· we conducted our audit in accordance with the auditing standards as applicable in pakistan

17

UTPIslamicFund

We have audited the annexed statement of assets and liabilities of UTP-ISLAMIC FUND as atJune 30, 2004 and the related income statement, distribution statement, cash flow statementand statement of movement in unit holders’ funds, together with the notes forming part thereof,for the year then ended and we state that we have obtained all the information and explanationswhich to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the Management Company to establish and maintain a system ofinternal control and prepare and present the above said statements in conformity with therequirements of the Trust Deed, and the Non-Banking Finance Companies (Establishment andRegulation) Rules, 2003. Our responsibility is to express an opinion on these statements basedon our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan.These standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the above said statements are free of any material misstatement. An auditincludes examining on a test basis, evidence supporting the amounts and disclosures in theabove said statements. An audit also includes assessing the accounting policies and significantestimates made by management, as well as, evaluating the overall presentation of the abovesaid statements. We believe that our audit provides a reasonable basis for our opinion and afterdue verification, we report that:

In our opinion and to the best of our information and according to the explanations given to us,the statement of assets and liabilities, income statement, distribution statement, cash flowstatement and statement of movement in unit holders’ funds, together with the notes formingpart thereof, have been prepared in accordance with the relevant provisions of the Trust Deed,the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 and presenta true and fair view of the state of affairs as at June 30, 2004 and of the transactions of thescheme for the year then ended.

Karachi Ford Rhodes Sidat Hyder & Co.July 10, 2004 Chartered Accountants

Auditors’ Report to the Unit Holders

18

UTPIslamicFund

19

UTPIslamicFund

Statement of Assets and Liabilities 20

Income Statement 21

Statement of Portfolio ofInvestments, Receivables and Financing 22

Distribution Statement 23

Cash Flow Statement 24

Statement of Movement in Unit Holders' Funds 25

Statement of Financial Highlights 26

Notes to the Financial Statements 27

Contents

20

UTPIslamicFund

2004 2003Note Rupees Rupees

Assets

Investments 5 533,554,806 319,010,594Receivables 6 338,120 142,546,860Other assets - 398,838Bank balances 7 117,631,135 37,055,561

Total assets 651,524,061 499,011,853

Liabilities

Remuneration payable to Management Company 8 4,978,969 5,636,803Remuneration payable to Trustee 9 258,711 194,156Remuneration payable to Shariah Advisory Council 10 10,000 15,000Creditors, accrued and other liabilities 11 3,413,747 1,859,834Amount payable on redemption of units 883,384 2,780,424Distribution payable 66,925 33,244,520

Total liabilities 9,611,736 43,730,737

Net assets 641,912,325 455,281,116

Unit holders' funds (as per statement attached) 641,912,325 455,281,116

Contingencies and commitments 12

Number of units in issue 926,861 831,113

Net asset value per unit 693 548

The annexed notes form an integral part of these financial statements.

Statement of Assets and LiabilitiesAs at June 30, 2004

For ABAMCO Limited(Management Company)

Muhammad Najam Ali Munawar Alam Siddiqui Munaf IbrahimChief Executive Officer Chairman Director

For Muslim Commercial Financial Services (Private) Limited(Trustee)

A. Razzak H. AdamManaging Director

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UTPIslamicFund

For the periodfrom

December 26, 2002to

2004 June 30, 2003Note Rupees Rupees

Income

Net gain from transactions in held-for-trading securities 67,759,341 36,964,708Return on bank balances 3,985,509 2,122,439Dividend income 24,634,481 1,603,700Other income 72,980 -Element of income and capital gains in prices of units sold less those in units redeemed (18,599,048) 6,869,205

77,853,263 47,560,052Unrealised gain on investment in held-for-trading securities and derivative financial instruments - net 83,365,551 30,686,014

161,218,814 78,246,066Expenses

Remuneration of Management Company 8 21,223,803 5,636,803Remuneration of Trustee 9 3,537,280 939,300Remuneration of Shariah Advisory Council 10 200,000 100,000Bank and settlement charges 628,291 344,916Auditors' remuneration 13 334,966 265,000SEC annual fee 11.1 707,398 109,274Listing fee 37,000 105,000Formation cost written off - 600,000MUFAP subscription fee 17,591 -

26,686,329 8,100,293

Net income 134,532,485 70,145,773

Net distributable income as per clause 30.2 of the Trust Deed 51,166,934 39,459,759Add: Unrealised gain on investment in held-for-trading securities and derivative financial instruments - net 83,365,551 30,686,014

Net income 134,532,485 70,145,773

Net distributable income per unit as per clause 30.2 of the Trust Deed 55 47Net income per unit attributable to unrealised gains on held-for-trading securities and derivative financial instruments - net 90 37

Net income per unit 145 84


Income StatementFor the Year ended June 30, 2004





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UTPIslamicFund

Statement of Portfolio ofInvestments, Receivables and FinancingFor the Year ended June 30, 2004

June 30, 2004 Percentage ofNote Rupees Total Assets

Investments 5 533,554,806 82

Receivables 6 - -

Financing - -






23

UTPIslamicFund

For the periodfrom

December 26, 2002to

2004 June 30, 2003 Rupees Rupees

Undistributed income brought forward from July 1, 2003 36,901,253 -

Net income for the year 134,532,485 70,145,773

Final distribution - transfer to reserve for issue of bonus units at the rate of Rs. 85 per unit (78,783,185) -

Distributed Rs. 40 per unit on August 12, 2003 - (33,244,520)

Undistributed income carried forward 92,650,553 36,901,253

Distribution StatementFor the Year ended June 30, 2004





24

UTPIslamicFund

For the periodfrom

December 26, 2002to

2004 June 30, 2003 Rupees Rupees

Cash Flow from operating activities

Net income 134,532,485 70,145,773

Adjustments for:Net gain from transactions in held-for-trading securities (67,759,341) (36,964,708)Element of income and capital gains in prices of units sold less those of units redeemed 18,599,048 (6,869,205)Unrealised loss on investment in held-for-trading securities and derivative financial instruments - net (83,365,551) (30,686,014)

Operating profit before working capital changes 2,006,641 (4,374,154)

Working capital changes

(Increase) / decrease in current assetsReceivables 142,208,740 (142,546,860)Other assets 398,838 (398,838)

142,607,578 (142,945,698)Increase / (decrease) in current liabilitiesRemuneration payable to Management Company (657,834) 5,636,803Remuneration payable to Trustee 64,555 194,156Remuneration payable to Shariah Advisory Council (5,000) 15,000Creditors, accrued and other liabilities 1,553,913 1,859,834

955,634 7,705,793

145,569,853 (139,614,059)

Sale of held-for-trading investments 1,900,521,349 698,388,258Purchase of held-for-trading investments (1,963,940,668) (949,748,130)

Cash generated / (used in) operating activities 82,150,534 (390,973,931)

Cash Flow from financing activities

Amounts received on issue of units 848,729,806 555,919,615Amounts paid on redemption of units (817,127,171) (127,890,123)Distribution paid (33,177,595) -

Net cash flow from financing activities (1,574,960) 428,029,492

Net increase in bank balances during the period 80,575,574 37,055,561

Bank balances at the beginning of the period 37,055,561 -

Bank balances at the end of the period 117,631,135 37,055,561

Cash Flow StatementFor the Year ended June 30, 2004





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UTPIslamicFund

For the periodfrom

December 26, 2002 to

2004 June 30, 2003Rupees Rupees

Net assets as at the beginning of the year 455,281,116 -

Amounts received on issue of 1,342,988 (2003: 1,066,506) units 848,729,806 555,919,615Amounts paid on redemption of 1,247,240 (2003: 235,393) units (815,230,131) (130,670,547)

33,499,675 425,249,068Element of income and capital gains in prices of units sold less those in units redeemed 18,599,048 (6,869,205)

Net income for the year 134,532,486 70,145,773

Cash distribution for the year - (33,244,520)

Net assets as at the end of the year 641,912,325 455,281,116

Net assets as at the end of the year consist of:

Capital account 470,478,587 418,379,863

Reserve for issue of bonus units 78,783,185 -

Undistributed income carried forward 92,650,553 36,901,253

641,912,325 455,281,116

Statement of Movement in Unit Holders' FundsFor the Year ended June 30, 2004





26

UTPIslamicFund

For the periodfrom


2004 June 30, 2003Note Rupees Rupees

Net asset value at the beginning of the period 548 -

Net income or loss from investments, sale and financing 26 2Net realised and unrealised gains or losses from investments 173 89

Net income before remuneration of management company 199 91Remuneration of management company (24) (7)Distribution - (40)Capital contributions 38 504Computational adjustment for opening and average number of units (68) -

Net asset value at the end of the period 693 548

Total net assets at the end of the period (Rupees) 641,912,325 455,281,116

Weighted average net assets (Rupees) 700,854,613 372,662,288

Ratio of expenses to weighted average net assets 20.1 3.81% 2.17%

Portfolio investments, receivables and financing turnover rate 20.2 4.30 6.91

Annual rate of return 20.3 24.52% 36.94%

Statement of Financial HighlightsFor the Year ended June 30, 2004





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UTPIslamicFund

Notes to the Financial StatementsFor the Year ended June 30, 20041. LEGAL STATUS AND NATURE OF BUSINESS

UTP - Islamic Fund (UTP - ISF) has been established under the Asset Management CompaniesRules, 1995 [replaced by the Non-Banking Finance Companies (Establishment and Regulation) Rules,2003] and has been approved as an investment scheme by the Securities and Exchange Commissionof Pakistan on November 18, 2002. It has been constituted under a Trust Deed, dated December 16,2002 between ABAMCO Limited as the Management Company, a company incorporated under theCompanies Ordinance, 1984 and the Muslim Commercial Financial Services (Private) Limited as theTrustee, also incorporated under the Companies Ordinance, 1984 and a wholly owned subsidiary ofMuslim Commercial Bank Limited.

All the activities of the Fund are undertaken in accordance with the Islamic Shariah rules and principles.The Management Company has appointed a Shariah Advisory Council whose advice is followed toensure that activities of the Fund are in compliance with Shariah.

The Fund is an open ended mutual fund and offers units for public subscription on a continuousbasis. The units are transferable and can also be redeemed by surrendering them to the Fund. Theunits are listed on the Lahore Stock Exchange.

The principal activity of the Fund is to make shariah compliant investments in securities listed on theStock Exchanges registered in Pakistan.

2. STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with the requirements of the TrustDeed, the Non Banking Finance Companies (Establishment & Regulation) Rules, 2003 and approvedaccounting standards as applicable in Pakistan and relevant standards issued by the Accounting andAuditing Organisation for Islamic Financial Institutions (AAOIFI). Wherever, the requirements of theNon Banking Finance Companies (Establishment & Regulation) Rules, 2003 differ with therequirements of these standards, the requirements of the Non Banking Finance Companies(Establishment & Regulation) Rules, 2003 take precedence.

3. BASIS OF MEASUREMENT

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4.1 Investments

Investments which are acquired principally for the purpose of generating a profit from shortterm fluctuations in price or dealer's margin are classified as held-for-trading. Investmentswhich are intended to be held for an indefinite period but may be sold in response to the needfor liquidity or changes in interest rates are classified as available-for-sale. Investments withfixed maturity where management has both the intent and ability to hold to maturity, are classifiedas held-to-maturity.

All investments are initially recognised at cost, being the fair value of the consideration givenincluding acquisition charges associated with the investment.

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UTPIslamicFund

After initial recognition, investments which are classified as held-for-trading and available-for-sale are remeasured at fair value. Gains or losses on held-for-trading investments arerecognised in income. Gains or losses on available-for-sale investments are recognised in theunit holders' funds until the investment is sold, collected or otherwise disposed of, or until theinvestment is determined to be impaired, at which time the cumulative gain or loss previouslyreported in unit holders' funds is included in income. Investments classified as held-to-maturityare stated at amortised cost.

For investments in quoted marketable securities, fair value is determined by reference toStock Exchange quoted market prices at the close of business on balance sheet date.

4.2 Derivatives

Derivative instruments held by the Fund generally comprise of futures contracts in the capitalmarket. These are initially recognised at cost and are subsequently remeasured at their fairvalue. The fair value of futures contracts is calculated as being the net difference between thecontract price and the closing price reported on the primary exchange of the futures contract.Derivatives with positive market values (unrealised gains) are included in other assets andderivatives with negative market values (unrealised losses) are included in other liabilities inthe balance sheet. The resultant gains and losses are included in the income currently.

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

4.3 Issue and redemption of units

Units are issued at the offer price prevalent during the week in which the units are issued. Theoffer price represents the net asset value of units at the end of the previous week plus theallowable sales load. The sales load is payable to the Distribution Company and theManagement Company as processing fee. Issue of units is recorded on acceptance ofapplication for sale.

Units redeemed are recorded at the redemption price prevalent during the week in which theunits are redeemed. The redemption price represents the net asset value at the end of theprevious week. Redemption of units is recorded on acceptance of application for redemption.

4.4 Revenue recognition

Gain or loss on sale of marketable securities is accounted for in the year in which it arises.

Dividend income is recorded at the time of the closure of share transfer book of the Funddeclaring the dividend. Dividend received on marketable securities acquired after theannouncement of dividend till the book closure date is not taken to income but reflected asreduction in the cost of investment.

Return on bank balances is recognised on a time proportion basis.

Notes to the Financial Statements For the Year ended June 30, 2004

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UTPIslamicFund

4.5 Element of income and capital gains 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 onredemption, as dividend, an equalization account called “element of income and capital gainsin prices of units sold less those in units redeemed” is created.

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

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

4.6 Taxation

The Fund is exempt from taxation under clause 99 of the Part I of the 2nd Schedule of theIncome Tax Ordinance, 2001, subject to the condition that not less than 90% of its incomeexcluding realised and unrealised capital gains for the period is distributed amongst the unitholders.

4.7 Financial instruments

All the financial assets and financial liabilities are recognised at the time when the Fund becomesa party to the contractual provisions of the instrument. Any gain or loss on derecognition of thefinancial assets and financial liabilities is taken to income currently.

4.8 Trade date accounting

All regular way purchases / sales of investments are recognised on the trade date, i.e., thedate that the Fund commits to purchase / sell the investments. Regular way purchases orsales of investments require delivery of securities within three days after the transaction dateas required by Stock Exchange regulations.

4.9 Offsetting of financial assets and liabilities

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

4.10 Zakat

Units held by resident Pakistani unit holders shall be subject to Zakat at 2.5% of the par valueof units under Zakat and Ushr Ordinance, 1980, (XVII of 1980), except those exempted underthe said Ordinance. Zakat will be deducted at source from the dividend amount or from theredemption payment, if units are redeemed during the Zakat year before payment of dividend.

4.11 Cash and cash equivalents

Cash and cash equivalents comprise of bank balances.


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UTPIslamicFund


5. INVESTMENTS

Held-for-trading

Listed equity securities 5.1 533,554,806 319,010,594

No. of Bonus/ holdings rights No. of

at the Acquired received Disposed holdings Market beginning during the during during at the end value % of of the year year the year the year of the year (Rupees) net assets

5.1 Listed equity securities *

* Ordinary shares / certificates have a face value of Rs. 10/- each unless stated otherwise.Sectors / Companies

Mutual funds

BSJS Balanced Fund Limited (connected person) 300,000 - - 300,000 - - -1st ICP Mutual Fund (connected person) 208,000 318,575 281,379 807,954 - - -3rd ICP Mutual Fund (connected person) - 426,000 35,775 461,775 - - -4th ICP Mutual Fund (connected person) 212,000 1,309,943 295,243 298,743 1,518,443 53,297,349 8.308th ICP Mutual Fund (connected person) - 992,500 - 992,500 - - -11th ICP Mutual Fund (connected person) 86,500 407,338 128,776 622,614 - - -12th ICP Mutual Fund (connected person) 65,000 563,188 312,751 940,939 - - -15th ICP Mutual Fund (connected person) 27,000 258,713 40,451 326,164 - - -19th ICP Mutual Fund (connected person) 38,000 1,989,451 51,301 2,078,752 - - -20th ICP Mutual Fund (connected person) 24,000 2,015,002 32,402 2,071,404 - - -21st ICP Mutual Fund (connected person) - 113,500 - 113,500 - - -23rd ICP Mutual Fund (connected person) 260,000 571,500 - 831,500 - - -25th ICP Mutual Fund (connected person) 181,000 828,000 - 1,009,000 - - -ABAMCO Capital Fund (connected person) - 9,436,594 - 8,000 9,428,594 151,800,363 23.65ABAMCO Stock Market Fund (connected person) - 1,494,587 - 111,500 1,383,087 28,906,518 4.50

Modaraba

First Punjab Modaraba - 2,373,000 - 2,373,000 - - -

Textile spinning

Umer Fabrics Mills Limited - 213,500 - - 213,500 7,365,750 1.15

Textile composite

Nishat Mills Limited 300,000 1,845,000 - 2,145,000 - - -Azgard Nine Limited - 1,400,669 - - 1,400,669 31,515,053 4.91

Unexercised rights **

Azgard Nine Limited - - 1,400,669 - 1,400,669 8,968,992 1.40

Cement

D.G. Khan Cement Company Limited - 1,150,000 - 1,150,000 - - - -

Refinery

Attock Refinery Limited 100,000 167,000 - 267,000 - - -National Refinery Limited 100,000 90,000 - 28,200 161,800 29,908,730 4.66

Power generation and distribution

Hub Power Company Limited 625,000 3,669,000 - 3,094,000 1,200,000 38,760,000 6.04Kohinoor Energy Limited 750,000 - - - 750,000 26,100,000 4.07Southern Electric Power Company Limited - 500,000 - 500,000 - - -

Balance carried forward 376,622,755 58.68


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UTPIslamicFund

No. of Bonus/ holdings rights No. of

at the Acquired received Disposed holdings Market beginning during the during during at the end value % of of the year year the year the year of the year (Rupees) net assets

Balance brought forward 376,622,755 58.68

Oil and gas marketing companies

Pakistan State Oil Company Limited 150,000 765,000 - 915,000 - - -

Oil and gas exploration companies

Oil & Gas Development Company Limited - 1,500,212 - 1,200,212 300,000 19,350,000 3.01Pakistan Oilfields Limited - 650,000 - 550,000 100,000 20,850,000 3.25

Automobile assembler

Atlas Honda Limited - 7,000 - 7,000 - - -

Technology and communication

Pakistan Telecommunication Company Limited 300,000 7,200,000 - 6,950,000 550,000 23,182,500 3.61TRG Pakistan Limited - 858,000 - 858,000 - - -

Unexercised rights **

TRG Pakistan Limited - - 58,000 - 58,000 368,300 0.06

Fertilizer

Engro Chemical Pakistan Limited 500,000 588,000 - 838,000 250,000 24,375,000 3.80Fauji Fertilizer Company Limited 400,000 975,400 - 1,275,400 100,000 11,885,000 1.85

Chemical

ICI Pakistan Limited - 507,000 - 507,000 - - -

Transport

Pakistan International Container Terminal Limited - 975,000 - 775,000 200,000 4,600,000 0.71

Paper and board

Packages Limited 140,000 - - 140,000 - - -

Food and personal care products

Unilever Pakistan Limited 8,000 - - 8,000 - - -(Face value Rs.50 each)

Miscellaneous

Tri-Pack Films Limited 139,000 - - 139,000 - - -

Securities sold under futures contracts

Power generation and distributionHub Power Company Limited 536,000 1,000,000 - 536,000 1,000,000 32,300,000 5.03

Fertilizer

Engro Chemical Pakistan Limited 375,000 - - 375,000 - - -

Technology and communication

Pakistan Telecommunication Company Limited - 475,000 - - 475,000 20,021,250 3.12

533,554,806 83.12

Cost of held-for-trading investments as at June 30, 2004 442,043,593

** Market values of unexercised rights have been calculated by adjusting the market value of existing shares of the funds for estimated dividend and the exercise price.


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UTPIslamicFund


6. RECEIVABLES - considered good

Against sale of held-for-trading investments - net - 140,743,531

Other receivableReturn receivable on bank balances 163,120 153,329Dividend income 175,000 1,650,000

338,120 142,546,860

7. BANK BALANCES - local currency

On savings accounts - approved by Shariah Advisory Council 116,967,499 30,698,424On current accounts 663,636 6,357,137

117,631,135 37,055,561

7.1 Saving accounts carry markup rates ranging from 1% to 4.25% p.a (2003: 1% to 4.50%).

8. REMUNERATION PAYABLE TO MANAGEMENT COMPANY

The Management Company is entitled to a remuneration for services rendered to the Fund under theprovisions of the Asset Management Companies Rules, 1995 [replaced by the Non Banking FinanceCompanies (Establishment & Regulation) Rules, 2003] upto a maximum of 3% per annum of theaverage weekly net assets of the Fund.

9. REMUNERATION PAYABLE TO TRUSTEE

The Trustee is entitled to a monthly remuneration for services rendered to the Fund under the provisionsof the Trust Deed upto a maximum of 0.5% per annum of the average weekly net assets of the Fundupto rupees one billion and 0.1% per annum for the average weekly net assets of the Fund exceedingrupees one billion. The remuneration of the Trustee has been calculated at 0.5% per annum of theaverage weekly net assets of the Fund for the year ended June 30, 2004 as per the agreement withthe Trustee.

10. REMUNERATION PAYABLE TO SHARIAH ADVISORY COUNCIL

Shariah Advisory Council is entitled to a remuneration for the services rendered to the Fund underthe agreement between Management Company and the Shariah Advisory Council. The ShariahAdvisory Council comprises of a chairman and two members. Members are entitled to a remunerationof Rs.5,000 per meeting while the chairman is entitled to a remuneration of Rs.10,000 per month. Theremuneration for the year ended June 30, 2004 amounts to Rs.200,000.


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UTPIslamicFund

Note 2004 2003Rupees Rupees

11. CREDITORS, ACCRUED AND OTHER LIABILITIES

Sales load payable 778,674 1,437,563SEC annual fee payable 11.1 816,672 109,274Accrued expenses 333,183 215,025Zakat payable 17,175 -Negative fair value of derivative financial instruments 1,436,000 -Other payables 32,043 97,972

3,413,747 1,859,834

11.1 SEC annual fee payable

This represents annual fee payable to SEC in accordance with rule 79 of the Non BankingFinance Companies (Establishment & Regulation) Rules, 2003, whereby the Fund is requiredto pay SEC an amount equal to one tenth of 1% of the average annual net assets of the Fund.

12. CONTINGENCIES AND COMMITMENTS

Commitment for the sale of quoted securities under futures contracts 51,154,000 53,731,874Commitment for the acquisition of right shares - 14,118,131

For the periodfrom


2004 June 30, 2003Rupees Rupees13.

AUDITORS' REMUNERATION

Audit fee 150,000 125,000Other services 169,000 140,000Out of pocket expenses 15,966 -

334,966 265,000

14. TAXATION

For tax year 2003 the Fund has filed tax return which is deemed to be assessed under section 120 ofthe Income Tax Ordinance, 2001. No provision for taxation has been made in the financial statementsin view of the exemption under clause 99 of the Part I of the 2nd Schedule of the Income Tax Ordinance,2001, subject to the condition that not less than 90% of its income excluding realised and unrealisedcapital gains for the period is distributed among unit holders.

15. TRANSACTIONS WITH CONNECTED PERSONS

Connected persons include ABAMCO Limited being the management company, Jahangir Siddiqui &Company Limited being the holding company of the management company, Jahangir Siddiqui CapitalMarkets (Private) Limited and Jahangir Siddiqui Investment Bank Limited being subsidiaries of theholding company of the management company and 1st ICP Mutual Fund, 3rd ICP Mutual Fund, 4thICP Mutual Fund, 8th ICP Mutual Fund, 11th ICP Mutual Fund, 12th ICP Mutual Fund, 15th ICP


34

UTPIslamicFund

Mutual Fund, 19th ICP Mutual Fund, 20th ICP Mutual Fund, 21st ICP Mutual Fund, 23rd ICP MutualFund and 25th ICP Mutual Fund being funds under common management.

The transactions with connected persons are in the normal course of business, at contracted ratesand terms determined in accordance with market rates.

For the periodfrom



ABAMCO Limited

Remuneration of Management Company 21,223,803 5,636,803Sales load 6,633,297 2,460,589

Jahangir Siddiqui & Company Limited

Brokerage fee 646,661 832,520Purchase of marketable securities 122,798,488 450,200,580Sale of marketable securities 107,378,488 275,483,643Issue of units 99,999,506 -Redemption of units 106,961,243 -Sales load 246,893 -

Jahangir Siddiqui Capital Markets (Private) Limited

Brokerage fee 830,077 -Purchase of marketable securities 207,249,790 -Sale of marketable securities 233,267,126 -

Jahangir Siddiqui Investment Bank Limited

Issue of unit (5,000 units - IPO) - 2,500,000Sales load 40,988 -

1st ICP Mutual Fund

Dividend 295,200 -Bonus (27,675 shares) - -Rights (542,379 shares) 5,423,790 -

3rd ICP Mutual Fund

Rights (400,000 shares) 4,500,000 -

4th ICP Mutual Fund



35

UTPIslamicFund

For the periodfrom


2004 June 30, 2003

8th ICP Mutual Fund

Rights (900,000 shares) 12,150,000 -

11th ICP Mutual Fund



Dividend 114,300 -Bonus (7,938 shares) - -Rights (2,057,751 shares) 20,577,510 -







21st ICP Mutual Fund

Dividend 28,520 -

23rd ICP Mutual Fund

Dividend 363,750 -


Dividend 1,115,400 -


36

UTPIslamicFund

For the periodfrom



16. STATEMENT OF OPERATIONS

(In accordance with AAOIFI Standard 14)

INCOME

Income from investments, sales and financing

Return on bank balances 3,985,509 2,122,439Dividend income 24,634,481 1,603,700Other income 72,980 -

28,692,970 3,726,139EXPENSES

Remuneration of Management Company 21,223,803 5,636,803Remuneration of Trustee 3,537,280 939,300Remuneration of Shariah Advisory Council 200,000 100,000Bank and settlement charges 628,291 344,916Auditors' remuneration 334,966 265,000SEC annual fee 707,398 109,274Listing fee 37,000 105,000Formation cost written off - 600,000MUFAP Subscription fee 17,591 -

26,686,329 8,100,293

Net income / (loss) from investments, sales and financing 2,006,641 (4,374,154)

Realised and unrealised gains from investments

Net realised gains from investments 67,759,341 36,964,708Unrealised gains from changes in value of investments 83,365,551 30,686,014Element of income and capital gains in prices of units sold less those in units redeemed (18,599,048) 6,869,205

132,525,844 74,519,927

Net gains from investments, sales and financing / increase in net assets from operations 134,532,485 70,145,773

17. HARAM INCOME IN THE DISTRIBUTED INCOME

17.1 According to the instructions of the Shariah Advisory Council, any income earned by the Fundfrom investments whereby a portion of income of such investees has been derived from haramsources, such proportion of income of the Fund should be donated for charitable purposes either:


37

UTPIslamicFund

1. directly by the Fund if the unit holders has permitted the Fund in this respect; or

2. by the unit holder if he has not given such permission to the Fund. In such case, themanagement should intimate the unit holder about the portion of such haram income inthe income distributed by the Fund.

For the periodfrom


2004 June 30, 2003

Haram income included in the total income of the Fund 1,442,478 132,472

Per unit proportion of the income (926,861 units as of June 30, 2004) 1.55 0.16Amount to be transfered to charity fund (58,020 units) where the unit holders have given permission for donation of the haram income by the Fund 89,931 6,016

17.2 The Fund has made certain investments in various ICP Mutual Funds as disclosed in note 5.1 tothe financial statements. The Shariah Advisory Council of the Fund had approved investment insuch funds subject to the condition that any Haram income arising out of these funds should bepurified. Due to the practical constraints in determination of actual amount of such income arisingfrom these funds with reasonable accuracy, the same has been calculated on estimated basis.

17.3 The portion of Haram income for which the management company was authorised to pay intocharity for the year ended June 30, 2003 has been paid to Sindh Institute of Urology andTransplantation, Karachi with due approval of Shariah Advisory Council.

18. FINANCIAL RISK MANAGEMENT POLICIES

18.1 Market risk

Market risk is the risk that the value of a financial instrument will fluctuate as a result of changesin market prices. The Management Company manages market risk by monitoring exposureon marketable securities by following the internal guidelines of the Investment Committee andregulations laid down by the Securities and Exchange Commission of Pakistan.

18.2 Liquidity risk

Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meetcommitments associated with financial instruments. The Management Company manages liquidityrisk by following internal guidelines of the Investment Committee such as monitoring maturitiesof financial assets and financial liabilities and investing in highly liquid financial assets.

The Fund is not materially exposed to liquidity risk as all obligations / commitments of theFund are short term in nature and all assets of the Fund are readily disposable on the StockExchanges and over-the-counter market.

18.3 Credit risk

Credit risk arising from the inability of the counterparties to meet the terms of the Fund’s financialinstrument contracts is generally limited to the amounts, if any, by which the counterpartyobligations exceed the obligations of the Fund. The Fund’s policy is to enter into financialinstrument contracts by following internal guidelines duly approved by the Investment Committeesuch as approving counterparties, approving credit and obtaining adequate collateral.

Concentrations of credit risk exist when changes in economic or industry factors similarly


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UTPIslamicFund

affect groups of counterparties whose aggregate credit exposure is significant in relation tothe Fund’s total credit exposure. The Fund’s portfolio of financial instruments is broadlydiversified and transactions are entered into with diverse creditworthy counterparties therebymitigating any significant concentrations of credit risk.

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the amount for which an asset could be exchanged, or a liability settled, betweenknowledgeable willing parties in an arm's length transaction. Consequently differences can arisebetween carrying values and the fair value estimates.

Underlying the definition of fair value is the presumption that the Fund is a going concern without anyintention or requirement to curtail materially the scale of its operations or to undertake a transactionon adverse terms.

Financial assets which are tradable in an open market are revalued at the market prices prevailing onthe balance sheet date. The estimated fair value of all other financial assets and liabilities is considerednot significantly different from book value as the items are short term in nature.

20. METHODS OF CALCULATION

20.1 Ratio of expenses to weighted average net assets

This represents total expenses for the period divided by weighted average net assets duringthe period.

20.2 Portfolio of investments receivables and financing turnover rate

This represents the number of times, investments, receivables and financing have beenreplaced during the period . This has been derived by dividing the total purchases of investmentsduring the period with average investments balance for the period.

20.3 Annual rate of return

This has been derived by dividing net income during the period by the average net assetsduring the period. This has then been annualised.

21. DATE OF AUTHORISATION FOR ISSUE

These financial statements were authorised for issue by Board of Directors of Management Companyon July 10, 2004.

22. GENERAL

Figures have been rounded off to the nearest rupee.






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UTPIslamicFund

Year ended June 30, 2004 2003*

Net Assets (Rs. in million) 642 455Net income (Rs. in million) 134 70Number of units in issue 926,861 831,113

Per unit

Net asset value (Rs.) 693.00 548.00Highest issue price during the year (Rs.) 751.50 595.75Lowest redemption price during the year (Rs.) 552.25 504.50

*For the period from December 26, 2002 to June 30, 2003

Performance Table

· we conducted our audit in accordance with the auditing standards as applicable in pakistan

Documents