Quarterly Reports Sep 2012

Contents
Management Company & Funds Information

CONDENSED INTERIM FINANCIAL STATEMENTS
(i)
Askari Sovereign Cash Fund (ASCF) Directors Report ......................... 01 Financial Statements................. 05 Askari High Yield Scheme (AHYS) Directors Report ......................... 16 Financial Statements................... 20 Askari Sovereign Yield Enhancer (ASYE) Directors Report ......................... 34 Financial Statements................... 38 Askari Islamic Income Fund (AIIF) Directors Report ......................... 50 Financial Statements................... 53 Askari Asset Allocation Fund (AAAF) Directors Report ......................... 64 Financial Statements....................68 Askari Islamic Asset Allocation Fund (AIAAF) Directors Report ......................... 80 Financial Statements....................84 Askari Equity Fund (AEF) Directors Report ......................... 95 Financial Statements................... 98
information about the management company

REGISTERED OFFICE Askari Investment Management Ltd. Office No. 2/W, Kashmir Plaza Jinnah Avenue, Blue Area Islamabad HEAD OFFICE Askari Investment Management Ltd. 20-C, Khayaban-e-Nishat, Ittehad Commercial Area, Phase VI, DHA, Karachi. UAN: 111-246-111 Email: info@askariinvestments.com BOARD OF DIRECTORS l Lt. Gen. (R.) Tahir Mehmood Chairman l Mr. Shahid Hafeez Azmi l Mr. Muhammad Naseem- FCA l Mr. Mohammad Rafiq Uddin Mekhari l Maj. Gen. (R.) Mukhtar Ahmed l Mr. Sufian Mazhar l Mr. Tahir Aziz l Mr. Adnan Ahmed Siddiqui CEO EXECUTIVE COMMITTEE l Mr. Mohammad Rafiq Uddin Mekhari- Chairman l Mr. Shahid Hafeez Azmi l Mr. Tahir Aziz l Mr. Adnan Ahmed Siddiqui CEO AUDIT COMMITTEE Mr. Muhammad Naseem- FCA (Chairman) l Mr. Shahid Hafeez Azmi l Mr. Mohammad Rafiq Uddin Mekhari l Mr. Tahir Aziz
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(i)
HR COMMITTEE Mr. Maj. Gen. (R.) Mukhtar Ahmed Mr. Muhammad Naseem- FCA l Mr. Tahir Aziz
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CHIEF FINANCIAL OFFICER Zeeshan COMPANY SECRETARY Zeeshan
funds information
BANKERS Askari Sovereign Cash Fund: l Askari Bank Limited l MCB Bank Limited l Habib Metro Bank Limited l National Bank of Pakistan l Standard Chartered Bank Pakistan Limited l Faysal Bank Limited l Bank Al-Habib Limited l United Bank Limited l Habib Bank Limited l Bank Alfalah Limited l Allied Bank Limited l Bank Alfalah Limited (Islamic Banking) Askari Asset Allocation Fund: Askari Bank Limited JS Bank Limited l Burj Bank Limited l Habib Metro Bank Limited
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BANKERS Askari Islamic Income Fund: Askari Bank Limited (Islamic Banking) l Dubai Islamic Bank Limited l Bank Islami Pakistan Ltd. l UBL Ameen l Meezan Bank Limited l Bank Alfalah Limited (Islamic Banking) l Bank of Khyber Limited (Islamic Banking) l Burj Bank Limited
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TRUSTEES l Central Depository Company of Pakistan Limited CDC House, 99-B, Block B, S.M.C.H.S., Main Shahrah-e-Faisal, Karachi Tel: (92-021) 111-111-500 (for ASCF, AHYS, AAAF, AEF & ASYE)
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Askari High Yield Scheme: Askari Bank Limited l Bank Alfalah Limited l Bank Alfalah Limited (Islamic Banking) l Bank of Khyber Limited (Islamic Banking) l Bank of Khyber Limited l Faysal Bank Limited l Burj Bank Limited l Habib Metro Bank Limited
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MCB Financial Services Limited 3rd Floor Adamjee House, I.I Chundrigar Rd., Karachi. Tel: (92-021) 3241-9770 (for AIIF & AIAAF)
AUDITORS l A.F. Ferguson & Co. Chartered Accountants State Life Building No. 1-C, I.I. Chundrigar Road, P.O. Box 4716, Karachi-74000, Pakistan. Tel: (021) 324 26682-6 LEGAL ADVISORS l Mohsin Tayabaly & Company Advocates & Legal Consultants 2nd Floor, Dine Centre, PC-4, Block 9, Kehkashan, Clifton, Karachi. l Bawaney & Partners Advocates & Investment & Corporate Advisors 404, 4th Floor, Beaumont Plaza, 6-D-10, Beaumont Road, Civil Lines, Karachi-75530. REGISTRAR l Technology Trade (Pvt.) Ltd. Dagia House: 241-C, P.E.C.H.S Block-2, Shahrah-e-Quaideen, Karachi. Tel: (021) 34391316-7 & 9 SHARIAH ADVISOR l Dr. Muhammad Tahir Mansoori
Askari Islamic Asset Allocation Fund: l Askari Bank Limited (Islamic Banking) l Dubai Islamic Bank Limited l Bank Islami Pakistan Ltd. l UBL Ameen l Meezan Bank Limited l Bank Alfalah Limited (Islamic Banking) l Bank of Khyber Limited (Islamic Banking) l Burj Bank Limited Askari Sovereign Yield Enhancer l Askari Bank Limited l Habib Metro Bank Limited
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Askari Equity Fund Askari Bank Limited Habib Metro Bank Limited
Directors Report
01
Sovereign Cash Fund

Category: Money Market Scheme
QUARTERLY REPORT SEPTEMBER 2012

Directors' Report to the Unit Holders
02
The Board of Directors of Askari Investment Management Limited ("the Management Company" or "AIM" or "the Company") is pleased to present the un-audited condensed interim financial report of Askari Sovereign Cash Fund (ASCF) for the quarter ended September 30, 2012. Economic Review During the first quarter of this fiscal year, the only visible improvement on the macroeconomic front was slowdown in inflation. The CPI inflation for the 1QFY13 came down to post a single digit growth; averaging 9.2%Y/Y compared to 11.6%Y/Y growth experienced in the previous quarter. This was mainly contributed by slowdown in food prices, due to improvement in domestic production and supplies. Furthermore high base effect from previous year also assisted the single digit growth in inflation. However, the underlying factors for inflation still remain intact. The core inflation as measured by Non-food and Non-energy is still persistent and remains in double digit; 10.8%Y/Y on average in 1QFY13.Central bank duly responded to ease in headline CPI inflation and slashed the policy rate by 150bps to 10.5% in the monetary policy announced during Aug-12. The cut would also serve in achieving the objective of reviving country's economic growth. On the external side, the country's current account balance during the first two months posted surplus of USD 884mn (compared to a deficit of USD 298mn in 2MFY12), mainly due to hefty payments received under the coalition support fund, worth USD 1.12bn. Worker's remittances receipts grew by 9.2%Y/Y during 1QFY13 to USD 3.6bn. In terms of trade, lower international oil prices, helped narrowed country's trade balance to USD 2.4bn in 2MFY13 from USD 2.5bn in corresponding period last year. Overall imports depicted a 4.6%Y/Y decline to USD 6.5bn, whereas exports declined by 4.6% to USD 4bn. However, this trend may not continue and country's balance of payment will likely turn negative in coming months ahead given the outstanding loan repayments to IMF and no other visible capital and financial inflows. So far, the country' foreign exchange reserves has declined from USD 15.3bn in Jun-12 to USD ~14.9bn by Sep-12 end. Hence deficit in balance of payment could see further depletion in country's foreign exchange reserves, which would put downward pressure on PKR. The PKR has depreciated by almost ~3%Q/Q in 1QFY13. Given the lack of sustainable foreign inflows, the government borrowing burden has shifted on domestic sources. During the 1QFY13, government net fiscal borrowing increased by PKR 172bn or 4.5%. Although the government was able to make a net retirement of PKR 360bn to SBP, but this retirement to SBP was only made possible by borrowing PKR 530bn from the schedule banks, showing an increment of almost 25% from the stock ending Jun-12. Continued government borrowing from schedule banks has depressed the private sector credit off-take; which declined by 2.5% in 1QFY13. Country's tax revenue remains dismissal. The provisional tax collection figures for 1QFY13 suggests a shortfall of PKR 28bn, from an initial target of PKR 437bn. With economic growth remaining slow during this fiscal year, the government will be hard pressed to achieve the growth target in tax revenues. At the same time, with elections due in next six months, government spending will remain on the higher side, hence leading to higher fiscal deficit, easily surpassing the target of 4.2% set for the year. Country's large sector manufacturing showed subdued growth of 0.8%Y/Y in 2MFY13. This can be attributed to extended energy shortages, unfavorable law and order situation and uncertain political environment. During the quarter, floods, resulting from the heavy Monsoon starting Aug-12, caused a widespread loss of life, properties and infrastructure in lower Punjab, upper Sindh and north-eastern Baluchistan. Although it would be too premature to put an economic cost of recent floods, but unofficial estimates suggest that the loss could well reach above PKR ~300bn. For FY13, The government had targeted 25mn ton of wheat, 6.9mn rice, 14.5mn bales of Cotton and 59mn tons of Sugarcane crop. However, the initial reports by National Disaster Management Authority (NDMA), estimate a crop area of almost 1.1 million acres to be affected by these flash foods. This year's floods have impacted rice crop in particular, which will lead to relatively lower growth in total agriculture sector compared to the original target. Overall, the combined effects of energy shortages, private sector crowding, weak exports, unfavorable law & order conditions and floods, all points towards slow economic growth during this fiscal year. The IMF in its latest reports has projected an economic growth rate of 3-3.5% for Pakistan compared to government initial estimates of 4.2%. Fixed income review In 1QFY13, the SBP slashed the discount rate by 150bps to 10.0%. Subsequently, the domestic yield curve adjusted downward. Rates on 3M, 6M and 12M papers fell by 177bps, 194bps and 196bps to 10.1%, 10.0% and 10.0%, respectively
Sovereign Cash Fund
03
at the end of quarter. Rate on 10-year bond came down by 185bps to 11.4% from 13.3% at the start of the quarter. Moreover, as of the latest developments, yields across all tenors are still trading below their historical levels. Hence one can deduce that market is expecting another cut of 50-100bps in the policy rate to be announced in the 1st week of October, 2012. During the quarter auctions conducted by SBP, participation remained skewed on the short-end of the paper. On a cumulative basis, the SBP raised almost 1,736bn in the bi-monthly auctions conducted during the quarter.
ASCF Performance Review ASCF generated a return of 11.61% for the quarter ending September 2012 which is 46 basis points higher than the average returns generated by the money market fund category and 171 basis points higher than its benchmark hence maintaining the pole position amongst its category. During the quarter, the funds size decreased by 46% to 5.37 billion, with an average fund size of PKR 7.65billion for the quarter ended September 2012. Major asset class of the Fund remained Treasury Bills, where the Fund was invested on average 73% of Fund size. The market witnessed a cut in the policy rate during the quarter by 150bps as 3month & 6month PKRV rates closed at 10.14% & 10.01 end September compared to 11.92% & 11.95 respectively at June end. The fund manager captured maximum advantage of this decreasing interest rate scenario by maximizing the duration (i.e. 90days) at the right time reflected through the funds return and outperformance. However, average duration for the quarter was maintained at 50days. During the quarter, the Fund was invested on average 22% of Fund size in TDRs of AA rated banks, and availed those opportunities when the rates of return were higher than the yields on treasury securities. ASCF has the flexibility to shift 30% of its asset to AA (and above) rated banks when they offer better rates and may stay liquid with AAA quality T-Bills to enjoy safety and highest liquidity profile.
Sovereign Cash Fund
04
Dividend Distribution The Chief Executive on behalf of the Board of Directors has approved the following interim distributions for the unit holders of the Fund:
Date of distribution July 25, 2012 August 27, 2012 September 25, 2012 Total distribution
Acknowledgements
Distribution Rs per unit 0.5804 1.0995 0.8532 2.5331
Distribution percentage for the month-Annualized 8.45% 12.90% 10.00%
We thank our valued investors who have placed their confidence in us. The Board is also thankful to the Securities and Exchange Commission of Pakistan, the State Bank of Pakistan, the Trustee of the Fund and the Islamabad Stock Exchange for their continued cooperation and support. The Board of Directors also appreciates the efforts put in by the management team and for their commitment and hard work. For and on behalf of the Board of Directors of the Management Company
Chief Executive Officer Karachi: October 23, 2012
Sovereign Cash Fund
Financial Statements
05
Sovereign Cash Fund

Category: Money Market Scheme

ASKARI SOVEREIGN CASH FUND CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES AS AT SEPTEMBER 30, 2012
Un-audited September 30, 2012 Audited June 30, 2012
06
Assets Bank Balances Investments Term Deposits and Money Market Placements Receivable Against Sale of Securities Prepayments and other receivables Deferred formation cost Total assets
Note
5 6 7
------------ Rupees -----------176,432,663 8,321,569,813 1,500,000,000 2,675,710 906,516 10,001,584,702
492,193,370 3,826,138,184 1,500,000,000 1,500,000 3,855,226 804,812 5,824,491,593
Liabilities Payable to Askari Investment Management Ltd - Management Company Payable to Central Depository Company of Pakistan Ltd - Trustee Annual fee payable to the Securities and Exchange Commission of Pakistan Dividend Payable Payable Against Redemption of Units Accrued and other Liabilities Total liabilities Net assets Unit holders' fund (as per statement attached) Contingencies and commitments 9
6,111,923 498,917 1,446,096 1,278,235 399,210,865 43,416,649 451,962,684 5,372,528,909 5,372,528,909
10,079,421 739,381 8,595,752 2,319,577 39,268,792 61,002,923 9,940,581,779 9,940,581,779
-----------(Number of Units)-------------Number of units in issue Net asset value per unit 53,461,830 100.4928 98,305,942 101.1188
The annexed notes from 1 to 12 form an integral part of these condensed interim financial statements.
For Askari Investment Management Limited (Management Company)
Chief Executive Officer
Director
Sovereign Cash Fund

ASKARI SOVEREIGN CASH FUND CONDENSED INTERIM INCOME STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
07
September 30, 2012
September 30, 2011
------------ Rupees -----------Income Income from Government Securities Profit on Bank Balances and Term Deposits Income on Reverse Repurchase Transactions Net Realized Gain on sale of investments Net unrealised Gain on revaluation of investments classified as 'at fair value through profit or loss' Total Income Expenses Remuneration of the Management Company Sindh Sales Tax on Services Remuneration of the Trustee Annual fee - Securities and Exchange Commission of Pakistan Amortisation of formation cost Listing fee Legal fee Securities Transaction Cost Auditors' remuneration Printing expenses Bank charges Rating fee Provision for contribution to Workers' Welfare Fund Total Expenses Net Income from Operating Activities Element of (loss) / income and capital (loss) / gain included in prices of units issued less those in units redeemed - net Net Income for the quarter before taxation Taxation Net income for the quarter after taxation Earnings per unit 19,297,739 3,087,638 1,752,716 1,446,097 101,703 6,341 12,568 716,366 100,547 62,038 234,608 76,011 76 011 3,662,143 30,556,514 211,511,848 17,943,297 2,868,216 1,658,217 1,345,747 101,703 2,521 8,798 319,075 84,208 62,038 222,660 43,976 43 976 24,660,456 216,869,087 167,719,605 47,515,417 4,272,169 20,492,296 2,068,875 22,561,171 242,068,362 187,219,390 42,987,767 7,742,893 2,409,806 1,169,687 3,579,493 241,529,543
(32,066,813) 179,445,035 179,445,035
(9,909,631) 206,959,456 206,959,456
Director
Sovereign Cash Fund

ASKARI SOVEREIGN CASH FUND CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
08
September 30, 2012
September 30, 2011
------------ Rupees -----------Net income for the quarter after taxation Other comprehensive income Total comprehensive income for the quarter 179,445,035 179,445,035 206,959,456 206,959,456
Director
Sovereign Cash Fund

ASKARI SOVEREIGN CASH FUND CONDENSED INTERIM DISTRIBUTION STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
09
September 30, 2012
September 30, 2011
------------ Rupees -----------Undistributed income brought forward: Realised Income Unrealised Loss
111,628,656 (1,640,815) 109,987,841 179,445,035
43,873,448 (83,412) 43,790,036 206,959,456 -
Net income for the quarter Final Distribution of Rs 0.8827 per unit on July 6, 2012 For the period ended June 30, 2012 (2011 : 0.3522 per unit on July 6, 2011)
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Cash Distribution Bonus Units
First Interim Distribution of Rs 0.5804 per unit on July 25, 2012 For the quarter ended September 30, 2012 (2011: 2.7726 per unit on Sep 26, 2011)
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(14,020,722) (72,753,933) (86,774,655)
(4,910,160) (17,440,843) (22,351,003)
(2,277,109) (45,597,786) (47,874,895)
(51,390,965) (139,227,133) (190,618,098)
Second Interim Distribution of Rs 1.0995 per unit on August 27, 2012 For the quarter ended September 30, 2012
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(1,652,417) (75,380,686) (77,033,103)
Third Interim Distribution of Rs 0.8532 per unit on September 25, 2012 For the quarter ended September 30, 2012
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(1,280,859) (50,127,044) (51,407,903) 26,342,320
37,780,391
Undistributed income carried forward
Undistributed income comprising : Realised income Unrealised income
24,273,445 2,068,875 26,342,320
36,610,704 1,169,687 37,780,391
Director
Sovereign Cash Fund

ASKARI SOVEREIGN CASH FUND CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
10
September 30, 2012
September 30, 2011
------------------------(Rupees)----------------------Net assets at the beginning of the quarter Issue of 9,900,568 (2011: 30,753,342) units Redemption of 57,174,665 (2011: 39,037,540) units Issuance of 2,430,002 bonus Units (2011: 1,558,832) units Element of (income) / loss and capital (gain) / loss included in prices of units issued less those in units redeemed - net Net Realized Gain on sale of Investments Net Unrealized Gain on revaluation of investments classified as "at fair value through profit or loss' - note 6.1 Other Comprehensive income Other Net income for the period Total comprehensive income for the period Final Distribution of Rs 0.8827 per unit on July 6, 2012 For the period ended June 30, 2012 (2011 : 0.3522 per unit on July 6, 2011) l Cash Distribution l Bonus Units First Interim Distribution of Rs 0.5804 per unit on July 25, 2012 For the quarter ended September 30, 2012 (2011: 2.7726 per unit on Sep 26, 2011) l Cash Distribution l Bonus Units Second Interim Distribution of Rs 1.0995 per unit on August 27, 2012 For the quarter ended September 30, 2012 l Cash Distribution l Bonus Units Third Interim Distribution of Rs 0.8532 per unit on September 25, 2012 For the quarter ended September 30, 2012 l Cash Distribution l Bonus Units Net assets at the end of the period 9,940,581,779 997,666,256 (5,757,999,867) (4,760,333,611) 243,859,449 (4,516,474,162) 32,066,813 20,492,296 2,068,875 156,883,864 179,445,035 6,389,900,643 3,125,584,093 (3,964,697,708) (839,113,615) 156,667,976 (682,445,639) 9,909,631 2,409,806 1,169,687 203,379,963 206,959,456
(14,020,722) (72,753,933) (86,774,655)
(4,910,160) (17,440,843) (22,351,003)
(2,277,109) (45,597,786) (47,874,895)
(51,390,965) (139,227,133) (190,618,098)
(1,652,417) (75,380,686) (77,033,103)
(1,280,859) (50,127,044) (51,407,903) 5,372,528,909
5,711,354,990
Director
Sovereign Cash Fund

ASKARI SOVEREIGN CASH FUND CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
11
September 30, 2012 CASH FLOWS FROM OPERATING ACTIVITIES Net income for the period Adjustments for: Net Unrealized gain on revaluation of investments classified as 'at fair value through profit or loss' Amortisation of formation cost Element of (income) / loss and capital (gain) / loss included in prices of units issued less those in units redeemed-net
September 30, 2011
------------ Rupees -----------179,445,035 206,959,456
(2,068,875) 101,703 32,066,813 30,099,641 209,544,676 4,497,500,504 (1,500,000) (1,179,516) 4,494,820,988
(1,169,687) 101,703 9,909,631 8,841,647 215,801,103 735,181,647 (47,166,147) (11,285,084) 676,730,416
Decrease / (Increase) assets: Investments - net Receivable Against Sale of Securities Prepayments and Other Receivable
(Decrease) / Increase in liabilities: Payable to the Management Company Remuneration payable to the Trustee Annual fee payable to the Securities and Exchange Commission of Pakistan Accrued and other liabilities
(3,967,498) (240,464) (7,149,656) 4,147,857 (7,209,762) 4,697,155,902
1,311,196 27,500 (1,061,197) 974,833 1,252,332 893,783,851
Net cash inflow from operating activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of units Payments against redemption of units Dividend paid Net cash outflow from financing activities Net increase in cash and cash equivalents during the quarter Cash and cash equivalent at the beginning of the quarter Cash and cash equivalent at the end of the quarter
997,666,256 (5,361,108,579) (17,952,872) (4,381,395,195) 315,760,707 176,432,663 492,193,370
3,125,584,093 (3,971,156,846) (46,046,933) (891,619,686) 2,164,165 95,672,470 97,836,635
Director
Sovereign Cash Fund
12
ASKARI SOVEREIGN CASH FUND NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
1 1.1 LEGAL STATUS AND NATURE OF BUSINESS Askari Sovereign Cash Fund (the Fund) was established under the Non Banking Finance Companies (Establishment and Regulation) Rules, 2003 (the NBFC Rules). It was registered under a Trust deed executed between Askari Investment management Limited (a wholly owned subsidiary of Askari Bank Limited) as the Mangement Company and the Central Depository Company of Pakistan Limited as the Trustee on June 11, 2009 and was approved by the Securities and Exchange Commission of Pakistan (the SECP) on June 25, 2009. The registered office of the Management Company is situated at Shop No. 2/W, Kashmir Plaza Jinnah Avenue, Blue Area Islamabad with its Head Office situated at 20-C, Khayaban-e-Nishat, Phase VI, DHA, Karachi. The Fund offers units for public subscription on a continous basis. The units are transferable and can also be redeemed by surendering them to the Fund. The units are listed on the Islamabad Stock Exchange (Guarantee) Limited. The objective of the Fund is to provide the investors with a high level of liquidity along with extremely low credit and price volatility. The Fund primarily invests in government securities and other authorized investments enabling the investors to manage their liquidity efficiently. The Pakistan Credit Rating Agency Limited (PACRA) has assigned an asset manager rating of 'AM3+' (Positive Outlook) to the Management Company in June 2012. As per the rating scale of PACRA, this rating denotes that the asset manager meets high investment industry standards and benchmarks. The Fund has been assigned a stability rating of 'AA+(f)' by PACRA in June 2012. The rating denotes a very strong capacity to manage relative stability in returns and very low exposure to risks. Title to the assets of the Fund are held in the name of CDC as a trustree of the Fund. BASIS OF PREPARATION Statement of compliance These condensed interim financial statements has been prepared in accordance with the approved accounting standards as applicable in Pakistan for interim financial reporting. Approved accounting standards comprise of IAS 34: 'Interim Financial Reporting' (IAS 34), the Trust Deed, NBFC Rules, NBFC Regulations and the directives issued by the SECP. Wherever the requirements of the Trust Deed, the NBFC Rules, NBFC Regulations or the said directives differ with the requirements of IAS 34, the requirements of the Trust Deed, NBFC Rules, NBFC Regulations or the said directives take precedence. 2.3 These condensed interim financial statements does not include all the information and disclosures required in the annual financial statements and should be read in conjuction with the annual financial statements of the Fund for the year ended June 30, 2012 SIGNIFICANT ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of these condensed interim financial statements are the same as those applied in the preparation of the annual financial statements for the year ended June 30, 2012. 4 TAXATION The Fund is exempt from taxation under clause 99 of the Part 1 of the 2nd schedule of the Income Tax Ordinance 2001, subject to the condition that not less than 90% of its accounting income excluding realised and unrealised capital gains for the year is distributed amongs the Fund's unit holders. The Fund intends to avail such exemption in current and the future periods. Accordingly, no provision has been made for the current and deferred taxation in these condensed interim financial statements.
1.2
1.3
1.4
1.5 1.6 2 2.1
BANK BALANCES PLS Saving accounts
Note 5.1
Un-audited September 30, 2012 492,193,370
Audited June 30, 2012 176,432,663
5.1
These savings accounts carry profit at the rates ranging from 5% to 11.75% (June 30, 2012: 5% to 11.75% ) per annum.
Sovereign Cash Fund

Un-audited Audited September 30, June 30, 2012 2012 ------------ Rupees ------------
13
INVESTMENTS At fair value through profit or loss - held for trading Government securities - Market Treasury Bills
Note 6.1
3,826,138,184
8,321,569,813
6.1
Investment in government securities - 'at fair value through profit or loss'

Face Value Balance as at September 30, 2012 Market value as Market value as a a percentage of percentage of net assets total investments
Issue date
Tenor
As at July 1, 2012
Sales/matured during the Purchases during the period peiod
As at September 30, 2012
Carrying Value
Market value
Appreciation / (diminution)
------------Rupees-----------Market Treasury Bills July 28, 2011 August 11, 2011 September 8, 2011 September 22, 2011 November 3, 2011 January 12, 2012 January 26, 2012 January 26, 2012 February 9, 2012 February 9, 2012 May 3, 2012 May 17, 2012 May 31, 2012 June 14, 2012 June 28, 2012 July 12, 2012 July 12, 2012 July 26, 2012 July 26, 2012 August 9, 2012 August 9, 2012 August 23, 2012 August 23, 2012 September 6, 2012 September 6, 2012 September 20, 2012 September 20, 2012 Total - September 30, 2012 Total - June 30, 2012 1 Year 1 Year 1 Year 6 Month 1 Year 6 Month 6 Month 1 Year 6 Month 1 Year 3 Month 3 Month 3 Month 3 Month 3 Month 6 Month 3 Month 3 Month 6 Month 3 Month 6 Month 6 Month 3 Month 3 Month 6 Month 3 Month 6 Month 500,000,000 2,150,000,000 85,000,000 462,000,000 365,000,000 1,962,000,000 1,467,895,000 1,000,000,000 100,000,000 331,500,000 8,423,395,000 4,190,610,000 2,950,000,000 40,000,000 340,500,000 653,000,000 302,800,000 500,000,000 2,600,000,000 556,000,000 985,250,000 2,563,152,141 3,275,347,859 1,195,000,000 3,011,000,000 750,000,000 350,000,000 425,000,000 1,843,150,000 250,000,000 250,000,000 22,840,200,000 105,429,750,000 500,000,000 5,100,000,000 40,000,000 340,500,000 400,000,000 85,000,000 462,000,000 250,000,000 365,000,000 200,000,000 1,962,000,000 1,467,895,000 1,000,000,000 100,000,000 2,931,500,000 335,000,000 600,000,000 1,478,012,141 3,060,347,859 573,500,000 3,011,000,000 750,000,000 350,000,000 120,000,000 1,650,000,000 250,000,000 27,381,755,000 101,196,965,000 253,000,000 52,800,000 300,000,000 221,000,000 385,250,000 1,085,140,000 215,000,000 621,500,000 305,000,000 193,150,000 250,000,000 3,881,840,000 8,423,395,000 250,813,019 51,135,939 289,548,707 214,962,190 384,923,887 1,079,066,028 207,818,823 615,667,536 300,056,935 185,073,268 245,002,976 3,824,069,309 8,323,210,628 250,791,816 51,177,086 289,715,700 214,987,474 384,920,226 1,079,922,260 208,391,545 616,075,548 300,004,100 185,165,179 244,987,250 3,826,138,184 8,321,569,813 (21,203) 41,147 166,993 25,284 (3,661) 856,232 572,722 408,012 (52,835) 91,911 (15,726) 2,068,875 (1,640,815) 0.00% 0.00% 0.00% 0.00% 4.67% 0.00% 0.00% 0.95% 0.00% 5.39% 0.00% 0.00% 0.00% 0.00% 0.00% 4.00% 7.16% 20.10% 3.88% 11.47% 0.00% 0.00% 0.00% 5.58% 3.45% 4.56% 0.00% 71.22% 83.71% 0.00% 0.00% 0.00% 0.00% 6.55% 0.00% 0.00% 1.34% 0.00% 7.57% 0.00% 0.00% 0.00% 0.00% 0.00% 5.62% 10.06% 28.22% 5.45% 16.10% 0.00% 0.00% 0.00% 7.84% 4.84% 6.40% 0.00% 100.00% 100.00%
TERM DEPOSITS & MONEY MARKET PLACEMENTS Term Deposits 7.1 1,500,000,000 1,500,000,000 1,500,000,000 1,500,000,000
7.1 8
This represents Term Deposits with a commercial bank carrying profit at the rates ranging from 10.85% to 12.25% (June 30, 2012: 13.40 to 13.65%) per annum. These deposits will mature within 3 months (June 30, 2012: 3Monhts) Earnings per unit Earnings per unit has not been disclosed as in the opinion of the management determination of cumulative weighted average number of outstanding units for calculation earings per unit is not practicable.
Contingencies and commitments The Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As a result of this amendment it may be construed that all Collective Investment Schemes / mutual funds (CISs) whose income exceeds Rs. 0.5 million in a tax year, have been brought within the scope of the WWF Ordinance,
Sovereign Cash Fund
14
thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In light of this, Mutual Funds Association of Pakistan (MUFAP) filed a constitutional petition in the Honorable Sindh High Court challenging the applicability of WWF on CISs which was dismissed mainly on the ground that MUFAP is not an aggrieved party. Keeping in view the prevalent conditions on this matter, the Management Company had made a provision for WWF contribution in the annual financial statements of the Fund for the year ended June 30, 2010. Subsequently, clarifications were issued by the Ministry of Labour and Manpower (the Ministry) which stated that mutual funds are not liable to contribute to WWF on the basis of their income. These clarifications were forwarded by the Federal Board of Revenue (FBR) (being the collecting agency of WWF on behalf of the Ministry) to its members for necessary action. Based on these clarifications, the FBR also withdrew notice of demand which it had earlier issued to one of the mutual funds for collection of WWF. Other mutual funds to whom notices were issued by the FBR also took up the matter with FBR for their withdrawal. Based on the positive developments and a legal advice taken by the Management Company thereon, provision for WWF made in the books of accounts of the Fund was reversed on October 7, 2010 and no further provision was maintained in the books of accounts. Further, a fresh Constitutional Petition has been filed with the Honorable High Court of Sindh by a CIS/mutual fund and a pension fund through their trustee and an asset management company inter alia praying to declare that mutual funds/voluntary pension funds being pass through vehicles/entities are not industrial establishments and hence, are not liable to contribute to the WWF under the WWF Ordinance. The proceedings of the Honorable Court in this matter have concluded and the Honorable Court has reserved its decision. Subsequent to June 30, 2011, the Honourable Lahore High Court (LHC) in a Constitutional Petition relating to the amendments brought in the WWF Ordinance, 1971 through the Finance Act, 2006, and the Finance Act, 2008, has declared the said amendments as unlawful and unconstitutional and struck them down. During the year ended June 30, 2012, a show cause notice has been issued to one of the Fund managed by the Management Company by Deputy Commissioner Inland Revenue stating that the Fund is liable to pay WWF under section 4 of the Workers' Welfare Fund Ordinance, 1971. Although the Management Company is hopeful that the case will be decided in its favour, it has taken a decision to provide for WWF and accordingly has recognised the aggregate amount of unrecorded provision for WWF amounting to Rs 41.384 million as at September 30, 2012 (including Rs 3.662 million in respect of the current period). The provision has been made without prejudice to pending application in the High Court of Sindh. 10 TRANSACTIONS WITH RELATED PARTIES / CONNECTED PERSONS Connected persons of the Fund include the Management Company, Holding Company of the Management Company, other collective investment schemes being managed by the Management Company, the Trustee, directors, key management personnel and other associated undertakings. Transactions with connected persons are in the normal course of business, and are carried out at agreed terms.
Transactions during the Quarter : Askari Investment Management Limited (Management Company) Remuneration of the Management Company Sindh Sales Tax on remuneration Issue of 31 Bonus units (2011: Nil units) Central Depository Company of Pakistan Limited (Trustee) Remuneration of the Trustee
Un-audited Un-Audited September 30, September 30, 2012 2011 ------------ Rupees ------------
19,297,739 3,087,638 3,164
17,943,297 2,868,216 -
1,752,716
1,658,217
Askari Bank Limited (Holding company of the Management Company) Profit on bank deposits Cash Dividend Bank charges Askari General Insurance Company Limited (Group Company) Issue of Nil units (2011: 99,037 units) Issue of 12,468 bonus units (2011: 12,843)
2,604,420 1,578,261 72,535
2,604,420 1,578,261 72,535
1,251,293
9,969,655 1,292,942
Sovereign Cash Fund
15
Un-audited Un-Audited September 30, September 30, 2012 2011 ------------ Rupees ------------
Askari Investment Management Limited Employees Provident Fund (Group Company) Issue of Nil units (2011: 92,335 units) Issue of Nil bonus units (2011: 2547 Units) Askari Bank Limited Employees Provident Fund Issue of Bonus units 10,561 (2011: Nil units) Key Management Personnel Issue of 1,592 units (2011: Nil units) Redemption of 7,498 units(2011:Nil units) Issue of Bonus units 96 (2011: Nil units) 9,294,954 256,368
1,059,885 160,000 753,809 9,649
Un-audited Audited September 30, June 30, 2012 2012 ------------ Rupees -----------Balance as at Period end : Askari Investment Management Limited (Management Company) Remuneration payable Sindh sales tax payable on remuneration Outstanding 946 units (June 30, 2012: 915 units) Central Depository Company of Pakistan Limited (Trustee) Remuneration payable Askari Bank Limited (Holding company of the Management Company) Bank balances Profit receivable on bank deposits Askari General Insurance Company Limited (Group Company) Outstanding units 374,221 (June 30, 2012: 361,753) units Askari Bank Limited Employees Provident Fund Outstanding units 316,977 (June 30, 2012: 306,416) units Key Management Personnel Outstanding units 859 (June 30, 2012: 7,238) units
11 GENERAL Figures have been rounded off to the nearest rupee. 12 DATE OF AUTHORISATION FOR ISSUE These condensed interim financial statements were authorised for issue by the Board of the Directors of the Management Company on October 23, 2012.
5,268,899 843,024 95,066 498,917 52,231,524 197,753 37,606,516 31,853,906 86,323
8,689,155 1,390,265 92,501 739,381 151,521,031 340,551 36,580,018 30,984,439 731,862
Director
Sovereign Cash Fund
Directors Report
16
High Yield Scheme

Category: Aggressive Income Scheme
QUARTERLY REPORT SEPTEMBER 2012 QUARTERLY REPORT SEPTEMBER 2012

17
The Board of Directors of Askari Investment Management Limited ("the Management Company" or "AIM" or "the Company") is pleased to present the un-audited condensed interim financial report of Askari High Yield Scheme (AHYS) for the quarter ended September 30, 2012. Economic Review During the first quarter of this fiscal year, the only visible improvement on the macroeconomic front was slowdown in inflation. The CPI inflation for the 1QFY13 came down to post a single digit growth; averaging 9.2%Y/Y compared to 11.6%Y/Y growth experienced in the previous quarter. This was mainly contributed by slowdown in food prices, due to improvement in domestic production and supplies. Furthermore high base effect from previous year also assisted the single digit growth in inflation. However, the underlying factors for inflation still remain intact. The core inflation as measured by Non-food and Non-energy is still persistent and remains in double digit; 10.8%Y/Y on average in 1QFY13.Central bank duly responded to ease in headline CPI inflation and slashed the policy rate by 150bps to 10.5% in the monetary policy announced during Aug-12. The cut would also serve in achieving the objective of reviving country's economic growth. On the external side, the country's current account balance during the first two months posted surplus of USD 884mn (compared to a deficit of USD 298mn in 2MFY12), mainly due to hefty payments received under the coalition support fund, worth USD 1.12bn. Worker's remittances receipts grew by 9.2%Y/Y during 1QFY13 to USD 3.6bn. In terms of trade, lower international oil prices, helped narrowed country's trade balance to USD 2.4bn in 2MFY13 from USD 2.5bn in corresponding period last year. Overall imports depicted a 4.6%Y/Y decline to USD 6.5bn, whereas exports declined by 4.6% to USD 4bn. However, this trend may not continue and country's balance of payment will likely turn negative in coming months ahead given the outstanding loan repayments to IMF and no other visible capital and financial inflows. So far, the country' foreign exchange reserves has declined from USD 15.3bn in Jun-12 to USD ~14.9bn by Sep-12 end. Hence deficit in balance of payment could see further depletion in country's foreign exchange reserves, which would put downward pressure on PKR. The PKR has depreciated by almost ~3%Q/Q in 1QFY13. Given the lack of sustainable foreign inflows, the government borrowing burden has shifted on domestic sources. During the 1QFY13, government net fiscal borrowing increased by PKR 172bn or 4.5%. Although the government was able to make a net retirement of PKR 360bn to SBP, but this retirement to SBP was only made possible by borrowing PKR 530bn from the schedule banks, showing an increment of almost 25% from the stock ending Jun-12. Continued government borrowing from schedule banks has depressed the private sector credit off-take; which declined by 2.5% in 1QFY13. Country's tax revenue remains dismissal. The provisional tax collection figures for 1QFY13 suggests a shortfall of PKR 28bn, from an initial target of PKR 437bn. With economic growth remaining slow during this fiscal year, the government will be hard pressed to achieve the growth target in tax revenues. At the same time, with elections due in next six months, government spending will remain on the higher side, hence leading to higher fiscal deficit, easily surpassing the target of 4.2% set for the year. Country's large sector manufacturing showed subdued growth of 0.8%Y/Y in 2MFY13. This can be attributed to extended energy shortages, unfavorable law and order situation and uncertain political environment. During the quarter, floods, resulting from the heavy Monsoon starting Aug-12, caused a widespread loss of life, properties and infrastructure in lower Punjab, upper Sindh and north-eastern Baluchistan. Although it would be too premature to put an economic cost of recent floods, but unofficial estimates suggest that the loss could well reach above PKR ~300bn. For FY13, The government had targeted 25mn ton of wheat, 6.9mn rice, 14.5mn bales of Cotton and 59mn tons of Sugarcane crop. However, the initial reports by National Disaster Management Authority (NDMA), estimate a crop area of almost 1.1 million acres to be affected by these flash foods. This year's floods have impacted rice crop in particular, which will lead to relatively lower growth in total agriculture sector compared to the original target. Overall, the combined effects of energy shortages, private sector crowding, weak exports, unfavorable law & order conditions and floods, all points towards slow economic growth during this fiscal year. The IMF in its latest reports has projected an economic growth rate of 3-3.5% for Pakistan compared to government initial estimates of 4.2%. Fixed income review In 1QFY13, the SBP slashed the discount rate by 150bps to 10.0%. Subsequently, the domestic yield curve adjusted downward. Rates on 3M, 6M and 12M papers fell by 177bps, 194bps and 196bps to 10.1%, 10.0% and 10.0%, respectively
High Yield Scheme
18
at the end of quarter. Rate on 10-year bond came down by 185bps to 11.4% from 13.3% at the start of the quarter. Moreover, as of the latest developments, yields across all tenors are still trading below their historical levels. Hence one can deduce that market is expecting another cut of 50-100bps in the policy rate to be announced in the 1st week of October, 2012. During the quarter auctions conducted by SBP, participation remained skewed on the short-end of the paper. On a cumulative basis, the SBP raised almost 1,736bn in the bi-monthly auctions conducted during the quarter.
AHYS Performance Review Askari High Yield Scheme (AHYS) yielded negative 3.05% for the quarter ended September 2012 against a benchmark return of 11.14%. The fund was required under regulations to make additional provisions against few non-earning assets (Trust instruments, maple leaf, Pace and Telecard) during this quarter reflected through the disclosures. The fund size reduced slightly closing at PKR 1.19billion against PKR 1.23billion in the beginning of the quarter. The market witnessed a cut in the policy rate during the quarter by 150bps as 3month & 6month PKRV rates closed at 10.14% & 10.01% end September compared to 11.92% & 11.95 respectively at June end. The Fund increased its allocation in Tier -1 TFCs/Sukuks to 48% of the total assets against 46% at the start of the quarter emphasizing on fixed rate TFC in anticipation of capital appreciation in a decreasing interest rate scenario along with high recurring returns. The fund also increased its investment against PIBs resulting in an average investment of 2.31% against 0.37% exposure at the beginning of this quarter capturing capital gains along with high recurring income. As a result, during the quarter duration of the fund remained on the higher side averaging 267 days compared to 248 days at the beginning of this quarter. The fund maintained an average allocation in T-Bills at 22% of the total assets thus improving the weighted average rating of the overall portfolio. Unlike PIBs / T-Bills, the impact of cut in the discount rate is not yet fully reflected in fixed rated TFCs prices (mostly banking sector), which is bulk of the AHYS portfolio. The price appreciation of fixed rated TFCs is expected to be witnessed in the near future which should enhance the overall return of the portfolio. Exposure against the Non-Earning / Non Performing Assets was reduced by making adequate provisioning against these assets. This has reduced the downside risk while at the same time positioning the Fund to make higher returns in the future in case of revival in the fortunes/restructuring of any non-performing TFCs going forward. AHYS being an "aggressive income Fund" gives greater flexibility & space to the Fund Manager to take directional view in order to enhance returns. The Fund will practice active Fund management (capitalizing on market opportunities/inefficiencies) while creating an optimal blend of risk and return.
High Yield Scheme
19
Acknowledgements We thank our valued investors who have placed their confidence in us. The Board is also thankful to the Securities and Exchange Commission of Pakistan, the State Bank of Pakistan, the Trustee of the Fund and the Lahore Stock Exchange for their continued cooperation and support. The Board of Directors also appreciates the efforts put in by the management team and for their commitment and hard work. For and on behalf of the Board of Directors of the Management Company
High Yield Scheme
20
High Yield Scheme

Category: Aggressive Income Scheme

ASKARI HIGH YIELD SCHEME CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES AS AT SEPTEMBER 30, 2012
21
Note ASSETS Bank balances Term deposit and money market placements Investments Accrued profit and other receivables Security deposits Assets acquired in settlement of investments Net investment in finance lease Properties - held for sale Total assets LIABILITIES Payable to the Management Company Payable to the Trustee Payable to Securities and Exchange Commission of Pakistan Payable against redemption of units Accrued and other liabilities Total liabilities NET ASSETS 4 5 6
Unaudited Audited September 30, June 30, 2012 2012 ---------------------Rupees------------------31,535,879 23,899,999 976,455,465 31,285,705 3,600,000 62,962,307 73,443,673 1,203,183,028 117,466,593 42,639,079 904,459,981 36,750,495 3,600,000 68,717,739 73,593,673 1,247,227,560
7 7
1,717,377 153,757 273,640 259,779 11,592,647 13,997,200 1,189,185,828
1,769,234 156,004 1,276,801 10,973 12,171,405 15,384,417 1,231,843,143
UNIT HOLDERS' FUND (as per statement attached) CONTINGENCIES AND COMMITMENTS 9
1,189,185,828
1,231,843,143
-----------------Number of units----------NUMBER OF UNITS IN ISSUE 12,287,975 12,511,355
---------------------Rupees------------------NET ASSET VALUE PER UNIT 96.7764 98.4580
The annexed notes 1 to 13 form an integral part of these condensed interim financial statements.
Director
High Yield Scheme

ASKARI HIGH YIELD SCHEME CONDENSED INTERIM INCOME STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
Quarter ended September 30 2012 2011 (Rupees) 2,058,063 11,451,932 149,148 30,251,283 5,144,630 2,179,485 688,282 998,104 52,920,927 4,816,544 (18,739,080) (150,000) (32,721,568) (51,610,648) 6,126,823 5,405,726 10 864,821 520,662 273,639 175,843 10,081 25,205 1,500 129,430 12,603 201,644 42,597 217,403 7,881,154 (1,754,331) (6,714,244) (8,468,575) 3.2
22
INCOME Return on bank balances and placements Income on government securities Income from reverse repurchase transaction Mark-up on term finance and sukuk certificates Net realised gain on sale of investments Mark-up on finance lease Rental income Other income Net unrealised appreciation in value of investments classified as 'at fair value through profit or loss' - net (Provision) / reversal of provision against non-performing placements - net (Provision) / reversal of provision against assets acquired in settlement of investments - net Provision against non-performing investments Total income EXPENSES Remuneration of the Management Company Sindh sales tax on remuneration of the Management Company Remuneration of the Trustee Annual fee of Securities and Exchange Commission of Pakistan Security transaction costs Listing fee Rating fee Custodian fee Bank and settlement charges Legal and professional charges Auditors remuneration Printing and stationery Property Expenses Total expenses Net (loss) / income from operating activities Element of (loss) / income and capital (losses) / gains included in prices of units issued less those in units redeemed - net Net (loss) / income for the period Earnings per unit
Note 4
7,261,948 16,833,844 1,541,917 (2,299,040) 4,214,349 3,382,863 955,126 31,891,007 11,866,285 18,966,666 39,200,302 (78,764,755) (20,597,787) 23,159,505 7,037,864 1,125,044 612,463 351,893 239,989 10,082 5,000 72,977 8,820 199,627 42,450 163,332 9,869,541 13,289,964 (2,408,317) 10,881,647
Director
High Yield Scheme

ASKARI HIGH YIELD SCHEME CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
Quarter ended September 30 2012 2011 (Rupees) Net (loss) / income for the period Other comprehensive income Total comprehensive (loss) / income for the period (8,468,575) (8,468,575)
23
10,881,647 10,881,647
Director
High Yield Scheme

ASKARI HIGH YIELD SCHEME CONDENSED INTERIM DISTRIBUTION STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
Quarter ended September 30 2012 (Rupees) Accumulated (loss) / undistributed income brought forward: - Realised (loss) / income - Unrealised income / (loss) 2011
24
(28,298,890) 9,034,897 (19,263,993) (8,468,575)
5,477,502 (4,991,582) 485,920 10,881,647
Net (loss) / income for the period Final distribution of Rs 0.9492 unit on July 6, 2012 for the year ended June 30, 2012: (2011: Rs 1.8786 per unit) - Cash dividend - Bonus
(11,070,446) (805,332) (11,875,778) (39,608,346)
(19,084,554) (13,434,567) (32,519,121) (21,151,554)
Accumulated (loss) carried forward: Accumulated (loss) carried forward: - Realised (loss) - Unrealised income
(44,424,890) 4,816,544 (39,608,346)
(33,017,839) 11,866,285 (21,151,554)
Director
High Yield Scheme

ASKARI HIGH YIELD SCHEME CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
Quarter ended September 30 2012 (Rupees) Net assets at the beginning of the period 1,231,843,143 2011
25
1,731,515,674
Issue of 4,268,489 units (2011: 4,257,801 units) Redemption of 4,500,129 units (2011: 2,965,945 units)
412,219,449 (442,051,987) (29,832,538) 805,332 (29,027,206)
423,740,544 (296,710,013) 127,030,531 13,434,567 140,465,098
Issue of 8,259 bonus units (2011: 136,879 bonus units)
Element of loss / (income) and capital losses / (gains) included in prices of units issued less those in units redeemed - net Net (loss) / income for the period Other comprehensive income Total comprehensive (loss) / income for the period Final distribution of Rs 0.9492 unit on July 6, 2012 for the year ended June 30, 2012: (2011: Rs 1.8786 per unit) - Cash dividend - Bonus
6,714,244 (8,468,575) (8,468,575)
2,408,317 10,881,647 10,881,647
(11,070,446) (805,332) (11,875,778) 1,189,185,828
(19,084,554) (13,434,567) (32,519,121) 1,852,751,615
Net assets at the end of the period
Director
High Yield Scheme

ASKARI HIGH YIELD SCHEME CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
Quarter ended September 30 CASH FLOW FROM OPERATING ACTIVITIES Net (loss) / income for the period Adjustments: Capital gain on sale of investments Net unrealised appreciation in value of investments classified as 'at fair value through profit or loss' - net Provision / (reversal) of provision against non-performing placements - net Provision against non-performing investments Provision / (reversal) of provision against assets acquired in settlement Element of loss / (income) and capital losses / (gains) included in prices of units issued less those in units redeemed - net Decrease / (increase) in assets Term deposit and money market placements Investments - net Assets acquired in settlement of investments Accrued profit and other receivables (Decrease) / increase in liabilities Remuneration payable to the Management Company Remuneration payable to the Trustee Payable to Securities and Exchange Commission of Pakistan Payable against purchase of investment Payable against redemption of units Accrued and other liabilities Net cash outflow from operating activities CASH FLOW FROM FINANCING ACTIVITIES Receipts in respect of issuance of units Payments against redemption of units Dividend paid Net cash (outflow) / inflow from financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 4 412,219,449 (442,051,987) (11,070,446) (40,902,984) (85,930,714) 117,466,593 31,535,879 Note: 2012 (Rupees) 2011
26
(8,468,575) (5,144,630) (4,816,544) 18,739,080 32,721,568
10,881,647 (4,214,349) (11,866,285) (18,966,666) 78,764,755
150,000 6,714,244 48,363,718 (94,755,878) 5,755,432 5,464,790 (83,535,656) (51,857) (2,247) (1,003,161) 248,806 (578,758) (1,387,217) (45,027,730)
(39,200,302) 2,408,317 6,925,470 (223,214,753) 70,960,030 3,261,723 7,339,570 (141,653,430) 878,984 28,420 (651,026) 17,991,171 55,894 203,392 18,506,835 (105,339,478)
423,740,544 (296,710,013) (19,084,554) 107,945,977 2,606,499 76,576,482 79,182,981
Director
High Yield Scheme
27
ASKARI HIGH YIELD SCHEME NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
1. 1.1 LEGAL STATUS AND NATURE OF BUSINESS Askari High Yield Scheme (the Fund) was established under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 (the NBFC Rules) as an open end unit trust scheme. It was registered under a Trust Deed, dated December 16, 2005 executed between Askari Investment Management Limited (a wholly owned subsidiary of Askari Bank Limited), as the Management Company and Central Depository Company of Pakistan Limited as its Trustee on December 5, 2005 and was approved by the Securities and Exchange Commission of Pakistan (the SECP) as a Notified Entity in accordance with the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations) on February 19, 2009. The registered office of the Management Company is situated at Shop No. 2/W, Kashmir Plaza Jinnah Avenue, Blue Area Islamabad with its Head Office situated at 20-C, Khayaban-e-Nishat, Phase VI, DHA, Karachi. The Fund offers units for public subscription on a continuous basis. The units are transferable and can be redeemed by surrendering them to the Fund. The units are listed on the Lahore Stock Exchange (Guarantee) Limited. As per the offering document, the Fund shall invest in a mix of spread transactions, debt securities and various other money market instruments. Pursuant to Circular 7 of 2009 of the SECP, the Board of Directors of the Management Company have approved the category of the Fund as "Aggressive Fixed Income Scheme" and required changes have been made in the constitutive documents of the Fund. The Pakistan Credit Rating Agency Limited (PACRA) assigned an asset manager rating of 'AM3+' (Positive Outlook) to the Management Company in June 2012. As per the rating scale of PACRA, this rating denotes that the asset manager meets high industry standards and benchmark The Pakistan Credit Rating Agency Limited (PACRA) assigned a fund stability rating of 'A+(f)' to the Fund in March 2012. As per the rating scale of PACRA, this rating denotes a strong capacity to maintain relative stability in returns and low exposure to risk. Title to the assets of the Fund are held in the name of the CDC as trustee of the Fund. BASIS OF PREPARATION Statement of compliance These condensed interim financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan for interim financial reporting. Approved accounting standards comprise of IAS 34: 'Interim Financial Reporting' (IAS 34), the Trust Deed, NBFC Rules, NBFC Regulations and the directives issued by the SECP. Wherever the requirements of the Trust Deed, the NBFC Rules, NBFC Regulations or the said directives differ with the requirements of IAS 34, the requirements of the Trust Deed, NBFC Rules, NBFC Regulations or the said directives take precedence. This condensed interim financial information should be read in conjunction with the annual published financial statements of the Fund for the year ended June 30, 2012. This condensed interim financial information is unaudited. SIGNIFICANT ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of this condensed interim financial information are the same as those applied in the preparation of the annual published financial statements of the Fund for the year ended June 30, 2012.
1.2
1.3
1.4
1.5 2. 2.1 2.1.1
2.1.2
2.1.3 3.
High Yield Scheme

3.1 Net Asset Value per unit
28
The net asset value (NAV) per unit, as disclosed on the condensed interim statement of assets and liabilities, is calculated by dividing the net assets of the Fund by the number of units in issue at the period end. 3.2 Earning / (loss) per unit Earnings / (loss) per unit has not been disclosed as in the opinion of the management, determination of cumulative weighted average number of outstanding units for calculating earnings per unit is not practicable.
Note 4. BANKS BALANCES Savings accounts

4.1
(Unaudited) (Audited) September June 30, 30, 2012 2012 ------------ Rupees -----------31,535,879 117,466,593
4.1
These carry profit rates ranging from 5.00% to 12.00% (June 30, 2012: 6.00% to 12.25%) per annum.
5.
TERM DEPOSIT AND MONEY MARKET PLACEMENTS Placements with banks and financial institutions 5.1 23,899,999 23,899,999 42,639,079 42,639,079
Note
(Un-audited) (Audited) September 30, June 30, 2012 2012 ------------ Rupees ------------
5.1
Placements with banks and financial institutions: Trust Investment Bank Limited Saudi Pak Leasing Company Limited: Less: Provisions 5.1.1 5.1.1 129,111,798 15,000,000 (120,211,799) 23,899,999 129,111,798 15,000,000 (101,472,719) 42,639,079
5.1.1
The facilities have been classified as non-performing in accordance with the Fund's provisioning policy. Accordingly, the carrying value stated above has been arrived at after taking into account provision as under:
(Un-audited) (Audited) September 30, June 30, 2012 2012 ------------ Rupees -----------Trust Investment Bank Limited Saudi Pak Leasing Company Limited Total Provision 105,211,799 15,000,000 120,211,799 86,472,719 15,000,000 101,472,719
6.
INVESTMENTS At fair value through profit or loss (held-for-trading) Government securities Listed Term finance certificates Unlisted Term finance certificates Sukuk certificates 6.1 6.2 6.2 6.3 228,954,215 395,975,696 190,557,110 160,968,444 351,525,852 976,455,465 103,411,460 382,520,590 184,273,099 234,254,832 418,527,931 904,459,981
High Yield Scheme

6.1 6.1.1 Investment in government securities Government Treasury Bills:
Face value Issue date Tenor As at July 1, 2012 Balance as at September 30, 2012
29
Purchased during the period
Disposed / matured during the period
Carrying Value
Market value
Appreciation / (diminuition)
Market value as Market value as a a percentage of percentage of net assets total investments
-----------------------------------------------------Rupees--------------------------------------------------
May 17,2012 3 months July 12, 2012 6 months July 12, 2012 1 year July 26, 2012 1 year July 26, 2012 6 months July 26, 2012 3 months July 26, 2012 6 months August 9, 2012 6 months August 9, 2012 3 months August 9, 2012 6 months August 9, 2012 1 year August 23, 2012 1 year August 23, 2012 3 months August 9, 2012 6 months August 23, 2012 3 months August 9, 2012 6 months June 14, 2012 3 months August 23, 2012 1 year August 9, 2012 3 months August 9, 2012 6 months August 9, 2012 3 months September 20, 2012 6 months September 20, 2012 1 year October 4, 2012 3 months October 4, 2012 1 year October 4, 2012 6 months September 20, 2012 3 months September 6, 2012 3 months September 20, 2012 3 months December 1, 2011 1 year Total - September 30, 2012 Total - June 30, 2012
100,000,000
100,000,000 495,000,000
100,000,000 100,000,000 250,000,000 100,000,000 250,000,000 150,000,000 250,000,000 150,000,000 300,000,000 750,000,000 250,000,000 101,000,000 400,000,000 149,000,000 100,000,000 100,000,000 250,000,000 50,000,000 25,000,000 100,000,000 100,000,000 100,000,000 200,000,000 100,000,000 100,000,000 100,000,000 200,000,000 200,000,000 6,000,000 5,031,000,000 8,469,900,000
100,000,000 100,000,000 100,000,000 250,000,000 100,000,000 250,000,000 150,000,000 250,000,000 150,000,000 300,000,000 750,000,000 250,000,000 101,000,000 400,000,000 149,000,000 100,000,000 100,000,000 250,000,000 50,000,000 25,000,000 100,000,000 100,000,000 100,000,000 200,000,000 100,000,000 100,000,000 100,000,000 180,000,000 50,000,000 4,955,000,000 8,469,900,000
20,000,000 150,000,000 6,000,000 176,000,000 100,000,000
19,675,500 147,001,786 5,902,227 172,579,513 98,756,942
19,672,400 146,992,350 5,901,720 172,566,470 98,741,588
(3,100) (9,436) (507) (13,043) (15,354)
1.65% 12.36% 0.50%
2.01% 15.05% 0.60%
6.1.2
Pakistan Investment Bonds:

Face value Issue date Tenor As at July 1, 2012 Purchased during Disposed during As at September the period 30, 2012 the period Balance as at September 30, 2012 Market value Appreciation / (diminuition) Market value as Market value as a a percentage of percentage of net total assets investments
Carrying Value
-----------------------------------------------------Rupees--------------------------------------------------
October 6, 2003 July 19, 2012 July 19, 2012 July 19, 2012 August 18, 2011 Total - September 30, 2012 Total - June 30, 2012
10 years 3 years 5 years 10 years 10 years
5,000,000 -
100,000,000 75,000,000 100,000,000 100,000,000 375,000,000 355,000,000
100,000,000 75,000,000 75,000,000 75,000,000 325,000,000 350,000,000
25,000,000 25,000,000 5,000,000 55,000,000 5,000,000
25,398,621 25,599,623 4,673,686 55,671,929 4,709,407
25,455,000 25,778,650 5,154,095 56,387,745 4,669,872
56,379 179,027 480,409 715,816 (39,535)
2.14% 2.17% 0.43%
2.61% 2.64% 0.53%
6.1.3
Sukuk certificates
Number of certificates Issue date Tenor As at July 1, 2012 Purchased during Disposed during As at September the period the period 30, 2012 Balance as at September 30, 2012 Market value Appreciation / (diminuition) Market value as Market value as a a percentage of percentage of net total assets investments
Carrying Value
---------------------------Rupees------------------------
GoP (26-06-12) GoP (26-12-11) Total - September 30, 2012 Total - June 30, 2012 Total investment in government securities - September 30, 2012 Total investment in government securities - June 30, 2012
3 years 3 years
20,000 3,000 23,000 16,000
20,000 3,000 23,000 16,000
228,251,442 103,466,349
228,954,215 103,411,460
702,773 (54,889)
High Yield Scheme

6.2
30
Term finance certificates

Number of certificates Name of investee company Note As at July 1, 2012 Purchased during the period Balance as at September 30, 2012 Appreciation / (diminuition) Investment as a percentage of Market value of total investments
Disposed/ As at September redeemed during Carrying value 30, 2012 the period
Market value
Net Assets
Issue size
---------------Rupees--------------
Term finance certificates - listed Askari Bank Limited Dewan Cement Limited Engro fertilizer limited (30-11-07) Pace Pakistan Limited (15-02-08) Pak Arab Fertilizer Limited (28-02-08) Pakistan Mobile Communication Limited (28-10-08) Telecard Limited (27-05-05) Trust Investment Bank limited (04-07-08) United Bank Limited (14-02-08) United Bank Limited (15-03-05) Worldcall Telecom Limited (07-10-08) Term finance certificates - unlisted Agritech Limited (formerly Pak American Fertlizer Limited) Agritech Limited (formerly Pak American Fertlizer Avari Hotels Limited (30-04-09) Azgard Nine Limited (3rd Issue) Bank Al Habib (30-06-11) New Allied Electronics Industries (private) Limited (15-05-07) Total - September 30, 2012 9,936 25,000 12,800 15,000 28,710 10,000 10,000 5,200 6,670 4,200 127,516 12,000 2,375 15,200 6,000 22,984 5,000 63,559 191,075 182,070 60,153 60,153 60,153 119,211 9,936 9,936 9,936 110,206 25,000 12,800 15,000 60,153 28,710 10,000 10,000 5,200 6,670 4,200 177,733 12,000 2,375 15,200 6,000 22,984 5,000 63,559 241,292 191,075 61,686,141 48,670,629 90,323,339 141,671,218 12,922,954 26,173,802 31,689,665 6,745,948 419,883,696 61,976,293 122,269,967 184,246,260 604,129,956 557,742,493 62,645,179 26,956,800 90,323,339 142,137,899 9,371,250 26,244,447 31,689,665 6,607,117 395,975,696 63,989,774 126,567,336 190,557,110 586,533,104 566,793,689 959,039 (21,713,829) 466,681 (3,551,704) 70,645 (138,831) (23,908,000) 2,013,481 4,297,667 6,311,148 (17,596,852) 9,051,196 5.27% 2.27% 7.60% 11.95% 0.79% 2.21% 2.66% 0.56% 33.30% 5.38% 10.64% 16.02% 49.33% 46.01% 6.42% 2.76% 7.60% 14.56% 0.96% 2.69% 3.25% 0.68% 38.92% -
6.4
1.57% 1.80% 1.81% 1.78% 1.56% 1.31% 1.58% 0.65%
6.4
6.4 6.4
12.96% 19.51% 58.43% 62.67%
6.55%
1.71% 4.22% -
6.3
Total - June 30, 2012
Sukuk bonds
Security Leasing Corporation Limited II (Sep-07) Hubco Short-term Sukuk - (August - 12) Hubco Short-term Sukuk - (February - 12) Engro Fertilizers Al-Zamin Leasing Modaraba (May-08) Maple Leaf Cement Factory Limited I (Dec-07) Maple Leaf Cement Factory Limited II (Mar-10) Total - September 30, 2012 Total investment in Term Finance Certifcates/Sukuks - September 2012 Total investment in Term Finance Certifcates/Sukuks - June 2012 6.4 8,000 18,000 9,840 7,000 35,000 1,312 79,152 270,227 233,382 18,000 18,000 78,153 133,051 18,000 9,840 7,000 34,840 44,776 110,206 8,000 18,000 35,000 1,312 62,312 303,604 256,227 2,829,576 90,000,000 109,766,284 202,595,860 806,725,816 791,958,735 2,867,159 90,000,000 68,101,285 160,968,444 747,501,548 801,048,521 39,916 (41,664,999) (41,625,083) (59,221,935) 9,089,786 0.24% 7.57% 5.73% 13.54% 62.86% 65.03% 0.29% 7.57% 0.38% 8.18% 0.85% -
6.4 6.4
6.97%
14.83% 73.26% 88.57%
6.4
These securities have been classified as non-performing in accordance with the SECP's Circular 1 of 2009 and the Fund's provisioning policy for non-performing exposures. Accordingly, the carrying values stated above have been arrived at after taking into account provisions as under:
(Unaudited) September 30, 2012 Outstanding principal Provision held Net carrying value Outstanding principal
(Audited) June 30, 2012 Provision held Net carrying value
--------------------------------------------- Rupees --------------------------------------------Agritech Limited (29-Nov-07) Al Zamin Leasing Modaraba Azgard Nine Limited Dewan Cement Limited Maple Leaf Cement Factory Limited -1 (03-12-07) New Allied Electronics Industries (Private) Limited (15-05-07) Security Leasing Corporation Limited (19-11-07) Telecard Limited Pace (Pakistan) Limited Maple Leaf - Sukuk (31-03-10) Agritech Limited (01-07-11) Trust Investment Bank Limited
59,952,000 27,246,671 29,976,000 125,000,000 106,773,450 10,221,615 10,720,177 12,115,938 50,367,711 3,160,849 11,875,000 14,056,875 461,466,286
59,952,000 27,246,671 29,976,000 125,000,000 38,672,165 10,221,615 7,853,018 12,115,938 23,410,911 3,160,849 11,875,000 4,685,625 354,169,792
68,101,285 2,867,159 26,956,800 9,371,250 107,296,495
59,952,000 27,246,671 29,976,000 125,000,000 109,517,210 10,221,615 11,007,326 12,115,938 50,367,684 4,618,627 11,875,000 451,898,071
59,952,000.00 27,246,671 29,976,000 125,000,000 17,616,686 10,221,615 7,853,018 7,017,184 13,259,792 4,618,627 11,872,625 314,634,218
91,900,524 3,154,308 5,098,754 37,107,892 2,375 137,263,853
High Yield Scheme

7 ASSETS ACQUIRED AGAINST SETTLEMENT OF INVESTMENTS
31
During the year 2009, the Fund acquired certain assets in settlement of certificate of investment and letter of placement due from an Investment Bank as allowed by SECP vide its letter dated 12 August 2009. The carrying value of such assets as of September 30, 2012 is as under:
Note
(Un-audited) (Audited) September 30, June 30, 2012 2012 ------------Rupees-----------62,962,307 62,962,307 68,717,739 68,717,739
Net investment in finance lease Less: Provision against non-performing lease receivables
Properties - held for sale Less: Provision for diminution in value of properties held for sale
7.1
135,563,709 135,563,709 (62,120,036) (61,970,036) 73,443,673 73,593,673 136,405,980 142,311,412
7.1
Represents settlement value (together with related direct costs incurred) of seven different properties situated in Karachi. Titles of four properties have been transferred to the Fund and the Management Company is taking steps for transfer of titles for the remaining three properties in the name of the Trustee of the Fund. In terms of the SECP's letter dated August 12, 2009, the Fund was required to dispose off these properties within 1 year of the letter i.e. August 12, 2010. However, due to the prevailing conditions in the property market, these properties remain unsold as of the period end. The Management Company of the Fund remains committed to sell these properties at the earliest available suitable opportunity in the best interest of the Fund and, hence the same continue to be classified as held for sale. Further, the Fund, vide its letter dated August 9, 2011, had sought an extension from the SECP to dispose off the above properties. The SECP vide its letter No. NBFC/RS/JD-VS/AIML/359/2011 dated August 15, 2011 has granted an extension to the Fund upto August 12, 2012 for the disposal of the properties. A further extension has been applied by the Management Company and the approval from SECP is expected soon. As of September 30, 2012 the fair value of these properties has been assessed by independent valuers to be Rs 76,550,000 (June 30, 2012: Rs 76,700,000). Accordingly, an aggregate provision of Rs 62,120,036 (June 30, 2012: Rs 61,970,036) has been made on account of any impairment in the value of these properties. The provision has been made after adjusting the necessary costs to be incurred in order to make the sale from the fair value of these properties. TAXATION The income of the Fund is exempt from income tax under Clause 99 of Part I of the Second Schedule to the Income Tax Ordinance, 2001 subject to the condition that not less than 90 percent of its accounting income for the year, as reduced by capital gains, whether realised or unrealised, is distributed amongst the unit holders. The Fund has not recorded provision for taxation as the Management Company intends to distribute the required minimum percent age of the Fund's accounting income for the current year to its unit holders.
7.2
9 9.1
CONTINGENCIES AND COMMITMENTS The Finance Act, 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As a result of this amendment it may be construed that all Collective Investment Schemes / mutual funds (CISs) whose income exceeds Rs. 0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In light of this, Mutual Funds Association of Pakistan (MUFAP) filed a constitutional petition in the Honorable Sindh High Court challenging the applicability of WWF on CISs which was dismissed mainly on the ground that MUFAP is not an aggrieved party. Keeping in view the prevalent conditions on this matter, the Management Company had made a provision for WWF contribution in the annual financial statements of the Fund for the year ended June 30, 2010. Subsequently, clarifications were issued by the Ministry of Labour and Manpower (the Ministry) which stated that mutual funds are not liable to contribute to WWF on the basis of their income. These clarifications were forwarded by the Federal Board of Revenue (FBR) (being the collecting agency of WWF on behalf of the Ministry) to its members for necessary action. Based on these clarifications, the FBR also withdrew notice of demand which it had earlier issued to one of the mutual funds for collection of WWF. Other mutual funds to whom notices were issued by the FBR also took up the matter with FBR for their withdrawal. Based on the positive developments and a legal advice taken by the Management Company thereon, provision for WWF made in the books of accounts of the Fund was reversed on October 7, 2010 and no further provision was maintained in the books of accounts.
High Yield Scheme
32
Further, a fresh Constitutional Petition has been filed with the Honorable High Court of Sindh by a CIS/mutual fund and a pension fund through their trustee and an asset management company inter alia praying to declare that mutual funds/voluntary pension funds being pass through vehicles/entities are not industrial establishments and hence, are not liable to contribute to the WWF under the WWF Ordinance. The proceedings of the Honorable Court in this matter have concluded and the Honorable Court has reserved its decision. Subsequent to June 30, 2011, the Honourable Lahore High Court (LHC) in a Constitutional Petition relating to the amendments brought in the WWF Ordinance, 1971 through the Finance Act, 2006, and the Finance Act, 2008, has declared the said amendments as unlawful and unconstitutional and struck them down. During the last year ended June 30, 2012, a show cause notice has been issued to the Fund by Deputy Commissioner Inland Revenue stating that the Fund is liable to pay WWF under section 4 of the Workers' Welfare Fund Ordinance, 1971. Although the Management Company is hopeful that the case will be decided in its favour, it has taken a decision to provide for WWF and accordingly has recognised the aggregate amount of unrecorded provision for WWF amounting to Rs 4.457 million as at September 30, 2012 . The provision has been made without prejudice to pending application in the High Court of Sindh. There were no other contingencies and commitments outstanding as at September 30, 2012 (June 30, 2012: NIL) 10 SINDH SALES TAX ON REMUNERATION OF THE MANAGEMENT COMPANY During the current period, the provincial government has levied General Sales tax at the rate of 16% on the remuneration of the Management Company through Sindh Sales Tax on Services Act 2011 from July 1, 2011. 11 TRANSACTIONS WITH RELATED PARTIES / CONNECTED PERSONS Connected persons of the Fund include the Management Company, Holding Company of the Management Company, other collective investment schemes being managed by the Management Company, the Trustee, directors, key management personnel and other associated undertakings. Transactions with connected persons are in the normal course of business and are carried out at agreed terms.
11.1
Transactions during the period:
(Unaudited) Quarter ended September 30, September 30, 2012 2011 ------------ Rupees ------------
Askari Bank Limited (Holding company of the Management Company) Return on balances with banks Issue of NIL units (2011: 2,008,724 units) Cash dividend Purchase of term finance certificate Sale of term finance certificate Income on term finance certificate Askari Investment Management Limited (Management Company) Remuneration of the Management Company Sindh sales tax on remuneration Issue of NIL units (2011: 101,695) Redemption of 76,208 units (2011: NIL units ) Issue of 1,567 bonus units (2011: NIL units) Askari General Insurance Limited (Group Company) Issue of 505 bonus units (2011: 974) President Askari Bank Limited Fund Issue of 818 bonus units (2011: 1578) Askari Bank Employees' Provident Fund Issue of 2,990 bonus units (2011: 5,768 units) Central Depository Company of Pakistan Limited (Trustee) Remuneration of the Trustee Custodian fee
261,662 11,050,924 52,484,063 -
2,049,891 200,000,000 18,097,740 52,484,063 19,582
5,405,726 864,821 7,400,000 152,825 49,250 79,744 291,542 520,662 1,523
7,037,864 1,125,044 10,000,000 95,642 154,860 566,165 612,463 5,000
High Yield Scheme
33
(Unaudited) (Audited) June 30, September 30, 2012 2012 ------------ Rupees -----------2,592,233 53,982 1,126,705,301 16,506,393 6,957 1,146,283,087 52,484,063 842,043
11.2
Amounts outstanding at the period end / year end: Askari Bank Limited (Holding company of the Management Company) Balance with bank Accrued profit receivable Outstanding units:11,642,356 units (June 30, 2012: 11,642,356 units) Investment - term finance certificates Profit receivable on term finance certificates Askari Investment Management Limited (Management Company) Management remuneration payable Sindh sales tax payable Other payable Sales load payable Outstanding units: 86,364 units (June 30, 2012: 161,004 units) Central Depository Company of Pakistan Limited (Trustee) Trustee remuneration payable Security deposit Askari General Insurance Company Limited (Group Company) Outstanding units: 52,391 units (June 30,2012: 51,885 units) Askari Bank Employees' Provident Fund Outstanding units: 310,134 units (June 30, 2012: 307,145 units) President Askari Bank Limited Fund Outstanding units: 84,830 units (June 30, 2012: 84,012 units)
1,480,497 236,880 1,259,274 56,016 8,357,997 153,757 100,000 5,070,212 30,013,652 8,209,542
1,525,120 244,114 1,259,274 55,891 15,852,132 156,004 100,000 5,108,493 30,240,882 8,271,653
12 12.1 12.2 13
GENERAL Figures have been rounded off to the nearest rupee unless otherwise stated. Corresponding figures have been rearranged and reclassified, where necessary, for the purpose of comparison. No significant reclassification was done during the period. DATE OF AUTHORISATION FOR ISSUE This condensed interim financial information was authorised for issue by the Board of the Directors of the Management Company on October 23, 2012.
Director
High Yield Scheme
Directors Report
34
Sovereign Yield Enhancer

Category: Income Scheme

35
The Board of Directors of Askari Investment Management Limited ("the Management Company" or "AIM" or "the Company") is pleased to present the un-audited condensed interim financial report of Askari Sovereign Yield Enhancer (ASYE) for the quarter ended September 30, 2012. Economic Review During the first quarter of this fiscal year, the only visible improvement on the macroeconomic front was slowdown in inflation. The CPI inflation for the 1QFY13 came down to post a single digit growth; averaging 9.2%Y/Y compared to 11.6%Y/Y growth experienced in the previous quarter. This was mainly contributed by slowdown in food prices, due to improvement in domestic production and supplies. Furthermore high base effect from previous year also assisted the single digit growth in inflation. However, the underlying factors for inflation still remain intact. The core inflation as measured by Non-food and Non-energy is still persistent and remains in double digit; 10.8%Y/Y on average in 1QFY13.Central bank duly responded to ease in headline CPI inflation and slashed the policy rate by 150bps to 10.5% in the monetary policy announced during Aug-12. The cut would also serve in achieving the objective of reviving country's economic growth. On the external side, the country's current account balance during the first two months posted surplus of USD 884mn (compared to a deficit of USD 298mn in 2MFY12), mainly due to hefty payments received under the coalition support fund, worth USD 1.12bn. Worker's remittances receipts grew by 9.2%Y/Y during 1QFY13 to USD 3.6bn. In terms of trade, lower international oil prices, helped narrowed country's trade balance to USD 2.4bn in 2MFY13 from USD 2.5bn in corresponding period last year. Overall imports depicted a 4.6%Y/Y decline to USD 6.5bn, whereas exports declined by 4.6% to USD 4bn. However, this trend may not continue and country's balance of payment will likely turn negative in coming months ahead given the outstanding loan repayments to IMF and no other visible capital and financial inflows. So far, the country' foreign exchange reserves has declined from USD 15.3bn in Jun-12 to USD ~14.9bn by Sep-12 end. Hence deficit in balance of payment could see further depletion in country's foreign exchange reserves, which would put downward pressure on PKR. The PKR has depreciated by almost ~3%Q/Q in 1QFY13. Given the lack of sustainable foreign inflows, the government borrowing burden has shifted on domestic sources. During the 1QFY13, government net fiscal borrowing increased by PKR 172bn or 4.5%. Although the government was able to make a net retirement of PKR 360bn to SBP, but this retirement to SBP was only made possible by borrowing PKR 530bn from the schedule banks, showing an increment of almost 25% from the stock ending Jun-12. Continued government borrowing from schedule banks has depressed the private sector credit off-take; which declined by 2.5% in 1QFY13. Country's tax revenue remains dismissal. The provisional tax collection figures for 1QFY13 suggests a shortfall of PKR 28bn, from an initial target of PKR 437bn. With economic growth remaining slow during this fiscal year, the government will be hard pressed to achieve the growth target in tax revenues. At the same time, with elections due in next six months, government spending will remain on the higher side, hence leading to higher fiscal deficit, easily surpassing the target of 4.2% set for the year. Country's large sector manufacturing showed subdued growth of 0.8%Y/Y in 2MFY13. This can be attributed to extended energy shortages, unfavorable law and order situation and uncertain political environment. During the quarter, floods, resulting from the heavy Monsoon starting Aug-12, caused a widespread loss of life, properties and infrastructure in lower Punjab, upper Sindh and north-eastern Baluchistan. Although it would be too premature to put an economic cost of recent floods, but unofficial estimates suggest that the loss could well reach above PKR ~300bn. For FY13, The government had targeted 25mn ton of wheat, 6.9mn rice, 14.5mn bales of Cotton and 59mn tons of Sugarcane crop. However, the initial reports by National Disaster Management Authority (NDMA), estimate a crop area of almost 1.1 million acres to be affected by these flash foods. This year's floods have impacted rice crop in particular, which will lead to relatively lower growth in total agriculture sector compared to the original target. Overall, the combined effects of energy shortages, private sector crowding, weak exports, unfavorable law & order conditions and floods, all points towards slow economic growth during this fiscal year. The IMF in its latest reports has projected an economic growth rate of 3-3.5% for Pakistan compared to government initial estimates of 4.2%. Fixed income review In 1QFY13, the SBP slashed the discount rate by 150bps to 10.0%. Subsequently, the domestic yield curve adjusted downward. Rates on 3M, 6M and 12M papers fell by 177bps, 194bps and 196bps to 10.1%, 10.0% and 10.0%, respectively at the end of quarter. Rate on 10-year bond came down by 185bps to 11.4% from 13.3% at the start of the quarter. Moreover, as of the latest developments, yields across all tenors are still trading below their historical levels. Hence one can deduce that market is expecting another cut of 50-100bps in the policy rate to be announced in the 1st week of October, 2012. During the quarter auctions conducted by SBP, participation remained skewed on the short-end of the paper. On a cumulative basis, the SBP raised almost 1,736bn in the bi-monthly auctions conducted during the quarter.
36
ASYE Performance Review ASYE generated a return of 15.54% for the quarter ending September 2012 outperforming its benchmark by 559 basis points. Strong performance of the fund led to an increase in the fund size by a huge 97% closing at PKR 1.59billion against PKR 809million at the start of the quarter. The fund maintained an average allocation against Treasury Bills at 61% of the total assets while 17% allocation was maintained against GoP Ijara Sukuk and 3% of the total assets were invested in PIBs on quarterly average basis. Allocation in banking sector Term Finance Certificates (TFCs) was on an average 15% of the total assets for the purpose of yield enhancement. Capital gains were realized during the quarter as a result of trading in different banking sector TFCs as reflected in the fund's return for the quarter. The exposure in this asset class mainly consists of fixed coupon TFCs which are expected to perform relatively better in declining interest rate scenario. The market witnessed a cut in the policy rate during the quarter by 150bps as 3month & 6month PKRV rates closed at 10.14% & 10.01 end September compared to 11.92% & 11.95 respectively at June end. The fund manager captured the maximum advantage of this decreasing interest rate scenario by trading in instruments like GoP Ijara Sukuks, PIBs, T-Bills and Banking Sector TFCs reflected through the increase in the NAV of the fund. ASYE has the flexibility to shift 30% of its asset to AA (and above) rated banks when they offer better rates and may stay liquid with AAA quality T-Bills to enjoy safety and highest liquidity profile.

Dividend Distribution
37
The Chief Executive on behalf of the Board of Directors has approved the following interim distributions for the unit holders of the Fund:
Date of distribution
Distribution Rs per unit
Distribution percentage for the month- Annualized 11.79% 13.00% 11.00%
July 25, 2012 August 27, 2012 September 25, 2012 Total distribution
Acknowledgements
0.8077 1.1063 0.9370 2.8510
We thank our valued investors who have placed their confidence in us. The Board is also thankful to the Securities and Exchange Commission of Pakistan, the State Bank of Pakistan, the Trustee of the Fund and the Islamabad Stock Exchange for their continued cooperation and support. The Board of Directors also appreciates the efforts put in by the management team and for their commitment and hard work. For and on behalf of the Board of Directors of the Management Company
38

Category: Income Scheme

ASKARI SOVEREIGN YIELD ENHANCER CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES AS AT SEPTEMBER 30, 2012
Unaudited Audited September 30, 2012 June 30, 2012 ------------(Rupees)--------------
39
Note
ASSETS Bank balances Investments Prepayments and other receivables Preliminary expenses and floatation costs Security deposits Total assets LIABILITIES Payable to the Management Company Payable to the trustee Payable to Securities and Exchange Commission of Pakistan Payable against purchase of investments Accrued and other liabilities Total liabilities NET ASSETS UNIT HOLDERS' FUND (as per statement attached) Contingencies and commitments Number of units in issue 7 15,822,267 ------(Rupees)-------NET ASSET VALUE PER UNIT 100.8033 100.9629 8,043,093 2,855,399 149,684 181,574 3,109,127 6,295,784 1,594,937,394 1,594,937,394 1,823,486 92,774 65,516 1,270,846 3,252,622 812,054,331 812,054,331 4 5 43,101,444 1,544,202,485 12,909,715 919,534 100,000 1,601,233,178 29,148,674 780,296,260 4,792,074 969,945 100,000 815,306,953
The annexed notes 1 to 11 form an integral part of these condensed Interim financial statements.
Director

ASKARI SOVEREIGN YIELD ENHANCER CONDENSED INTERIM INCOME STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
40
Note Income Profit on balances with banks Markup on government securities Markup on term finance certificates and sukuks Capital gain on sale of investments Other income
September 30, 2012 ---(Rupees)--1,745,990 17,719,026 7,632,145 10,795,908 22,800 37,915,869
Net unrealised appreciation in the value of investments classified as 'at fair value through profit or loss'
3,983,573 41,899,442
Expenses Remuneration of the Management Company Sindh sales tax on remuneration of the Management Company Remuneration of the Trustee Annual fee of Securities and Exchange Commission of Pakistan Auditors' remuneration Legal and professional charges Securities transaction costs Settlement and bank charges Fee and subscription Printing and stationery expenses Amortisation of preliminary expenses and floatation costs Total expenses Net income from operating activities Element of income and capital gains included in prices of units issued less those in units redeemed - net Provision for the Workers' Welfare Fund
2,663,122 426,099 336,210 181,575 71,836 12,603 792,195 189,489 52,932 12,603 50,411 4,789,075 37,110,367
5,633,282 (854,875)
Net income for the period before taxation Taxation Net income for the period after taxation Earning per unit 3.2 8
41,888,774 41,888,774
Director

ASKARI SOVEREIGN YIELD ENHANCER CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
41
September 30, 2012 ---(Rupees)--Net income for the period after taxation Other comprehensive income Total comprehensive income for the period 41,888,774 41,888,774
Director

ASKARI SOVEREIGN YIELD ENHANCER CONDENSED INTERIM DISTRIBUTION STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
42
Undistributed income brought forward: Realised income Unrealised loss
September 30, 2012 ---(Rupees)---
7,916,685 (171,677) 7,745,008 41,888,774
Net income for the period Final distribution of Re 0.9437 per unit on July 06, 2012 for the period ended June 30, 2012: - Cash distribution - Bonus units
(943,700) (6,646,567) (7,590,267)
First interim distribution of Re 0.8077 per unit on July 25, 2012 for the period ending June 30, 2013: - Cash distribution - Bonus units
(807,700) (4,351,746) (5,159,446)
Second interim distribution of Re 1.1063 per unit on August 25, 2012 for the period ending June 30, 2013: - Cash distribution - Bonus units
(1,106,300) (8,489,579) (9,595,879)
Third interim distribution of Re 0.937 per unit on September 25, 2012 for the period ending June 30, 2013: - Cash distribution - Bonus units
(937,000) (13,640,328) (14,577,328) 12,710,862
Undistributed income carried forward Undistributed income carried forward: Realised income Unrealised gain
8,727,289 3,983,573 12,710,862
Director

ASKARI SOVEREIGN YIELD ENHANCER CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
43
September 30, 2012 ---(Rupees)--Net assets at the beginning of the period Issue of 12,294,501 units Redemption of 4,845,447 units Issue of 330,120 bonus units Element of income and capital gains included in prices of units issued less those in units redeemed - net - transferred to income statement Capital gain on sale of investments Net unrealised income on revaluation of investments classified as 'at fair value through profit or loss' Other income for the period Other comprehensive income Final distribution of Re 0.9437 per unit on July 06, 2012 for the period ended June 30, 2012: - Cash distribution - Bonus units First interim distribution of Re 0.8077 per unit on July 25, 2012 for the period ending June 30, 2013: - Cash distribution - Bonus units Second interim distribution of Re 1.1063 per unit on August 25, 2012 for the period ending June 30, 2013: - Cash distribution - Bonus units Third interim distribution of Re 0.937 per unit on September 25, 2012 for the period ending June 30, 2013: - Cash distribution - Bonus units Net assets at the end of the period
812,054,331 1,237,637,780 (487,215,510) 33,128,221 783,550,491
(5,633,282) 1,745,990
3,983,573 36,159,211 41,888,774
(943,700) (6,646,567) (7,590,267)
(807,700) (4,351,746) (5,159,446)
(1,106,300) (8,489,579) (9,595,879)
(937,000) (13,640,328) (14,577,328) 1,594,937,394
Director

ASKARI SOVEREIGN YIELD ENHANCER CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
44
Note CASH FLOWS FROM OPERATING ACTIVITIES Net income for the period Adjustments for: Net unrealised appreciation in the value of investments classified as 'at fair value through profit or loss' Amortisation of preliminary expenses and floatation costs Element of income and capital gains included in prices of units issued less those in units redeemed - net
41,888,774
(3,983,573) 50,411 (5,633,282) (9,566,444) 32,322,330 (759,922,652) (8,117,640) (768,040,292) 1,031,913 56,910 116,058 1,838,281 3,043,162 (732,674,800)
Increase in assets Investments - net Prepayments and other receivables Increase in liabilities Payable to the Management Company Payable to the trustee Payable to Securities and Exchange Commission of Pakistan Payable against purchase of investments Accrued and other liabilities
Net cash used in operating activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of units Payments on redemption of units Cash distribution Net cash generated from financing activities Net decrease in cash and cash equivalents during the period Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 4
1,237,637,780 (487,215,510) (3,794,700) 746,627,570 13,952,770 29,148,674 43,101,444
Director
45
ASKARI SOVEREIGN YIELD ENHANCER NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
1 1.1 LEGAL STATUS AND NATURE OF BUSINESS Askari Sovereign Yield Enhancer Fund (the Fund) was established under the Non Banking Finance Companies and Notified Entities Regulations, 2008 (NBFC Regulations). It was registered under a Trust deed executed between Askari Investment Management Limited (a wholly owned subsidiary of Askari Bank Limited) as the Management Company and the Central Depository Company of Pakistan Limited (CDC) as the Trustee on December 09, 2011. The Fund was registered as a Notified Entity under the NBFC Regulations on December 23, 2011. The units of the Fund were initially issued at Rs 100 per unit. The registered office of the Management Company is situated at Shop No. 2/W, Kashmir Plaza Jinnah Avenue, Blue Area Islamabad with its Head Office situated at 20-C, Khayaban-e-Nishat, Phase VI, DHA, Karachi. The Fund offers units for public subscription on a continuous basis. The units are transferable and can be redeemed by surrendering them to the Fund. The units are listed on the Islamabad Stock Exchange (Guarantee) Limited. The objective of the Fund is to generate relatively higher yield than the conventional bank deposits, from a portfolio constituted of credit worthy sovereign instruments and banking sector fixed income instruments and deposits. Persuant to Circular 7 of 2009 of the SECP, the Board of Directors of the Management Company have approved the category of the Fund as 'Income Scheme'. The Pakistan Credit Rating Agency Limited (PACRA) has assigned an asset manager rating of 'AM3+ (positive outlook)' to the Management Company on June 14, 2012. As per the rating scale of PACRA, this rating denotes that the asset manager meets high investment industry standards and benchmarks. Pakistan Credit Rating Agency Limited (PACRA) has also assigned stability rating of 'AA-' to the Fund on May 16, 2012. Title to the assets of the Fund are held in the name of Central Depository Company (CDC) as trustee of the Fund. The Fund was opened for subscription from May 7, 2012 BASIS OF PRESENTATION Statement of compliance These condensed interim financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan for interim financial reporting. Approved accounting standards comprise of IAS 34: 'Interim Financial Reporting' (IAS 34), the Trust Deed, NBFC Rules, NBFC Regulations and the directives issued by the SECP. Wherever the requirements of the Trust Deed, the NBFC Rules, NBFC Regulations or the said directives differ with the requirements of IAS 34, the requirements of the Trust Deed, NBFC Rules, NBFC Regulations or the said directives take precedence. 2.2 2.3 3 This condensed interim financial information should be read in conjunction with the annual published financial statements of the Fund for the year ended June 30, 2012 This condensed interim financial information is unaudited SIGNIFICANT ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of this condensed interim financial information are the same as those applied in the preparation of the annual published financial statements of the Fund for the year ended June 30, 2012. 3.1 Net Asset Value per unit The net asset value (NAV) per unit, as disclosed on the condensed interim statement of assets and liabilities, is calculated by dividing the net assets of the Fund by the number of units in issue at the period end. 3.2 Earning per unit Earnings per unit has not been disclosed as in the opinion of the management, determination of cumulative weighted average number of outstanding units for calculating earning per unit is not practicable.
1.2
1.3
1.4 1.5 2 2.1

Unaudited Note 4 BANK BALANCES In saving accounts
4.1
46
Audited
September 30, June 30, 2012 2012 ------------Rupees--------------43,101,444 29,148,674
4.1
These carry profit at the rates ranging from 6.00% to 8.50% (June 2012: 6.00% to 10.25%) per annum. This includes an amount of Rs 26,617,124 maintained in a bank account with Askari Bank Limited, the holding company of the Management Company.
INVESTMENTS Financial assets at fair value through profit or loss - held for trading Government securities Government Treasury Bills Pakistan Investment Bonds Sukuk Certificates Listed debt securities Unlisted debt securities 5.1.1 5.1.2 5.1.3 5.2 5.3 589,137,650 85,366,502 681,908,300 100,940,180 86,849,853 1,544,202,485 358,071,652 294,015,000 128,209,608 780,296,260
5.1 5.1.1
Investment in government securities - 'at fair value through profit or loss' Government Treasury Bills:
Face Value Issue date Tenor As at July 01, 2012 Purchased during the period Carrying value Market value Market value Market value as As at Disposed / as at as at Appreciation as a a percentage of matured during September 30, September 30, September30, / (diminution) percentage total 2012 the period 2012 2012 of net assets investments
-------------------------------------Rupees-------------------------------------
July 28, 2011 August 11, 2011 September 22, 2011 November 3, 2011 July 26, 2012 August 9, 2012 August 23, 2012 September 6, 2012 September 20, 2012 January 12, 2012 January 26, 2012 July 26, 2012 August 23, 2012 September 6, 2012 September 20, 2012 May 3, 2012 May 17, 2012 May 31, 2012 June 28, 2012 July 26, 2012 August 9, 2012 September 6, 2012 September 20, 2012 Total - September 30 2012 Total - June 30 2012
1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 6 months 6 months 6 months 6 months 6 months 6 months 3 months 3 months 3 months 3 months 3 months 3 months 3 months 3 months
25,000,000 25,000,000 115,000,000 197,000,000 362,000,000
65,000,000 65,000,000 230,000,000 255,000,000 121,000,000 121,000,000 400,000,000 400,000,000 250,000,000 250,000,000 275,000,000 275,000,000 250,000,000 250,000,000 250,000,000 250,000,000 250,000,000 250,000,000 306,200,000 306,200,000 107,000,000 132,000,000 250,000,000 200,000,000 250,000,000 250,000,000 250,000,000 250,000,000 250,000,000 250,000,000 115,000,000 50,000,000 247,000,000 50,000,000 50,000,000 1,285,000,000 1,285,000,000 250,000,000 200,000,000 550,000,000 550,000,000 250,000,000 250,000,000 6,189,200,000 5,951,200,000
50,000,000 50,000,000 250,000,000 250,000,000 600,000,000
48,237,088 49,731,845 245,943,750 245,002,976 588,915,659 358,121,960
48,461,700 49,759,200 245,917,250 244,999,500 589,137,650 358,071,652
224,612 27,355 (26,500) (3,476) 221,991 (50,308)
3.04% 3.12% 15.42% 15.36% 36.94%
3.14% 3.22% 15.93% 15.87% 38.15%

5.1.2 Pakistan Investment Bonds:
Face Value Issue date Tenor As at July 01, 2012 Purchased during the period 150,000,000 300,000,000 8,700,000 425,000,000 350,000,000 300,000,000
47
Carrying value Market value Market value Market value as Disposed / As at as at as at as a Appreciation percentage a percentage of matured during September 30, September 30, September30, total investment the period 2012 2012 2012 of net assets 150,000,000 300,000,000 400,000,000 300,000,000 300,000,000 8,700,000 25,000,000 50,000,000 83,700,000 8,764,145 25,398,620 50,895,047 85,057,812 8,968,128 25,454,989 50,943,385 85,366,502 203,983 56,369 48,338 308,690 0.56% 1.60% 3.19% 5.35% 0.58% 1.65% 3.30% 5.53%
-------------------------------------Rupees------------------------------------August 18, 2011 August 18, 2011 August 18, 2011 July 19, 2012 July 19, 2012 July 19, 2012 Total - September 30 2012 Total - June 30 2012 3 years 5 years 10 years 3 years 5 years 10 years -
1,533,700,000 1,450,000,000
5.1.3
Sukuk certificates
Face Value Issue date Tenor As at July 01, 2012 Purchased during the period 675,000 550,000 1,225,000 Carrying value Market value Market value Market value as Disposed / As at as at as at Appreciation as a a percentage of matured during September 30, September 30, September30, / (diminution) percentage total the period 2012 2012 2012 of net assets investments 841,000 841,000 25,000 103,000 550,000 678,000 25,015,000 104,017,787 550,000,000 679,032,787 294,022,500 25,252,500 104,400,800 552,255,000 681,908,300 294,015,000 237,500 383,013 2,255,000 2,875,513 (7,500) 1.58% 6.55% 34.63% 42.75% 1.64% 6.76% 35.76% 44.16%
-------------------------------------Rupees------------------------------------GoP (16-05-2011) GoP (28-06-2012) GoP (18-09-2012) Total - September 30 2012 Total - June 30 2012 3 years 3 years 3 years 25,000 269,000 294,000
5.2
Listed debt securities

Market value Market value Market value Carrying value as a Investments as Disposed/ As at Purchased as at as a Appreciation as at September percentage a percentage of during the redeemed during September 30, September30, / (diminution) percentage of 30, 2012 of total total issue size the period 2012 period 2012 net assets investments Number of Certificates Certificates having a face value of Rs 5,000 each unless stated otherwise Term finance certificates Faysal Bank Limited (12-11-07) Askari Bank Limited (18-11-09) United Bank Limited (14-02-08) Total - September 30 2012 Total - June 30 2012 15,000 10,000 25,000 1,001 20,000 21,001 16,001 10,000 26,001 20,000 20,000 100,668,470 100,668,470 128,323,477 100,940,180 100,940,180 128,209,608 271,710 271,710 (113,869) 6.33% 6.33% 6.54% 6.54% 1.67% 1.67% --------------------------------Rupees-------------------------------
Name of investee company
As at July 01, 2012
5.3
Unlisted debt securities

Face Value Market value Market value Market value Carrying value as a Investments as Purchased Disposed/ As at as at as a Appreciation as at September percentage a percentage of during the redeemed during September 30, September30, percentage of 30, 2012 of total total issue size period the period 2012 2012 net assets investments
Name of investee company
As at July 01, 2012
Certificates having a face value of Rs 5,000 each unless stated otherwise Term finance certificates 15,000 Bank Al Habib (30-06-11) 25 Askari Bank Limited (23-12-11) Total - September 30 2012 Total - June 30 2012 15,025
21 21
15,000 4 15,004
82,467,000 4,077,184 86,544,184 -
82,601,571 4,248,282 86,849,853 -
134,571 171,098 305,669 -
10.17 0.52 10.70
10.59 0.54 11.13
2.50% 0.00% 0.03

6 PROVISION FOR WORKERS' WELFARE FUND
48
The Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As a result of this amendment it may be construed that all Collective Investment Schemes / mutual funds (CISs) whose income exceeds Rs 0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In this regard, a constitutional petition has been filed by certain CISs through their trustees in the Honourable High Court of Sindh (the Court), challenging the applicability of WWF to the CISs, which is pending adjudication. Subsequent to June 30, 2010, a clarification was issued by the Ministry of Labour and Manpower (the Ministry) which stated that mutual funds are not liable to contribute to WWF on the basis of their income. However, on December 14, 2010 the Ministry filed its response against the Constitutional petition requesting the court to dismiss the petition. According to the legal counsel who is handling the case, there is a contradiction between the aforeme ntioned clarification issued by the Ministry and the response filed by the Ministry in Court. Subsequent to June 30, 2011, the Honourable Lahore High Court (LHC) in a constitutional petition relating to the amendments brought in the WWF Ordinance, 1971 through the Finance Act, 2006, and the Finance Act 2008, has declared the said amendments as unlawful and unconstitutional and struck them down. The Management Company is hopeful that the decision of the LHC will lend further support to the constitutional petition which is pending in the Sindh High Court (SHC). During last year, a show cause notice has been issued to one of the Funds managed by the Mangement Company by the Deputy Commissioner Inland Revenue stating that the Fund is liable to pay WWF under section 4 of the Workers Welfare Fund Ordinance, 1971. Although the Management Company is hopeful that the case will be decided in its favour, it has taken a decision to provide for WWF and accordingly has recognised the amount of provision for WWF Rs 1.09 million (including 0.85 million for the current period) as at September 30, 2012. The provision has been made without prejudice to pending applications in the High Court of Sindh. 7 7.1 8 CONTINGENCIES AND COMMITMENTS There were no other contingencies and commitments outstanding as at September 30, 2012. TAXATION The income of the Fund is exempt from income tax under Clause 99 of Part I of the Second Schedule to the Income Tax Ordinance, 2001 subject to the condition that not less than 90 percent of its accounting income for the year, as reduced by capital gains, whether realised or unrealised, is distributed amongst the unit holders. The Fund has not recorded provision for taxation as the Management Company intends to distribute the required minimum percentage of the Fund's accounting income to its unit holders. 9 TRANSACTIONS WITH CONNECTED PERSONS Connected persons / related parties include Askari Investment Management Limited being the Management Company, Central Depository Company Pakistan Limited being the Trustee, Askari Bank Limited being the holding company of the Management Company, the funds under the common management of the Management Company, and the directors and officers of the Management Company. Transactions with connected persons / related parties are in the normal course of business and conducted at contracted rates and terms. Remuneration to the Management Company is determined in accordance with the provisions of the NBFC Regulations and the Trust Deed. Remuneration payable to the Trustee is determined in accordance with the provisions of the Trust Deed.
Unaudited September 30, 2012 ---(Rupees)--9.1 Details of transactions with connected persons are as follows: Askari Investment Management Limited - the Management Company Remuneration for the period Sindh sales tax on remuneration of Management Company Issue of 264,660 units Redemption of 228,694 units Issue of 15,256 bonus units 2,663,122 426,099 26,700,000 22,988,896 1,530,188
49
Unaudited September 30, 2012 ---(Rupees)---
Askari Bank Limited (Holding company of the Management Company) Profit on balances with bank Cash Dividend Bank charges Investment in Term Finance Certificate (TFC) Askari Bank Limited (23-12-11) 25 certificates Disposal of Investment in Term Finance Askari Bank Limited (23-12-11) 21 Certificates 10,000 Certificates Askari Bank Limited (18-11-09) Markup income on Term Finance Certificates Central Depository Company Limited - Trustee Remuneration of the Trustee CDS charges Key Management Personnel Issue of 4,424 units Redemption of 1,463 units Issue of 398 bonus units
397,361 3,794,700 25,210 25,482,403 21,405,218 52,822,125 1,314,609
336,210 1,506 445,248 147,274 39,973
9.2
Amounts outstanding as at period end:
Unaudited Audited September 30, June 30, 2012 2012 ---(Rupees)--1,291,278 206,605 1,000,000 357,516 39,469,633 680,360 108,858 1,000,000 34,268 34,360,401
Askari Investment Management Limited - the Management Company Remuneration payable Sindh sales tax payable on management company remuneration Preliminary expenses and floatation costs Sales load Units held in the fund 391,551 units (June 2012: 340,327 units) Askari Bank Limited (Holding company of the Management Company) Units held in the fund 1,000,000 units Dividend payable Balance with bank Profit receivable Askari Bank Limited TFC (18-11-09) Nil certificates Askari Bank Limited TFC (23-12-11) 4 certificates Markup receivable on TFC Central Depository Company Limited - Trustee Trustee fee payable Security deposits Key Management Personnel Outstanding 12,712 units (June 30, 2012: 1,328 units)
10 DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on October 23, 2012 by the Board of Directors of the Management Company. 11 GENERAL Figures have been rounded off to the nearest rupee.
100,803,300 937,000 26,617,124 164,902 4,077,184 149,489 149,684 100,000 1,281,412
100,962,900 570,000 9,854,335 17,789 52,822,125 867,175 92,774 100,000 134,123
Director
Directors Report
50
Islamic Income Fund

Category: Islamic Income Scheme

51
The Board of Directors of Askari Investment Management Limited ("the Management Company" or "AIM" or "the Company") is pleased to present the un-audited condensed interim financial report of Askari Islamic Income Fund (AIIF) for the quarter ended September 30, 2012. Economic Review During the first quarter of this fiscal year, the only visible improvement on the macroeconomic front was slowdown in inflation. The CPI inflation for the 1QFY13 came down to post a single digit growth; averaging 9.2%Y/Y compared to 11.6%Y/Y growth experienced in the previous quarter. This was mainly contributed by slowdown in food prices, due to improvement in domestic production and supplies. Furthermore high base effect from previous year also assisted the single digit growth in inflation. However, the underlying factors for inflation still remain intact. The core inflation as measured by Non-food and Non-energy is still persistent and remains in double digit; 10.8%Y/Y on average in 1QFY13.Central bank duly responded to ease in headline CPI inflation and slashed the policy rate by 150bps to 10.5% in the monetary policy announced during Aug-12. The cut would also serve in achieving the objective of reviving country's economic growth. On the external side, the country's current account balance during the first two months posted surplus of USD 884mn (compared to a deficit of USD 298mn in 2MFY12), mainly due to hefty payments received under the coalition support fund, worth USD 1.12bn. Worker's remittances receipts grew by 9.2%Y/Y during 1QFY13 to USD 3.6bn. In terms of trade, lower international oil prices, helped narrowed country's trade balance to USD 2.4bn in 2MFY13 from USD 2.5bn in corresponding period last year. Overall imports depicted a 4.6%Y/Y decline to USD 6.5bn, whereas exports declined by 4.6% to USD 4bn. However, this trend may not continue and country's balance of payment will likely turn negative in coming months ahead given the outstanding loan repayments to IMF and no other visible capital and financial inflows. So far, the country' foreign exchange reserves has declined from USD 15.3bn in Jun-12 to USD ~14.9bn by Sep-12 end. Hence deficit in balance of payment could see further depletion in country's foreign exchange reserves, which would put downward pressure on PKR. The PKR has depreciated by almost ~3%Q/Q in 1QFY13. Given the lack of sustainable foreign inflows, the government borrowing burden has shifted on domestic sources. During the 1QFY13, government net fiscal borrowing increased by PKR 172bn or 4.5%. Although the government was able to make a net retirement of PKR 360bn to SBP, but this retirement to SBP was only made possible by borrowing PKR 530bn from the schedule banks, showing an increment of almost 25% from the stock ending Jun-12. Continued government borrowing from schedule banks has depressed the private sector credit off-take; which declined by 2.5% in 1QFY13. Country's tax revenue remains dismissal. The provisional tax collection figures for 1QFY13 suggests a shortfall of PKR 28bn, from an initial target of PKR 437bn. With economic growth remaining slow during this fiscal year, the government will be hard pressed to achieve the growth target in tax revenues. At the same time, with elections due in next six months, government spending will remain on the higher side, hence leading to higher fiscal deficit, easily surpassing the target of 4.2% set for the year. Country's large sector manufacturing showed subdued growth of 0.8%Y/Y in 2MFY13. This can be attributed to extended energy shortages, unfavorable law and order situation and uncertain political environment. During the quarter, floods, resulting from the heavy Monsoon starting Aug-12, caused a widespread loss of life, properties and infrastructure in lower Punjab, upper Sindh and north-eastern Baluchistan. Although it would be too premature to put an economic cost of recent floods, but unofficial estimates suggest that the loss could well reach above PKR ~300bn. For FY13, The government had targeted 25mn ton of wheat, 6.9mn rice, 14.5mn bales of Cotton and 59mn tons of Sugarcane crop. However, the initial reports by National Disaster Management Authority (NDMA), estimate a crop area of almost 1.1 million acres to be affected by these flash foods. This year's floods have impacted rice crop in particular, which will lead to relatively lower growth in total agriculture sector compared to the original target. Overall, the combined effects of energy shortages, private sector crowding, weak exports, unfavorable law & order conditions and floods, all points towards slow economic growth during this fiscal year. The IMF in its latest reports has projected an economic growth rate of 3-3.5% for Pakistan compared to government initial estimates of 4.2%. Fixed income review In 1QFY13, the SBP slashed the discount rate by 150bps to 10.0%. Subsequently, the domestic yield curve adjusted downward. Rates on 3M, 6M and 12M papers fell by 177bps, 194bps and 196bps to 10.1%, 10.0% and 10.0%, respectively at the end of quarter. Rate on 10-year bond came down by 185bps to 11.4% from 13.3% at the start of the quarter. Moreover, as of the latest developments, yields across all tenors are still trading below their historical levels. Hence one can deduce that market is expecting another cut of 50-100bps in the policy rate to be announced in the 1st week of October, 2012. During the quarter auctions conducted by SBP, participation remained skewed on the short-end of the paper. On a cumulative basis, the SBP raised almost 1,736bn in the bi-monthly auctions conducted during the quarter.
Islamic Income Fund

AIIF Performance Review
52
AIIF generated a return of 12.79% for the quarter ended September 2012 maintaining top quartile position amongst its peers & outperforming its benchmark by 535bps. Continuous outperformance led to an increase of 22% in the Fund size closing at PKR 769million. During this quarter, the fund had an average allocation of 45% in GoP Ijara Sukuk. In this segment, the fund availed trading opportunities by actively managing this Sukuk portfolio leading to higher capital gains and enhanced returns. In addition, 11.13% of the net assets were invested in short term corporate Sukuk of Hub Power Corporation Limited & Engro Fertilizer Limited resulting in enhanced recurring returns along with providing stability to the overall Fund portfolio as both the instruments are amortized over a period of 6 months. Short term deposits (with AA & above rated Islamic Bank / Islamic Wings) were on average 44% of Fund size during the Quarter. The portfolio mix of the fund is positioned to maintain the deliverance of stable returns going forward.
Dividend Distribution The Chief Executive on behalf of the Board of Directors has approved the following interim distributions for the unit holders of the Fund:
Date of distribution
Distribution Rs per unit
Distribution percentage for the month- Annualized 9.63% 11.00% 10.50%
July 25, 2012 August 27, 2012 September 25, 2012 Total distribution
0.6607 0.9366 0.8960 2.4933
Acknowledgements We thank our valued investors who have placed their confidence in us. The Board is also thankful to the Securities and Exchange Commission of Pakistan, the State Bank of Pakistan, the Trustee of the Fund and the Islamabad Stock Exchange for their continued cooperation and support. The Board of Directors also appreciates the efforts put in by the management team and for their commitment and hard work. For and on behalf of the Board of Directors of the Management Company
Islamic Income Fund
53
Islamic Income Fund

Category: Islamic Income Scheme

ASKARI ISLAMIC INCOME FUND CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES AS AT SEPTEMBER 30, 2012
54
Un Audited Audited September June 30, Note 30, 2012 2012 ----------------(Rupees)---------------Assets Bank balances Investments Deposits, prepayments and other receivables Unamortised formation costs Total assets Liabilities Payable to Askari Investment Management Limited- Management Company Payable to MCB Financial Services Limited - Trustee Annual fee payable to the Securities and Exchange Commission of Pakistan Payable against redemption of units Accrued expenses and other liabilities Total liabilities NET ASSETS Unit holders fund (as per statement attached) Contingencies and commitments 5 --------- (Number of units) --------Number of units in issue 7,637,140 6,227,440 3 4 201,405,523 561,195,850 14,949,203 866,743 778,417,318 192,080,320 431,824,000 13,259,344 976,272 638,139,936
684,576 113,899 129,998 124,752 8,182,843 9,236,067 769,181,250 769,181,250
680,351 99,759 447,721 3,536,859 3,706,457 8,471,147 629,668,789 629,668,789
----------------(Rupees)---------------Net asset value per unit 100.7159 101.1120
Director
Islamic Income Fund

ASKARI ISLAMIC INCOME FUND CONDENSED INTERIM INCOME STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
September 30, 2012
55
Note Income Profit on balances and placements with banks Profit on sukuk certificates Net realised gain on sale of investments Net unrealised gain on revaluation of investments classified as 'at fair value through profit or loss' Total income Expenses Remuneration of the Management Company Sind tax on services Remuneration of the Trustee Annual fee to the Securities and Exchange Commission of Pakistan Amortisation of the deferred formation cost Auditor's remuneration Securities Transaction Cost Legal and professional charges Fee & Subscription Bank and settlement charges Printing charges Total expenses Net income from operating activities Element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed - net Provision for contribution to the Workers' Welfare Fund Net income for the period Taxation Net income for the period after taxation Earnings per unit 7 5.1
September 30, 2011
------------------Rupees-----------------8,651,109 11,175,564 1,915,808 2,784,042 24,526,523 1,906,635 305,062 323,009 129,998 109,530 106,830 142,000 12,568 79,137 9,184 29,529 3,153,482 21,373,040 800,907 443,320 21,730,628 21,730,628 7,480,872 7,269,033 1,323,793 177,252 16,250,950 944,609 150,998 221,188 88,536 109,530 92,882 73,325 8,822 79,138 1,526 29,529 1,800,082 14,450,868 677,473 15,128,341 15,128,341
Director
Islamic Income Fund

ASKARI ISLAMIC INCOME FUND CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
56
September 30, September 30, 2012 2011 -----------------Rupees----------------Net income for the period Other comprehensive income for the period Net Comprehensive Income for the period 21,730,628 21,730,628 15,128,341 15,128,341
Director
Islamic Income Fund

ASKARI ISLAMIC INCOME FUND CONDENSED INTERIM DISTRIBUTION STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
September 30, 2012
57
September 30, 2011
------------------Rupees-----------------Undistributed income brought forward Realised income Unrealised (loss) / income Net Income for the period Final distribution of Rs 0.9488 per unit on July 6, 2012 (2011: Distribution of Rs. 2.4107 per units) - Cash dividend - Bonus units First interim distribution of Rs 0.6607 per unit on July 25, 2012 - Cash dividend - Bonus units Second interim distribution of Rs 0.9366 per unit on August 27, 2012 - Cash dividend - Bonus units Third interim distribution of Rs 0.8960 per unit on September 25, 2012 - Cash dividend - Bonus units Undistributed income carried forward Undistributed income comprising: Realised income Unrealised income 7,159,806 (235,319) 6,924,487 21,730,628 11,481,613 50,205 11,531,818 15,128,341
(3,524,659) (2,383,937) (5,908,595) (2,454,279) (1,626,035) (4,080,315) (3,712,574) (2,694,977) (6,407,551) (3,551,640) (3,240,633) (6,792,273) 5,466,381
(5,729,007) (4,907,481) (10,636,488) 16,023,671
2,682,339 2,784,042 5,466,381
15,846,419 177,252 16,023,671
Director
Islamic Income Fund

ASKARI ISLAMIC INCOME FUND CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
September 30, 2012
58
September 30, 2011
----------------------Rupees--------------------Net assets at beginning of the period Issued 2,092,637 (2011: 1,019,830) units Redemption of 781,993 (2011: 688,672) units Issue of 99,055 bonus (2011: 48,975) units Element of (income) / loss and capital (gains) / losses included in prices of units issued less those in units redeemed - net - transferred to income statement Net realised gain on sale of investments Net unrealised gain on revaluation of investments classified as 'at fair value through profit or loss' Other net income for the period Other comprehensive income Net income for the period Final distribution of Rs 0.9488 per unit on July 6, 2012 (2011: Distribution of Rs. 2.4107 per unit) - Cash dividend - Bonus units First interim distribution of Rs 0.6607 per unit on July 25, 2012 - Cash dividend - Bonus units Second interim distribution of Rs 0.9366 per unit on August 27, 2012 - Cash dividend - Bonus units Third interim distribution of Rs 0.8960 per unit on September 25, 2012 - Cash dividend - Bonus units 629,668,789 210,534,458 (78,708,566) 131,825,892 9,945,582 771,440,263 (800,907) 1,915,808 2,784,042 17,030,778 21,730,628 452,751,707 103,765,095 (69,982,127) 33,782,968 4,907,481 491,442,156 (677,473) 1,323,793 177,252 13,627,296 15,128,341
(3,524,659) (2,383,937) (5,908,595) (2,454,279) (1,626,035) (4,080,315) (3,712,574) (2,694,977) (6,407,551) (3,551,640) (3,240,633) (6,792,273) 769,181,250
(5,729,007) (4,907,481) (10,636,488) 495,256,536
Net assets as at the end of the period
Director
Islamic Income Fund

ASKARI ISLAMIC INCOME FUND CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
September 30, 2012 CASH FLOWS FROM OPERATING ACTIVITIES Net income for the period Adjustments for: Net unrealised gain on investments classified as financial assets 'at fair value through profit or loss' Amortisation of formation costs Element of (income) / loss and capital (gains) / losses included in prices of units issued less those in units redeemed - net (Increase) / decrease in assets: Investments - net Deposits, prepayments and other receivables Increase / (decrease) in liabilities Payable to Askari Investment Management Limited - Management Company Payable to MCB Financial Services Limited - Trustee Annual fee payable to the Securities and Exchange Commission of Pakistan Payable against redemption of units Accrued expenses and other liabilities Net cash outflow from operating activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of units Payment against redemption of units Dividend paid Net cash inflow / outflow from financing activities Net increase / decrease in cash and cash equivalents during the period Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period
59
September 30, 2011
------------------Rupees-----------------21,730,628 15,128,341
(2,784,042) 109,529 (800,907) (3,475,420) (126,587,807) (1,689,859) (128,277,665)
(177,252) 109,530 (677,473) (745,195) (180,587,543) (4,441,725) (185,029,268)
4,225 14,140 (317,723) (3,412,107) 4,476,386 764,920 (109,257,537) 210,534,458 (78,708,566) (13,243,152) 118,582,740 9,325,203 192,080,320 201,405,523
(26,809) 8,660 (83,616) 56,435,310 56,333,545 (114,312,578) 103,775,429 (70,868,154) (5,729,007) 27,178,268 (87,134,310) 287,151,018 200,016,708
The annexed notes 1 to 11 form an integral part of these financial statements.
Director
Islamic Income Fund
60
ASKARI ISLAMIC INCOME FUND NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
1 1.1 LEGAL STATUS AND NATURE OF BUSINESS Askari Islamic Income Fund (the Fund) was established under a Trust Deed executed between Askari Investment Management Limited (a wholly owned subsidiary of Askari Bank Limited), as Management Company and MCB Financial Services Limited as Trustee on August 26, 2008 and was approved by the Securities and Exchange Commission of Pakistan (the SECP) as Notified Entity on June 25, 2009 in accordance with Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations). The registered office of the Management Company is situated at Shop No. 2/W, Kashmir Plaza Jinnah Avenue, Blue Area Islamabad with its Head Office situated at 20-C, Khayaban-e-Nishat, Phase VI, DHA, Karachi. The Fund is an open ended mutual fund and offers units for public subscription on a continuous basis. The units are transferable and can be redeemed by surrendering them to the Fund except for the core units which are subject to certain restrictions as per the NBFC Regulations and the constitutive documents of the Fund. The units are listed on the Islamabad Stock Exchange (Guarantee) Limited. As per the offering document , the Fund is allowed to invest in shariah compliant income instruments, such as debt securities, placements under Mudarabah, Murabaha and Musharaka arrangements, government securities and other shariah compliant instruments including shariah compliant securities available outside Pakistan as approved by the Shariah Advisor and SECP from time to time. The Pakistan Credit Rating Agency Limited (PACRA) has assigned an asset manager rating of 'AM3+' (positive outlook) to the Management Company in June 2012. As per the rating scale of PACRA, this rating denotes that the asset manager meets high investment industry standards and benchmarks. Further, PACRA has upgraded the stability rating of the Fund to 'AA-(f)' in June 2012. The rating of the Fund denotes a very strong capacity to manage relative stability in returns and very low exposure to risks. Titles to the assets of the Fund are held in the name of MCB Financial Services Limited as trustee of the Fund BASIS OF PREPARATION Statement of compliance This condensed interim financial statement has been prepared in accordance with the approved accounting standards as applicable in Pakistan for interim financial reporting. Approved accounting standards comprise of IAS 34: 'Interim Financial Reporting' (IAS 34), the Trust Deed, NBFC Rules, NBFC Regulations and the directives issued by the SECP. Wherever the requirements of the Trust Deed, the NBFC Rules, NBFC Regulations or the said directives differ with the requirements of IAS 34, the requirements of the Trust Deed, NBFC Rules, NBFC Regulations or the said directives take precedence. 2.2 SIGNIFICANT ACCOUNTING POLICIES The accounting policies and the methods of comuptation adopted in the preparation of this condensed interim financial information are the same as those applied in the preparation of the annual published financial statements of the Fund for the year ended June 30, 2012.
1.2
1.3
1.4
1.5 2 2.1
BANK BALANCES Saving accounts
Note 3.1
Un-Audited Audited Sep 30, 2012 June 30, 2012 ------------Rupees-----------201,405,523 192,080,320
3.1
These are shariah compliant bank accounts and carry profit at the rates ranging from 5% to 12% (June 2012: 5% to 12%) per annum.
INVESTMENTS Financial assets 'at fair value through profit and loss' - Held for trading Sukuk certificates 4.1 561,195,850 431,824,000
Islamic Income Fund

4.1 Sukuk certificates - At fair value through profit or loss Face value of Rs 5,000 each unless otherwise stated
61
Name
As at
----------------Number of certificates-----------Purchase Sales As at 30 during September 30, 2012 the period the period
----------------Rupees-----------------Carrying Value Market Value
July 1, 2012 during
Market value Appreciation as percentage / (Diminution) of net assets )
Market value as percentage of total investment
GoP Ijara Sukuk VII GoP Ijara Sukuk IV GoP Ijara Sukuk V GoP Ijara Sukuk VIII GoP Ijara Sukuk I GoP Ijara Sukuk XIV GoP Ijara Sukuk XII GoP Ijara Sukuk XVI GoP Ijara Sukuk XV GoP Ijara Sukuk XVII Hub Power Company Sukuk Hub Power Company Sukuk Engro Fertilizer Limited Sukuk
3,400 7,200 700 9,000 21,200 8,000 15,000 12,000 9,840
6,000 40,000 45,000 55,000 12,000 -
60,000 36,000 15,000 12,000 9,840
3,400 17,010,200 7,200 36,018,000 6,700 33,500,697 9,000 45,031,500 1,200 6,001,416 17,000 85,850,000 55,000 275,000,000 12,000 60,000,000 558,411,813
17,170,000 36,385,200 33,804,850 45,490,500 6,061,800 86,156,000 276,127,500 60,000,000 561,195,850
159,800 367,200 304,153 459,000 60,384 306,000 1,127,500 2,784,037
2.00% 5.00% 0.00% 4.00% 0.00% 6.00% 1.00% 11.00% 0.00% 36.00% 0.00% 8.00% 0.00% 73.00%
3.06% 6.48% 0.00% 6.02% 0.00% 8.11% 1.08% 15.35% 0.00% 49.20% 0.00% 10.70% 0.00% 100.00%
5 5.1
CONTINGENCIES AND COMMITMENTS The Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As a result of this amendment it may be construed that all Collective Investment Schemes / mutual funds (CISs) whose income exceeds Rs. 0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In light of this, Mutual Funds Association of Pakistan (MUFAP) filed a constitutional petition in the Honorable Sindh High Court challenging the applicability of WWF on CISs which was dismissed mainly on the ground that MUFAP is not an aggrieved party. Keeping in view the prevalent conditions on this matter, the Management Company had made a provision for WWF contribution in the annual financial statements of the Fund for the year ended June 30, 2010. Subsequently, clarifications were issued by the Ministry of Labour and Manpower (the Ministry) which stated that mutual funds are not liable to contribute to WWF on the basis of their income. These clarifications were forwarded by the Federal Board of Revenue (FBR) (being the collecting agency of WWF on behalf of the Ministry) to its members for necessary action. Based on these clarifications, the FBR also withdrew notice of demand which it had earlier issued to one of the mutual funds for collection of WWF. Other mutual funds to whom notices were issued by the FBR also took up the matter with FBR for their withdrawal. Based on the positive developments and a legal advice taken by the Management Company thereon, provision for WWF made in the books of accounts of the Fund was reversed on October 7, 2010 and no further provision was maintained in the books of accounts. Further, a Constitutional Petition was filed with the Honorable High Court of Sindh by a CIS/mutual fund and a pension fund through their trustee and an asset management company inter alia praying to declare that mutual funds/voluntary pension funds being pass through vehicles/entities are not industrial establishments and hence, are not liable to contribute to the WWF under the WWF Ordinance. The proceedings of the Honorable Court in this matter have concluded and the Honorable Court has reserved its decision. We have been advised by the Management Company that the Bench of the Honorable Court hearing the case had been dissolved and a fresh Bench shall be constituted to take up the proceedings. Subsequent to June 30, 2011, the Honourable Lahore High Court (LHC) in a Constitutional Petition relating to the amendments brought in the WWF Ordinance, 1971 through the Finance Act, 2006, and the Finance Act, 2008, has declared the said amendments as unlawful and unconstitutional and struck them down. The Management Company believes that the decision of LHC will lend further support to the constitutional petition which is pending in the Sindh High Court (SHC). During the year ended June 30, 2012, a show cause notice, has been issued to one of the Fund managed by the Management Company by Deputy Commissioner Inland Revenue stating that the Fund is liable to pay WWF under section 4 of the Workers Welfare Fund Ordinance, 1971. Although the Management Company is hopeful that the case will be decided in its favour, it has taken a decission to provide for WWF amounting to Rs 3.231 million as at September 30, 2012 (including Rs 0.443 million in respect of the current period).The provision has been made without prejudice to pending application in the High Court of Sindh.
Islamic Income Fund

5.2 6 There were no other contingencies and commitments outstanding as at September 30, 2012 (June 2012: Nil). TAXATION
62
The income of the Fund is exempt from income tax under Clause 99 of Part I of the Second Schedule to the Income Tax Ordinance, 2001 subject to the condition that not less than 90 percent of its accounting income for the year, as reduced by capital gains, whether realised or unrealised, is distributed amongst the unit holders. The Fund has not recorded provision for taxation as the Management Company intends to distribute the required minimum percentage of the Fund's accounting income for the current year to its unit holders. 7 EARNING PER UNIT (EPU) Earnings per unit has not been disclosed as in the opinion of the management, determination of weighted average number of outstanding units is not practicable. 8 CASH AND CASH EQUIVALENTS Un-Audited Audited September 30, 2012 June 30, 2012 --------Rupees---------201,405,523 192,080,320 201,405,523 192,080,320
Saving accounts Placements with Islamic banks
9 9.1
TRANSACTIONS WITH CONNECTED PERSONS / RELATED PARTIES Connected persons / related parties include Askari Investment Management Limited being the Management Company, MCB Financial Services Limited being the Trustee, Askari Bank Limited being the holding company of the Management Company, Askari General Insurance Company Limited being an associate company of the Management Company, Askari Investment Management Employees Provident Fund and other Collective Investment Shemes under common management and the directors and officer of the Management Company. Transactions with connected persons / related parties are in the normal course of business and are carried out at agreed terms Remuneration to the Management Company is determined in accordance with the provisions of the NBFC Regulations and the Trust Deed. Remuneration payable to the Trustee is determined in accordance with the provisions of the Trust Deed. Details of the transactions and balances with connected persons are as follows:
9.2 9.3 9.4 9.5
Un-Audited Un-Audited September 30, September 30, 2012 2011 Rupees Askari Investment Management Limited Remuneration of the Management Company Sindh sales tax on remuneration of the management company Units redeemed: Nil units (2011: 269,502 units) MCB Financial Services Limited Remuneration of the Trustee Askari Bank Limited Profit on balances and placements with banks Issue of Nil units (2011: 493,029 units) Cash Dividend AIM Employees Provident Fund Issue of 169 bonus units (2011 :207 ) Key Management Personnel Issue of units 4,969 (2011:NIL units) Redemption of units 1,705 (2011:NIL units) Issue of bonus units 1,868 (2011:NIL units) 1,906,635 305,062 323,009 40,036 5,503,246 17,031 499,743 171,088 187,627 944,609 150,998 27,500,000 221,188 14,665 50,000,000 2,665,694 20,472 -
Islamic Income Fund

9.6 Balances with connected persons as at period end
63
Un-Audited Audited Septmber 30, 2012 June 30, 2012 Rupees 684,576 109,534 189,636 2,953,641 12,480 161,025,057 509,119 113,899 5,489,821 581,294 93,008 6,049 1,139,995 3,405 161,658,338 493,932 99,759 5,351,554
Askari Investment Management Limited Management fee payable Sindh tax payable Sales load payable Askari Bank Limited Balances with Bank - Islamic Banking Accrued Profit receivables Outstanding 1,598,805 units (June 2012: 1,598,805 units) AIM Employees Provident Fund Units outstanding 5,055 units (June 2012: 4,885) MCB Financial Services (Private) Limited Trustee fee payable Key Management Personnel Outstanding units 54,508 (June 2012: 52,927 units)
10 DATE OF AUTHORISATION FOR ISSUE
Condense interim financial statements were authorised for issue on October 23, 2012 by the Board of Directors of the Management Company. 11 GENERAL Figures have been rounded off to the nearest rupee.
Director
Islamic Income Fund
Directors Report
64
Asset Allocation Fund

Category: Asset Allocation Scheme

65
The Board of Directors of Askari Investment Management Limited ("the Management Company" or "AIM" or "the Company") is pleased to present the un-audited condensed interim financial report of Askari Asset Allocation Fund (AAAF) for the quarter ended September 30, 2012. Economic Review During the first quarter of this fiscal year, the only visible improvement on the macroeconomic front was slowdown in inflation. The CPI inflation for the 1QFY13 came down to post a single digit growth; averaging 9.2%Y/Y compared to 11.6%Y/Y growth experienced in the previous quarter. This was mainly contributed by slowdown in food prices, due to improvement in domestic production and supplies. Furthermore high base effect from previous year also assisted the single digit growth in inflation. However, the underlying factors for inflation still remain intact. The core inflation as measured by Non-food and Non-energy is still persistent and remains in double digit; 10.8%Y/Y on average in 1QFY13.Central bank duly responded to ease in headline CPI inflation and slashed the policy rate by 150bps to 10.5% in the monetary policy announced during Aug-12. The cut would also serve in achieving the objective of reviving country's economic growth. On the external side, the country's current account balance during the first two months posted surplus of USD 884mn (compared to a deficit of USD 298mn in 2MFY12), mainly due to hefty payments received under the coalition support fund, worth USD 1.12bn. Worker's remittances receipts grew by 9.2%Y/Y during 1QFY13 to USD 3.6bn. In terms of trade, lower international oil prices, helped narrowed country's trade balance to USD 2.4bn in 2MFY13 from USD 2.5bn in corresponding period last year. Overall imports depicted a 4.6%Y/Y decline to USD 6.5bn, whereas exports declined by 4.6% to USD 4bn. However, this trend may not continue and country's balance of payment will likely turn negative in coming months ahead given the outstanding loan repayments to IMF and no other visible capital and financial inflows. So far, the country' foreign exchange reserves has declined from USD 15.3bn in Jun-12 to USD ~14.9bn by Sep-12 end. Hence deficit in balance of payment could see further depletion in country's foreign exchange reserves, which would put downward pressure on PKR. The PKR has depreciated by almost ~3%Q/Q in 1QFY13. Given the lack of sustainable foreign inflows, the government borrowing burden has shifted on domestic sources. During the 1QFY13, government net fiscal borrowing increased by PKR 172bn or 4.5%. Although the government was able to make a net retirement of PKR 360bn to SBP, but this retirement to SBP was only made possible by borrowing PKR 530bn from the schedule banks, showing an increment of almost 25% from the stock ending Jun-12. Continued government borrowing from schedule banks has depressed the private sector credit off-take; which declined by 2.5% in 1QFY13. Country's tax revenue remains dismissal. The provisional tax collection figures for 1QFY13 suggests a shortfall of PKR 28bn, from an initial target of PKR 437bn. With economic growth remaining slow during this fiscal year, the government will be hard pressed to achieve the growth target in tax revenues. At the same time, with elections due in next six months, government spending will remain on the higher side, hence leading to higher fiscal deficit, easily surpassing the target of 4.2% set for the year. Country's large sector manufacturing showed subdued growth of 0.8%Y/Y in 2MFY13. This can be attributed to extended energy shortages, unfavorable law and order situation and uncertain political environment. During the quarter, floods, resulting from the heavy Monsoon starting Aug-12, caused a widespread loss of life, properties and infrastructure in lower Punjab, upper Sindh and north-eastern Baluchistan. Although it would be too premature to put an economic cost of recent floods, but unofficial estimates suggest that the loss could well reach above PKR ~300bn. For FY13, The government had targeted 25mn ton of wheat, 6.9mn rice, 14.5mn bales of Cotton and 59mn tons of Sugarcane crop. However, the initial reports by National Disaster Management Authority (NDMA), estimate a crop area of almost 1.1 million acres to be affected by these flash foods. This year's floods have impacted rice crop in particular, which will lead to relatively lower growth in total agriculture sector compared to the original target. Overall, the combined effects of energy shortages, private sector crowding, weak exports, unfavorable law & order conditions and floods, all points towards slow economic growth during this fiscal year. The IMF in its latest reports has projected an economic growth rate of 3-3.5% for Pakistan compared to government initial estimates of 4.2%. Fixed income review In 1QFY13, the SBP slashed the discount rate by 150bps to 10.0%. Subsequently, the domestic yield curve adjusted downward. Rates on 3M, 6M and 12M papers fell by 177bps, 194bps and 196bps to 10.1%, 10.0% and 10.0%, respectively at the end of quarter. Rate on 10-year bond came down by 185bps to 11.4% from 13.3% at the start of the quarter. Moreover, as of the latest developments, yields across all tenors are still trading below their historical levels. Hence one can deduce that market is expecting another cut of 50-100bps in the policy rate to be announced in the 1st week of October, 2012. During the quarter auctions conducted by SBP, participation remained skewed on the short-end of the paper. On a cumulative basis, the SBP raised almost 1,736bn in the bi-monthly auctions conducted during the quarter.
66
Equity market review Pakistan equities performed exceptionally in Jul-Sep period with KSE-100 benchmark index gaining 11.91% to close at 15,445 on main trigger point of 150 bps cut in the discount rate. Global equity markets also delivered impressive returns during 1QFY13 on central banks actions (QE3). MSCI frontier and emerging market indices gained 5.2% and 5.8%, respectively in Jul-Sept. S&P index also grew 5.8%, the best quarterly gain since 2010. Positive news flows kept equity market near to all time record levels derived by declining interest rates amid 150 bps cut in discount rate. The quarter started on positive note amid improving relationship with USA and expected inflow of CFS funds. This rally was further extended on the back of strong corporate results (up 11%Y/Y). Softening monthly inflation numbers led to higher cut in the discount rate in August pushed the bonds yield lower and hence leading to attractive equity valuations. Oil & gas, cement and food producers sectors showed strong gains while banks underperformed. Oil & gas stocks came under limelight on healthy payouts and rising earnings projections on the back of new discoveries. Cement continued to rally due to stable cement prices amid decline in input cost of thermal coal. Banking stocks underperformed the broader index on declining NIMs with monetary easing. Food producers also gained due to foreign interest in domestic consumer staples and food producers. Key triggers in the near term will be corporate results for Jul-Sept quarter and result expectations for the second quarter. Profitability for oil & gas, cements, textile and food is expected to grow while banks earnings growth will slow down. On the macroeconomic front, inflation numbers in coming months will influence expectations regarding policy rate decision due in December 12. After a 50 bps cut in October, market is expecting further ease in the discount rate over the next two months. AAAF Performance Review Askari Asset Allocation Fund gained 8.03% in 1QFY13 against its reference benchmark of 6.03% and peer average of 6.67%. The fund also consistently outperformed the benchmark on risk adjusted basis. Given, the fund was 52% invested in equities on average, outperformance with respect to index is notable. Fund's overweight position in oil & gas sector contributed in outperformance for the quarter. Major outperforming stocks in the portfolio were PPL and POL while banking stocks ABL and BAFL were performance dragger. During the quarter, fund's equity allocation increased to 60% from 50% at the end of last quarter as decline in yields on fixed income instruments which made equities relatively more attractive. Weight in cement sector was increased to 12% from 3% at the start of the quarter by adding D.G.K Cement and Lucky Cement in a portfolio. Allocation in banks was also increased by 4.0% to 10% of the fund size by raising allocation in Bank Alfalah and UBL while the fund's exposure in oil & gas and chemical sectors was maintained. Exposure in electricity sector and automobile parts was slashed to zero as price objectives were achieved in equities in portfolio. On debt side, the fund's duration was increased by shifting towards longer tenors to benefit from dropping yields. Exposure in PIBs was increased to 21% of the fund size from 11% at start of the quarter whereas exposure in T-bills was reduced to 6.1% from 26.4%. Going forward, companies in oil & gas, cements and banks are expected to outperform and the fund has adequate exposure in these sectors to capture gains. The fund will remain overweight in equities and fund manager is continuously looking for opportunities to deliver outperformance in coming months.
67
QUARTERLY REPORT SEPTEMBER 2012 Financial Statements
68

Category: Asset Allocation Scheme

ASKARI ASSET ALLOCATION FUND CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES AS AT SEPTEMBER 30, 2012
69
Un-Audited Audited September June 30, 2012 30, 2012 Note ------------------(Rupees)-----------------ASSETS Bank balances Investments Dividend, prepayments and other receivables Security deposits Total assets LIABILITIES Payable to Askari Investment Management Limited- Management Company Payable to Central Depository Company of Pakistan Limited - Trustee Annual fee payable to Securities and Exchange Commission of Pakistan Payable against purchase of investments Payable against redemption of units Accrued expenses and other liabilities Total liabilities NET ASSETS Unit holders' fund (as per statement attached) Contingencies and commitments 7 ----------- (Number of units) -----------Number of units in issue 4,811,329 4,198,350 5 6 25,488,702 193,194,485 2,080,426 3,600,000 224,363,613 13,883,816 178,116,256 1,825,866 3,600,000 197,425,938
623,605 57,533 46,852 13,321,262 3,743,620 17,792,872 206,570,742 206,570,742
698,906 57,376 174,646 38,625 3,211,050 4,180,603 193,245,335 193,245,335
------------------(Rupees)-----------------Net asset value per unit 42.9342 46.0289
Director

ASKARI ASSET ALLOCATION FUND CONDENSED INTERIM INCOME STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
70
Note Income Net realised gain / (loss) on sale of investments Dividend income Profit on bank deposits Income from term finance certificates Income from government securities Income from Term Deposit Receipts Other income
September 30, 2012
September 30, 2011
------------------(Rupees)-----------------3,188,025 1,148,047 585,764 129,098 2,093,665 7,144,599 (480,979) 3,315,262 712,327 417,483 607,729 12,342 407 4,584,571
Net unrealised gain / (loss) on revaluation of investments classified as 'at fair value through profit or loss'
9,136,013 16,280,612
(2,013,481) 2,571,090
Expenses Remuneration of the Management Company Sindh sales tax on services Remuneration of the Trustee Annual fee - Securities and Exchange Commission of Pakistan Amortisation of formation costs Securities transaction costs Auditors' remuneration Legal and professional charges Printing and stationery expenses Settlement and bank charges Rating fee Listing fee Custodian fee
1,355,422 216,867 176,438 46,852 129,329 114,372 12,568 23,609 71,728 27,650 2,174,835 14,105,776
1,304,944 208,792 175,956 41,324 129,639 170,448 105,574 8,799 23,609 60,214 25,136 2,513 3,799 2,260,747 310,343
Net income from operating activities Element of (loss) / income and capital (losses) / gains included in prices of units issued less those in units redeemed - net Net (loss) / income for the quarter before taxation Taxation Net (loss) / income for the quarter after taxation Earnings per unit 8
(35,679,894) (21,574,118) (21,574,118)
889,948 1,200,291 1,200,291
Director

ASKARI ASSET ALLOCATION FUND CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
71
September 30, 2012
September 30, 2011
------------------(Rupees)-----------------Net (loss) / income for the quarter after taxation Other comprehensive income Total comprehensive (loss) / income for the quarter (21,574,118) (21,574,118) 1,200,291 1,200,291
Director

ASKARI ASSET ALLOCATION FUND CONDENSED INTERIM DISTRIBUTION STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
72
September 30, 2012
September 30, 2011
-------------------(Rupees)-------------------Accumulated loss brought forward Realised loss Unrealised loss (226,024,921) (565,605) (226,590,526) (21,574,118) (251,008,249) (3,369,871) (254,378,120) 1,200,291
Net (loss) / income for the quarter Final distribution of Rs 6.2878 per unit on July 6, 2012 for the year ended June 30, 2012. (2011: Rs Nil per unit) - Cash distribution - Bonus units Accumulated loss carried forward Accumulated loss carried forward Realised loss Unrealised income / (loss)
(18,863,849) (7,534,536) (26,398,385) (274,563,029)
(253,177,829)
(283,699,042) 9,136,013 (274,563,029)
(251,164,348) (2,013,481) (253,177,829)
Director

ASKARI ASSET ALLOCATION FUND CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
73
September 30, 2012
September 30, 2011
------------------(Rupees)----------------Net assets at beginning of the quarter Issue of 1,752,670 units (2011: 8,477 units) Redemption of 1,329,282 units (2011: 23,461 units) Issue of 189,590 bonus units (2011: Nil) Element of (loss) / income and capital (losses) / gains included in prices of units issued less those in units redeemed - net - transferred to income statement Net realised gain / (loss) on sale of investments Net unrealised gain / (loss) on revaluation of investments classified as 'at fair value through profit or loss' Other net (loss) / income for the quarter Other comprehensive income Final distribution of Rs 6.2878 per unit on July 6, 2012 for the year ended June 30, 2012. (2011: Rs Nil per unit) - Cash distribution - Bonus units 193,245,335 74,056,449 (55,972,970) 18,083,479 7,534,536 218,863,350 177,149,656 328,805 (937,284) (608,479)
176,541,177
35,679,894 3,188,025
(889,948) (480,979)
9,136,013 (33,898,155) (21,574,117)
(2,013,481) 3,694,751 1,200,291
(18,863,849) (7,534,536) (26,398,385) 206,570,742
Net assets at the end of the quarter
176,851,520
Director

ASKARI ASSET ALLOCATION FUND CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
74
Note CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) / income for the quarter before taxation Adjustments for: Net unrealised (gain) / loss on revaluation of investments classified as 'at fair value through profit or loss' Amortisation of formation costs Element of (loss) / income and capital (losses) / gains included in prices of units issued less those in units redeemed - net
September 30, 2012
September 30, 2011
------------------(Rupees)-----------------(21,574,118) 1,200,291
(9,136,013) 35,679,894 26,543,881 4,969,763 (5,942,216) (254,560) (6,196,776)
2,013,481 129,639 (889,948) 1,253,172 2,453,463 (13,378,495) 202,365 4,756,101 (8,420,029)
(Increase) / decrease in assets Investments - net Receivable against sale of investments Deposits, prepayments and other receivables (Decrease) / increase in liabilities Payable to Askari Investment Management Limited - Management Company Payable to Central Depository Company of Pakistan Limited - Trustee Annual fee payable to Securities and Exchange Commission of Pakistan Payable against purchase of investments Payable against redemption of units Accrued expenses and other liabilities
(75,301) 157 (127,794) (38,625) 13,321,262 532,570 13,612,269 12,385,256
72,620 (158) (107,655) 9,711,370 264,053 9,940,230 3,973,664
Net cash inflow from operating activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of units Payments on redemption of units Distributions paid Net cash outflow on financing activities Net increase in cash and cash equivalents during the quarter Cash and cash equivalents at the beginning of the quarter Cash and cash equivalents at the end of the quarter 5
74,056,449 (55,972,970) (18,863,849) (780,370) 11,604,886 13,883,816 25,488,702
328,805 (1,241,598) (912,793) 3,060,871 41,309,219 44,370,090
Director
75
ASKARI ASSET ALLOCATION FUND NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
1. 1.1 LEGAL STATUS AND NATURE OF BUSINESS Askari Asset Allocation Fund (the Fund) was established under the Non Banking Finance Companies (Establishment and Regulation) Rules, 2003 (the NBFC Rules). It was registered under a Trust deed executed between Askari Investment Management Limited (a wholly owned subsidiary of Askari Bank Limited) as the Management Company and the Central Depository Company of Pakistan Limited (CDC) as the Trustee on January 17, 2007. The Fund was registered as a Notified Entity under the Non Banking Finance Companies Regulations, 2008 (NBFC Regulations) in February 2009. The units of the Fund were initially issued at Rs 100 per unit. The Management Company of the Fund has been licensed to act as an Asset Management Company under the NBFC Rules through a certificate of registration issued by the SECP. The registered office of the Management Company is situated at Shop No. 2/W, Kashmir Plaza Jinnah Avenue, Blue Area Islamabad with its Head Office situated at 20-C, Khayaban-e-Nishat, Phase VI, DHA, Karachi. The Fund is an open ended mutual fund. Units are offered for public subscription on a continuous basis. The units are transferable and can be redeemed by surrendering them to the Fund. The units are listed on the Islamabad Stock Exchange (Guarantee) Limited. The objective of the Fund is to invest in equity securities as well as debt securities including government securities, commercial papers and various other money market instruments. The Pakistan Credit Rating Agency Limited (PACRA) has assigned an asset manager rating of 'AM3+' (positive out look) to the Management Company on June 2012. As per the rating scale of PACRA, this rating denotes that the asset manager meets high investment industry standards and benchmarks. Pakistan Credit Rating Agency Limited (PACRA) has assigned a short term rating of '3 star' (positive outlook) and a long term rating of '3 star' to the Fund in October 2011. Title to the assets of the Fund are held in the name of CDC as a trustee of the Fund. BASIS OF PREPARATION These condensed interim financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan for interim financial reporting. Approved accounting standards comprise of IAS 34: 'Interim Financial Reporting' (IAS 34), the Trust Deed, NBFC Rules, NBFC Regulations and the directives issued by the SECP. Wherever the requirements of the Trust Deed, the NBFC Rules, NBFC Regulations or the said directives differ with the requirements of IAS 34, the requirements of the Trust Deed, NBFC Rules, NBFC Regulations or the said directives take precedence. These condensed interim financial statements does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the annual financial statements of the Fund for the year ended June 30, 2012. SIGNIFICANT ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of this condensed interim financial report are the same as those applied in the preparation of the annual financial statements for the year ended June 30, 2012. 4. TAXATION The income of the Fund is exempt from income tax under Clause 99 of Part I of the Second Schedule to the Income Tax Ordinance, 2001 subject to the condition that not less than 90 percent of its accounting income for the year, as reduced by capital gains, whether realised or unrealised, is distributed amongst the unit holders. The Fund has not recorded provision for taxation as the Management Company intends to distribute the required minimum percentage of the Fund's accounting income to its unit holders.
1.2
1.3
1.4 1.5
1.6 1.7 2. 2.1
2.2
3.
Note 5. 5.1 6. BALANCES WITH BANKS PLS savings accounts
5.1
Un-audited Audited September 30, June 30, 2012 2012 -----------(Rupees)-----------13,883,816 25,488,702
These accounts carry profit at rates ranging from 5.00% to 12% (June 30, 2012: 5% to 11.50%) per annum.
INVESTMENTS Investments at fair value through profit or loss: Held-for-trading Listed shares Government securities Term Finance Certificate
6.1 6.2 6.3
130,044,789 59,845,633 3,304,063 193,194,485
99,301,463 73,738,513 5,076,280 178,116,256
6.1
Held for trading - shares of listed companies
Name of the investee company
As at July 1, 2012
Purchases during the period Bonus issue Appreciation / (diminution) Market value as a percentage of net assets
Carrying value as Market value as at Sales during As at September at September 30, September 30, 2012 30, 2012 the period 2012
Paid up value of shares Market value as a held as percentage of paid percentage of total up capital of investee investments company
----------------------------------------- Number of shares--------------------------------------------Rupees--------------2,113,202 8,295,100 9,704,130 6,269,474 13,247,845 12,662,857 17,031,705 16,810,084 11,677,618 4,378,605 8,007,985 11,509,912 1,453,227 123,161,743 4,377,570 8,052,693 11,271,969 1,708,016 130,044,789 126,364,626 (1,035) 44,708 (237,943) 254,788 6,883,046 19,405,861 19,157,370 12,905,590 2,374,156 2,347,285 1,227,972 14,133,898 12,592,514 886,053 (70,343) 7,465,918 1,196,444 3.61% 3.61% 6.84% 6.10% 12.94% 9.39% 9.27% 6.25% 24.92% 0.00% 0.00% 2.12% 3.90% 5.46% 11.47% 0.83% 53.60% 2,042,470 7,359,880 9,571,041 (70,732) (935,220) (133,089) 0.99% 3.56% 4.63% 9.18% 1.06% 3.81% 4.95% 9.82% 3.86% 3.86% 7.32% 6.52% 13.83% 10.04% 9.92% 6.68% 26.64% 0.00% 0.00% 2.27% 4.17% 5.83% 12.27% 0.88% 57.31%
Bank United Bank Limitd Bank Alfalah Limited Allied Bank Limited 21,778 9,903 14,576 37,752 8,672 3,000 41,000 72,047 466,555 463,846 10,061 9,563 9,000 5,000 44,780 108,892 59,418 63,962 12,463 280,992 94,581 10,000 131,767 8,000 27,687 473,000 149,012
184,000 140,012
27,687 289,000 17,000
0.002% 0.054% 0.017% 0.081% 0.064% 0.029% 0.121% 0.008% 0.035% 0.000% 0.000% 0.010% 0.006% 0.022% 0.017%
Personal goods Nishat Mills Limited
141,767
Construction and Materials D.G Khan Cement Limited Lucky Cement Limited
94,514 16,871
250,440 90,173
Oil and Gas Pak Oilfields Limited Pakistan Petroleum Limited Pakistan State Oil Company Limited
44,843 83,614 54,515
9,500 12,500 -
Electricity Pak Gen Power Limited Nishat Power Limited
463,846 10,061
Chemicals Engro Corporation Limited Fauji Fertilizers Company Limited Fatima Fertilizers Company Limited
37,752 60,672 469,555
41,000 20,047 -
General Industrials Packages Limited
14,576
Total
Total cost of investments
6.1.1
All shares have a nominal value of Rs 10 each.
6.1.2
Investments include shares with market value of Rs 8,646,200 (June 30, 2012: Rs 8,588,300) which have been pledged with National Clearing Company of Pakistan Limited for guaranteeing settlement of the Fund's trades in accordance with Circular no 11 dated October 23, 2007 issued by the Securities and Exchange Commission of Pakistan.
76
6.2
Held for trading - Government securities
Percentage in relation to Purchases during Sales during the As at September the period 30, 2012 period Market value as a percentage of Net Assets Carrying value as Market value as at September 30, at September 30, 2012 2012 Appreciation / (diminution) ---------------Rupees-----------Market value as a percentage of total investments
As at July 1, 2012
---------------Face value in Rupees----------
MARKET TREASURY BILLS December 1, 2011 January 26, 2012 May 17, 2012 August 9, 2012 July 26, 2012
1 year 1 year 3 Months 1 year 3 Months
14,000,000 15,000,000 25,000,000
13,771,828 20,616,460 25,457,345

-
120,916
25,000,000 25,000,000
15,000,000 25,000,000 25,000,000 25,000,000
14,000,000 -
13,650,913 -
6.67% 0.00% 0.00% 0.00% 0.00%
9.98% 0.00% 0.00% 0.00% 0.00%
PAKISTAN INVESTMENT BONDS August 22, 2007 August 18, 2011 July 19, 2012 July 19, 2012 July 19, 2012
5 years 10 years 3 years 5 years 10 years 125,000,000 143,000,000 59,000,000
3,000,000 20,000,000 -
25,000,000 25,000,000 25,000,000

20,000,000 25,000,000 18,689,084 25,402,585 -
3,000,000 25,000,000 25,000,000 57,742,582 59,845,633
1,927,376 54,760
0.00% 9.98% 12.32% 0.00% 0.00%
0.00% 14.94% 18.44% 0.00% 0.00%
Total
77,000,000
2,103,052
28.97%
1.02%
6.3
Unlisted term finance certificates (Face value of Rs 5,000 each)
Percentage in relation to Appreciation / (diminution)
Name of Investee company
Carrying value as Market value as at Sales during the As at September Purchases As at July 1, at September 30, September 30, period during the period 2012 30, 2012 2012 2012
Net assets of the Total Issue size on fund on the basis the basis of market of market value value
----------Number of certificates-----------------
----------------------Rupees----------------------
Term finance certificate - listed United Bank Limited

1,150 -
1,150
Term finance certificate - unlisted

600
Bank Al-Habib Limited
600
3,154,148
3,154,148
3,304,063
3,304,063
149,915
149,915
1.60%
1.60%
2.87%
2.87%
77

7. Contingencies and commitments
78
The Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As a result of this amendment it may be construed that all Collective Investment Schemes / mutual funds (CISs) whose income exceeds Rs. 0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In light of this, Mutual Funds Association of Pakistan (MUFAP) filed a constitutional petition in the Honorable Sindh High Court challenging the applicability of WWF on CISs which was dismissed mainly on the ground that MUFAP is not an aggrieved party. Keeping in view the prevalent conditions on this matter, the Management Company had made a provision for WWF contribution in the annual financial statements of the Fund for the year ended June 30, 2010. Subsequently, clarifications were issued by the Ministry of Labour and Manpower (the Ministry) which stated that mutual funds are not liable to contribute to WWF on the basis of their income. These clarifications were forwarded by the Federal Board of Revenue (FBR) (being the collecting agency of WWF on behalf of the Ministry) to its members for necessary action. Based on these clarifications, the FBR also withdrew notice of demand which it had earlier issued to one of the mutual funds for collection of WWF. Other mutual funds to whom notices were issued by the FBR also took up the matter with FBR for their withdrawal. Based on the positive developments and a legal advice taken by the Management Company thereon, provision for WWF made in the books of accounts of the Fund was reversed on October 7, 2010 and no further provision was maintained in the books of accounts. Further, a Constitutional Petition was filed with the Honorable High Court of Sindh by a CIS/mutual fund and a pension fund through their trustee and an asset management company inter alia praying to declare that mutual funds/voluntary pension funds being pass through vehicles/entities are not industrial establishments and hence, are not liable to contribute to the WWF under the WWF Ordinance. The proceedings of the Honorable Court in this matter have concluded and the Honorable Court has reserved its decision. We have been advised by the Management Company that the Bench of the Honorable Court hearing the case had been dissolved and a fresh Bench shall be constituted to take up the proceedings. Subsequent to June 30, 2011, the Honourable Lahore High Court (LHC) in a Constitutional Petition relating to the amendments brought in the WWF Ordinance, 1971 through the Finance Act, 2006, and the Finance Act, 2008, has declared the said amendments as unlawful and unconstitutional and struck them down. The Management Company believes that the decision of LHC will lend further support to the constitutional petition which is pending in the Sindh High Court (SHC). During the last year ended June 30, 2012, a show cause notice has been issued to one of the Funds managed by the Management Company by Deputy Commissioner Inland Revenue stating that the Fund is liable to pay WWF under section 4 of the Workers' Welfare Fund Ordinance, 1971. Although the Management Company is hopeful that the case will be decided in its favour, it has taken a decision to provide for WWF and accordingly has recognised the aggregate amount of unrecorded provision for WWF amounting to Rs 2.364 million (including Nil pertaining to the current period). The provision has been made without prejudice to pending application in the High Court of Sindh. 7.1 8. There were no other contingencies and commitments outstanding as at September 30, 2012 (June 2012: Nil). Earnings per unit Earnings per unit has not been disclosed as in the opinion of the management, determination of cumulative weighted average number of outstanding units for calculating earnings per unit is not practicable. 9. TRANSACTIONS WITH RELATED PARTIES/ CONNECTED PERSONS Connected persons of the Fund include the Management Company, Holding Company of the Management Company, other collective investment schemes being managed by the Management Company, the Trustee, directors, key management personnel and other associated undertakings. Transactions with connected persons are in the normal course of business, and on agreed terms determined in accordance with market rates.
9.1
Transactions during the period: Askari Investment Management Limited (Management Company) Remuneration for the period Sindh sales tax on remuneration of the Management company Sales load charged during the period Issue of 131 bonus units (2011: Nil units)
Un-Audited Un-Audited Quarter Quarter ended ended September September 30, 2011 30, 2012 -----------------(Rupees)----------------1,355,422 216,867 2,500 5,204 1,304,944 -
79
Un-Audited Un-Audited Quarter Quarter ended ended September September 30, 2011 30, 2012 -----------------(Rupees)-----------------
Central Depository Company of Pakistan Limited (Trustee) Remuneration of the Trustee Custodian fee Askari Bank Limited - Holding company of the Management Company Profit on bank deposits Bank charges Cash distribution paid Askari Investment Management Employees Provident Fund Issue of 5,032 units (2011: Nil units) Key Management Personnel Redemption of 6,529 units (2011: Nil units) Issue of 892 bonus units (2011: Nil units)
176,438 3,443 475,838 10,949 15,719,500 199,973 267,961 35,447
175,956 3,799 711,916 7,032 -
9.2
Amounts / Balances outstanding as at quarter end: Askari Investment Management Limited (Management Company) Remuneration payable Sindh sales tax payable Sales load payable Other payables Outstanding 959 units (June 2012: 827 units) Central Depository Company of Pakistan Limited (Trustee) Payable to Central Depository Company of Pakistan Limited Security deposit Askari Bank Limited (Holding company of the Management Company) Investment held in the fund 2,500,000 units (June 2012: 2,500,000 units) Balance with bank Profit receivable Askari Investment Management Employees Provident Fund Investment held in the fund 36,835 units (June 2012: 31,803 units) Key Management Personnel Outstanding Nil units (June 2012: 9,100 units)
Un-Audited Audited September June 30, 30, 2012 2012 -----------------(Rupees)----------------408,274 65,323 33,750 116,259 41,174 57,533 100,000 107,335,500 19,773,904 87,558 1,581,481 475,343 76,054 31,509 116,000 38,066 57,376 100,000 115,072,250 13,807,338 143,926 1,463,857 416,864
10.
GENERAL Figures have been rounded off to the nearest rupee unless otherwise stated.
11.
DATE OF AUTHORISATION FOR ISSUE This condensed interim financial report was authorised for issue by the Board of the Directors of the Management Company on October 23, 2012.
Director
Directors Report
80
Islamic Asset Allocation Fund

Category: Islamic Asset Allocation Scheme

81
The Board of Directors of Askari Investment Management Limited ("the Management Company" or "AIM" or "the Company") is pleased to present the un-audited condensed interim financial report of Askari Islamic Asset Allocation Fund (AIAAF) for the quarter ended September 30, 2012. Economic Review During the first quarter of this fiscal year, the only visible improvement on the macroeconomic front was slowdown in inflation. The CPI inflation for the 1QFY13 came down to post a single digit growth; averaging 9.2%Y/Y compared to 11.6%Y/Y growth experienced in the previous quarter. This was mainly contributed by slowdown in food prices, due to improvement in domestic production and supplies. Furthermore high base effect from previous year also assisted the single digit growth in inflation. However, the underlying factors for inflation still remain intact. The core inflation as measured by Non-food and Non-energy is still persistent and remains in double digit; 10.8%Y/Y on average in 1QFY13.Central bank duly responded to ease in headline CPI inflation and slashed the policy rate by 150bps to 10.5% in the monetary policy announced during Aug-12. The cut would also serve in achieving the objective of reviving country's economic growth. On the external side, the country's current account balance during the first two months posted surplus of USD 884mn (compared to a deficit of USD 298mn in 2MFY12), mainly due to hefty payments received under the coalition support fund, worth USD 1.12bn. Worker's remittances receipts grew by 9.2%Y/Y during 1QFY13 to USD 3.6bn. In terms of trade, lower international oil prices, helped narrowed country's trade balance to USD 2.4bn in 2MFY13 from USD 2.5bn in corresponding period last year. Overall imports depicted a 4.6%Y/Y decline to USD 6.5bn, whereas exports declined by 4.6% to USD 4bn. However, this trend may not continue and country's balance of payment will likely turn negative in coming months ahead given the outstanding loan repayments to IMF and no other visible capital and financial inflows. So far, the country' foreign exchange reserves has declined from USD 15.3bn in Jun-12 to USD ~14.9bn by Sep-12 end. Hence deficit in balance of payment could see further depletion in country's foreign exchange reserves, which would put downward pressure on PKR. The PKR has depreciated by almost ~3%Q/Q in 1QFY13. Given the lack of sustainable foreign inflows, the government borrowing burden has shifted on domestic sources. During the 1QFY13, government net fiscal borrowing increased by PKR 172bn or 4.5%. Although the government was able to make a net retirement of PKR 360bn to SBP, but this retirement to SBP was only made possible by borrowing PKR 530bn from the schedule banks, showing an increment of almost 25% from the stock ending Jun-12. Continued government borrowing from schedule banks has depressed the private sector credit off-take; which declined by 2.5% in 1QFY13. Country's tax revenue remains dismissal. The provisional tax collection figures for 1QFY13 suggests a shortfall of PKR 28bn, from an initial target of PKR 437bn. With economic growth remaining slow during this fiscal year, the government will be hard pressed to achieve the growth target in tax revenues. At the same time, with elections due in next six months, government spending will remain on the higher side, hence leading to higher fiscal deficit, easily surpassing the target of 4.2% set for the year. Country's large sector manufacturing showed subdued growth of 0.8%Y/Y in 2MFY13. This can be attributed to extended energy shortages, unfavorable law and order situation and uncertain political environment. During the quarter, floods, resulting from the heavy Monsoon starting Aug-12, caused a widespread loss of life, properties and infrastructure in lower Punjab, upper Sindh and north-eastern Baluchistan. Although it would be too premature to put an economic cost of recent floods, but unofficial estimates suggest that the loss could well reach above PKR ~300bn. For FY13, The government had targeted 25mn ton of wheat, 6.9mn rice, 14.5mn bales of Cotton and 59mn tons of Sugarcane crop. However, the initial reports by National Disaster Management Authority (NDMA), estimate a crop area of almost 1.1 million acres to be affected by these flash foods. This year's floods have impacted rice crop in particular, which will lead to relatively lower growth in total agriculture sector compared to the original target. Overall, the combined effects of energy shortages, private sector crowding, weak exports, unfavorable law & order conditions and floods, all points towards slow economic growth during this fiscal year. The IMF in its latest reports has projected an economic growth rate of 3-3.5% for Pakistan compared to government initial estimates of 4.2%. Fixed income review In 1QFY13, the SBP slashed the discount rate by 150bps to 10.0%. Subsequently, the domestic yield curve adjusted downward. Rates on 3M, 6M and 12M papers fell by 177bps, 194bps and 196bps to 10.1%, 10.0% and 10.0%, respectively at the end of quarter. Rate on 10-year bond came down by 185bps to 11.4% from 13.3% at the start of the quarter. Moreover, as of the latest developments, yields across all tenors are still trading below their historical levels. Hence one can deduce that market is expecting another cut of 50-100bps in the policy rate to be announced in the 1st week of October, 2012. During the quarter auctions conducted by SBP, participation remained skewed on the short-end of the paper. On a cumulative basis, the SBP raised almost 1,736bn in the bi-monthly auctions conducted during the quarter.
82
Equity market review Pakistan equities performed exceptionally in Jul-Sep period with KSE-100 benchmark index gaining 11.91% to close at 15,445 on main trigger point of 150 bps cut in the discount rate. Global equity markets also delivered impressive returns during 1QFY13 on central banks actions (QE3). MSCI frontier and emerging market indices gained 5.2% and 5.8%, respectively in Jul-Sept. S&P index also grew 5.8%, the best quarterly gain since 2010. Positive news flows kept equity market near to all time record levels derived by declining interest rates amid 150 bps cut in discount rate. The quarter started on positive note amid improving relationship with USA and expected inflow of CFS funds. This rally was further extended on the back of strong corporate results (up 11%Y/Y). Softening monthly inflation numbers led to higher cut in the discount rate in August pushed the bonds yield lower and hence leading to attractive equity valuations. Oil & gas, cement and food producers sectors showed strong gains while banks underperformed. Oil & gas stocks came under limelight on healthy payouts and rising earnings projections on the back of new discoveries. Cement continued to rally due to stable cement prices amid decline in input cost of thermal coal. Banking stocks underperformed the broader index on declining NIMs with monetary easing. Food producers also gained due to foreign interest in domestic consumer staples and food producers. Key triggers in the near term will be corporate results for Jul-Sept quarter and result expectations for the second quarter. Profitability for oil & gas, cements, textile and food is expected to grow while banks earnings growth will slow down. On the macroeconomic front, inflation numbers in coming months will influence expectations regarding policy rate decision due in December 12. After a 50 bps cut in October, market is expecting further ease in the discount rate over the next two months. AIAAF Performance Review Askari Islamic Asset Allocation Fund gained 8.2% in 1QFY13, almost equal to the benchmark (50% KMI-30 + 50% average deposits rates). The fund was invested 47% in equities during the quarter. Exposure in oil & gas stocks contributed positively to the performance of the period. Allocation in equities was increased from 44% to 51% to fund size as earning yields became relatively attractive. Fund's allocation to cement sector was increased to 13.72% from 2.41% by adding D.G Khan Cement and Lucky Cement keeping in view positive dynamics for the sector. At the same time, exposure in electricity sector was reduced from 4.31% to 0.65% of the fund size. Further, exposure in personal goods and automobile parts sectors was slashed to zero as prices had reached our desired price objective. On debt side, exposure on Ijara Sukuk decreased to 27% of the fund size versus 42% at the start of the quarter to increase allocation on equities. The fund took 10% exposure in Hubco Sukuk which will enhance recurring income on debt portfolio. Oil & gas companies are expected to perform better on the back of rising profits amid volumetric growth. Stable cement prices and declining coal prices will further keep earnings momentum this year as well. Fund is well position to benefit from these trends as it has overweight allocation in oil & gas sector and cement stocks.
83
84

Category: Islamic Asset Allocation Scheme

ASKARI ISLAMIC ASSET ALLOCATION FUND CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES AS AT SEPTEMBER 30, 2012
Un-audited September 30, 2012 Audited June 30, 2012
85
Note ASSETS Balances with banks Investments Receivables against sale of Investments Advances, deposits, prepayment and other receivables Preliminary expenses and floatation cost Total assets LIABILITIES Payable to the Management Company Payable to the Trustee Payable to Securities and Exchange Commission of Pakistan Payables against Purchase of investments - net Accrued and other liabilities Total liabilities NET ASSETS UNIT HOLDERS' FUND (AS PER STATEMENT ATTACHED) Contingencies and commitments 7.1 9 10 11 12 4 6 7 8
----------------(Rupees)---------------25,566,720 100,796,620 4,206,304 436,994 131,006,638 14,122,973 113,024,028 10,120 4,034,923 492,385 131,684,429
312,113 57,534 29,733 1,252,735 2,140,017 3,792,132 127,214,506 127,214,506
382,740 57,377 116,353 1,728,540 2,285,010 129,399,419 129,399,419
-----------Number of units----------Number of units in issue 1,162,365 1,165,443
----------------(Rupees)---------------NET ASSET VALUE PER UNIT 109.4446 111.0302
Director

ASKARI ISLAMIC ASSET ALLOCATION FUND CONDENSED INTERIM INCOME STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
Note September 30, 2012
86
September 30, 2011
Income Profit on balances and placements with banks Profit on sukuk certificates Dividend income Capital gain on sale of investments Net unrealised appreciation in value of investments classified as 'at fair value through profit or loss' Total Income Expenses Remuneration of the Management Company Sindh Sales Tax on remuneration of the Management Company Remuneration of the Trustee Annual fee to the Securities and Exchange Commission of Pakistan Auditors' remuneration Fees and Subscription Amortisation of preliminary expenses and floatation cost Legal and professional charges Securities transaction costs Bank and settlement charges Printing charges Charity expense Total expenses Net income from operating activities Element of (loss) / income and capital (losses) / gains included in prices of units issued less those in units redeemed - net (Provision ) / reversal of provision for Workers' Welfare Fund Net income for the quarter before taxation Taxation Net income for the quarter after taxation Earnings per unit
--------------------(Rupees)----------------230,807 1,566,422 793,869 2,771,712 6,150,995 11,513,805 1,021,603 907,310 2,169,767 495,968 460,160 5,054,808
6.1& 6.2
938,856 150,031 176,438 29,733 107,120 27,037 55,391 12,603 54,317 49,674 21,391 1,622,591 9,891,214
890,300 142,448 175,956 28,193 94,262 26,689 55,241 8,798 72,473 47,940 25,136 1,567,436 3,487,372
(59,006) (196,705) 9,635,503
9,902 3,497,274 3,497,274
9,635,503
Director

ASKARI ISLAMIC ASSET ALLOCATION FUND CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
87
September 30, September 30, 2012 2011 ---------------------(Rupees)-----------------Net income for the quarter after taxation Other comprehensive income Total comprehensive income for the quarter 9,635,503 9,635,503 3,497,274 3,497,274
Director

ASKARI ISLAMIC ASSET ALLOCATION FUND CONDENSED INTERIM DISTRIBUTION STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
September 30, 2012
88
September 30, 2011
-------------------(Rupees)---------------Undisributed income brought forward: Realised Income Unrealised loss
15,792,712 (2,937,838) 12,854,874 9,635,503
14,332,160 (1,141,681) 13,190,479 3,497,274
Net income for the quarter Final distribution of Rs 9.8782 per unit on July 6, 2012 for the year ended June 30, 2012 (2011:Rs 11.1899 per unit, July 6, 2011) - Cash dividend - Bonus units Undisributed income carried forward Undistributed income carried comprising: Realised Income Unrealised income
(10,825,403) (687,083) (11,512,486) 10,977,891
(12,262,310) (191,715) (12,454,025) 16,687,753
4,826,896 6,150,995 10,977,891
16,227,593 460,160 16,687,753
Director

ASKARI ISLAMIC ASSET ALLOCATION FUND CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
89
September 30, September 30, 2012 2011 --------------------(Rupees)----------------Net assets at beginning of the quarter Issue of 3,301 units (2011: 140,369 units) Redemption of 11,935 units (2011: 70,754 units) 129,399,419 214,850 (1,268,869) (1,054,019) 687,083 (366,936) 124,487,504 14,072,528 (7,102,348) 6,970,180 191,715 131,649,399
Issue of 6,793 bonus units (2011: 17,132 units)
Element of loss / (income) and capital losses / (gains) included in prices of units issued less those in units redeemed - net Net realised gain on sale of investments Net unrealised appreciation in value of investments classified as 'at fair value through profit or loss' Other net income for the quarter Other comprehensive income Net income for the quarter Final distribution of Rs 9.8782 per unit on July 6, 2012 for the year ended June 30, 2012 (2011:Rs 11.1899 per unit, July 6, 2011) - Cash Dividend - Bonus Units Net assets as at the end of the quarter
59,006 2,771,712
(9,902) 495,968
6,150,995 712,796 9,635,503
460,160 2,541,146 3,497,274
(10,825,403) (687,083) 127,214,506
(12,262,310) (191,715) 122,682,746
Director

ASKARI ISLAMIC ASSET ALLOCATION FUND CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
September 30, 2012 CASH FLOW FROM OPERATING ACTIVITIES Net income for the quarter Adjustments for: Dividend income Net unrealised diminution in value of investments classified as 'at fair value through profit or loss' Amortisation of preliminary expenses and floatation cost Element of loss / (income) and capital losses / (gains) included in prices of units issued less those in units redeemed - net (793,869) (6,150,995) 55,391 59,006 (6,830,467)
90
September 30, 2011
--------------------(Rupees)-------------------
9,635,503
3,497,274
(460,160) 55,241 (9,902) (414,821)
Decrease / (increase) in assets Investments - net Receviable against sale of securities Advances, deposits, prepayment and other receivables (Decrease) / increase in liabilities Payable to the Management Company Payable to the Trustee Payable to Securities and Exchange Commission of Pakistan Payable against purchase of investments Accrued and other liabilities
18,378,403 10,119 247,131 18,635,653 (70,626) 157 (86,620) 1,252,735 411,477 1,507,123 375,357 23,323,169
(24,502,292) 3,424,393 (21,077,899) 44,808 (159) (84,237) 196,259 156,671 (17,838,775)
Dividend received Net cash inflow / (out flow) from operating activities
CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issuance of units Payments against redemption of units Dividend paid Net cash outflow from financing activities Net cash inflow / (outflow) during the quarter Cash and cash equivalents at the beginning of the quarter Cash and cash equivalents at the end of the quarter 10 214,850 (1,268,869) (10,825,403) (11,879,422) 11,443,747 14,122,973 25,566,720 14,072,528 (7,030,986) (12,262,310) (5,220,768) (23,059,543) 50,844,812 27,785,269
Director
91
ASKARI ISLAMIC ASSET ALLOCATION FUND NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
1 1.1 LEGAL STATUS AND NATURE OF BUSINESS Askari Islamic Asset Allocation Fund (the Fund) was established under a Trust Deed executed between Askari Investments Management Limited (a wholly owned subsidiary of Askari Bank Limited), as the Management Company and MCB Financial Services Limited as the Trustee on August 26, 2008 and was approved by the Securities and Exchange Commission of Pakistan (SECP) as a Notified Entity on June 25, 2009 in accordance with the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations).The registered office of the Management Company is situated at Shop No. 2/W, Kashmir Plaza Jinnah Avenue, Blue Area Islamabad with its Head Office situated at 20-C, Khayaban-e-Nishat, Phase VI, DHA, Karachi. The Fund offers units for public subscription on a continuous basis. The units are transferable and can also be redeemed by surrending them to the Fund except for the core units which are subject to certain restrictions as per NBFC Regulations and the constitutive documents of the Fund. The units are listed on the Islamabad Stock Exchange (Guarantee) Limited. As per the offering document, the Fund shall invest in shariah compliant equities and debt securities and other shariah compliant instruments including shariah compliant securities available outside Pakistan as approved by the Shariah Advisor and SECP from time to time. Pakistan Credit Rating Agency Limited (PACRA) has assigned an asset manager rating of 'AM3+' (positive outlook) to the Management Company in June 2012. As per the rating scale of PACRA, this rating denotes that the asset manager meets high industry standards and benchmarks. Further, Pakistan Credit Rating Agency Limited (PACRA) has assigned a performance rating of "3 - Star" (short - term) to the Fund. Title to the assets of the Fund are held in the name of MCB Financial Services Limited as a trustee of the Fund. BASIS OF PREPARATION Statement of compliance These condensed interim financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan for interim financial reporting. Approved accounting standards comprise of IAS 34: 'Interim Financial Reporting' (IAS 34), the Trust Deed, NBFC Rules, NBFC Regulations and the directives issued by the SECP. Wherever the requirements of the Trust Deed, the NBFC Rules, NBFC Regulations or the said directives differ with the requirements of IAS 34, the requirements of the Trust Deed, NBFC Rules, NBFC Regulations or the said directives take precedence. 2.2 These condensed interim financial statements does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the annual financial statements of the Fund for the year ended June 30, 2012. SIGNIFICANT ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of these condensed interim financial statements are the same as those applied in the preparation of the annual financial statements for the year ended June 30, 2012.
1.2
1.3
1.4
1.5 2 2.1
Note 4 BANK BALANCES Saving accounts

4.1
September 30, June 30, 2012 2012 ------------Rupees-----------25,566,720 14,122,973
4.1
These are shariah compliant bank accounts and carry profit at the rates ranging from 5% to 12.25% ( June 30, 2012: 5% to 11.70%) per annum.
PLACEMENTS WITH ISLAMIC BANKS Placements with Islamic banks 5.1 10,000,000
5.1
This represents placement with an Islamic bank carrying profit at the rate of Nil ( June 30, 2012: 12.75%) per annum.
INVESTMENTS At fair value through profit and loss - Held for trading Listed equity securities Sukuk certificates 6.1 6.2 65,539,122 35,257,500 100,796,622 60,224,688 30,158,000 90,382,688
92
6.1
Listed equity securities Shares of listed companies - Fully paid ordinary shares of Rs. 10 each unless otherwise stated.
-----------------------------Number of shares----------------------------
------------------Rupees---------------------
Name of the investee company
Paid-up value of Carrying Value Bonus/ right Market value as Market value as a shares held as a % Market Value As Purchases As at As at issues Sales during Appreciation/ a percentage of percentage of of total paid up As at July 1, 2012 during the at September September September 30, during the the period (Diminution) net assets capital of the investments 30, 2012 period 30, 2012 2012 period investee company
Construction and Materials D.G. Khan Cement Limited Lucky Cement Limited Chemicals Fauji Fertilizers Company Limited Lotte Pakistan PTA Limited Electricity The Hub Power Company Limited Pakgen Power Limited Personal Goods Nishat Mills Limited General Industrials Packages Limited Oil and Gas Pak Oil Fields Limited Pakistan State Oil Company Limited Pakistan Petroleum Limited Pharmaceutical Abbot Laboratories (Pakistan) Limited
48,169 11,088 59,257 61,079 194,476 255,555 18,025 384,432 402,457 75,040 75,040 18,480 18,480 33,265 41,720 57,418 132,403 23,000 23,000 966,192
199,000 52,700 251,700 6,300 6,300 258,000
7,595 14,170 21,765 21,765
40,581 8,191 48,772 5,795 5,795 384,432 384,432 75,040 75,040 703 3,741 757 5,201 23,000 23,000 542,240
206,588 55,597 262,185 61,584 194,476 256,060 18,025 18,025 18,480 18,480 32,562 45,574 70,831 148,967 703,717
9,820,172 7,434,655 17,254,827 6,841,958 1,367,166 8,209,124 755,067 755,067 1,842,456 1,842,456 11,948,300 8,956,967 10,668,700 31,573,967 59,635,442
10,391,376 7,402,185 17,793,561 6,883,244 1,380,780 8,264,023 845,012 845,012 2,165,486 2,165,486 14,111,068 9,898,673 12,461,298 36,471,039 65,539,122
571,205 (32,470) 538,735 41,285 13,613 54,898 89,945 89,945 323,030 323,030 2,162,768 941,705 1,792,598 4,897,071 5,903,679
8.17% 5.82% 13.99% 5.41% 1.09% 6.50% 0.66% 0.00% 0.66% 0.00% 0.00% 1.70% 1.70% 11.09% 7.78% 9.80% 28.67% 0.00% 0.00% 51.52%
10.31% 7.34% 17.65% 6.83% 1.37% 8.20% 0.84% 0.00% 0.84% 0.00% 0.00% 2.15% 2.15% 14.00% 9.82% 12.36% 36.18% 0.00% 0.00% 65.02%
0.05% 0.02% 0.06% 0.00% 0.01% 0.02% 0.00% 0.00% 0.00% 0.00% 0.00% 0.02% 0.02% 0.01% 0.03% 0.01% 0.05% 0.00% 0.00%
Total
6.1.1
Investments include shares with market value of Rs 5,638,880 (June 30, 2012: Rs 5,293,920) which have been pledged with National Clearing Company of Pakistan Limited for guaranteeing settlement of the Fund's trades in accordance with Circular no 11 dated October 23, 2007 issued by the Securities and Exchange Commission of Pakistan.
Face value of Rs. 5,000 each unless otherwise stated
------------Number of certificates-----Purchases As at July 01, during the 2012 period Sales/ Matured during the period --------------------Rupees------------------
6.2
Issue date
Tenor
Market value as a Market value as a Carrying value Market value as As at percentage of net percentage of total as As at Appreciation / at September30, September 30, assets investments September 30, (Diminution) 2012 2012 2012
Ijarah Sukuk- November 15, 2010 Ijarah Sukuk- December 26, 2011 Ijarah Sukuk- March 2, 2012 Hubco Sukuk II - August 16, 2012 Total
3 Yrs 3 Yrs 3 Yrs
1,000 5,000 5,000 -
2,000
1,000 5,000 -
5,000 2,000
25,015,000 10,000,000 35,015,000
25,257,500 10,000,000 35,257,500
242,500 242,500
0.00% 19.85% 0.00% 7.86% 27.71%
0.00% 25.06% 0.00% 25.06%
CONTINGENCIES AND COMMITMENTS The Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As a result of this amendment it may be construed that all Collective Investment Schemes / mutual funds (CISs) whose income exceeds Rs. 0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In light of this, Mutual Funds Association of Pakistan (MUFAP) filed a constitutional petition in the Honorable Sindh High Court challenging the applicability of WWF on CISs which was dismissed mainly on the ground that MUFAP is not an aggrieved party. Keeping in view the prevalent conditions on this matter, the Management Company had made a provision for WWF contribution in the annual financial statements of the Fund for the year ended June 30, 2010.
93
Subsequently, clarifications were issued by the Ministry of Labour and Manpower (the Ministry) which stated that mutual funds are not liable to contribute to WWF on the basis of their income. These clarifications were forwarded by the Federal Board of Revenue (FBR) (being the collecting agency of WWF on behalf of the Ministry) to its members for necessary action. Based on these clarifications, the FBR also withdrew notice of demand which it had earlier issued to one of the mutual funds for collection of WWF. Other mutual funds to whom notices were issued by the FBR also took up the matter with FBR for their withdrawal. Based on the positive developments and a legal advice taken by the Management Company thereon, provision for WWF made in the books of accounts of the Fund was reversed on October 7, 2010 and no further provision was maintained in the books of accounts. Further, a fresh Constitutional Petition has been filed with the Honorable High Court of Sindh by a CIS/mutual fund and a pension fund through their trustee and an asset management company inter alia praying to declare that mutual funds/voluntary pension funds being pass through vehicles/entities are not industrial establishments and hence, are not liable to contribute to the WWF under the WWF Ordinance. The proceedings of the Honorable Court in this matter have concluded and the Honorable Court has reserved its decision. Subsequent to June 30, 2011, the Honourable Lahore High Court (LHC) in a Constitutional Petition relating to the amendments brought in the WWF Ordinance, 1971 through the Finance Act, 2006, and the Finance Act, 2008, has declared the said amendments as unlawful and unconstitutional and struck them down. During the year ended June 30, 2012, a show cause notice has been issued to one of the Fund managed by the Management Company by Deputy Commissioner Inland Revenue stating that the Fund is liable to pay WWF under section 4 of the Workers' Welfare Fund Ordinance, 1971. Although the Management Company is hopeful that the case will be decided in its favour, it has taken a decision to provide for WWF and accordingly has recognised the aggregate amount of unrecorded provision for WWF amounting to Rs 0.980 million as at September 30, 2012 (including Rs 0.0197 million in respect of the current period). The provision has been made without prejudice to pending application in the High Court of Sindh. 7.1 8 There were no contingencies and commitments outstanding as at September 30, 2012 TAXATION The income of the Fund is exempt from income tax under Clause 99 of Part I of the Second Schedule to the Income Tax Ordinance, 2001 subject to the condition that not less than 90 percent of its accounting income for the year, as reduced by capital gains, whether realised or unrealised, is distributed amongst the unit holders. The Fund has not recorded provision for taxation as the Management Company intends to distribute the required minimum percentage of the Fund's accounting income for the current year to its unit holders. 9 EARNINGS PER UNIT (EPU) Earnings per unit has not been disclosed as in the opinion of the management, determination of weighted average number of outstanding units is not practicable.
September 30, 2012 10 CASH AND CASH EQUIVALENTS Saving accounts Placements with Islamic banks
June 30, 2012
--------Rupees---------25,566,720 25,566,720 14,122,973 10,000,000 24,122,973
11 11.1
TRANSACTIONS WITH CONNECTED PERSONS Connected persons / related parties include Askari Investment Management Limited being the Management Company, MCB Financial Services Limited being the Trustee, Askari Bank Limited being the holding company of the Management Company, Askari General Insurance Company Limited being an associate company of the Management Company, Askari Investment Management Employees Provident Fund, Askari Securities Limited and Other Collective Investment Schemes being funds under common management and the directors and officer of the Management Company. Transactions with connected persons / related parties are in the normal course of business, at contracted rates and terms determined in accordance with market norms. Remuneration to the Management Company is determined in accordance with the provisions of the NBFC Regulations and the Trust Deed. Remuneration payable to the Trustee is determined in accordance with the provisions of the Trust Deed.
11.2 11.3 11.4
94
September September 30, 2012 30, 2011 --------Rupees---------938,856 150,031 28,812 176,438 12,054 10,824,900 126,364 35,994 417,561 890,300 142,448 175,956 11,954 12,262,310 1,309,643 -
11.5
Details of transactions with connected persons are as follows: Askari Investment Management Limited Remuneration of the Management Company Sindh sales tax on remuneration of the Management Company Sales load expense of the Management Company MCB Financial Services Limited Remuneration of the Trustee Askari Bank Limited Profit on bank balances and placements Cash dividend AIM Employees Provident Fund Issue of 1,249 units (2011: 12,792 units) Key Management Personnel Issue of 356 bonus units (2011: NIL units) Redemption of 4,000 units (2011: NIL units)
11.6
Amounts outstanding as at quarter end: Askari Investment Management Company Limited Remuneration payable Sindh sales tax payable to Management Company Sales load payable MCB Financial Services Limited Trustee fee payable Askari Bank Limited Balances with bank Profit receivable on balances with bank Outstanding units: 1,095,837 units (June 30, 2012:1,095,837 units) AIM Employees Provident Fund Outstanding units: 14,041 units (June 30, 2012: 12,792 units) Askari Securities Limited Brokerage payable Federal Excise Duty payable Key Management Personnel Outstanding units: NIL units (June 30, 2012: 4,131 units)
September June 30, 2012 30, 2012 --------Rupees----------
312,113 49,943 16,763 57,534 187,280 6,139 119,933,442 1,536,712 -
318,053 51,074 13,613 57,377 965,907 3,020 121,671,033 1,420,320 8,036 322 458,641
12
CORRESPONDING FIGURES Corresponding figures have been re-classified, re-arranged or additionally incorporated in the financial statements, wherever necessary to facilitate comparison and to conform with changes in presentation in the current period. No significant rearrangements or reclassifications were made in these financial statements.
13
DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on October 23, 2012 by the Board of Directors of the Management Company.
14
GENERAL Figures have been rounded off to the nearest rupee.
Director
Directors Report
95
Equity Fund
Category: Equity Scheme

96
The Board of Directors of Askari Investment Management Limited ("the Management Company" or "AIM" or "the Company") is pleased to present the un-audited condensed interim financial report of Askari Equity Fund (AEF) for the quarter ended September 30, 2012. Economic Review During the first quarter of this fiscal year, the only visible improvement on the macroeconomic front was slowdown in inflation. The CPI inflation for the 1QFY13 came down to post a single digit growth; averaging 9.2%Y/Y compared to 11.6%Y/Y growth experienced in the previous quarter. This was mainly contributed by slowdown in food prices, due to improvement in domestic production and supplies. Furthermore high base effect from previous year also assisted the single digit growth in inflation. However, the underlying factors for inflation still remain intact. The core inflation as measured by Non-food and Non-energy is still persistent and remains in double digit; 10.8%Y/Y on average in 1QFY13.Central bank duly responded to ease in headline CPI inflation and slashed the policy rate by 150bps to 10.5% in the monetary policy announced during Aug-12. The cut would also serve in achieving the objective of reviving country's economic growth. On the external side, the country's current account balance during the first two months posted surplus of USD 884mn (compared to a deficit of USD 298mn in 2MFY12), mainly due to hefty payments received under the coalition support fund, worth USD 1.12bn. Worker's remittances receipts grew by 9.2%Y/Y during 1QFY13 to USD 3.6bn. In terms of trade, lower international oil prices, helped narrowed country's trade balance to USD 2.4bn in 2MFY13 from USD 2.5bn in corresponding period last year. Overall imports depicted a 4.6%Y/Y decline to USD 6.5bn, whereas exports declined by 4.6% to USD 4bn. However, this trend may not continue and country's balance of payment will likely turn negative in coming months ahead given the outstanding loan repayments to IMF and no other visible capital and financial inflows. So far, the country' foreign exchange reserves has declined from USD 15.3bn in Jun-12 to USD ~14.9bn by Sep-12 end. Hence deficit in balance of payment could see further depletion in country's foreign exchange reserves, which would put downward pressure on PKR. The PKR has depreciated by almost ~3%Q/Q in 1QFY13. Given the lack of sustainable foreign inflows, the government borrowing burden has shifted on domestic sources. During the 1QFY13, government net fiscal borrowing increased by PKR 172bn or 4.5%. Although the government was able to make a net retirement of PKR 360bn to SBP, but this retirement to SBP was only made possible by borrowing PKR 530bn from the schedule banks, showing an increment of almost 25% from the stock ending Jun-12. Continued government borrowing from schedule banks has depressed the private sector credit off-take; which declined by 2.5% in 1QFY13. Country's tax revenue remains dismissal. The provisional tax collection figures for 1QFY13 suggests a shortfall of PKR 28bn, from an initial target of PKR 437bn. With economic growth remaining slow during this fiscal year, the government will be hard pressed to achieve the growth target in tax revenues. At the same time, with elections due in next six months, government spending will remain on the higher side, hence leading to higher fiscal deficit, easily surpassing the target of 4.2% set for the year. Country's large sector manufacturing showed subdued growth of 0.8%Y/Y in 2MFY13. This can be attributed to extended energy shortages, unfavorable law and order situation and uncertain political environment. During the quarter, floods, resulting from the heavy Monsoon starting Aug-12, caused a widespread loss of life, properties and infrastructure in lower Punjab, upper Sindh and north-eastern Baluchistan. Although it would be too premature to put an economic cost of recent floods, but unofficial estimates suggest that the loss could well reach above PKR ~300bn. For FY13, The government had targeted 25mn ton of wheat, 6.9mn rice, 14.5mn bales of Cotton and 59mn tons of Sugarcane crop. However, the initial reports by National Disaster Management Authority (NDMA), estimate a crop area of almost 1.1 million acres to be affected by these flash foods. This year's floods have impacted rice crop in particular, which will lead to relatively lower growth in total agriculture sector compared to the original target. Overall, the combined effects of energy shortages, private sector crowding, weak exports, unfavorable law & order conditions and floods, all points towards slow economic growth during this fiscal year. The IMF in its latest reports has projected an economic growth rate of 3-3.5% for Pakistan compared to government initial estimates of 4.2%. Equity market review Pakistan equities performed exceptionally in Jul-Sep period with KSE-100 benchmark index gaining 11.91% to close at 15,445 on main trigger point of 150 bps cut in the discount rate. Global equity markets also delivered impressive returns during 1QFY13 on central banks actions (QE3). MSCI frontier and emerging market indices gained 5.2% and 5.8%, respectively in Jul-Sept. S&P index also grew 5.8%, the best quarterly gain since 2010. Positive news flows kept equity market near to all time record levels derived by declining interest rates amid 150 bps cut in discount rate. The quarter started on positive note amid improving relationship with USA and expected inflow of CFS funds. This rally was further extended on the back of strong corporate results (up 11%Y/Y). Softening monthly inflation numbers led to higher cut in the discount rate in August pushed the bonds yield lower and hence leading to attractive equity valuations.
Equity Fund
97
Oil & gas, cement and food producers sectors showed strong gains while banks underperformed. Oil & gas stocks came under limelight on healthy payouts and rising earnings projections on the back of new discoveries. Cement continued to rally due to stable cement prices amid decline in input cost of thermal coal. Banking stocks underperformed the broader index on declining NIMs with monetary easing. Food producers also gained due to foreign interest in domestic consumer staples and food producers. Key triggers in the near term will be corporate results for Jul-Sept quarter and result expectations for the second quarter. Profitability for oil & gas, cements, textile and food is expected to grow while banks earnings growth will slow down. On the macroeconomic front, inflation numbers in coming months will influence expectations regarding policy rate decision due in December 12. After a 50 bps cut in October, market is expecting further ease in the discount rate over the next two months. AEF Performance Review In 1QFY13, Askari Equity Fund gained 4.57%, underperforming the benchmark return of 9.29%. Underperformance was largely due to its overweight exposure in banking stocks which grossly underperformed during the quarter. In addition to this, at start of the quarter, the fund was under-invested when the benchmark gained the most. Allocation in equities was at 81% of the fund size as of quarter end compared to 50% at the start. During the quarter, the fund maintained 74% exposure in equities on average. Sector-wise, the fund increased allocation in construction & material and commercial banks. Allocation in cement was increased by 11.2% by adding Lucky Cement and D.G.K Cement. In addition to this, exposure in banks was gradually built as prices corrected and hence allocation in banks increased from 6.2% to 16.5% of the fund size. During the quarter, banking stocks underperformed the index amid concerns of declining NIMs. We believe that market reaction is unjustified and expect prices to recover going forward and would enhance the fund's performance. Major holdings of the fund as of quarter end are in oil & gas sector (POL, PPL and OGDC). As of quarter end, the fund portfolio is at 12.9% discount to its fair values with earnings multiple of 6.0x compared to market PE of 6.8x. We expect the fund is likely to outperform its benchmark given the valuation of the portfolio.
Equity Fund
98
Equity Fund
Category: Equity Scheme

ASKARI EQUITY FUND CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES AS AT SEPTEMBER 30, 2012
99
Note
Unaudited Audited September 30, 2012 June 30, 2012 ------------(Rupees)--------------
ASSETS Bank balances Investments Receivable against sale of investments Dividend, prepayments and other receivables Preliminary expenses and floatation costs Security deposits Total assets LIABILITIES Payable to the Management Company Payable to the trustee Payable to Securities and Exchange Commission of Pakistan Payable against purchase of investments Accrued and other liabilities Total liabilities NET ASSETS UNIT HOLDERS' FUND (as per statement attached) Contingencies and commitments Number of units in issue 7 1,084,235 ------(Rupees)-------NET ASSET VALUE PER UNIT 104.2328 99.7013 1,083,235 1,326,890 57,534 26,799 340,010 411,022 2,162,255 113,012,881 113,012,881 1,307,631 57,378 25,815 266,475 1,657,299 107,999,954 107,999,954 4 5 12,048,233 93,120,387 6,507,748 898,768 2,600,000 115,175,136 44,310,042 55,515,086 198,168 6,084,777 949,180 2,600,000 109,657,253
Director
Equity Fund

ASKARI EQUITY FUND CONDENSED INTERIM INCOME STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
100
Note Income Capital gain on sale of investments Dividend income Profit on balances with banks Other income
September 30, 2012 ---(Rupees)--903,553 1,041,465 489,725 70,192 2,504,935
Net unrealised appreciation in the value of investments classified as 'at fair value through profit or loss'
3,951,122 6,456,057
Expenses Remuneration of the Management Company Sindh sales tax on remuneration of the Management Company Remuneration of the Trustee Annual fee of Securities and Exchange Commission of Pakistan Auditors' remuneration Legal and professional charges Securities transaction costs Settlement and bank charges Fee and subscription Printing and stationery expenses Amortisation of preliminary expenses and floatation costs Total expenses Net income from operating activities Element of income and capital gains included in prices of units issued less those in units redeemed - net Provision for the Workers' Welfare Fund
847,114 135,538 176,437 26,799 71,836 12,603 72,612 55,101 2,520 12,603 50,411 1,463,574 4,992,483
20,757 (100,264)
Net income for the period before taxation Taxation Net income for the period after taxation Earning per unit 3.2 8
4,912,976 4,912,976
Director
Equity Fund

ASKARI EQUITY FUND CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
101
September 30, 2012 ---(Rupees)--Net income for the period after taxation Other comprehensive income Total comprehensive income for the period 4,912,976 4,912,976
Director
Equity Fund

ASKARI EQUITY FUND CONDENSED INTERIM DISTRIBUTION STATEMENT (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
102
Accumulated loss brought forward: Realised income Unrealised loss
665,595 (989,194) (323,599) 4,912,976 4,589,377
Net income for the period Undistributed income carried forward Accumulated loss carried forward: Realised income Unrealised gain
638,255 3,951,122 4,589,377
Director
Equity Fund
103
ASKARI EQUITY FUND CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
September 30, 2012 ---(Rupees)--Net assets at the beginning of the period Issue of 62,238 units Redemption of 61,238 units 107,999,954 6,525,232 (6,404,524) 120,708
Element of income and capital gains included in prices of units issued less those in units redeemed - net - transferred to income statement Capital gain on sale of investments Net unrealised income on revaluation of investments classified as 'at fair value through profit or loss' Other income for the period Other comprehensive income
(20,757) 903,553
3,951,122 58,301 4,912,976 113,012,881
Net assets at the end of the period
Director
Equity Fund

ASKARI EQUITY FUND CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
104
Note CASH FLOWS FROM OPERATING ACTIVITIES Net income for the period Adjustments for: Dividend income Net unrealised appreciation in the value of investments classified as 'at fair value through profit or loss' Amortisation of preliminary expenses and floatation costs Element of income and capital gains included in prices of units issued less those in units redeemed - net
4,912,976
(1,041,465) (3,951,122) 50,411 (20,757) (4,962,933) (49,957) (33,654,179) 198,168 (29,597) (33,485,608) 19,259 156 984 340,010 144,547 504,956 648,092 (32,382,517)
Increase in assets Investments - net Receivable against sale of investments Dividend, prepayments and other receivables Increase in liabilities Payable to the Management Company Payable to the trustee Payable to Securities and Exchange Commission of Pakistan Payable against purchase of investments Accrued and other liabilities
Dividend received Net cash used in operating activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of units Payments on redemption of units Net cash generated from financing activities Net decrease in cash and cash equivalents during the period Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 4
6,525,232 (6,404,524) 120,708 (32,261,809) 44,310,042 12,048,233
Director
Equity Fund
105
ASKARI EQUITY FUND NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2012
1 1.1 LEGAL STATUS AND NATURE OF BUSINESS Askari Equity Fund (the Fund) was established under the Non Banking Finance Companies and Notified Entities Regulations, 2008 (NBFC Regulations). It was registered under a Trust deed executed between Askari Investment Management Limited (a wholly owned subsidiary of Askari Bank Limited) as the Management Company and the Central Depository Company of Pakistan Limited (CDC) as the Trustee on November 17, 2011. The Fund was registered as a Notified Entity under the NBFC Regulations on December 19, 2011. The units of the Fund were initially issued at Rs 100 per unit. The registered office of the Management Company is situated at Shop No. 2/W, Kashmir Plaza Jinnah Avenue, Blue Area Islamabad with its Head Office situated at 20-C, Khayaban- e-Nishat, Phase VI, DHA, Karachi. The Fund offers units for public subscription on a continuous basis. The units are transferable and can be redeemed by surrendering them to the Fund. The units are listed on the Islamabad Stock Exchange (Guarantee) Limited. The objective of the Fund is to provide equity investors a vehicle for their long term investment needs, capable of locking in capital appreciation and securing reasonable dividends from listed equity securities. The Fund would seek to replicate benchmark returns and reduce volatility compared with the benchmark through efficient equity allocations, enhancing "Risk Adjusted Returns". Pursuant to Circular 7 of 2009 of the SECP, the Board of Directors of the Management Company have approved the category of the Fund as an 'Equity Scheme'. The Pakistan Credit Rating Agency Limited (PACRA) has assigned an asset manager rating of 'AM3+ (positive outlook)' to the Management Company on June 14, 2012. As per the rating scale of PACRA, this rating denotes that the asset manager meets high investment industry standards and benchmarks. Title to the assets of the Fund are held in the name of Central Depository Company (CDC) as trustee of the Fund. The Fund was opened for subscription from March 30, 2012 BASIS OF PRESENTATION Statement of compliance These condensed interim financial statements have been prepared in accordance with the approved accounting standards as a p p l i c a b l e i n P a k i s ta n f o r i n t e r i m f i n a n c i a l r e p o r t i n g . A p p r o v e d a c c o u n t i n g s ta n d a r d s c o m p r i s e o f IAS 34: 'Interim Financial Reporting' (IAS 34), the Trust Deed, NBFC Rules, NBFC Regulations and the directives issued by the SECP. Wherever the requirements of the Trust Deed, the NBFC Rules, NBFC Regulations or the said directives differ with the requirements of IAS 34, the requirements of the Trust Deed, NBFC Rules, NBFC Regulations or the said directives take precedence. 2.2 2.3 3 These condensed interim financial statements should be read in conjunction with the annual published financial statements of the Fund for the year ended June 30, 2012 These condensed interim financial statements is unaudited SIGNIFICANT ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of these condensed interim financial statements are the same as those applied in the preparation of the annual published financial statements of the Fund for the year ended June 30, 2012. 3.1 Net Asset Value per unit The net asset value (NAV) per unit, as disclosed on the condensed interim statement of assets and liabilities, is calculated by dividing the net assets of the Fund by the number of units in issue at the period end. 3.2 Earning per unit Earnings per unit has not been disclosed as in the opinion of the management, determination of cumulative weighted average number of outstanding units for calculating earning per unit is not practicable.
1.2
1.3
1.4 1.5 2 2.1
Unaudited Note
Audited
BANK BALANCES In saving accounts 4.1
4.1
These carry profit at the rates ranging from 6.00% to 8.50% (June 2012: 6.00% to 10.25%) per annum. This includes an amount of Rs 12,038,118 maintained in a bank account with Askari Bank Limited, the holding company of the Management Company.
Unaudited Audited
INVESTMENTS At fair value through profit and loss - Held for trading Listed equity securities
Note
5.1
Equity Fund
5.1
Listed equity securities
Shares of listed companies - Fully paid up ordinary shares of Rs 10 each unless otherwise stated.
Name of the investee company -----------Rupees-----------
As at July 01, 2012
Purchased during the period Bonus / Rights Sold during the period
Carrying value as Market value as at at September 30, September 30, 2012 2012 Appreciation/ (Diminution)
Percentage of paid Market value as Market value as a up capital of a percentage of percentage of total investee company net assets investments held
--------------------------Number of shares--------------------
Oil & Gas 11,625 2,599 32,874,401 37,523,646 4,649,245 15,598 3,065,684 3,387,886 322,202 58,125 8,755,485 10,225,931 1,470,446 9.05% 3.00% 33.20% 26,900 9,870,686 11,657,384 1,786,698 10.32% 48,097 7,853,940 8,627,640 773,700 7.63% 6,921 3,328,606 3,624,805 296,199 3.21% 3.89% 9.27% 12.52% 10.98% 3.64% 40.30% 0.002% 0.001% 0.011% 0.004% 0.008%
Attock Petroleum Limited -
1,221
5,700
Oil & Gas Development Company Limited
35,097
13,000
Pak Oilfields Limited
26,900
Pakistan Petroleum Limited
46,500
Pakistan State Oil Company Limited
12,999
Chemicals 15,602,202 15,356,668 5,094 75,400 8,573,172 8,427,458 194,000 4,785,980 4,687,040 35,300 21,000 2,243,050 2,242,170 (880) (98,940) (145,714) (245,534) 1.98% 4.15% 7.46% 13.59% 2.41% 5.03% 9.05% 16.49% 0.005% 0.010% 0.004% 0
Engro Corporation Limited
25,300
31,000
Fatima Fertilizer Limited
194,000
Fauji Fertilizer Company Limited
45,294
35,200
Construction and Materials 15,573,045 19,500 60,000 7,570,169 51,304 163,000 8,002,876 8,198,900 7,988,400 16,187,300 196,024 418,231 614,255 7.25% 7.07% 14.32% 8.80% 8.58% 17.38% 0.010% 0.010%
D.G. Khan Cement Company Limited
45,304
169,000
Lucky Cement
79,500
Personal Goods 7,000 89,400 4,253,652 4,253,652 5,065,404 5,065,404 811,752 811,752 4.48% 4.48% 5.44% 5.44% 0.038%
Nishat Mills Limited
96,400
Commercial Banks 5,000 18,500 15,000 89,300 534,000 67,000 6,053,358 9,451,897 5,360,710 20,865,965 14,224 156,698 1,448,741 89,169,265 5,735,739 8,309,040 4,942,590 18,987,369 93,120,387 (317,619) (1,142,857) (418,120) (1,878,596) 3,951,122 5.08% 7.35% 4.37% 16.80% 82.40% 6.16% 8.92% 5.31% 20.39% 100.00% 0.000% 0.015% 0.002%
Allied Bank Limited -
3,100
86,200
Bank Al Falah Limited
200,000
349,000
MCB Bank Limited
18,500
United Bank Limited
27,500
44,500
Total
778,115
813,100
Equity Fund
5.1.1
Amount of Rs 6 million is held with National Clearing Company of Pakistan Limited as margin for guaranteeing settlement of Fund's trades in accordance with Circular no. 11 dated October 23, 2007 issued by SECP.
106

6 PROVISION FOR WORKERS' WELFARE FUND
107
The Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As a result of this amendment it may be construed that all Collective Investment Schemes / mutual funds (CISs) whose income exceeds Rs 0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In this regard, a constitutional petition has been filed by certain CISs through their trustees in the Honourable High Court of Sindh (the Court), challenging the applicability of WWF to the CISs, which is pending adjudication. Subsequent to June 30, 2010, a clarification was issued by the Ministry of Labour and Manpower (the Ministry) which stated that mutual funds are not liable to contribute to WWF on the basis of their income. However, on December 14, 2010 the Ministry filed its response against the Constitutional petition requesting the court to dismiss the petition. According to the legal counsel who is handling the case, there is a contradiction between the aforementioned clarification issued by the Ministry and the response filed by the Ministry in Court. Subsequent to June 30, 2011, the Honourable Lahore High Court (LHC) in a constitutional petition relating to the amendments brought in the WWF Ordinance, 1971 through the Finance Act, 2006, and the Finance Act 2008, has declared the said amendments as unlawful and unconstitutional and struck them down. The Management Company is hopeful that the decision of the LHC will lend further support to the constitutional petition which is pending in the Sindh High Court (SHC). During last year, a show cause notice has been issued to one of the Funds managed by the Mangement Company by the Deputy Commissioner Inland Revenue stating that the Fund is liable to pay WWF under section 4 of the Workers Welfare Fund Ordinance, 1971. Although the Management Company is hopeful that the case will be decided in its favour, it has taken a decision to provide for WWF and accordingly has recognised the amount of provision for WWF Rs 0.10 million as at September 30, 2012. The provision has been made without prejudice to pending applications in the High Court of Sindh. 7 7.1 8 CONTINGENCIES AND COMMITMENTS There were no other contingencies and commitments outstanding as at September 30, 2012. TAXATION The income of the Fund is exempt from income tax under Clause 99 of Part I of the Second Schedule to the Income Tax Ordinance, 2001 subject to the condition that not less than 90 percent of its accounting income for the year, as reduced by capital gains, whether realised or unrealised, is distributed amongst the unit holders. The Fund has not recorded provision for taxation as the Management Company intends to distribute the required minimum percentage of the Fund's accounting income to its unit holders. 9 TRANSACTIONS WITH CONNECTED PERSONS Connected persons / related parties include Askari Investment Management Limited being the Management Company, Central Depository Company Pakistan Limited being the Trustee, Askari Bank Limited being the holding company of the Management Company, the funds under the common management of the Management Company, and the directors and officers of the Management Company. Transactions with connected persons / related parties are in the normal course of business and conducted at contracted rates and terms. Remuneration to the Management Company is determined in accordance with the provisions of the NBFC Regulations and the Trust Deed. Remuneration payable to the Trustee is determined in accordance with the provisions of the Trust Deed.
Unaudited September 30, 2012 ---(Rupees)--9.1 Details of transactions with connected persons are as follows: Askari Bank Limited (Holding company of the Management Company) Profit on bank deposits Bank charges Askari Investment Management Limited - the Management Company Remuneration for the period Sindh sales tax on remuneration of Management Company Issue of 47,586 units Central Depository Company Limited - Trustee Remuneration of the Trustee CDS charges Key Management Personnel Issue of 143 units 14,996 176,437 2,850 489,725 5,664 847,114 135,538 4,994,279
Equity Fund
108
Unaudited Audited September 30, June 30, 2012 2012 ---(Rupees)---
9.2
Amounts outstanding as at period end:
Askari Investment Management Limited - the Management Company Remuneration payable Sindh sales tax payable on management company remuneration Preliminary expenses and floatation costs Sales load Units held 47,586 (June 2012: NIL) Askari Bank Limited (Holding company of the Management Company) Investment held in the fund 1,000,000 units Balance with bank Profit receivable Central Depository Company Limited - Trustee Trustee fee payable Security deposits Key Management Personnel Units held 143 (June 2012: NIL)
10 DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on October 23, 2012 by the Board of Directors of the Management Company. 11 GENERAL Figures have been rounded off to the nearest rupee.
280,722 44,915 1,000,000 1,253 4,960,022
264,596 42,335 1,000,000 700 -
104,232,800 12,038,118 33,254
99,701,300 44,299,928 1,135
57,534 100,000
57,378 100,000
14,905
Director
Equity Fund

Quarterly Reports Sep 2012

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Quarterly Reports Sep 2012

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Contents

Management Company & Funds Information

information about the management company

CHIEF FINANCIAL OFFICER Zeeshan COMPANY SECRETARY Zeeshan

Sovereign Cash Fund

QUARTERLY REPORT SEPTEMBER 2012

Sovereign Cash Fund

QUARTERLY REPORT SEPTEMBER 2012

Sovereign Cash Fund

QUARTERLY REPORT SEPTEMBER 2012

Distribution Rs per unit 0.5804 1.0995 0.8532 2.5331

Distribution percentage for the month-Annualized 8.45% 12.90% 10.00%

Chief Executive Officer Karachi: October 23, 2012

Sovereign Cash Fund

Sovereign Cash Fund

QUARTERLY REPORT SEPTEMBER 2012

------------ Rupees -----------176,432,663 8,321,569,813 1,500,000,000 2,675,710 906,516 10,001,584,702

492,193,370 3,826,138,184 1,500,000,000 1,500,000 3,855,226 804,812 5,824,491,593

6,111,923 498,917 1,446,096 1,278,235 399,210,865 43,416,649 451,962,684 5,372,528,909 5,372,528,909

10,079,421 739,381 8,595,752 2,319,577 39,268,792 61,002,923 9,940,581,779 9,940,581,779

For Askari Investment Management Limited (Management Company)

Chief Executive Officer

Sovereign Cash Fund

QUARTERLY REPORT SEPTEMBER 2012

September 30, 2012

September 30, 2011

(32,066,813) 179,445,035 179,445,035

(9,909,631) 206,959,456 206,959,456

For Askari Investment Management Limited (Management Company)

Chief Executive Officer

Sovereign Cash Fund

QUARTERLY REPORT SEPTEMBER 2012

September 30, 2012

September 30, 2011

For Askari Investment Management Limited (Management Company)

Chief Executive Officer

Sovereign Cash Fund

QUARTERLY REPORT SEPTEMBER 2012

September 30, 2012

September 30, 2011

111,628,656 (1,640,815) 109,987,841 179,445,035

43,873,448 (83,412) 43,790,036 206,959,456 -

Cash Distribution Bonus Units

(14,020,722) (72,753,933) (86,774,655)

(4,910,160) (17,440,843) (22,351,003)

Cash Distribution Bonus Units

(2,277,109) (45,597,786) (47,874,895)

(51,390,965) (139,227,133) (190,618,098)

Cash Distribution Bonus Units

(1,652,417) (75,380,686) (77,033,103)

Cash Distribution Bonus Units

(1,280,859) (50,127,044) (51,407,903) 26,342,320

Undistributed income carried forward

Undistributed income comprising : Realised income Unrealised income

24,273,445 2,068,875 26,342,320

36,610,704 1,169,687 37,780,391

For Askari Investment Management Limited (Management Company)

Chief Executive Officer

Sovereign Cash Fund

QUARTERLY REPORT SEPTEMBER 2012

September 30, 2012

September 30, 2011

(14,020,722) (72,753,933) (86,774,655)