Funds Managed by: AKD Investment Management Ltd.

Annual Report 2010

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AKD Investment Management Ltd. AKD Opportunity Fund Financial Statements - 2010

Contents

58 Fund Information

59 Fund Manager’s Report

61 Details of Pattern of Holding (Units)

62 Trustee Report to the Unit Holders

63 Statement of Compliance with the Best Practices of the Code of Corporate Governance

65 Review Report to the Unit Holders on Statement of Compliance with Best Practices of the Code of Corporate Governance

66 Independent Auditors’ Report to the Unit Holders

67 Statement of Assets and Liabilities

68 Income Statement

69 Distribution Statement

70 Cash Flow Statement

71 Statement of Movement in Unit Holders’ Fund

72 Notes to and Forming Part of the Financial Statements AKD AKD Opportunity Fund Opportunity Fund

MANAGEMENT COMPANY AKD Investment Management Limited 216-217, Continental Trade Centre, Block-8, Clifton, Karachi-74000

INTERNAL AUDITORS LEGAL ADVISER Ford Rhodes Sidat Hyder & Co. Sattar & Sattar Chartered Accountants Attorneys -at -law Progressive Plaza, Beaumont Road, 3rd Floor, UBL Building, P.O. Box 15541, Karachi 75530. I.I. Chundrigar Road, Karachi TRUSTEE Central Depository Company REGISTRAR of Pakistan Limited Gangjees Registrar Services (Pvt.) Ltd. CDC House 99-B, Block-B 516, Clifton Centre, S.M.C.H.S., Main Shahra-e-Faisal, Karachi. Khayaban-e-Roomi, Kehkashan, Block-5, Clifton, Karachi. BANKERS Tel: 35375714 - 35836920. Bank Alfalah Limited Bank Al-Habib Limited DISTRIBUTORS Habib Metropolitan Bank Limited AKD Investment Management Limited KASB Bank Limited AKD Securities Limited MCB Bank Limited BMA Capital Management Limited Mybank Limited IGI Investment Bank Limited Standard Chartered Bank (Pakistan) Limited The Bank of Punjab The Bank of Punjab Accesss Financial Services (Private) Limited United Bank Limited Al-Falah Securities (Private) Limited Foundation Securities (Private) Limited AUDITORS Reliance Financial Products (Private) Limited M. Yousuf Adil Saleem & Co. Bulls & Bulls (Private) Limited Chartered Accountants Cavish Court, A-35, Block 7 & 8 RATING - AKDOF KCHSU, Sharea Faisal, Karachi. JCR-VIS: MFR 2-Star AKD Opportunity Fund - Annual Report 2010

FUND MANAGER’S REPORT

AKD OPPORTUNITY FUND PERFORMANCE

The AKD Opportunity Fund (AKDOF) achieved a positive return of 16.96% in FY10 as compared to 35.74% for its benchmark, the KSE-100 index. This was the first time since its inception that such a large underperformance was posted.

The underperformance was largely due to two factors: First, the Fund was cash - heavy in the first half of fiscal year 2010. (On average 6.7% cash from July 2009 - December 2010). Thus, when the market bounced back from 7,200 levels to 8,700 levels, the Fund's low equity exposure hurt performance. The Investment Committee decision to limit exposure to the equity market was driven by macro level uncertainties in the first half of FY10. Second, the rally beyond 9,000 levels was driven mainly by foreign portfolio investment which focused on Oil & Gas E&P Sector where the Fund was underweight. Additionally, in order to reduce return volatility, exposure to fixed income securities had been raised in FY2009 and continued in early part of FY10. This too, caused a drag in performance. Pkr AKDOF vs. KSE100 Index Index Points 54 10700 52 50 10200 48 9700 46 9200 44 8700 42 8200 40 38 7700 36 7200 5-Apr-10 5-Jan-10 1-July-09 1-Oct-09 18-Feb-10 16-Nov-09 13-Aug-09 18-May-10 30-June-10 AKDOF (L.H.S) KSE (R.H.S)

For the year ended June 30, 2010, AKDOF earned a profit of PKR 192.9million versus a loss of PKR 453.5million in FY09. In quantitative terms, the fund started FY10 with a BETA of 0.8. Thus when the broader market rally took the KSE-100 index from 7,200 to 8,700 (a rise of nearly 21%), a BETA of 0.8 implied that the fund would grow by around 16.8%. Given that fixed income securities comprised 3.83% of NAV on average during the first half of 2010, the Fund's performance was further dragged down. With signs of macro stability becoming visible from end of 4Q calendar 2009, exposure to equities was gradually raised. At the end of FY09 (i.e. June 2009), the top five sectors of the Fund were O&G Exploration (18.85%); Banking (7.39%); Fertilizer (5.11%), Oil and Gas Marketing (2.12%) and Automobile (1.85%), totalling about 35.32% of NAV. As the year progressed, gains were booked in the Oil & Gas Sectors as well as some Power Generation & Banking stocks. The resultant liquidity was redeployed in sectors deemed more attractive on the basis of forward valuations or event driven outlook. Thus, as at June end 2010, the top 5 sectors in AKDOF were Chemicals (22.3%), Banks (12.4%); Oil and Gas (10.93%); Gas Utilities (7.88%) and Fixed Line Telecommunication (6.17%), totaling 59.68% of NAV. As at June 30, 2010, 96.46% of the Fund was deployed in listed stocks and its BETA was 0.84. With EPS growth in invested companies of 16%, PER of 8.3x and P/B ratio of 0.97x, the Investment Committee believes that downside risk is manageable. At the same time, overweight positions in Chemicals and Utilities sectors should enable the Fund to show strong performance over the next twelve months based on the Investment Committee's view that these were laggard sectors in the previous year and also of the likelihood of fundamentally positive changes in sector outlook going forward. STOCK MARKET PERFORMANCE & OUTLOOK KSE-100 Index posted a return of 35.7% during the 12-month period from July 2009 to June 2010. This performance led to the Pakistan bourse being ranked as the 3rd best market in Asia (ex Japan) in the first half of FY10 and the 5th best market for the full year FY10 amongst 13 Asian Emerging Markets.

59 AKD Opportunity Fund - Annual Report 2010

KSE-100 started the year at 7,270 and steadily crossed 10,000 levels to peak at 10,731 in April 20, 2010. The impetus for upward move came from improvement in macro-indicators such as large scale manufacturing (LSM) rebound, sharply higher inward remittances, decelerating inflation, reduction in current account deficit, rising foreign exchange reserves (thanks to IMF funding) and a stable Rs/$ exchange rate. Investor confidence was further boosted by U.S. Congressional approval of the US$ 7.5 billion Kerry-Lugar (Civilian Support) bill over the next 5 years. This was the second largest foreign assistance program by U.S. to any country after Israel. The above, coupled with approval of increased long term financing by IFI's, such as the World Bank and Asian Development Bank, led international rating agencies to upward re rate Pakistan to B+ from early CCC rating. The credit default swap spread for Pakistan also narrowed sharply in 1HFY10. Boost to local investor sentiment came from a 50bp cut in State Bank of Pakistan's discount rate from 13% to 12.5% in 2009/2010. Since 1QCY2010 a new dynamic entered into the capital market equation in Pakistan. Foreign Portfolio Investment inflows began to rise sharply and for the full fiscal year July 09 to June 10, totalled US$ 550 million. In a market where average daily volume declined by 40%, the impact was dramatic. However, the FPI inflows were restricted to a very narrow segment of the market viz. Oil & Gas, E&P sector, Power Generation and Fertilizers. As an example consider that OGDC alone carried a weight of 24.62% in the KSE-100 capitalization at end June 2010 versus 17.72% in June 2009. This phenomenon has severely skewed the performance of KSE-100 as a benchmark for equity oriented funds and led to broad underperformance by almost all managed equity funds. Market performance also suffered in 4QFY10 due to imposition of Capital Gains Tax. In sector performance terms, during FY10 the Oil & Gas E&P sector posted a performance of 34.19%, followed by Fertilizer, Banking & Autos. Banking stocks initially performed very well on the back of 30%-40% FSV (forced sale value) of real estate collateral relaxation. However, this performance gave way due to concerns about potential non-performing loans which, although rising much slower than last year, still represented accumulated NPL's far higher than last five years average. Spread shrinkage fear also played a part in investors booking profit on banking stocks. Auto sector showed rebound as volumes and margins picked up, including those for tractors. Cement, on the other hand, was the laggard in 2010 with shrinking exports and lower domestic demand due to fall in development expenditure.

Going forward, FY11 is likely to be a volatile year for equities as an asset class. With delays in reformed GST implementation (instead of VAT), power sector restructuring and circular debt resolution, fiscal deficit is likely to stay well above 6% versus IMF agreed target of 4% of GDP. This may delay remaining funding from IMF and related bilateral & multinational loans. Questions of governance and transparency have also delayed disbursements under Kerry-Lugar bill from the U.S. The large scale flooding in the new fiscal year will have both near & medium term negative impact on economic growth and government fiscal position along with supply side pressures on inflation and rising imports. This would lead to widening of current account deficit, reduction of foreign exchange reserves if foreign funding is delayed and thus potential rising pressures on the PkR/US$ exchange rate. In such a scenario, high government borrowing will continue to crowd out private sector credit and liquidity, while rise in inflationary expectations would prompt the central bank to go back towards a higher interest rate regime. For the equity market the above environment in the near term appears non-conducive. On the other hand, market valuation, both in terms of its own historic ranges and in terms of regional comparison is not elevated. Forward valuations as of end July 2010 put KSE-100 FY11 Price to Earning at 7.5x and Price to Book at 1.5x. At the same time, the key issue is earnings growth. It is more than likely that as the impact of recent floods is factored into analysts' earnings forecasts, 1HFY11 EPS estimates could be revised down and create a drag on FY11 full year earnings currently forecast in the range of 12%-13%.

Despite the above, a potential positive trigger for the market would be reintroduction of margin financing product. This would boost market volumes and is likely to be a shot in the arm for second- tier liquid stocks that have lagged the market in FY10. Based on the above, the Investment Committee will focus on steering the Fund through uncertain times using a cautious approach where risk management will play an important role while keeping an eye on potential mispricing opportunities presented by market volatility. DISTRIBUTION FOR THE YEAR The Board has approved a bonus of Rs.15.30 per unit, 43.40% on the opening NAV and 30.60% of the par value of Rs.50.00 for FY10.

60 AKD Opportunity Fund - Annual Report 2010

DETAILS OF PATTERN OF HOLDING (UNITS)

AS AT JUNE 30, 2010

Particulars Unit Holders Units Holding Percentage

Individuals 576 2,925,101 25.19

Associated Companies 1 16,231 0.14

Banks / DFIs 2 2,265,304 19.51

Retirement Funds 29 1,584,267 13.65

Others 7 4,820,186 41.51

Total 615 11,611,089 100.00

61 AKD Opportunity Fund - Annual Report 2010

TRUSTEE REPORT TO THE UNIT HOLDERS

AKD INCOME FUND

Report of the Trustee pursuant to Regulation 41(h) and Clause 9 of Schedule V of the Non-Banking Finance Companies and Notified Entities Regulations, 2008

AKD Opportunity Fund (the Fund), an open-end scheme was established under a trust deed dated December 19, 2005, executed between AKD Investment Management Limited, as the Management Company and Central Depository Company of Pakistan Limited, as the Trustee.

In our opinion, the Management Company has in all material respects managed the Fund during the year ended June 30, 2010 in accordance with the provisions of the following:

(i) Limitations imposed on the investment powers of the Management Company under the constitutive documents of the Fund;

(ii) The pricing, issuance and redemption of units are carried out in accordance with the requirements of the constitutive documents of the Fund; and

(iii) The Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003, the Non- Banking Finance Companies and Notified Entities Regulations, 2008 and the constitutive documents of the Fund.

Muhammad Hanif Jakhura Chief Executive Officer Karachi, October 12, 2010 Central Depository Company of Pakistan Limited

62 AKD Opportunity Fund - Annual Report 2010

STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES OF THE CODE OF CORPORATE GOVERNANCE This statement is being presented by the Board of Directors of AKD Investment Management Limited (Company), the Management Company of the AKD Opportunity Fund (Fund) to comply with the Code of Corporate Governance as contained in Chapter XI of the listing regulations of the Karachi Stock Exchange for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance.

The Management Company has applied the principles contained in the Code of Corporate Governance as follows:

1) The Management Company encourages representation of independent non-executive directors. At present the Board has three independent non-executive directors.

2) The directors have confirmed that none of them is serving as a director in more than ten listed companies, including this Company.

3) All the resident directors of the Management Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being member of stock exchange, has been declared as a defaulter by such stock exchange.

4) During the year two casual vacancies occurred in the Board which were filled up by the Board within 30 days thereof.

5) The Management Company has prepared a 'Statement of Ethics and Business Practices' which has been signed by all the directors and employees of the company.

6) The Board has developed a vision and mission statement, overall corporate strategy and significant policies of the Fund. A complete record of particulars of significant policies along with dates on which they were approved or amended has been maintained.

7) All the powers of the Board have been duly exercised and decisions on material transactions, including appointment, remuneration and terms and conditions of employment of the Chief Executive Officer (CEO) have been taken by the Board.

8) No new appointment of CFO and Company Secretary has been made during the year.

9) The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purpose. Written notices of the Board Meetings along with agenda and working papers were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

10) The Directors have been provided with the copies of the NBFC (Establishment and Regulation) Rules, 2003, Non-Banking Finance Companies and Notified Entities Regulations, 2008, Companies Ordinance 1984, Listing Regulations, Code of Corporate Governance, Prudential Regulations, Company's Memorandum and Articles of Association and all other relevant rules and regulations and hence are conversant with the relevant laws applicable to the company and the funds and are aware of their duties and responsibilities.

11) The Directors' Report for the year ended June 30, 2010 has been prepared in compliance with the requirements of the Code of Corporate Governance and fully describes the salient matters required to be disclosed.

63 AKD Opportunity Fund - Annual Report 2010

12) The financial statements of the Fund were duly signed by the CEO and CFO before approval of the Board.

13) The Directors, CEO and executives do not hold any interest in the units of the Fund other than that disclosed in the pattern of unit holding.

14) The Management Company has complied with all the corporate and financial reporting framework requirements of the Code.

15) The Board has formed an audit committee. It comprises of three members, all of whom are non-executive directors including the Chairman of the committee.

16) The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Fund as required by the Code. The terms of reference of the committee have been formed and advised to the committee for compliance.

17) The Management Company has outsourced the internal audit function of the Company to M/s Ford Rhodes Sidat Hyder & Co. Chartered Accountants, Karachi, who are considered suitably qualified and experienced for the purpose and are well conversant with the policies and procedures of the Fund.

18) The statutory auditors of the Fund have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold units of the Fund and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan.

19) The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.

20) The related party transactions have been placed before the audit committee and approved by the Board of Directors with necessary justification for non arm's length transactions. Majority of the related party transactions of the Fund are governed under the Non-Banking Finance Companies and Notified Entities Regulations, 2008 and the transactions which are not governed under the said regulations are carried at arm's length prices.

21) We confirm that all other material principles contained in the Code have been complied with.

For and on behalf of the Board

Nadeem Naqvi Karachi: October 8, 2010 Chief Executive Officer

64 AKD Opportunity Fund - Annual Report 2010

REVIEW REPORT TO THE UNIT HOLDERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE

We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of AKD Investment Management Limited (the asset management company) of AKD Opportunity Fund to comply with the Listing Regulation of the Karachi Stock Exchange (Guarantee) Limited where the Fund is listed.

The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code.

As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out any special review of the internal control system to enable us to express an opinion whether the Board's statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks.

The Code of Corporate Governance requires board of directors to approve related party transactions bifurcating between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price. In this connection we are only required and have ensured compliance of requirement to the extent of board of directors approving the related party transactions in the aforesaid manner. We have not carried out any procedures to enable us to express an opinion as to whether the related party transactions were carried out at arm's length price.

Based on our review, nothing has come to our attention, which causes us to believe that the Statement of Compliance does not appropriately reflect the compliance of the Management Company of the Fund, in all material respects, with the best practices contained in the Code of Corporate Governance as applicable to the Fund for the year ended June 30, 2010.

M. Yousuf Adil Saleem & Co. Karachi: October 8, 2010 Chartered Accountants

65 AKD Opportunity Fund - Annual Report 2010

INDEPENDENT AUDITORS' REPORT TO THE UNIT HOLDERS

We have audited the accompanying financial statements of AKD Opportunity Fund (the Fund), which comprises the statement of assets and liabilities as at June 30, 2010, and the related income statement, statement of other comprehensive income, distribution statement, cash flow statement and statement of movements in unit holders' fund for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management Company's Responsibility for the Financial Statements

The Management Company of the Fund is responsible for the preparation and fair presentation of these financial statements in accordance with the requirements of the Trust Deed, Non-Banking Finance Companies and Notified Entities Regulations, 2008, Non-Banking Finance Companies (Establishment and Regulation ) Rules, 2003 and approved accounting standards as applicable in Pakistan. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error ; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards as applicable in Pakistan. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the fund's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the fund's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the state of the Fund's affairs as at June 30, 2010 and of its financial performance, cash flows and transactions for the year then ended in accordance with approved accounting standards as applicable in Pakistan.

Other Matters

In our opinion, the financial statements have been prepared in accordance with the relevant provisions of the Trust Deed, Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 and the Non-Banking Finance Companies and Notified Entities Regulation, 2008.

M. Yousuf Adil Saleem & Co. Chartered Accountants Karachi: October 8, 2010 Engagement Partner: Mushtaq Ali Hirani

66 AKD Opportunity Fund - Annual Report 2010

STATEMENT OF ASSETS AND LIABILITIES AS AT JUNE 30, 2010

2010 2009 Note Rupees in '000' ASSETS

Investments 5 479,547 614,902 Bank balances 6 2,707 90,644 Dividend and profit receivable 7 568 2,927 Security deposits 2,600 2,600 Total Assets 485,422 711,073

LIABILITIES

Payable to management company 8 1,221 1,842 Remuneration payable to the trustee 79 121 Annual fee payable to Securities and Exchange Commission of Pakistan 629 1,123 Payable against purchase of securities - 1,574 Payable on redemption of units 534 - Accrued expenses and other liabilities 9 306 326 Worker's Welfare Fund 10 3,937 - Unclaimed dividend 15 1,663 Total Liabilities 6,721 6,649

CONTINGENCIES AND COMMITMENTS 11 - -

NET ASSETS 478,701 704,424

Unit Holders' Fund (as per statement attached) 478,701 704,424

(Number of Units)

Number of units in issue 11,611,089 19,983,967

(Rupees)

Net assets value per unit (face value per unit Rs.50/-) 41.23 35.25

The annexed notes from 1 to 30 form an integral part of these financial statements.

For AKD Investment Management Limited (Management Company)

Nadeem Naqvi Imran Motiwala Chief Executive Officer Director

67 AKD Opportunity Fund - Annual Report 2010

INCOME STATEMENT FOR THE YEAR ENDED JUNE 30, 2010

2010 2009 Note Rupees in '000' INCOME

Investment Income / (Loss)

Capital gain / (loss) on sale of investments 155,851 (448,131) Dividend income 33,674 56,740 Profit / return on - bank deposits 6,428 8,895 - investment in debt securities 3,850 6,383 - government securities - 2,544 - letters of placement - 103 Unrealised diminution on remeasurement of investment at fair value through profit or loss - held for trading (25,912) (333,470) 173,891 (706,936) Other Income

Element of income / (loss) and capital gains / (losses) included in prices of units sold less those in units redeemed 48,951 293,835 222,842 (413,101)

OPERATING EXPENSES

Remuneration to management company 12 19,860 34,494 Remuneration to trustee 13 1,324 2,049 Annual fee to Securities and Exchange Commission of Pakistan 14 629 1,123 Securities transaction cost 3,182 1,848 Auditors' remuneration 15 240 240 Worker's welfare fund 3,937 - Others 16 749 674 29,921 40,428 Net income / (loss) for the year 192,921 (453,529)

Other Comprehensive Income - -

Total comprehensive income / (loss) for the year carried to distribution statement 192,921 (453,529)

Earnings per unit 4.10

The annexed notes from 1 to 30 form an integral part of these financial statements. For AKD Investment Management Limited (Management Company)

Nadeem Naqvi Imran Motiwala Chief Executive Officer Director

68 AKD Opportunity Fund - Annual Report 2010

DISTRIBUTION STATEMENT FOR THE YEAR ENDED JUNE 30, 2010

2010 2009 Rupees in '000'

Undistributed (loss) / income brought forward - Realised 84,327 418,062 - Unrealised (379,104) (106,284) (294,777) 311,778

Net income / (loss) for the year 192,921 (453,529)

Bonus units issued for the year ended June 30, 2008 - (153,026) @Rs.5 per unit distributed on July 07, 2008

192,921 (606,555)

Unallocated (loss) carried forward (101,856) (294,777)

Represented by: - Realised 58,665 84,327 - Unrealised (160,521) (379,104) (101,856) (294,777)

The annexed notes from 1 to 30 form an integral part of these financial statements.

For AKD Investment Management Limited (Management Company)

Nadeem Naqvi Imran Motiwala Chief Executive Officer Director

69 AKD Opportunity Fund - Annual Report 2010

CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2010

2010 2009 Note Rupees in '000' A. CASH FLOWS FROM OPERATING ACTIVITIES

Net income / (loss) for the year 192,921 (453,529) Adjustments for: Unrealised diminution on remeasurement of investment at fair value through profit or loss' - held for trading 25,912 333,470 Element of income / (loss) and capital gains / (losses) included in prices of units sold less those in units redeemed (48,951) (293,835) 169,882 (413,894) (Increase) / decrease in assets Investments 109,443 879,824 Dividend and profit receivable 2,359 11,752 Security deposits - 1,000 111,802 892,576 Increase / (decrease) in liabilities Payable to management company (621) (3,455) Remuneration payable to trustee (42) (117) Annual fee payable to Securities and Exchange Commission of Pakistan (494) (348) Payable against purchase of securities (1,574) 1,574 Payable on redemption of units 534 (48,213) Accrued expenses and other liabilities (20) (592) Worker's Welfare Fund 3,937 - Unclaimed dividend - 1,685 1,720 (49,466) Net cash generated from operating activities A 283,404 429,216

B. CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid during the year (1,648) (66) Amount received on issue of units 139,351 474,033 Amount paid on redemption of units (509,044) (864,285) Net cash used in financing activities B (371,341) (390,318)

Net (decrease) / increase in cash and cash equivalents during the year A+B (87,937) 38,898 Cash and cash equivalents at beginning of the year 90,644 51,746 Cash and cash equivalents at end of the year 6 2,707 90,644

The annexed notes from 1 to 30 form an integral part of these financial statements.

For AKD Investment Management Limited (Management Company)

Nadeem Naqvi Imran Motiwala Chief Executive Officer Director

70 AKD Opportunity Fund - Annual Report 2010

STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUNDS FOR THE YEAR ENDED JUNE 30, 2010

2010 2009 Rupees in '000'

Net assets at beginning of the year 704,424 1,842,040

Amount received on issue of units : Number of units Issued: for the year ended 2010: 3,222,297 units (2009: 10,138,528 units) 139,351 474,033

Amount paid on redemption of units : Number of units redeemed: for the year ended 2010: 11,595,175 units (2009: 23,532,611 units) (509,044) (864,285) (369,693) (390,252)

Final distribution of 2,772,853 bonus units for the year ended June 30, 2008 - 153,026

Element of income and capital gains included in prices of units sold less those in units redeemed (48,951) (293,835)

Total comprehensive income / (loss) for the year after distribution 192,921 (606,555)

Net assets at end of the year 478,701 704,424

Net assets value per unit (face value per unit Rs.50/-) 41.23 35.25

The annexed notes from 1 to 30 form an integral part of these financial statements.

For AKD Investment Management Limited (Management Company)

Nadeem Naqvi Imran Motiwala Chief Executive Officer Director

71 AKD Opportunity Fund - Annual Report 2010

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2010

1. LEGAL STATUS AND NATURE OF BUSINESS

1.1 AKD Opportunity Fund (the Fund) was established under a Trust Deed executed between AKD Investment Management Limited (AKDIML) as the Management Company and Central Depository Company of Pakistan Limited (CDC) as the Trustee. The Trust Deed was executed on December 7, 2005 and was approved by the Securities and Exchange Commission of Pakistan (SECP) on December 19, 2005 in accordance with the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 (the NBFC Rules).

1.2 The Management Company of the Fund has obtained a license to act as an Asset Management Company under the NBFC Rules from SECP. Registered office of the Management Company is situated at Continental Trade Centre, Block-8, Clifton, Karachi, in the province of Sind.

1.3 It is an open-ended mutual fund and is listed on the Karachi Stock Exchange. Its units are offered for public subscription on a continuous basis. The units are transferable and can be redeemed by surrendering the same to the Fund.

1.4 It is the policy of the Fund to invest primarily in listed securities and fixed income, money and capital market investments.

1.5 Title to the assets of the Fund are held in the name of Central Depository Company Limited as a trustee of the Fund.

1.6 Management Quality rating of 'AM3' has been assigned to the Management Company on September 14, 2010 and Mutual Fund Performance Ranking (MFP) of 'MFR 2-Star' as one year rating has been assigned to the Fund on July 29, 2010 by JCR-VIS Credit Rating Company Limited.

2. STATEMENT OF COMPLIANCE

2.1 These financial statements have been prepared in accordance with requirements of Non- Banking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations), Non-Banking Finance Companies (Establishment and Regulation) Rules 2003 (the NBFC Rules), the Trust Deed, the Companies Ordinance, 1984 ( the Ordinance), directives issued by the Securities and Exchange Commission of Pakistan (SECP) and approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) as are notified under the provisions of the Ordinance. Wherever, the requirements of the NBFC Rules, the NBFC Regulations, the Ordinance or directives issued by SECP differ with the requirements of these standards, the requirements of the NBFC Rules, the NBFC Regulations, the Ordinance and the said directives issued by SECP shall prevail.

2.2 Adoption of new International Financial Reporting Standards

Change in accounting policy

IAS 1 (Revised), ‘Presentation of financial statements’ is effective from January 1, 2009. The revised standard prohibits the presentation of items of income and expenses (i.e., ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity. All non-owner changes in equity are required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). The Fund has applied IAS 1 (revised) from July 1, 2009 and has adopted to present one performance statement.

72 AKD Opportunity Fund - Annual Report 2010

The Fund does not have any item of income & expenses representing other comprehensive income, therefore, comprehensive income is equal to the net income /(loss) reported for all period presented and accordingly restated statement of assets and liabilities has not been prescribed.

IFRS 8, ‘Operating segments’ is effective from 1 January 2009. IFRS 8 replaces IAS 14, ‘Segment reporting’. The new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. The segment information is therefore reported in a manner that is more consistent with the internal reporting provided to the chief operating decision-maker. The Investment Committee of the Management Company has been identified as the chief operating decision-maker, which is responsible for allocating resources and assessing performance of the operating segment.

The Investment Committee is responsible for the Fund’s entire portfolio and considers the Fund to have a single operating segment. The Investment Committee asset allocation decisions are based on a single, targeted investment strategy, and the Fund’s performance is evaluated on an overall basis.

The internal reporting provided to the Investment Committee for the Fund’s assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of IFRSs. The Fund has no assets classified as non-current assets.

The Fund is domiciled in Pakistan. All of the Fund’s income is from investments in entities incorporated in Pakistan.

2.3 Standards and Interpretations adopted with no effect on the financial statements

The following new and revised Standards and Interpretations have also been adopted in these financial statements. Their adoption has no significant impact on the amounts reported in these financial statements but may affect the accounting for future transactions or arrangements.

Amendments to IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance January 01, 2009

Amendments to IAS 40 - Investment Property January 01, 2009

Amendments to IAS 23 - Borrowing Costs January 01, 2009

IFRS 2 - Share-based Payment : Vesting Conditions and Cancellations January 01, 2009

IFRS 3 - Business Combinations (Revised) and IAS 27 - Consolidated and Separate Financial Statements (Amended) including consequential amendments to IFRS 7, IAS 21, IAS 28, IAS 31 and IAS 39 July 01, 2009

IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations July 01, 2009

IAS 32- Financial Instruments : Presentation and IAS 1 Puttable Financial Instruments and Obligations arising on Liquidation January 01, 2009

IAS 38 - Intangible Assets January 01, 2009

IAS 39 - Financial Instruments : Recognition and Measurement - Eligible Hedged Items July 01, 2009

IFRIC 9 - Remeasurement of Embedded derivatives and IAS 39 Financial Instruments : Recognition and Measurement July 01, 2009

73 AKD Opportunity Fund - Annual Report 2010

IFRIC 15 - Agreements for the Construction of Real Estate January 01, 2009

IFRIC 17 - Distribution of Non-cash Assets to Owners July 01, 2009

IFRIC 18 - Transfers of Assets from Customers July 01, 2009

2.4 Standards, amendments and interpretations to published approved accounting standards that are not yet effective.

The following International Financial Reporting Standards and Interpretations as notified by the Securities and Exchange Commission of Pakistan are only effective for accounting periods, beginning on or after the date mentioned against each of them :

IFRS 9 - Financial Instruments January 01, 2013

Amendments to IFRS 1 - First -time Adoption of International Financial Reporting Standards- Additional Exemption for First-time Adopters January 01, 2010

Amendments to IFRS 2 - Share based Payment January 01, 2010

Amendments to IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations January 01, 2010

Amendments to IFRS 8 - Operating Segments January 01, 2010

Amendments to IAS 1 - Presentation of Financial Statements January 01, 2010

Amendments to IAS 7 - Statement of Cash Flows January 01, 2010

Amendments to IAS 17 - Leases January 01, 2010

Amendments to IAS 36 - Impairment of Assets January 01, 2010

Amendments to IAS 24 - Related Party Disclosures January 01, 2011

IFRIC – 17 Distributions of Non-cash Assets to Owners July 01, 2009

Revised IFRS 3 – Business Combinations July 01, 2010

Amendment to IAS 32 - Financial Instruments: Presentation – Classification of Rights Issues January 01, 2010

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments July 01, 2010

Amendments to IFRIC 14 IAS 19 - The Limit on a Defined Benefit Assets, Minimum Funding Requirements and their Interaction January 01, 2011

3. BASIS OF PREPARATION

3.1 Accounting convention

These financial statements have been prepared under the historical cost convention, except for investment - held for trading and derivative financial instruments, which are stated at fair value.

3.2 Functional and presentation currency

These financial statements are presented in Pak Rupees, which is the functional and presentation currency of the Fund.

74 AKD Opportunity Fund - Annual Report 2010

3.3 Critical accounting estimates and judgments

The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Fund's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience, including expectations of future events that are believed to be reasonable under the circumstances.

The significant area where judgments were made by the management in the application of accounting policies relate to classification and measurement of its investment portfolio as disclosed in notes 4.1 and 5 of these financial statements.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4.1 Investments

All purchases and sale of securities that require delivery within the time frame established by regulation or market convention are recognised at the trade date. Trade date is the date on which the Fund commits to purchase or sell the asset.

The management company determines the appropriate classification of the Fund's investment in accordance with the requirement of International Accounting Standard (IAS) 39 'Financial Instruments: Recognition and Measurement', at the time of purchase. Investment of the Fund are categorised as follows:

a) Financial assets at fair value through profit or loss - Held for trading

Investments that are acquired principally for the purpose of generating profit from short- term fluctuations in prices are classified as ''fair value through profit or loss - held for trading''. These investments are initially recognised at fair value which is the quoted bid price at stock exchange at the date when the Fund commits to purchase the investments and the transaction cost associated with the investments are taken directly to the income statement. Subsequent to initial recognition, these investments are marked to market using the closing market rates and are carried on the statement of assets and liabilities at fair value. The fair value of financial instrument traded in an active market is based on quoted market prices. Net gains and losses arising on changes in fair value of these investments are taken to income statement in the period in which they arise.

b) Held to maturity

Only those securities are classified as held to maturity which have fixed or determinable payments and fixed maturity that the Fund has the positive intent and ability to hold up to maturity. Held to maturity investments are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition of the financial assets. Subsequent to initial recognition these investments are carried at amortized cost, less any impairment loss.

c) Available for sale

Available for sale financial assets are non-derivatives that are either designated in this category or are not classified as at fair value through profit or loss, loans and receivable or held to maturity. These are initially measured at fair value which is the quoted bid price at stock exchange at the date when the Fund commits to purchase the investment plus transaction costs that are directly attributable to the acquisition of the investments. Subsequent to initial recognition, 'available for sale' investments are measured at fair value. Net gains and losses arising on changes in fair values of these investments are taken to equity until the available for sale investment is derecognized. At this time, the cumulative gain or loss previously recognized directly in equity is transferred to the income statement.

75 AKD Opportunity Fund - Annual Report 2010

Fair value measurement principles

Basis of valuation of Term Finance Certificates

The management company determines the appropriate classification of the debt securities in accordance with the requirement of International Accounting Standard (IAS) 39 as described above. Investments in debt securities whether traded or not are valued at the rates determined and announced by the Mutual Funds Association of Pakistan (MUFAP) based on the methodology prescribed by the SECP.

Basis of valuation of Government Securities

Government securities not listed on stock exchange and traded in inter bank market are valued at average rate quoted on widely used electronic quotation system and such average rate is be based on the remaining tenor of the security.

4.2 Derecognition

All investments are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and either (a) the Company has transferred substantially all risks and rewards of ownership or (b) the Company has neither transferred nor retained substantially all risks and rewards of the asset, but has transferred the control of the asset.

4.3 Derivatives Financial Instruments

Derivative financial instruments generally comprise of unpaid right letters. These are initially measured at fair value. The fair value of a derivative is based on quoted bid price of the Stock Exchange ruling at the balance sheet date. Subsequently, the resultant gain or loss on re-measurement of value of derivative is recognized in the Income Statement.

Derivative financial instruments entered into by the Fund do not meet the hedging criteria as defined by International Accounting Standard - 39, Recognition and Measurement of Financial Instruments (IAS-39), consequently hedge accounting is not used by the Fund.

4.4 Securities under Repurchase / Resale Agreement

Transaction of purchase under resale (reverse- repo) of marketable and government securities, are entered into at contracted rates for specific periods of time. Securities purchase with a corresponding commitment to resell at a specified futures dates (reverse-repo) are not recognized in the statement of assets and liabilities. Amount paid under these agreement are included in receivable in respect of reverse repurchase transaction. The difference between purchase and resale price is treated as income from reverse repurchase transaction and accrued over the period of the reverse- repo agreement.

Transaction of sale under repurchase (repo) of marketable and government securities are entered into at contracted rates for specified period of time. Securities sold with a simultaneous commitment to repurchase at a specific future date (repos) continue to be recognised in the statement of assets and liabilities and are measured in accordance with accounting policies for investment in securities. The counterparty liabilities for amount received under these transactions are recorded as liabilities. The difference between sale and repurchase price treated as borrowing charges and accrued over the period of the repo agreement.

4.5 Issue and redemption of units

Units are issued at the offer price prevalent at the end of the day in which the units are issued. The offer price represents the net asset value of units at the end of the day plus the allowable sales load and such sum shall be adjusted upward to the nearest 5 paisa. The sales load is payable to the distribution company and the management company as processing fee. Issue of units is recorded on acceptance of application for sale.

76 AKD Opportunity Fund - Annual Report 2010

Units redeemed are recorded at the redemption price prevailing at the end of the day in which the units are redeemed. The redemption price represents the net assets value at the end of the day and shall be adjusted downwards to the nearest 5 paisa. Redemption of units is recorded on acceptance of application for redemption.

4.6 Element of income/ (loss) and capital gains / (losses) included in prices of units sold less those in units redeemed

To prevent the dilution of per unit income and distribution of income already paid out on redemption as dividend, an equalization account called "element of income and capital gains included in prices of units sold less those in units redeemed" is created.

The "element of income and capital gains included in prices of units sold less those in units redeemed "account is credited with the amount representing net income in capital gain accounted for in the last announced net assets value and included in the sale proceeds of units. Upon redemption of units, the "element of income and capital gains included in prices of units sold less those in units redeemed" account is debited with the amount representing net income and capital gains accounted for in the last announced net asset value and included in the redemption price.

The net "element of income and capital gains included in prices of units sold less those in units redeemed" during an accounting period is transferred to the income statement.

4.7 Payables and accruals

Payables and accruals are carried at cost which is the fair value of consideration to be paid in the future for the services received whether billed or not to the fund.

4.8 Provisions

Provisions are recognised when the Fund has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made. Provisions are regularly reviewed and adjusted to reflect the current best estimate.

4.9 Net asset value per unit

The net asset value (NAV) per unit as disclosed in the statement of assets and liabilities of the Fund is calculated by dividing the net assets of the Fund by the number of units in circulation at the year end.

4.10 Earnings per unit

Earnings per unit (EPU) has not been disclosed as in the opinion of the management, determination of weighted average units for calculating EPU is not practicable.

4.11 Taxation

The charge for the current taxation is based on taxable income at the current rates of taxation after taking into account tax credits and tax rebates available, if any.

The Fund has not recognised any amount of deferred tax in these financial statements as the Fund intends to continue availing tax exemption in future years by distributing at least 90% of its accounting income for the year as reduced by capital gain, whether realised or unrealised to its unitholders every year.

4.12 Offsetting of financial instruments

Financial assets and financial liabilities are only offset and the net amount reported in the Statement of Assets and Liabilities when there is a legally enforceable right to set off the recognised amounts and the Fund intends to either settle on a net basis, or to realise the asset and settle the liability simultaneously.

77 AKD Opportunity Fund - Annual Report 2010

4.13 Financial assets and financial liabilities

Financial assets carried on the statement of assets and liabilities include investments, bank balances, dividend and other receivables and security deposits.

Financial liabilities carried on the statement of assets and liabilities include payable to management company, remuneration payable to trustee, annual fee payable to SECP, payable against purchase of securities, payable on redemption of units, accrued expenses and other liabilities and unclaimed dividend.

At the time of initial recognition, all financial assets and financial liabilities are measured at cost, which is the fair value of the consideration given or received for it. Transaction costs are included in the initial measurement of all financial assets and liabilities except for transaction costs incurred for the acquisition of investment classified as 'financial assets at fair value through profit or loss' and transaction costs that may be incurred on disposal which are charged as expense when incurred. The particular recognition method adopted for measurement of financial assets and financial liabilities subsequent to the initial recognition is disclosed in the individual policy statement associated with each item.

4.14 Impairment

The carrying amount of the Fund's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the assets is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in the income statement.

4.15 Dividend distributions and appropriations

Dividend distributions and appropriations are recognised as liability in the period in which the distributions and appropriations are approved.

4.16 Revenue recognition

- Gains or losses arising on sale of investments are included in the income statement on the date at which the transaction takes place.

- Unrealised gain or loss arising on marking to market of investment classified as ‘financial assets at fair value through profit and loss - held for trading’ are included in the income statement in the year in which they arise.

- Dividend income is recognised when the right to receive the dividend is established.

- Profit from government securities, term finance certificates, letter of placements and bank deposits are recognised on time proportionate basis.

4.17 Cash and cash equivalents

For the purpose of cash flow statement, cash and cash equivalents comprise of balances with the banks in current accounts, saving accounts and other deposits with bank having original maturities of three months or less. 2010 2009 Note Rupees in '000' 5. INVESTMENTS

Investments in securities at fair value through profit or loss - held for trading - Quoted equity securities 5.1 461,733 577,886 - Term finance certificates - unquoted 5.2 17,814 37,016 479,547 614,902

78 AKD Opportunity Fund - Annual Report 2010 4.93 8.57 0.15 1.67 0.52 3.86 0.36 1.12 0.28 0.89 0.47 0.25 0.06 5.71 0.51 1.17 0.17 3.18 1.38 6.48 5.62 4.93 7.87 10.91 12.41 Total market value of Investment Fund of the Net assets Unrealised (diminution) appreciation/ - - - - - 31,768 31,768 23,620 87,489 66,463 52,322 4.93 10.93 45,969 38,639 26,959 5.63 69,098 68,937 59,535 12.44 38,379 38,379 37,720 7.88 Cost Book value Market value ------Rupees in '000' ------2010 As at June 30, year Sales during the Bonus / Rights issue Number of Shares / Certificates / UnitsNumber of Shares / Certificates Balance as at June 30, 2010 Percentage in relation to year Purchases during the

2009 As at July 01, - 238,724 - - 238,724 6,850 6,850 6,634 (216) 1.39 Name of Investee Unless stated otherwise, the holding are in the fully paid ordinary shares / certificates / units of Rs. 10/- each Gas Water and Multiutilities Food Producers JDW Sugar Mills Limited Construction and Materials Lucky Cement Limited D.G. Khan Cement Company Limited Attock Cement (Pakistan) Limited Oil and Gas National Refinery Limited 237,751 Pakistan Refinery Limited - Attock Refinery Limited 17,200 BYCO Petroleum Pakistan Limited Pakistan State Oil Company Limited 1,050,000 Oil & Gas Development Company Limited - Pakistan Oilfields Limited - Pakistan Petroleum Limited 783,710 - 242,900 70,000 - 51,700 769,153 - - - - 50,000 - - 390,000 - 237,751 - 375,250 38,900 1,000,000 - 240 17,200 99,502 1,552,863 51,700 50,000 - - 31,768 - - 275,000 - - - 140,000 46,050 18,061 31,768 70,000 - - 30,000 - - 250,000 471,300 224,839 23,620 - - 275,240 8,900 - - - 70,495 3,495 (8,148) - - 99,502 1,066 - 49,469 - 3,495 - - - 4.93 12,433 - - 1,066 41,112 2,495 - 12,433 - - - - (8,357) - 699 (1,000) - 8,016 - - - - 8.59 - (367) 0.52 - (4,417) - - - - 0.15 - - 1.67 ------Non Life Insurance Adamjee Insurance Company Limited Central Insurance Company Limited Century Insurance Company Limited 233,750 Personal Goods Artistic Denim Mills Limited Amtex Limited 6,413 74,200 243,925 Nishat Mills Limited Din Textile Mills Limited Ibrahim Fibres Limited - - - 231,200 477,675 - 674,413 - 1,318,600 261,500 - - 6,413 74,200 - 275,000 - 50,000 250,000 ------1,468,600 - - - 905,613 - - - 125,000 100,000 261,500 - 35,497 150,000 7,231 - - - 50,000 28,167 - 1,950 7,231 - 18,493 - - 1,291 - 1,950 5,390 (9,674) 1,291 - - - (1,841) 1,731 - 3.86 1,345 - (219) 1.13 - - - 54 0.36 - - - 0.28 - - Banks Bank AlFalah Limited Bank AlHabib Limited MCB Bank Limited Allied Bank Limited The Bank of Khyber National Bank of Pakistan United Bank Limited Askari Bank Limited Habib Metropolitan Bank Limited NIB Bank Limited First Credit & Investment Bank Limited Arif Habib Bank Limited - Habib Bank Limited - 464,812 412,050 693,125 - 800,000 - 1,018,600 476,755 - 312,872 - 85,000 2,346,900 - 987,130 104,490 95,351 - - 1,587,902 522,485 157,940 - 500,000 - 213,673 - 40,000 350,000 - - - 5,000 231,669 823,471 693,125 72,106 560,037 450,000 - 412,050 85,000 - - 522,485 - 312,872 1,145,070 14,263 1,960 5,692 - - 213,673 2,346,900 - - - 5,000 457,400 1,415 29,942 1,960 5,692 7,041 - 156,900 - - 29,942 - 1,415 301 - - 2,271 4,257 231,669 823,471 7,041 17,518 27,367 1,183 - 301 (1,435) - 311 - - 1,490 17,357 3,739 5,633 (2,575) (232)0.89 271 Sui Northern Gas Pipeline Company Limited - 15,259 0.47 1,490 (1,408) - 3,739 - - 5.72 0.25 (2,098) (30) 2,462 1.18 832 - - - - 3.19 (1,277) 0.06 (658) - - - - 0.51 0.17 - - - - Sui Southern Gas Company Limited - 1,953,873 - - 1,953,873 31,529 31,529 31,086 (443) 6.49 5.1 for trading through profit and loss - Held securities at fair value Quoted equity

79 AKD Opportunity Fund - Annual Report 2010 5.79 0.08 0.73 2.62 5.74 0.41 4.99 6.54 5.87 0.73 2.62 5.29 2.00 1.21 0.10 6.15 5.92 2.40 10.73 22.26 Total market value of Investment 5.30 2.00 1.21 0.10 5.93 2.40 Fund of the Net assets 50 (299) 8,120 (2,085) (3,170) (1,130) Unrealised (diminution) appreciation/ 432 432 482 7,976 4,518 3,516 0.73 35,636 31,893 28,137 13,702 18,271 10,060 11,677 12,562 9,592 5.88 2.62 12,788 6,087 5,788 35,748 17,240 25,360 31,553 31,553 28,383 12,625 12,625 11,495 154,967 92,081 106,746 22.30 Cost value Book Market value ------Rupees in '000' ------As at 2010- June 30, June 30, 2010 June 30, 2009 621,927 954,006 487,878 908,372 461,733 577,886 (26,145) (330,486) year Sales during the Bonus / Rights issue Number of Shares / Certificates / Units Shares / Certificates Number of Balance as at June 30, 2010 Percentage in relation to year Purchases during the

25,526 25,526 29,516 6.17 2009 As at July 01, Name of Investee Electricity Hub Power Company Limited Kohinoor Energy Limited Nishat Power Limited Sitara Energy Limited Kot Addu Power Company Limited 1,258,500 Industrial Metals and Mining Huffaz Seamless Pipe Limited 259,800 Crescent Steel & Allied Products Limited 50,000 873,500 Industrial Engineering 1,500,000 AL-Ghazi Tractors Limited * 125,000 175,000 Industrial Transportation - Pakistan National Shipping Corporation 656,500 - - - - 45,000 1,308,500 150,900 - 17,651 100 77,100 384,800 89,570 - - - 185,639 - - 1,500,000 - - 1,048,500 600,563 45,000 - - - 241,676 - 35,228 - - - - 17,651 31,485 7,976 - 15,000 - 240,470 - 27,775 - 4,518 408 62,100 - - (3,710) - 3,516 13,702 408 - - 5.80 (1,002) - 10,060 - 362 - 12,562 - 0.73 - (46) - - 2,502 - - 0.08 - 2.62 - - - Pharma and Bio Tech Otsuka Pakistan Limited 170,500 - - - 170,500 General Industrials Thal Limited * 222,600 - 44,520 - 267,120 Automobile and Parts Ghandhara Nissan Limited Electronic and Electrical Equipment Pakistan Cables Limited 103,000 - - 8,926 - 103,000 - - - - 8,926 - - - - - Support Services TRG Pakistan Limited - 6,905,950 - - 6,905,950 Fixed Line Telecommunication Pak Datacom Limited WorldCall Telecom Limited Pakistan Telecommunication Company Limited Chemicals Engro Corporation Limited Fauji Fertilizer Company Limited Fauji Fertilizer Bin Qasim Limited Dawood Hercules Chemicals Limited Sitara Chemical Industries Limited Ghani Gases Limited - Clariant Pakistan Limited - 280,140 3,700,000 350,000 245,882 - 177,200 - 1,205,000 122,030 - 250,000 - 1,625,000 519,753 26,665 - - 93,750 3,700,000 - 135,516 - - 1,443,661 - 117,000 - - - 293,319 - 1,625,000 71,864 250,000 111,339 519,753 245,882 - 62,899 - 2,323 - - - - 23,203 - 35,848 700 177,200 2,323 71,864 23,203 51,463 - - 210,050 - 53,264 - 1,982 27,534 15,615 - 38,804 27,732 - - - 4,331 - (341) 28,501 10.75 23,910 - - - - 5.75 0.41 31,373 - (3,822) - 2,872 - - - 4.99 - - 6.55 ------* Ordinary shares of face value Rs.5/- each Beverages Murree Brewery Company Limited - 125,000 12,500 - 137,500

80 AKD Opportunity Fund - Annual Report 2010 1.73 1.98 Total market value of Investment Fund of the Net assets Unrealised (diminution) appreciation/ ------Book Value ------Rupees in '000' ------Cost Fair value 2010 As at June 30, June 30, 2010June 30, 2009 - - - - - June 30, 2010 - June 30, 2009 ------June 30, 2010June 30, 2009 18,141 40,000 17,581 40,000 17,814 37,016 233 (2,984) Sales/ Redeemed during the year the during year Number of Certificates Balance as at June 30, 2010 Percentage in relation to Purchases during the 2009 As at July 01, ------Rupees in '000' ------Rupees in '000' ------Rate Coupon 12% p.a semi annually Semi Annually 3M Kibor plus Tenor Name of the Investee Pakistan Investments Bonds September 03, 2009 10 years payable Treasury bills October 08, 2009October 22, 2009November 05, 2009 - 25,000 25,000 1 year 6 months 6 months ------75,000 50,000 50,000 75,000 50,000 50,000 ------JDW Sugar Mills Limited(face value Rs 5,000 each)WorldCall Telecom Limited (face value Rs 5,000 each) 6 Years quarterly basis 5 Years 6M Kibor plus 8,000 1.25% p.a. 1,000 - 1.6% p.a. 7,000 2,000 2,000 - 8,723 2,000 8,163 9,418 8,318 9,418 155 9,496 1.74 78 1.98 5.3 Government securities - Held for trading 5.4 Government securities - Held for trading 5.2 - Held for trading Term finance certificates

81 AKD Opportunity Fund - Annual Report 2010

2010 2009 Note Rupees in '000' 6. BANK BALANCES

Balances in: - Deposit and PLS accounts 6.1 2,668 90,618 - Current accounts 39 26 2,707 90,644

6.1 It carries markup at the rate ranging from 5% to 12% (2009 : 5% to 15%) per annum.

7. DIVIDEND AND PROFIT RECEIVABLE

Dividend receivable 195 2,067 Profit receivable on PLS accounts 21 736 Profit receivable from debt securities 352 124 568 2,927

8. PAYABLE TO THE MANAGEMENT COMPANY

Management remuneration 1,191 1,815 Sales load 30 27 1,221 1,842

9. ACCRUED EXPENSES AND OTHER LIABILITIES

Auditors' remuneration 195 192 Brokerage - 67 Withholding tax 2 5 Others 109 62 306 326

10. 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 applied. The Mutual Funds Association of Pakistan (MUFAP), on behalf of its members filed a constitutional petition in the High Court of Sindh (SHC) praying it to declare the funds are not establishments and as a result are not liable to pay contribution to the WWF. The honorable Court has rejected the petition on the technical grounds and stating that MUFAP is not the aggrieved party in this case and required the aggrieved parties to approach the courts for the said petition. In response, a petition has been filed with the honorable High Court of Sindh by some of mutual funds through trustees alongwith few investors. However, subsequent to filing of the petition, the Ministry of Labour and Manpower issued into a letter which states that mutual funds are not liable to WWF. The clarification went on to state that WWF Ordinance 1971 does not have any provisions for the applicability of the WWF on those entities whose income are exempt from income tax under the provision of any law, and West Pakistan Shop and Establishment Ordinance, 1969 is not applicable to any public listed company and any organised financial institutions because they are ruled and governed by separate laws such as mutual funds.

82 AKD Opportunity Fund - Annual Report 2010

The MUFAP, on behalf of its member AMCs, obtained a legal opinion to assess the implications of the letter issued by the Ministry of Labour and Manpower. The legal opinion, among other things, states that mutual funds are not required to provide for contribution to WWF and earlier provisioning, if any, can be reversed and the terms of the letter suggest that provisioning was neither required nor necessary. Further, opinion suggest that the petition filed with the High Court of Sindh be withdrawn.

However, on prudence basis, the management has made the provision of WWF in these financial statements.

11. CONTINGENCIES AND COMMITMENTS

There were no contingencies and commitments outstanding as at June 30, 2010 and June 30, 2009.

12. REMUNERATION TO MANAGEMENT COMPANY

Under the provisions of the NBFC Regulations, AKDIML is entitled to a remuneration, during the first five years of the fund, of an amount not exceeding three percent of the average annual net assets of the Fund and thereafter of an amount equal to two percent of such assets of the Fund. AKDIML has charged its remuneration at the rate of three percent for the current year based on the daily net asset value of the Fund as under: 2010 2009 Rupees in '000'

Average annual net assets 662,000 1,149,800

Remuneration (3% of average annual net assets) 19,860 34,494

13. REMUNERATION TO TRUSTEE

In accordance with Trust Deed, the trustee is entitled to monthly remuneration for services rendered to the Fund out of the Fund Property based on annual tariff as follows: -

Net Assets TARIFF

- Upto 1,000 million Rs. 0.7 million or 0.20% of NAV, whichever is higher - Greater than 1,000 million Rs. 2 million plus 0.10% of NAV exceeding Rs. 1,000 million

The remuneration is paid monthly in arrears.

14. ANNUAL FEE TO SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN

Under the provision of the NBFC Regulations 2008, the fund is required to pay as annual fee to SECP, an amount equal to .095% of the average annual net assets of the Fund from November 21, 2008. Prior to this date the amount was equal to one tenth of one percent of average annual net assets of the Fund. 2010 2009 Rupees in '000'

15. AUDITORS' REMUNERATION

Statutory audit fee 160 160 Half yearly review fee 45 45 Review of Code of Corporate Governance fee 25 25 Out of pocket 10 10 240 240

83 AKD Opportunity Fund - Annual Report 2010

2010 2009 Rupees in '000' 16. OTHERS

Printing and Stationary 243 299 National Clearing Company Pakistan Limited fee 182 36 Credit rating fee 120 140 CDC charges 111 56 KSE listing fee 40 35 Legal and professional charges 25 50 Bank charges 28 58 749 674

17. TAXATION

The Fund is exempt from tax under clause 99 of Part 1 of Second Schedule to the Income Tax Ordinance, 2001 (the Ordinance), subject to the condition that not less than 90% of its accounting income for the year, as reduced by the capital gains whether realised or unrealised, is distributed among its unit holders.

The Fund is also exempt from the provisions of Section 113 (minimum tax) under Clause 11 of Part IV of the Second Schedule to the Income Tax Ordinance, 2001.

18. TRANSACTIONS WITH CONNECTED PERSONS / RELATED PARTIES

Connected person include AKD Investment Management Limited, being the asset management company of the Fund, Aqeel Karim Dhedhi Securities (Private) Limited, AKD Securities Limited being the associated companies of the management company, Central Depository Company of Pakistan Limited being the trustee, other collective investment schemes managed by the Management Company and directors and officers of the Management Company and their connected persons.

Remuneration payable to the management company and trustee is determined in accordance with the provisions of the NBFC Regulations and Trust Deed respectively.

Details of transactions and balances with connected persons are as follows:

2010 2009 Rupees in '000' 18.1 Transactions during the year

AKD Investment Management Limited - Management Company

Remuneration 19,860 34,494 Sales load 371 590 Value of units issued 16,231 units (2009: Nil units) 700 -

Aqeel Karim Dhedhi Securities (Private) Limited

Value of units redeemed - Nil units (2009: 5,406,652 units) - 151,444 Issue of bonus - Nil units (2009: 449,153 units) - 24,787

AKD Securities Limited- Brokerage House

Commission paid on purchase and sale of marketable securities 247 242

84 AKD Opportunity Fund - Annual Report 2010

2010 2009 Rupees in '000' AKD Income Fund

Purchase of Nil units (2009: 4,779,407 units) - 244,000 Bonus units received Nil Units (2009: 22,764 units) - 1,155 Redemption of Nil units (2009: 5,385,535 units) - 273,068

Directors and officers of the fund

Faisal Bengali

Value of units redeemed - Nil units (2009: 112,615 units) - 3,604 Issue of bonus - Nil units (2009: 9,355 units) - 516

Imran Motiwala

Value of units issued Nil units (2009: 14,129 units) - 500 Value of units redeemed 8,477 units (2009: 8,374 units) 351 295 Issue of bonus - Nil units (2009: 226 units) - 12

AKD Investment Management Limited Staff Provident Fund

Issue of bonus - Nil units (2009: 488 units) - 27

Aqeel Karim Dhedhi Securities (Pvt.) Limited Staff Provident Fund

Value of units redeemed 15,261 units (2009: nil units) 578 - Issue of bonus - Nil units (2009: 2,929 units) - 162

Central Depository Company of Pakistan Limited - Trustee

Remuneration 1,324 2,049 CDS charges 111 56

18.2 Balances outstanding at year end

Payable to AKD Investment Management Limited

Remuneration 1,191 1,815 Sales load 30 27

Payable to AKD Securities Limited - Brokerage House

Commission payable on purchase and sale of marketable securities - 3

Payable to Central Depository Company of Pakistan Limited - Trustee

Remuneration 79 121

85 AKD Opportunity Fund - Annual Report 2010

2010 2009 Rupees in '000' Directors and officers of the fund

Imran Motiwala

Units held - 8,477

AKD Investment Management Limited

Units held 16,231 -

AKD Investment Management Limited Staff Provident Fund

Units held 5,877 5,877

Aqeel Karim Dhedhi Securities (Pvt.) Limited Staff Provident Fund

Units held 20,000 35,261

19. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

Financial Risk Management

The Fund’s activities expose it to a variety of financial risks: market risk (including price risk and interest rate risk), credit risk and liquidity risk.

The Fund's overall risk management program seeks to maximize the returns derived for the level of risk to which Fund is exposed and seeks to minimize potential adverse effects on the Funds financial performance.

The management of risk is carried out by the investment manager under policies approved by the Board of Directors. The Board provides principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, market risk and the investment of excess liquidity etc.

The Fund's use different methods to measure and manage the various types of risks to which it is exposed, these are summarised below;

19.1 Market Risk Management

Market risk is the risk that the fair value or future cash flows of a financial instruments will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk ,such as equity risk. Financial instruments affected by market risk include loans and borrowings, deposits, available-for-sale investments and derivative financial instruments.

(a) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Fund, at present, is not exposed to any currency risk as its all transactions are carried out in Pak Rupees.

86 AKD Opportunity Fund - Annual Report 2010

(b) Interest Rate Risk Management

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As the Fund has no significant interest-bearing assets, the Fund’s income and operating cash flows are substantially independent of changes in market interest rates. The management company through investment committee monitors the Fund's overall interest rate sensitivity on periodic basis.

Inerest Rate Sensitivity

The Fund assets exposed to interest rate risk are investments in debt securities and bank balances total amounting to Rs. 20.457 million (2009: Rs 127.634 million), Other assets amounts to Rs. 464.965 million (2009:Rs. 583.439 million) are not exposed to any interest rate . Further the Fund total liability amount to Rs 6.721 million (2009: Rs 6.649 million) is not exposed to any interest rate risk.

2010 2009 Percentage per annum The rates of return on financial assets are as follows:

Investments 13.55% to 13.44% to 14.25% 16.75% Bank balances 5% - 12% 5% - 12%

(c) Equity Price Risk Management

The Fund is exposed to equity securities price risk because of investments held by the Fund and classified on the balance sheet as financial assets at fair value through 'profit or loss' and 'available for sale'. To manage its price risk arising from investments in equity securities, the Fund diversifies its portfolio within the eligible stocks prescribed in the Trust Deed. The Fund’s constitutive document / regulations also limit individual equity securities to no more than 10% of net assets of the Fund, or issued capital of the investee company, whichever is lower, and sector exposure limit to 25% of net assets.

In case of 5% increase / decrease in KSE 100 index on June 30, 2010, post-tax profit for the period would be affected by Rs. 10.901 million (2009: 17.637 million) as a result of gains / losses on equity securities classified at fair value through profit or loss.

The analysis is based on the assumption that the equity index had increased / decreased by 5% with all other variables held constant and all the Fund’s equity instruments moved according to the historical correlation with the index. This represents management’s best estimate of a reasonable possible shift in the KSE 100 Index, having regard to the historical volatility of the index. The composition of the Fund’s investment portfolio and the correlation thereof to the KSE 100 index, is expected to change over time. Accordingly, the sensitivity analysis prepared as of June 30, 2010 is not necessarily indicative of the effect on the Fund’s net assets of future movements in the level of the KSE 100 Index.

19.2 Credit Risk And Concentration Of Credit Risks

The Fund is exposed to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when they fall due. Credit risk arises from deposits with banks and financial institutions, investment in debt securities and credit exposures arising as a result of dividends receivable on equity securities. For banks and financial institutions, only reputed parties are accepted. Investment committee allows investment in debt securities of only those entities with credit rating above "BBB" by external credit rating agencies such as PACRA or JCR-VIS. Credit risk on dividend receivable is minimal due to statutory protection. All transactions in listed securities are settled / paid for upon delivery using the central clearing company. The risk of default is considered minimal due to inherent systematic measures taken therein.

87 AKD Opportunity Fund - Annual Report 2010

The Company limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have a good credit rating. Given these high credit ratings, management does not expect any counterparty to fail to meet its obligations .

The Fund enters into transactions with diverse credit worthy counter parties thereby mitigating any significant concentration of credit risk.

The Fund has currently invested in "A" rated term finance certificates.

19.3 Liquidity Risk

Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. The management committee manages liquidity risk by following internal guidelines of the investment committee such as monitoring maturities of financial assets and financial liabilities and investing in highly liquid financial assets.

The Fund is not materially exposed to liquidity risk as all its obligations/commitments are short term in nature and are restricted to the extent of available liquidity and all assets of the Fund are readily disposable in the market.

Liquidity risk sensitivity

Company’s contractual maturity for its non-derivative financial liabilities total amounting to Rs 6.721 million ( 2009: 6.649 million) is non interest bearing and payable upto three months (2009: three months).

19.4 Sensitivity analysis for variable rate instruments

Presently, the Fund holds KIBOR based interest bearing term finance certificates exposing the Fund to cash flow interest rate risk. In case of 100 basis points increase / decrease in KIBOR on June 30, 2010 and June 30, 2009 with all other variables held constant, the net assets of the Fund and net income for the year would have been higher / lower by Rs. 0.276 million (2009 : Rs. 0.9 million).

20. FAIR VALUE OF FINANCIAL INSTRUMENTS

Investments are carried at their fair values. The management company is of the view that the fair market value of most of the remaining financial assets and financial liabilities are not significantly different from their carrying values.Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arms’ length transaction other than in a forced or liquidation sale.The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values.

The management company is of the view that the fair market value of most of the remaining financial assets and financial liabilities are not significantly different from their carrying values.

21. CAPITAL RISK MANAGEMENT

The Fund's capital is represented by redeemable units. They are entitled to dividend and to payment of a proportionate share based on the Fund's net asset value per unit on the redemption date. The relevant movements are shown on the statement of movement in unit holders' fund. The Fund has no restrictions or specific capital requirements on the subscription and redemption of units. The Fund's objective when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for unit holders and to maintain an optimal fund structure to reduce the cost of the Fund.

The income distribution have been shown against the year to which they relate although these were declared and distributed subsequently to the year end.

Past performance is not necessarily indicative of future performance, and that unit prices and investment returns may go down, as well as up.

The portfolio composition of the Fund has been disclosed in note 5 to the financial statements.

88 AKD Opportunity Fund - Annual Report 2010

22. LIST OF TOP TEN BROKERS IN ORDER OF PERCENTAGE OF COMMISSION PAID

Percentage of commision paid 2010

i) NAEL Capital (Private) Limited 10.51 ii) Creative Capital Securities (Private) Limited 9.11 iii) AKD Securities Limited 8.97 iv) BMA Capital Management Limited 8.86 v) Taurus Securities Limited 8.65 vi) Investment Managers Securities (Private) Limited 7.66 vii) Invisor Securities (Private) Limited 6.44 viii) KASB Securities Limited 6.14 ix) Fortune Securities Limited 5.92 x) Foundation Securities (Private) Limited 5.90

Percentage of commision paid 2009

i) Investment Managers Securities (Private) Limited 14.14 ii) AKD Securities Limited 13.21 iii) Pearl Securities (Private) Limited 11.99 iv) Fortune Securities Limited 9.71 v) Taurus Securities Limited 8.01 vi) Foundation Securities (Private) Limited 7.92 vii) KASB Securities Limited 6.74 viii) Cassim Investments (Private) Limited 5.76 ix) Alfalah Securities (Private) Limited 5.22 x) Elixir Securities Pakistan (Private) Limited 3.77 2010 2009 2008 23. PERFORMANCE TABLE

Total net assets value - Rupees in '000 478,701 704,424 1,842,041 Net assets value per unit - Rupees 41.23 35.25 60.19 Net (loss) / income for the year - Rupees in '000 192,921 (453,529) 186,023 Selling price as at June 30 - Rupees 42.50 36.35 62.00 Repurchase price as at June 30 - Rupees 41.20 35.20 60.15 Highest selling price during the year - Rupees 50.65 54.75 72.65 Lowest repurchase price during the year - Rupees 35.65 23.90 51.65 Return of the fund - Rupees in '000 - Income distribution 177,650 - 153,026 - Capital growth 196,430 3,509 457,038 Distribution per unit (annual) - Rupees Gross [announced on July 8, 2010 ( July 7, 2008)] 15.30 - 5.00

2010 2009 2008

Average annual return of the Fund

- Last one year 16.96% -36% 5% - Last two years -9.5% -16% 24% - Last three years -4.7% 4% 11%

- The income distribution have been shown against the year to which they relate although these were declared and distributed subsequently to the year end.

- Past performance is not necessarily indicative of future performance, and that unit price and investment return may go down, as well as up.

- The portfolio composition of the Fund has been disclosed in note 5 of the financial statements.

89 AKD Opportunity Fund - Annual Report 2010

24. PATTERN OF UNIT HOLDINGS

As at June 30, 2010 Category No. of Unit Units Investment Percentage holders held amount Rupees in '000 Individuals 576 2,925,101 120,596 25.19 Associated Companies 1 16,231 669 0.14 Banks / DFIs 2 2,265,304 93,394 19.51 Retirement Funds 29 1,584,267 65,316 13.65 Others 7 4,820,186 198,726 41.51 615 11,611,089 478,701 100.00

As at June 30, 2009 Category No. of Unit Units Investment Percentage holders held amount Rupees in '000 Individuals 733 3,933,707 138,661 19.68 Directors 1 8,477 299 0.04 Insurance companies 3 2,183,718 76,975 10.93 Banks / DFIs 5 3,431,555 120,960 17.17 NBFCs 2 99,993 3,525 0.50 Retirement funds 47 3,656,629 128,894 18.30 Public limited companies 1 89,548 3,157 0.45 Others 9 6,580,340 231,953 32.93 801 19,983,967 704,424 100.00

25. PARTICULARS OF FUND MANAGER

Name of Fund Manager Qualification Names of Other Funds Managed

Imran Motiwala BBA Golden Arrow Selected Stocks Fund Ltd.

26. DETAIL OF MEMBERS OF INVESTMENT COMMITTEE OF THE MANAGEMENT COMPANY

Name of members Designation Qualification Experience in years

Mr. Nadeem Naqvi Chief Executive Officer MBA Finance 28 Mr. Imran Motiwala Fund Manager: BBA 16 - Golden Arrow Selected Stocks Fund Limited - AKD Opportunity Fund Mr. Muhammad Amin Hussain Company Secretary and ACMA, ICS 26 Chief Financial Officer Mr. Muhammad Yaqoob Fund Manager: MBA Finance 6 - AKD Index Tracker Fund - AKD Income Fund Mr. Ahmed Hassan Fund Manager: BBA 3 - AKD Index Tracker Fund Mr. Danish Owais Research Analyst BBA 3

90 AKD Opportunity Fund - Annual Report 2010

27. ATTENDANCE OF MEETING OF BOARD OF DIRECTORS OF THE MANAGEMENT COMPANY

During the year, four meetings of Board of Directors were held on August 20, 2009, October 23, 2009, February 25, 2010 and April 29, 2010. The number of meetings attended by each director are as follows:

Number of Meetings Name of Director Held Attended Leave Granted

Mr. Farrukh Shoukat Ansari 4 31 Mr. Imran Motiwala 4 4 - Mr. Faisal Bengali 4 2 - Mr. Ashraf Adamjee 4 2 - Mr. Zahoor Motiwala 4 4 - Mr. Asif Ikram 4 2 2 Mr. Nadeem Naqvi * 4 2 - Mr. Ali Qadir Gilani ** 4 - 1 Mr. Taufiq Habib 4 31

* Mr. Nadeem Naqvi appointed in place of Mr. Faisal Bengali on December 3, 2009. ** Mr. Ali Qadir Gilani appointed in place of Mr. Ashraf Adamjee on April 8, 2010.

28. NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATE

Dividend distribution

The Board of Directors of the management Company has approved a dividend of Rs. 15.3 (2009:Nil ) for every unit held for the year ended 30 June 2010, amounting to Rs. 177.65 million (2009: Nil ) in total in their meeting held on 08 July 2010. The financial statements for the year ended 30 June 2010 do not include the effect of this appropriation which will be counted for in the financial statements for the year ending 30 June 2011.

29. DATE OF AUTHORISATION FOR ISSUE

These financial statements were authorized for issue on October 08, 2010 by the Board of Directors of the Management Company.

30. GENERAL

Figures have been rounded off to the nearest of thousand rupees.

For AKD Investment Management Limited (Management Company)

Nadeem Naqvi Imran Motiwala Chief Executive Officer Director

91 216-217, Continental Trade Centre, Block-8, Clifton, Karachi-74000 U.A.N : 92-21-111-AKDIML (111-253-465) Fax : 92-21-35373217, 35303125 E-mail : [email protected] Website : www.akdinvestment.com

Islamabad Branch: Lahore Branch: Multan Branch: Suite # 302 - 303, Suite # 512-513, 5th Floor B.F 2/III, 2nd Business Floor, New ISE Tower, Main Jinnah Avenue, Lahore Stock Exchange Building, ChenOne Tower, Blue Area, Islamabad 19, Khayaban-e-Aiwan-e-Iqbal Road, Lahore 74 Abdali Road, Multan Tel: 051-2894316-18, Fax: 051-2894319 Tel: 042-36280916-8, Fax: 042-36280919 Tel: 061-4512728 - 29