on Member 3 April 2001 as a Public Limited Sarmaya Izafa Plan Company under the Conventional & Islamic HR & COMPENSATION Companies Ordinance, 1984 COMMITTEE Profit + Growth Plan MANAGEMENT QUALITY Conventional & Islamic Tariq Kirmani RATING OF PENSION Mera Kal - Children Savings Plan Chairman FUND MANAGER Conventional Shabbir Hussain Hashmi AM2 High Management Quality Member by JCR-VIS Credit Rating Company Saeed Iqbal Member

Mir Muhammad Ali, CFA Member

02 UBL RETIREMENT SAVINGS FUND

INVESTMENT OBJECTIVE UBL Retirement Savings Fund aims to provide a secure source of savings and regular income after retirement to the Participants. The Participants would contribute to the Fund during their working life and would typically withdraw from the Fund on or after retirement. Accordingly, the investment objective of the fund is to achieve capital growth up to the retirement age of the Participants.

FUND INFORMATION

Pension Fund Manager UBL Fund Managers Limited

Trustee MCB Financial Services Limited 3rd Floor, Adamjee House, I.I. Chundigar Road, Karachi - 74000 Tel: 021-32430485

Distribution Company United Bank Limited (For detail of other visit www.UBLFunds.com)

Auditors KPMG Taseer Hadi & Co. - Chartered Accountants

Legal Advisors Akhund Forbes

Bankers United Bank Limited Bank Alfalah Limited Deutsche Bank AG

03 Quarterly Report - I, 2011 - UBL Retirement Savings Fund

DIRECTORS REPORT For the quarter ended 30 September 2010

The Board of Directors of UBL Fund Managers Limited is monetary policies to counter domestic inflation (India: 5% pleased to present to you the Quarterly Report of UBL +125bps | S. Korea: 2.25% +25bps | Brazil: 10.5% +62bps). Retirement Savings Fund (URSF) for the quarter ended Commodities also rallied during the period with Crude oil September 30, 2010. (WTI) and Gold gaining 5.7% and 5.4% during the period in our view the rise in prices of almost all asset classes is Economy & Money Market Review 1QFY11 fuelled by expectations of high inflation and loss of value of paper money in the future. Pakistans economic recovery, that had been in place during FY10, lost significant ground during the 1QFY11 as country Stock Market Review 1QFY11 was hit by massive floods. Major economic indicators deteriorated, highlighted by the re-emergence of inflation The KSE100 index closed the quarter at 10,013, up 3% for due to supply side concerns for agricultural products and the period despite the catastrophic floods and weak macro- higher budgetary deficits as the Government spending rose economic conditions. The daily average trading volumes due to relief / reconstruction efforts. Inflation, as measured during the quarter declined to 45mn shares, down 46% QoQ. by Consumer Price Index (CPI) rose 13.23%YoY in Attractive valuations and strong fundamentals are the key August, driven by higher food prices, putting an end to the factors behind the resilient behavior of the market. The declining trend seen since April10. CPI figures for the next supply / demand dynamics in the Country have led to a de- few months are likely to also be high as the system adjusts coupling between the performance of the local equity market to the post-flood economic realities. Current account and and the economic numbers coming through in this challenging trade deficits for 2mFY11 also ballooned by 49%YoY and time period. Local investors largely stayed on the sidelines 18%YoY to USD944mn and USD1.23bn respectively. during the period plagued by uncertainty on the political Government borrowing for the quarter grew by 18%YoY and economic front although developments regarding to PkR213bn and major burden of the borrowing shifted to introduction of Margin Trading System did generate some the Central Bank from commercial banks. The damage to excitement. However, valuation-savvy foreign investors the agricultural sector will limit spending power of a major were net-buyers in the market with a net foreign portfolio section of the population and hence take a toll on demand inflow of USD106mn during the quarter. The valuation for LSM and services sector thus leading to subdued GDP discount between Pakistan equities (PE (FY11E): 7.2x) growth. The silver lining during the period was healthy and regional peers (China / India PE (FY11E): 12-14x) monthly remittance inflows which grew to USD933mn in seemed to be a key attraction for these investors. August10. The foreign exchange reserves also stand at a comfortable USD16.8bn enough coverage for 5-month The corporate sector is expected to report mixed earnings imports. for the period, depending the company / sectors sensitivity to the flood damages. Net Interest Margins for the banking The State Bank of Pakistan (SBP) took notice of the weakness sector strengthened during the period, rising to 7.56% in in the economic indicators, especially inflation, and raised August10 which will compensate for a potential rise in discount rate by a total of 100bps, from 12.5% to 13.5%, in agri-related NPLs due to the floods. Oil Marketing Companies its two Monetary Policy Statements announced during suffered from decline in POL product off take due to flood the quarter. The rate hikes put an end to the 20-month spate related infrastructure damage and circular-debt. Oil & Gas of monetary relaxation which saw discount rate come down (E&P) sector earnings will benefit from well-head price from 15% to 12.5% since November08. SBPs new hikes and high interest rate environment which is beneficial governor, Shahid Kardar, cited high inflation and fiscal for cash rich companies. Fertilizer sector earnings for the deficits when expressing his commitment to continuation quarter are likely to stay subdued due to weak fertilizer off of a tight monetary policy. take because of the floods. The listed companies in the refining sector are expected to benefit from higher capacity The global economic recovery also sputtered during the utilization during the period resulting from partial shut- period as GDP growth (FY11) expectations of major down of a large un-listed refinery. Auto-sector earnings will economies were revised downwards (World: 4.2% | US: benefit from strong sales and car price hikes; however 2.3%) and fears of a double-dip recession gained ground. strengthening Yen can eat into the manufacturers margins. However, emerging economies are expected to continue to Cement sector recorded weak sales during the period due grow at spectacular pace in FY11 (India: 8.4% | China: to floods however a spike in sales is expected in the coming 9.6%). The gradual shift of economic activity from developed quarters when the reconstruction activities start. to emerging markets has put significant strain on the currency parities. In response, central banks of developed economies Global markets recorded impressive performance during implemented another phase of quantitative relaxation (Policy the period as major markets generated returns in the 10%- rates- US: 0%0.25% | UK: 0.5% | ECB: 1% | Jap: 0%- 15% range (DJIA: 10.8% | FTSE: 13.75% | Sensex: 15.5% 0.1%) to take the strain off the currencies. On the other | Shanghai: 10.65%). The rallies were driven by healthy hand, a number of emerging market central banks tightened earnings and decent GDP growth expectations. We also

04 Quarterly Report - I, 2011 - UBL Retirement Savings Fund

believe that expectations of high inflation and weak paper revision of inflation expectations for FY11 from 12%YoY currencies in developed economies in the future could be to 14%YoY. The added pressure of reconstruction activity a significant underlying reason behind rise in major asset on fiscal expenses will fuel the already ballooning fiscal prices including equities. Emerging market currencies have deficits. In response to higher inflation and deficits, the SBP rallied in the quarter as well; with Brazilian Real and Indian has already switched to monetary tightening stance further Rupee gaining 4.5% and 4.2% versus the USD during the hike in discount rate by 150bps are likely by June 11 if period. inflation and deficits do not come under control.

Fund Performance and Operational Review As for the local equity market, the benchmark KSE100- Index is trading at Price to Earning (PE) (11E) of 7.2x, The Fund comprises of three sub funds namely Equity sub- which is below the average valuation range of 8.0x 8.5x fund, Debt sub-fund and Money Market sub-fund. The Fund on a historical basis. Therefore, the market is relatively as a whole earned a total income of PKR 2.07 million during cheap on a historical basis. The corporate earnings growth the period and fund size stood at PKR 101.86 million as at will also be subdued due to the infrastructure damages by the period end. Performance review for each sub Fund is the floods. We expect the market return for the year to be given below: in the 20% range, driven by earnings growth and convergence of valuations to historical average levels. Improvement in Equity Sub-Fund investor confidence resulting from security / economic / political stability can lead to a re-rating of the markets PE For the quarter ended September 30, 2010, the Equity sub- boosting the market returns. fund incurred a gross income of PKR 0.80 million and net income of PKR 0.55 million. The income was mainly due On the global front, we find evidence of gradual economic to dividend income on securities of PKR 0.316 million. The recovery as we earlier expected. However, the rally in global net assets of the equity sub-fund stood at Rs 31.65 million equity / commodity market is not driven as much by supply representing net asset value of PKR 100.99 per unit as at / demand or exceptional earnings but is rather fuelled by September 30, 2010. expectations of higher inflation and weak paper currency in the future. We expect the economic recovery to continue Debt Sub Fund at its natural pace and the various asset prices to adjust according to inflation expectations. During the quarter, the Debt sub-fund earned a gross income of PKR 0.92 million and net income of PKR 0.70 million Acknowledgements after accounting for the expenses of PKR 0.21 million. The major contributor to the income was profit on government We would like to thank our valued participant holders for securities of PKR 0.98 million. At September 30, 2010, the their confidence and trust in UBL Fund Managers Limited. net assets of the sub-fund stood at Rs 35.00 million and net In addition, we would like to acknowledge the Securities asset per unit was PKR 102.79 per unit. and Exchange Commission of Pakistan, State Bank of Pakistan and MCB Financial Services Limited (Trustee) for Money Market Sub Fund their continued support, guidance and cooperation. The Board also likes to take this opportunity to express its For the quarter ended September 30, 2010, the Money appreciation to the employees for their dedication, Market sub fund earned a gross income of PKR 1.04 million commitment, enthusiasm and hard work. and net income of PKR 0.82 million after incurring expenses of PKR 0.22 million. The major contributor to the income was profit on government securities of PKR 1.01 million. For & on behalf of the Board The net assets of the sub fund were Rs 35.21 million and net asset per unit was PKR 103.22 as at June 30, 2010.

Future Outlook MIR MUHAMMAD ALI, CFA On the economic front, GDP growth expectations for FY11 Chief Executive have been downgraded to 2.5% from 4.5% earlier. The Karachi, Dated: October 25, 2010 downward revision is the result of massive damages to the agricultural sector by the floods. Agricultural sector contributes a significant portion of the GDP and weak performance in this sector also trickles down to LSM and Services sector in the form of subdued demand. The supply sides pressures result from floods have also led to upward

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CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES As at 30 September 2010

(Un - audited) (Audited) 30 September 2010 30 June 2010 Note Equity Debt Money Market Total Total Sub-Fund Sub-Fund Sub-Fund Assets

Bank balances 5,830,491 1,515,405 214,658 7,560,553 23,220,888 Receivable on sale of investments - -- -- Investments 5 23,028,974 33,396,639 34,926,749 91,352,362 73,014,590 Dividend and income receivable 299,352 27,121 1,572 328,045 267,015 Deposit, prepayments and other receivables 6 3,701,733 3,949,199 4,185,870 11,836,801 14,479,015 Deferred formation cost 103,785 103,785 103,785 311,355 341,475 Total assets 32,964,334 38,992,149 39,432,633 111,389,116 111,322,984

Liabilities

Remuneration payable to the pension fund manager 38,896 42,969 43,221 125,086 115,273 Remuneration payable to trustee 9,357 7,460 7,292 24,109 22,602 Payable to auditors 52,083 52,084 52,083 156,250 100,000 Annual fee payable to Securities and Exchange - Commission of Pakistan 2,616 2,866 2,885 8,367 4,325 Accrued expenses and other liabilities 7 1,211,267 3,882,686 4,118,457 9,212,410 12,170,867 Total liabilities 1,314,218 3,988,065 4,223,939 9,526,222 12,413,067

Net assets Rupees 31,650,117 35,004,084 35,208,694 101,862,895 98,909,917

Participants' Sub-Funds (as per statement attached) Rupees 31,650,117 35,004,084 35,208,694 101,862,895 98,909,917

Number of units in issue 313,407 340,547 341,120

Net assets value per unit Rupees 100.99 102.79 103.22

The annexed notes from 1 to 11 form an integral part of these condensed interim financial statements.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

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CONDENSED INTERIM INCOME STATEMENT (UN-AUDITED) For the quarter ended 30 September 2010

For the quarter ended 30 September 2010 Equity Debt Money Market Total Sub-Fund Sub-Fund Sub-Fund Income

Financial income 106,676 975,896 1,009,631 2,092,203 Gain / (loss) on sale investments 12,945 (121,158) - (108,213) Dividend income 316,467 - - 316,467 Profit on deposit accounts with banks 235,418 54,704 26,936 317,058 671,506 909,442 1,036,567 2,617,515

Unrealised gain on revaluation of held for trading investments - net 124,314 - - 124,314 795,820 909,442 1,036,567 2,741,829 Expenses

Remuneration to the pension fund manager 118,877 130,270 131,179 380,326 Remuneration to the trustee 23,105 23,105 23,105 69,315 Annual fee to Securities and Exchange Commission of Pakistan 2,615 2,866 2,886 8,367 Auditors' remuneration 18,750 18,750 18,750 56,249 Brokerage expense 16,962 1,001 325 18,288 Printing expense 22,638 22,638 22,638 67,915 Bank charges 929 1,225 1,051 3,205 Fees & Legal charges 35,372 4,605 5,927 45,905 Amortization of formation cost 10,040 10,040 10,040 30,120 249,289 214,500 215,901 679,690

Net income from operations 546,531 694,942 820,666 2,062,139

Element of income and capital gains included in prices of units issued less those in units redeemed-net 1,861 5,929 3,478 11,268

Net income for the quarter Rupees 548,391 700,872 824,144 2,073,407

Earnings per unit Rupees 1.75 2.06 2.42

The annexed notes from 1 to 11 form an integral part of these condensed interim financial statements.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

07 Quarterly Report - I, 2011 - UBL Retirement Savings Fund

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN - AUDITED) For the quarter ended 30 September 2010

For the quarter ended 30 September 2010 Equity Debt Money Market Total Sub-Fund Sub-Fund Sub-Fund

Net income for the quarter 548,391 700,872 824,144 2,073,407

Other comprehensive income:

Unrealised gain during the quarter in the market value of investments classified as available-for-sale - 31,205 10,815 42,020

Total comprehensive income for the quarter Rupees 548,391 732,076 834,960 2,115,427

The annexed notes from 1 to 11 form an integral part of these condensed interim financial statements.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

08 Quarterly Report - I, 2011 - UBL Retirement Savings Fund

CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) For the quarter ended 30 September 2010

For the quarter ended 30 September 2010 Equity Debt Money Market Total Sub-Fund Sub-Fund Sub-Fund CASH FLOWS FROM OPERATING ACTIVITIES

Net income for the quarter 548,391 700,872 824,144 2,073,407

Adjustments for: Amortization of formation cost 10,040 10,040 10,040 30,120 Amortization of discount on investments - (139,311) (254,859) (394,170) Unrealised gain on investment in held for trading securities - net (124,314) - - (124,314) Element of income and capital gains included in prices of units issued less those in units redeemed - net (1,861) (5,929) (3,478) (11,268) 432,256 565,672 575,847 1,573,775 Operating assets Deposit and other receivables 483,861 1,085,598 1,072,754 2,642,214 Investments (10,528,595) (3,277,606) (3,971,068) (17,777,269) Dividend and income receivable (104,180) 34,478 8,672 (61,030) Deferred formation cost --- - (10,148,913) (2,157,530) (2,889,641) (15,196,086)

Operating Liabilities Remuneration payable to the pension fund manager 1,620 3,961 4,232 9,813 Remuneration payable to the trustee 1,823 (74) (242) 1,507 Payable to auditor 18,750 18,750 18,750 56,249 Annual fee payable to Securities and Exchange Commission of Pakistan 1,200 1,411 1,431 4,042 Accrued expenses and other liabilities (2,786,377) (86,361) (85,716) (2,958,454) (2,762,985) (62,313) (61,546) (2,886,844) Net cash flows from operating activites (12,479,641) (1,654,172) (2,375,340) (16,509,154)

CASH FLOWS FROM FINANCING ACTIVITIES Cash received on issue of units 315,912 353,604 179,301 848,817 Effect of reallocation --- - Net (decrease) / increase in cash and cash equivalents (12,163,729) (1,300,568) (2,196,037) (15,660,335)

Cash and cash equivalents at beginning of the quarter 17,994,220 2,815,973 2,410,695 23,220,888 Cash and cash equivalents at end of the quarter Rupees 5,830,491 1,515,405 214,658 7,560,553

The annexed notes from 1 to 11 form an integral part of these condensed interim financial statements.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

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CONDENSED INTERIM STATEMENT OF MOVEMENT IN PARTICIPANTS SUB-FUND (UN-AUDITED) For the quarter ended 30 September 2010

For the quarter ended 30 September 2010 Equity Debt Money Market Total Sub-Fund Sub-Fund Sub-Fund

Net assets at beginning of the quarter 30,787,675 33,924,332 34,197,912 98,909,919

Amount received on issue of units 315,912 353,604 179,301 848,817

Element of income and capital gains in prices of units sold less those of units redeemed - net (1,861) (5,929) (3,478) (11,268)

Unrealised gain during the quarter in the market value of investments classified as available-for-sale - 31,205 10,815 42,020

Net income for the quarter 548,391 700,872 824,144 2,073,407

Total recognised income for the quarter 548,391 732,077 834,959 2,115,427

Net assets at end of the quarter Rupees 31,650,117 35,004,084 35,208,694 101,862,895

The annexed notes from 1 to 11 form an integral part of these condensed interim financial statements.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

10 Quarterly Report - I, 2011 - UBL Retirement Savings Fund

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) For the quarter ended 30 September 2010

1. LEGAL STATUS AND NATURE OF BUSINESS

UBL Retirement Savings Fund ("the Fund") has been established under the Voluntary Pension System Rules, 2005 (VPS Rules) and has been approved as a pension fund by the Securities and Exchange Commission of Pakistan (SECP) on 29 January 2010. It has been constituted under a Trust Deed, dated 17 November 2009, between UBL Fund Managers as the Pension Fund Manager, a company incorporated under the Companies Ordinance, 1984 and MCB Financial Services Limited (formerly Muslim Commercial Financial Services Limited) as the Trustee, also incorporated under the Companies Ordinance, 1984. Accordingly, title to the assets of the Fund is held in the name of the Trustee.

The Fund is a pension fund and offers units for public subscription on a continuous basis. The units are non transferable except in the circumstances mentioned in Voluntary Pension System Rules, 2005 and can be redeemed by surrendering to the Fund. Further as per the offering document it cannot distribute any income from the Fund whether in cash or otherwise.

The Fund consists of three sub-funds namely, UBL Retirements Savings Fund Equity Sub-Fund ("Equity Sub-Fund"), UBL Retirement Savings Fund Debt Sub-Fund ("Debt Sub-Fund") and UBL Retirement Savings Fund Money Market Sub-Fund ("Money Market Sub-Fund") (collectively the "Sub-Funds"). The investment policy for each of the sub-funds are as follows:

- The Equity Sub-Fund shall have a minimum 90% of net assets invested in listed shares. Remaining assets of the equity fund shall be invested in any government security having less than one year time to maturity, or in banks having at least A rating.

- The Debt Sub-Fund consist of tradable debt securities with weighted average duration of the investment portfolio of the Sub-Fund not exceeding five years and at least twenty five percent (25%) of the assets in the Sub-Fund shall be invested in securities issued by the Federal Government & upto twenty five percent (25%) may be deposited with banks having not less than "AA +" rating. Composition of the remaining portion of the investments shall be as defined in the offering document.

- The Money Market Sub-Fund consists of short term debt instruments with time to maturity not exceeding six months. There is no restriction on the amount of investment in sharia'h compliant securities issued by the Federal Government and the commercial banks having A+ rating. Further, the investment in securities issued by provincial or city government, government or a corporate entity with 'A' or higher rating shall be made upto 10% , 5% and 5% of net assets of the Sub-Fund respectively.

The Fund offers five types of allocation schemes, as prescribed by the SECP under VPS Rules, to the contributors of the Fund namely High Volatility, Medium Volatility, Low Volatility, Lower Volatility & Life Cycle Allocation. The contributor has the option to suggest a minimum percentage of allocation to the above allocation schemes (subject to the minimum percentages prescribed in the offering document). Based on the minimum allocation, the funds are allocated to the above stated sub-funds. The allocation to the sub-funds has to be done at the date of opening of contributor's pension account and on an anniversary date thereafter. The contribution amount may be paid by the contributor on a periodic basis such as annual, semi annual, quarterly or monthly basis within 5 days of the close of the period. UBL Retirement Savings Fund also offers optional insurance cover to the contributors.

The registered office of UBL Fund Managers is situated at 8th Floor, State Life Building Number 1, I.I Chundrigrh Road , Karachi, Pakistan.

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2. BASIS OF MEASUREMENT

These financial statements have been prepared under the historical cost convention, except that the investments are valued at their fair values.

3. 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 such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984, requirements of Trust Deed and Voluntary Pension System Rule, 2005.

In case, the requirements differ, the provisions or directives of the Companies Ordinance, 1984, the requirements of the Trust Deed and Voluntary Pension System Rules shall prevail. The disclosures made in these condensed interim financial statements have been limited based on the requirement of IAS 34: 'Interim Financial Reporting'.

4. BANK BALANCES

Profit rates on the Profit and Loss sharing accounts range between 5% to 10.5% per annum. The balance of Rs. 2,813,674 held with United Bank Limited (a related party) carrying profit at 5% per annum.

5. INVESTMENTS 30 September 2010 30 Jun 2010 Note Equity Debt Money Market Total Total Investments by category Sub-Fund Sub-Fund Sub-Fund

At fair value through profit or loss - held for trading Listed equity securities 5.1 18,556,654 - - 18,556,654 12,376,065

Available for sale investments Government securities 5.2 4,472,320 30,973,564 34,926,749 70,372,633 60,638,525

Available for sale investments Debt securities 5.3 - 2,423,075 - 2,423,075 -

Rupees 23,028,974 33,396,639 34,926,749 91,352,362 73,014,590

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5.1 At fair value through profit or loss- quoted equity securities - held by Equity Sub-Fund

Sectors / companies Number of Acquired Bonus / Disposed/ Number of Cost of Market % of holdings during the rights rights holdings holdings value of net assets at the quarter received exercised at the end holdings of the beginning during during the of the quarter Sub-Fund of the quarter the quarter quarter AUTOMOBILE AND PARTS ------(No. of shares) ------(Rupees)------Atlas Battery Ltd. 300 200 100 - 600 91,066 82,446 0.26% BANKS Bank Al Habib Ltd. 19,200 9,506 - - 28,706 893,482 891,321 2.82% MCB Bank Ltd. 1,500 1,300 - - 2,800 526,995 527,268 1.67% Allied Bank Limited Ltd. 11,000 14,599 - - 25,599 1,437,407 1,317,837 4.16% Habib Metropolitan Bank Ltd. 6,500 17,089 - - 23,589 493,715 451,493 1.43% CHEMICALS Fauji Fertilizer Co Ltd 12,700 400 - - 13,100 1,381,297 1,373,404 4.34% ICI Pakistan Ltd. 10,051 2,500 - - 12,551 1,620,909 1,469,722 4.64% FFC Bin Qasim Ltd. 18,300 6,000 - - 24,300 659,200 650,400 2.05% Dawood Hercules Ltd. 1,600 400 - - 2,000 318,136 331,380 1.05% Lotte Pakistan PTA Ltd. 6,000 - - - 6,000 50,500 50,340 0.16% CONSTRUCTION AND MATERIALS Lucky Cement Ltd. 2,000 9,000 - - 11,000 743,220 760,760 2.40% ELECTRICITY 0.00% Hub Power Company Ltd. 37,500 7,500 - - 45,000 1,477,576 1,498,050 4.73% KAPCO 8,600 16,799 - - 25,399 1,072,149 1,043,899 3.30% GENERAL INDUSTRIALS 0.00% Thal Ltd. 8,000 1,000 - - 9,000 858,675 955,440 3.02% INDUSTRIAL ENGINEERING 0.00% Al-Ghazi Tractors Ltd863 110 -197,599 - 208,300 973 0.66% OIL AND GAS National Refinery Ltd. - 3,576 - - 3,576 709,856 722,567 2.28% Pakistan Oilfields Ltd. 5,600 1,200 - - 6,800 1,510,967 1,612,484 5.09% Pakistan State Oil Ltd. 3,200 750 - - 3,950 1,091,288 1,061,365 3.35% Pakistan Petroluem Ltd. 4,200 250 870 - 5,320 832,298 917,221 2.90% Attock Petroleum Ltd. 550 750 - - 1,300 385,248 442,728 1.40% Mari Gas Company Ltd. 3,900 2,400 - - 6,300 780,157 683,802 2.16% PERSONAL GOODS Nishat Mills Ltd. 14,500 3,500 - 10,000 8,000 369,985 368,000 1.16% Nishat (Chunian) Ltd. 26,000 2,400 - 16,200 12,200 205,622 196,176 0.62% Service Industries Ltd. 330 600 - - 930 189,822 171,148 0.54% Bata (Pakistan) Ltd. 29 100 - - 129 64,670 63,210 0.20% PHARMA AND BIO TECH Glaxosmithkline Ltd. - 2,867 - - 2,867 223,111 193,236 0.61% Searle Pakistan Ltd. - 4,083 - - 4,083 235,611 253,146 0.80% Abbott Lab (Pakistan) Ltd. 1,332 1,600 - - 2,932 258,608 259,511 0.82% 18,679,167 18,556,654

5.2.1 Available for sale investments- government securities- held by Equity Sub-Fund

Matured / % of Acquired Holdings at disposed Cost of Market value Net Assets during the Government Securities beginning of during the holdings of holdings of the quarter (Face value of Rs. 100,000 each) the quarter quarter Sub-Fund ------(No. of units) ------(Rupees)------

3 months Treasury Bills - 1,944,400- 1,944,400 1,977,224 6.2% 6 months Treasury Bills - 2,486,105- 2,486,105 2,495,096 7.9% 1 year Treasury Bills - 6,685,139 6,685,139 - -

4,430,505 4,472,320

5.2.2 Available for sale investments- government securities- held by Debt Sub-Fund

3 months Treasury Bills 5,944,038 17,184,542- 23,128,580 23,345,831 66.7% 6 months Treasury Bills 5,679,6961,708,268 - 7,387,964 7,627,733 21.8% 1 year Treasury Bills 18,086,740 -18,086,740 - -

30,516,544 30,973,564

5.2.3 Available for sale investments- government securities- held by Money Market Sub-Fund

3 months Treasury Bills - 32,077,450 - 32,077,450 32,484,871 92% 6 months Treasury Bills 1,230,600 1,138,845 - 2,369,446 2,441,877 7% 1 year Treasury Bills 29,122,200- 29,122,200 -- -

34,446,896 34,926,749

13 Quarterly Report - I, 2011 - UBL Retirement Savings Fund

5.3 Available for sale investments- debt securities- held by Debt Sub-Fund

Matured / % of Acquired Holdings at disposed Cost of Market value Net Assets during the beginning of during the holdings of holdings of the quarter the quarter quarter Sub-Fund Term Finance Certificates ------(Rupees)------

Faysal Bank Limited (12-11-2007) - 2,423,075 - 2,423,075 2,423,075 6.9%

2,423,075 2,423,075

6. DEPOSIT, PREPAYMENTS AND OTHER RECEIVABLES 30 September 2010 30 June 2010 Equity Debt Money Market Total Total Sub-Fund Sub-Fund Sub-Fund

Profit on Investments - 132,336 132,336 - Receivable against issuance of units 1,101,733 3,716,863 4,085,870 8,904,465 11,679,015 Security deposit 2,600,000 100,000 100,000 2,800,000 2,800,000 Rupees 3,701,733 3,949,199 4,185,870 11,836,801 14,479,015

7. ACCRUED EXPENSES AND OTHER LIABILITIES

Payable against redemption of units 1,010,785 3,729,911 3,967,521 8,708,217 8,708,217 Payable to pension fund manager 119,500 119,500 119,500 358,500 3,188,500 Payable for printing expense 22,638 22,638 22,638 67,915 - Brokerage & other payable 58,343 10,637 8,798 77,778 274,150 Rupees 1,211,267 3,882,686 4,118,457 9,212,410 12,170,867

8. CONTRIBUTION TABLE

Contributions (net of front end fee) received during the quarter.

Quarter ended 30 September 2010 Equity Sub-Fund Debt Sub-Fund Money Market Sub-Fund Total From: Units (Rupees) Units (Rupees) Units (Rupees) (Rupees)

Individuals 3,141 315,911 3,477 353,605 1,758 179,301 848,817 3,141 315,911 3,477 353,605 1,758 179,301 848,817

14 Quarterly Report - I, 2011 - UBL Retirement Savings Fund

9. TRANSACTIONS WITH RELATED PARTIES

9.1 Related party / connected persons comprise the following:

Related party Relationship

UBL Fund Managers Limited Pension Fund Manager Key Management Personnel Directors and Executives of the Pension Fund Manager United Bank Limited Holding Company of the Pension Fund Manager MCB Financial Services LimitedTrustee of the Fund UBL Liquidity Fund Plus (ULPF) Fund managed by UBL Fund Managers Limited United Growth & Income Fund (UGIF) ------do------United Stock Advantage Fund (USF) ------do------United Islamic Income Fund (UIIF) ------do------United Composite Islamic Fund (UCIF) ------do------UBL Capital Protected Fund - I (UCPF-I) ------do------UBL Capital Protected Fund - II (UCPF-II) ------do------UBL Islamic Retirement Saving Fund (UIRSF) ------do------UBL Fund Managers Limited Employees Provident Fund Associated undertaking UBL Fund Managers Limited Employees Gratuity Fund ------do------UBL Staff Pension Fund Trust ------do------UBL Officers/ Non-Officers Benevolent Fund ------do------UBL Insurers Limited ------do------UBL Insurers Limited Employees Gratuity Fund ------do------Engro Corporation Limited ------do------Engro Polymer and Chemicals Limited ------do------Engro Power Gen (Private) Limited ------do------National Bank of Pakistan ------do------Byco Petroleum Pakistan Limited ------do------

9.2 Details of transactions and balances of units with related parties during the period are as follows:

For the quarter ended 30 September 2010 Equity Debt Money Total Sub-Fund Sub-Fund Market Sub-Fund 9.3 Transactions with related party

Directors and executives of the Management Company Units sold by the Fund Number 17 20 12 49 Amount of units sold by the Fund Rupees 1,723 1,969 1,231 4,923

Pension Fund Manager - Remuneration expense Rupees 118,877 130,270 131,179 380,326

Trustee - Remuneration to trustee Rupees 23,105 23,105 23,105 -

15 Quarterly Report - I, 2011 - UBL Retirement Savings Fund

30 September 2010 30 June 2010 Equity Debt Money Total Total Sub-Fund Sub-Fund Market Sub-Fund 9.4 Balances related party - unsecured

United Bank Limited Units held by UBL Number 300,000 300,000 300,000 900,000 900,000 Amount of units held by UBL Rupees 30,000,000 30,000,000 30,000,000 90,000,000 90,000,000

Directors and executives of the Pension Fund Manager Units held by directors & executives Number 1,349 1,476 834 3,659 3,610 Amount of units held by directors & executives Rupees 168,041 149,211 84,470 401,722 396,799

Pension Fund Manager - Remuneration payable Rupees 38,896 42,969 43,221 125,086 115,273

Trustee - Remuneration payable Rupees 9,357 7,460 7,292 24,109 22,603

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial assets which are tradeble in an open market are revalued at the market prices prevailing on the balance sheet date. The fair value of all other financial assets and liabilities are not considered to be significantlydifferent from their carrying values as these financial assets and liabilities are short term in nature.

11. DATE OF AUTHORISATION FOR ISSUE

These condensed interim financial statements were authorised for issue by the Board of Directors of the PensionFund Manager on October 25, 2010.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

16 UBL ISLAMIC RETIREMENT SAVINGS FUND

INVESTMENT OBJECTIVE UBL Islamic Retirement Savings Fund aims to provide a secure shariah-compliant source of savings and regular income after retirement to the Participants. The Participants would contribute to the Fund during their working life and would typically withdraw from the Fund on or after retirement. Accordingly, the investment objective of the fund is to achieve capital growth up to the retirement age of the Participants.

FUND INFORMATION

Pension Fund Manager UBL Fund Managers Limited

Trustee MCB Financial Services Limited 3rd Floor, Adamjee House, I.I. Chundigar Road, Karachi - 74000 Tel: 021-32430485

Distribution Company United Bank Limited (For detail of other visit www.UBLFunds.com)

Auditors KPMG Taseer Hadi & Co. - Chartered Accountants

Legal Advisors Akhund Forbes

Bankers United Bank Limited Bank Alfalah Limited Al Baraka Islamic Bank Deutsche Bank AG

17 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

DIRECTORS REPORT For the quarter ended 30 September 2010

The Board of Directors of UBL Fund Managers Limited is monetary policies to counter domestic inflation (India: 5% pleased to present to you the Quarterly Report of "UBL +125bps | S. Korea: 2.25% +25bps | Brazil: 10.5% +62bps). Islamic Retirement Savings Fund" (UIRSF) for the quarter Commodities also rallied during the period with Crude oil ended September 30, 2010. (WTI) and Gold gaining 5.7% and 5.4% during the period - in our view the rise in prices of almost all asset classes is Economy & Money Market Review - 1QFY11 fuelled by expectations of high inflation and loss of value of paper money in the future. Pakistan's economic recovery, that had been in place during FY'10, lost significant ground during the 1QFY11 as country Stock Market Review - 1QFY11 was hit by massive floods. Major economic indicators deteriorated, highlighted by the re-emergence of inflation The KSE100 index closed the quarter at 10,013, up 3% for due to supply side concerns for agricultural products and the period - despite the catastrophic floods and weak macro- higher budgetary deficits as the Government spending rose economic conditions. The daily average trading volumes due to relief / reconstruction efforts. Inflation, as measured during the quarter declined to 45mn shares, down 46% QoQ. by "Consumer Price Index" (CPI) rose 13.23%YoY in Attractive valuations and strong fundamentals are the key August, driven by higher food prices, putting an end to the factors behind the resilient behavior of the market. The declining trend seen since April'10. CPI figures for the next supply / demand dynamics in the Country have led to a de- few months are likely to also be high as the system adjusts coupling between the performance of the local equity market to the post-flood economic realities. Current account and and the economic numbers coming through in this challenging trade deficits for 2mFY11 also ballooned by 49%YoY and time period. Local investors largely stayed on the sidelines 18%YoY to USD944mn and USD1.23bn respectively. during the period plagued by uncertainty on the political Government borrowing for the quarter grew by 18%YoY and economic front - although developments regarding to PkR213bn and major burden of the borrowing shifted to introduction of "Margin Trading System" did generate some the Central Bank from commercial banks. The damage to excitement. However, valuation-savvy foreign investors the agricultural sector will limit spending power of a major were net-buyers in the market with a net foreign portfolio section of the population and hence take a toll on demand inflow of USD106mn during the quarter. The valuation for LSM and services sector - thus leading to subdued GDP discount between Pakistan equities (PE (FY'11E): 7.2x) and growth. The silver lining during the period was healthy regional peers (China / India PE (FY'11E): 12-14x) seemed monthly remittance inflows which grew to USD933mn in to be a key attraction for these investors. August'10. The foreign exchange reserves also stand at a comfortable USD16.8bn - enough coverage for 5-month The corporate sector is expected to report mixed earnings imports. for the period, depending the company / sector's sensitivity to the flood damages. Net Interest Margins for the banking The State Bank of Pakistan (SBP) took notice of the weakness sector strengthened during the period, rising to 7.56% in in the economic indicators, especially inflation, and raised August'10 - which will compensate for a potential rise in discount rate by a total of 100bps, from 12.5% to 13.5%, in agri-related NPLs due to the floods. Oil Marketing Companies its two "Monetary Policy Statements" announced during the suffered from decline in POL product off take due to flood quarter. The rate hikes put an end to the 20-month spate of related infrastructure damage and circular-debt. Oil & Gas monetary relaxation which saw discount rate come down (E&P) sector earnings will benefit from well-head price from 15% to 12.5% since November'08. SBP's new governor, hikes and high interest rate environment which is beneficial Shahid Kardar, cited high inflation and fiscal deficits when for cash rich companies. Fertilizer sector earnings for the expressing his commitment to continuation of a tight quarter are likely to stay subdued due to weak fertilizer off monetary policy. take because of the floods. The listed companies in the refining sector are expected to benefit from higher capacity The global economic recovery also sputtered during the utilization during the period resulting from partial shut- period as GDP growth (FY'11) expectations of major down of a large un-listed refinery. Auto-sector earnings will economies were revised downwards (World: 4.2% | US: benefit from strong sales and car price hikes; however 2.3%) and fears of a double-dip recession gained ground. strengthening Yen can eat into the manufacturer's margins. However, emerging economies are expected to continue to Cement sector recorded weak sales during the period due grow at spectacular pace in FY'11 (India: 8.4% | China: to floods - however a spike in sales is expected in the coming 9.6%). The gradual shift of economic activity from developed quarters when the reconstruction activities start. to emerging markets has put significant strain on the currency parities. In response, central banks of developed economies Global markets recorded impressive performance during implemented another phase of quantitative relaxation (Policy the period as major markets generated returns in the 10%- rates- US: 0%-0.25% | UK: 0.5% | ECB: 1% | Jap: 0%- 15% range (DJIA: 10.8% | FTSE: 13.75% | Sensex: 15.5% 0.1%) to take the strain off the currencies. On the other | Shanghai: 10.65%). The rallies were driven by healthy hand, a number of emerging market central banks tightened earnings and decent GDP growth expectations. We also

18 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

believe that expectations of high inflation and weak paper side pressures result from floods have also led to upward currencies in developed economies in the future could be revision of inflation expectations for FY'11 from 12%YoY a significant underlying reason behind rise in major asset to 14%YoY. The added pressure of reconstruction activity prices including equities. Emerging market currencies have on fiscal expenses will fuel the already ballooning fiscal rallied in the quarter as well; with Brazilian Real and Indian deficits. In response to higher inflation and deficits, the SBP Rupee gaining 4.5% and 4.2% versus the USD during the has already switched to monetary tightening stance - further period. hike in discount rate by 150bps are likely by June '11 if inflation and deficits do not come under control. Fund Performance and Operational Review As for the local equity market, the benchmark KSE100- The Fund comprises of three sub-funds namely Equity sub- Index is trading at Price to Earning (PE) (11E) of 7.2x, fund, Debt sub-fund and Money Market sub-fund. The Fund which is below the average valuation range of 8.0x - 8.5x as a whole incurred a net income of PKR 1.81 million during on a historical basis. Therefore, the market is relatively the period under review and total fund size stood at PKR cheap on a historical basis. The corporate earnings growth 94.61 million as at September 30, 2010. Performance review will also be subdued due to the infrastructure damages by for each sub-fund is given below: the floods. We expect the market return for the year to be in the 20% range, driven by earnings growth and convergence Equity Sub-fund of valuations to historical average levels. Improvement in investor confidence resulting from security / economic / For the quarter ended September 30, 2010, the Equity sub- political stability can lead to a re-rating of the market's PE fund incurred a gross income of PKR 0.93 million and net - boosting the market returns. income of PKR 0.71 million. The income was mainly due to dividend income on securities amounting to PKR 0.42 On the global front, we find evidence of gradual economic million. The net assets of the sub-fund stood at Rs 31.68 recovery as we earlier expected. However, the rally in global million representing net asset value of PKR 100.97 per unit equity / commodity market is not driven as much by supply as at September 30, 2010. / demand or exceptional earnings but is rather fuelled by expectations of higher inflation and weak paper currency Debt Sub-fund in the future. We expect the economic recovery to continue at its natural pace and the various asset prices to adjust During the quarter, the Debt sub-fund earned a gross income according to inflation expectations. of PKR 0.90 million and net income of PKR 0.70 million after accounting for the expenses of PKR 0.20 million. The Acknowledgements major contributor to the income was profit on investments of PKR 0.89 million. At September 30, 2010, the net assets We would like to thank our valued unit holders for their of the sub-fund stood at Rs 31.95 million and net asset per confidence and trust in UBL Fund Managers Limited. In unit was PKR 102.78. addition, we would like to acknowledge the Securities and Exchange Commission of Pakistan, State Bank of Pakistan, Money Market Sub-fund MCB Financial Services Limited (Trustee) and Shariah Advisory Board for their continued support, guidance and For the quarter ended September 30, 2010, the Money cooperation. The Board also likes to take this opportunity Market sub-fund earned a gross income of PKR 0.60 million to express its appreciation to the employees for their and net income of PKR 0.40 million after deducting expenses dedication, commitment, enthusiasm and hard work. of PKR 0.20 million. The major contributor to the income was profit on bank deposits amounting PKR 0.29 million and Term Deposit Musharka amounting PKR 0.32 million. For & on behalf of the Board The net assets of the sub-fund stood at Rs 30.98 million and net asset per unit was PKR 101.51 as at September 30, 2010.

Future Outlook MIR MUHAMMAD ALI, CFA On the economic front, GDP growth expectations for FY'11 Chief Executive have been downgraded to 2.5% from 4.5% earlier. The Karachi, Dated: October 25, 2010 downward revision is the result of massive damages to the agricultural sector by the floods. Agricultural sector contributes a significant portion of the GDP and weak performance in this sector also trickles down to LSM and Services sector in the form of subdued demand. The supply

19 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES As at 30 September 2010

(Un - audited) (Audited) 30 September 2010 30 June 2010 Note Equity Debt Money Market Total Total Sub-Fund Sub-Fund Sub-Fund Assets

Bank balances 9,989,943 2,300,617 12,552,054 24,842,614 37,795,284 Investments 5 18,793,986 29,396,875 - 48,190,861 40,896,370 Term Deposit Musharaka - - 18,000,000 18,000,000 12,000,000 Dividend and income receivable 504,086 140,893 339,879 984,859 1,275,512 Deposits, prepayments and other receivables 6 3,458,080 925,724 628,973 5,012,777 4,996,220 Deferred formation cost 103,785 103,785 103,785 311,355 341,475 Total assets 32,849,880 32,867,894 31,624,692 97,342,466 97,304,861

Liabilities

Remuneration payable to the pension fund manager 38,952 39,230 38,099 116,281 112,151 Remuneration payable to trustee 7,902 7,883 8,324 24,109 22,602 Payable to auditors 60,417 60,417 60,416 181,249 125,001 Annual fee payable to Securities and Exchange Commission of Pakistan 2,602 2,616 2,555 7,773 4,257 Payable on purchase of investments - - - - 213,955 Accrued expenses and other liabilities 7 1,061,834 809,631 531,971 2,403,436 5,106,848 Total liabilities 1,171,707 919,777 641,365 2,732,849 5,584,814

Net assets Rupees 31,678,173 31,948,117 30,983,327 94,609,617 91,720,047

Participants' Sub-Funds (as per statement attached) Rupees 31,678,173 31,948,117 30,983,327 94,609,617 91,720,047

Number of units in issue 313,739 310,847 305,236

Net assets value per unit Rupees 100.97 102.78 101.51

The annexed notes from 1 to 11 form an integral part of these condensed interim financial statements.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

20 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

CONDENSED INTERIM INCOME STATEMENT (UN-AUDITED) For the quarter ended 30 September 2010

For the quarter ended 30 September 2010 Equity Debt Money Market Total Sub-Fund Sub-Fund Sub-Fund Income

Profit on investments - 886,149 - 886,149 Profit on Term Deposit Musharaka - - 315,370 315,370 Dividend income 415,601 - - 415,601 Profit on deposit accounts with banks 227,983 9,445 286,619 524,046 Capital loss on sale of investments (56,686) - - (56,686)

586,898 895,594 601,989 2,084,480 Unrealised gain on revaluation of held for trading investments - net 335,844 - - 335,844 Total income 922,742 895,594 601,989 2,420,324

Expenses Remuneration to the pension fund manager 118,285 118,891 116,133 353,309 Remuneration to the trustee 23,105 23,105 23,105 69,315 Annual fee to Securities and Exchange Commission of Pakistan 2,602 2,616 2,555 7,773 Auditors' remuneration 18,750 18,750 18,750 56,249 Brokerage expense 16,145 - 748 16,893 Custody and settlement charges 5,160 8,464 5,181 18,805 Bank charges 1,567 822 870 3,259 Printing expense 22,730 22,730 22,730 68,190 Amortization of formation cost 10,040 10,040 10,040 30,120 218,385 205,417 200,113 623,914

Net income from operations 704,357 690,177 401,876 1,796,410

Element of income and capital gains included in prices of units issued less those in units redeemed-net 7,097 5,642 761 13,500

Net income for the quarter Rupees 711,453 695,819 402,636 1,809,910

Earnings per unit Rupees 2.27 2.24 1.32

The annexed notes from 1 to 11 form an integral part of these condensed interim financial statements.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

21 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN - AUDITED) For the quarter ended 30 September 2010

For the quarter ended 30 September 2010 Equity Debt Money Market Total Sub-Fund Sub-Fund Sub-Fund

Net income for the quarter 711,453 695,819 402,636 1,809,908

Other comprehensive income:

Unrealised gain during the quarter in the market value of investments classified as available-for-sale - - - -

Total comprehensive income for the quarter Rupees 711,453 695,819 402,636 1,809,908

The annexed notes from 1 to 11 form an integral part of these condensed interim financial statements.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

22 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) For the quarter ended 30 September 2010

For the quarter ended 30 September 2010 Equity Debt Money Market Total Sub-Fund Sub-Fund Sub-Fund CASH FLOWS FROM OPERATING ACTIVITIES

Net income for the quarter 711,453 695,819 402,636 1,809,908

Adjustments for: Amortization of formation cost 10,040 10,040 10,040 30,120 Unrealised gain on investment in held for trading securities - net (335,844) - - (335,844) Element of income and capital gains included in prices of units issued less those in units redeemed - net (7,097) (5,642) (761) (13,500) 378,552 700,217 411,915 1,490,684

Operating assets Dividend and income receivable (406,454) 897,775 (200,667) 290,653 Deposits, prepayments and other receivables (3,132) (18,031) 4,606 (16,557) Deferred formation cost ---- Term Deposit Musharaka - - (6,000,000) (6,000,000) Investments (6,958,647) - - (6,958,647) (7,368,233) 879,744 (6,196,061) (12,684,551)

Operating Liabilities

Remuneration payable to the pension fund manager 1,486 1,752 892 4,130 Remuneration payable to the trustee 368 349 790 1,507 Payable to auditor 18,750 18,750 18,749 56,248 Annual fee payable to Securities and Exchange Commission of Pakistan 1,181 1,193 1,142 3,516 Payable on purchase of investments (213,955) - - (213,955) Accrued expenses and other liabilities (2,518,510) (93,219) (91,684) (2,703,413) (2,710,680) (71,175) (70,111) (2,851,966) Net cash flows from operating activites (9,700,361) 1,508,785 (5,854,257) (14,045,833)

CASH FLOWS FROM FINANCING ACTIVITIES Cash received on issue of units 521,235 434,304 137,624 1,093,163 Net (decrease) / increase in cash and cash equivalents (9,179,126) 1,943,089 (5,716,633) (12,952,670)

Cash and cash equivalentsequivalents at beginningbeginning of the qquarteruarter 1919,169,069,169,069357,528 357,52818,268,687 18,268,68737,795,284 37,795,284 Cash and cash equivalents at end of the quarter Rupees 9,989,943 2,300,617 12,552,054 24,842,614

The annexed notes from 1 to 11 form an integral part of these condensed interim financial statements.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

23 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

CONDENSED INTERIM STATEMENT OF MOVEMENT IN PARTICIPANTS SUB-FUND (UN-AUDITED) For the quarter ended 30 September 2010

For the quarter ended 30 September 2010 Equity Debt Money Market Total Sub-Fund Sub-Fund Sub-Fund

Net assets at beginning of the quarter 30,452,582 30,823,637 30,443,828 91,720,047

Amount received on issue of units 521,235 434,304 137,624 1,093,162

Element of income and capital gains in prices of units sold less those of units redeemed - net (7,097) (5,642) (761) (13,500)

Net income for the quarter 711,453 695,819 402,636 1,809,908

Total recognised income for the quarter 711,453 695,819 402,636 1,809,908

Net assets at end of the quarter 31,678,173 31,948,118 30,983,327 94,609,617

The annexed notes from 1 to 11 form an integral part of these condensed interim financial statements.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

24 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) For the quarter ended 30 September 2010

1. LEGAL STATUS AND NATURE OF BUSINESS

UBL Islamic Retirement Savings Fund ("the Fund") has been established under the Voluntary Pension System Rules, 2005 (VPS Rules) and has been approved as a pension fund by the Securities and Exchange Commission of Pakistan (SECP) on 29 January 2010. It has been constituted under a Trust Deed, dated 17 November 2009, between UBL Fund Managers as the Pension Fund Manager, a company incorporated under the Companies Ordinance, 1984 and MCB Financial Services Limited as the Trustee, also incorporated under the Companies Ordinance, 1984. Accordingly, title to the assets of the Fund is held in the name of the Trustee.

The Fund is a pension fund and offers units for public subscription on a continuous basis. The units are non-transferable except in the circumstances mentioned in Voluntary Pension System Rules, 2005 and can be redeemed by surrendering to the Fund. Further as per the offering document it cannot distribute any income from the Fund whether in cash or otherwise.

The Fund has been formed to enable the participants to contribute in a diversified portfolio of securities, which are sharia'h compliant. Under the Trust Deed, all the conducts and acts of the Fund are based on sharia'h. The pension fund manager has appointed Sharia'h Advisory Council to ensure that the activities of the Fund are in compliance with the principles of sharia'h.

The Fund consists of three sub-funds namely, UBL Islamic Retirement Savings Fund Equity Sub-Fund ("Equity Sub-Fund"), UBL Islamic Retirement Savings Fund Debt Sub-Fund ("Debt Sub-Fund") and UBL Islamic Retirement Savings Fund Money Market Sub-Fund ("Money Market Sub-Fund") (collectively the "Sub-Funds"). The investment policy for each of the sub-funds are as

Government & upto twenty five percent (25%) may be deposited with banks having not less than "AA +" rating. Composition of the remaining portion of the investments shall be as defined in the offering document.

Further, the investment in securites issued by provincial or city government, government or a corporate entity with 'A' or higher rating shall be made upto 10% , 5% and 5% of net assets of the Sub-Fund respectively.

The Fund offers five types of asset allocation schemes, as prescribed by the SECP under VPS rules, to the contributors of the Fund namely High Volatility, Medium Volatility, Low Volatility, Lower Volatility & Life Cycle Allocation. The contributor has the option to suggest a minimum percentage of allocation to the above allocation schemes (subject to the minimum percentages prescribed in the offering document). Based on the minimum allocation, the funds are allocated to the above stated sub-funds. The allocation to the sub-funds has to be done at the date of opening of contributor's pension account and on an anniversary date thereafter. The contribution amount may be paid by the contributor on a periodic basis such as annual, semi annual, quarterly or monthly basis within 5 days of the close of the period. 25 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) For the quarter ended 30 September 2010

The registered office of UBL Fund Managers is situated at 8th Floor, State Life Building Number 1, I.I. Chundrigrh Road , Karachi, Pakistan.

2. BASIS OF MEASUREMENT

These financial statements have been prepared under the historical cost convention, except that the investments are valued at their fair values.

3. STATEMENT OF COMPLIANCE

4. BANK BALANCES

Profit rates on the Profit and Loss sharing accounts range between 5% to 9.25% per annum. The balance of Rs. 14,512,560 held with United Bank Limited (a related party) carrying profit at 8% per annum.

5. INVESTMENTS 30 September 2010 30 June 2010 Equity Debt Money Market Total Total Investments by category Note Sub-Fund Sub-Fund Sub-Fund

At fair value through profit or loss - held for trading Listed equity securities 5.1 18,793,986 - - 18,793,986 11,499,495

Available for sale investments Government securities 5.2 - 29,396,875 - 29,396,875 29,396,875

Investments at fair value Rupees 18,793,986 29,396,875 - 48,190,861 40,896,370

26 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

5.1 Quoted equity securities - held by Equity Sub-Fund

Sectors / companies Holdings Acquired Bonus / Disposed/ Number of Cost of Market % of % of at the during the rights rights holdingsholdings value of net assets paid up beginning quarter received exercised at the end holdings of the capital of of the quarter during during the of the quarter Sub-Fund the company the quarter the quarter ------(Rupees)------

AUTOMOBILE AND PARTS Atlas Battery Ltd. 300 200 100 - 600 91,066 82,446 0.26% 0.04%

BANKS Meezan Bank Ltd. 33,266 62,104 - - 95,370 1,427,753 1,394,309 4.40% 0.02%

CHEMICALS - Fauji Fertilizer Co Ltd. 21,773 744 - - 22,517 2,377,9402,360,682 7.45% 0.07% ICI Pakistan Ltd. 12, 000 11, 002 - - 23,002 2,900,493 2,693,534 8.50% 0.19% FFC bin qasim Ltd. 18,300 4,800 - - 23,100 622,989 617,880 1.95% 0.01% Dawood Hercules Ltd. 1,600 400 - - 2,000 318,126 331,380 1.40% 0.03% Lotte Pakistan PTA Ltd. 4,500 - - - 4,500 38,200 37,755 0.11% -

CONSTRUCTION AND MATERIALS Lucky cement ltd. 2,000 9,000 - 11,000 743,285 760,760 0.76% 0.02%

ELECTRICITY - Hub power company ltd. 38,90028,800 - - 2,277,833 2,253,733 7.11% 0.02%

GENERAL INDUSTRIALS - Thal Ltd. 9,000 1,000 - - 10,000 952,975 1,061,600 3.35% 0.02%

INDUSTRIAL ENGINEERING - Al-Ghazi tractors ltd. 850 109 - - 959 195,340 205,303 0.64% -

OIL AND GAS National refinery Ltd. - 3,594 - - 3,594 712,858 726,204 2.29% 0.09% Pakistan oilfields ltd. 7,100 2,213 - - 9,313 2,082,9082,208,392 6.97% 0.86% Pakistan state oil ltd. 3,700 750 - - 1,237,214 1,195,715 3.77% 0.07% Pakistan petroluem ltd. 5,700 750 1,270 - 7,720 1,211,319 1,331,005 4.20% 0.01% Mari Gas Company Ltd. 3,100 2,491 - - 5,591 697,001 606,847 1.92% 0.80%

PERSONAL GOODS Service Industries Ltd. 260 600 - - 860 175,402 158,266 0.50% 0.13% Bata (Pakistan) Ltd. 5 100 - - 105 53,702 51,450 0.16% 0.07%

PHARMA AND BIO TECH - Glaxosmithkline Ltd. - 3,068 - - 3,068 238,055 206,783 0.65% 0.03% Searle Pakistan Ltd. - 4,329 -- 249,894 268,398 0.84% 0.08% Abbott Lab (Pakistan) Ltd. 1,150 1,579 - - 2,729 241,708 241,544 0.76% 0.02% - 18,846,058 18,793,986

5.2 Available for sale investments Holdings at Acquired Matured / Number of Cost of Market value % of beginning of during the disposed holdings at holdings of holdings Net Assets the quarter quarter during the the end of the of the quarter quarter Sub-Fund

Sukuk certificate issued by the ------(Rupees)------Government Ijara IV 29,452,500 - - 29,452,500 29,452,500 29,396,875 92.01%

6. DEPOSIT, PREPAYMENTS AND OTHER RECEIVABLES

30 September 2010 30 June 2010 Equity Debt Money Market Total Total Sub-Fund Sub-Fund Sub-Fund

Security deposits 2,600,000 100,000 100,000 2,800,000 2,800,000 Receivable against issuance of units 858,080 825,724 528,973 2,212,777 2,196,220

Rupees 3,458,080 925,724 628,973 5,012,777 4,996,220

27 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

7. ACCRUED EXPENSES AND OTHER LIABILITIES

30 September 2010 30 June 2010 Equity Debt Money Market Total Total Sub-Fund Sub-Fund Sub-Fund

Payable against redemption of units 845,339 662,947 387,263 1,895,550 1,895,550 Payable to pension fund manager 119,500 119,500 119,500 358,500 3,203,500 Payable to printing expense 22,730 22,730 22,730 68,190 - Brokerage & other payable 74,265 4,454 2,477 81,196 7,799 Rupees 1,061,834 809,631 531,971 2,403,436 5,106,849

8. CONTRIBUTION TABLE

Contributions (net of front end fee) received during the quarter.

Quarter ended 30 September 2010 Equity Sub-Fund Debt Sub-Fund Money Market Sub-Fund Total Units (Rupees) Units (Rupees) Units (Rupees) (Rupees) From: Individuals 5,141 521,434 4,287 434,545 1,369 137,670 1,093,648 5,141 521,434 4,287 434,545 1,369 137,670 1,093,648

9. TRANSACTIONS WITH RELATED PARTIES

9.1 Related party / connected persons comprise the following:

Related party Relationship UBL Fund Managers Limited Pension Fund Manager Key Management Personnel Directors and Executives of the Pension Fund Manager United Bank Limited Holding Company of the Pension Fund Manager MCB Financial rustee of the Fund Services LimitedT UBL Liquidity Plus Fund (ULPF) Fund managed by UBL Fund Managers Limited United Growth & Income Fund (UGIF) ------do------United Stock Advantage Fund (USF) ------do------United Islamic Income Fund (UIIF) ------do------United Composite Islamic Fund (UCIF) ------do------UBL Capital Protected Fund - I (UCPF-I) ------do------UBL Capital Protected Fund - II (UCPF-II) ------do------UBL Retirement Savings Fund (URSF) ------do------UBL Fund Managers Limited Employees Provident Fund Associated undertaking UBL Fund Managers Limited Employees Gratuity Fund ------do------UBL Staff Pension Fund Trust ------do------UBL Officers/ Non-Officers Benevolent Fund ------do------UBL Insurers Limited ------do------UBL Insurers Limited Employees Gratuity Fund ------do------Engro Corporation Limited ------do------Engro Polymer and Chemicals Limited ------do------Engro Power Gen (Private) Limited ------do------National Bank of Pakistan; ------do------Byco Petroleum Pakistan Limited ------do------

28 Quarterly Report - I, 2011 - UBL Islamic Retirement Savings Fund

9.2 Details of transactions and balances of units with related parties during the period are as follows:

For the quarter ended 30 September 2010 Equity Debt Money Total Sub-Fund Sub-Fund Market Sub-Fund Directors and executives of the Management Company Units sold by the Fund Number - 222 677 899 Amount of units sold by the Fund Rupees - 22,728 68,183 90,910

Pension Fund Manager - Remuneration expense Rupees 118,285 118,891 116,133 353,309

Trustee - Remuneration to trustee Rupees 23,105 23,105 23,105 69,315

30 September 2010 30 June 2010 Equity Debt Money Total Total 9.4 Balances related party - unsecured Sub-Fund Sub-Fund Market Sub-Fund United Bank Limited Units held by UBL Number 300,000 300,000 300,000 900,000 900,000 Amount of units held by UBL Rupees 30,000,000 30,000,000 30,000,000 90,000,000 90,000,000

Units held by directors & executives Number 5,796 3,150 2,481 11,427 10,528 Amount of units held by directors & executives Rupees 585,182 318,682 249,336 1,153,199 1,062,290

Pension Fund Manager - Remuneration payable Rupees 38,952 39,230 38,099 116,281 112,151

Trustee - Remuneration payable Rupees 7,902 7,883 8,324 24,109 22,602

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial assets which are tradeble in an open market are revalued at the market prices prevailing on the balance sheet date. The fair value of all other financial assets and liabilities are not considered to be significantly different from their carrying values as these financial assets and liabilities are short term in nature.

11. DATE OF AUTHORISATION FOR ISSUE

These condensed interim financial statements were authorised for issue by the Board of Directors of the Pension Fund Manager on October 25, 2010.

For UBL Fund Managers Limited (Pension Fund Manager)

Mir Muhammad Ali, CFA Saeed Iqbal Chief Executive Director

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