DAWOOD CAPITAL MANAGEMENT LIMITED › downloads › treasure-chest › ...Engro Fertilizer Limited SUKUK 12.61% Shahmurad Sugar Mills Limited SUKUK 8.78% Pak Elektron Limited SUKUK

INVESTMENT COMMITTEE CUTT-OFF TIMINGS OF FUNDS

PAKISTAN ECONOMIC UPDATES

Disclaimer:

This publication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any

fund. All investments in mutual funds are subject to market risks. The NAV based prices of units and any dividends/returns thereon are dependant on

forces and factors affecting the capital markets. These may go up or down based on market conditions. Past performance is not necessarily indicative of

future results.

DAWOOD CAPITAL MANAGEMENT LIMITED1500A Saima Trade Towers, I.I. Chundrigar Road, Karachi-74700, Pakistan

UAN: 111-DAWOOD (111-329-663) PABX: (92 21) 32271874 x 227 Fax: (92 21) 32271912

Email: [email protected] URL: www.edawood.com

Economic OutlookThe Pakistani markets are still assessing the scale of damages inflicted by the August floods, as well as their near term impact on the

economy. The floods are expected to have an immediate fiscal impact on the government’s budgetary priorities.

News reports suggest that a revised budget with a special flood tax, diminished development spending targets and a tight fiscal rein will

be offered to provide some fiscal stability, until a clearer picture of foreign flows emerges. However the excessive government borrowing

will tend to hike in inflationary pressure in near future.

Market PerformanceVolatile KSE-100 index gained 291 points to 10013 points (+3%) during the third quarter despite lower volumes (average daily volume of

62mn). Factors keeping investors sidelined included; 1) 100bps increase in Discount Rate, 2) Realization of the magnitude of floods and

resulting damages, 3) Uncertain macroeconomic environment and 4) Delay in leverage product. However, towards the end of the quarter

market activity picked up thanks to approval of MTS concept paper, helping KSE‐100 index to recover from July’s clobbering.

Nevertheless, overall perception of weakening macroeconomic fundamentals and political noise could continue going forward. In this

scenario, any progress pertaining to introduction of MTS or an exciting earnings season could help rejuvenate investor interest.

Debt Market ReviewMedium-term impact of floods is still not very clear on the economy and will be further clear in the up-coming months; however, the trend

is still showing the inclination towards further increase in the interest rates in near future. This coupled with persistent Government

borrowings indicates that T-Bills rates may remain high or creep up further.

As a result of prevailing economic conditions the overall debt market remained on the depressed side with substantial downward

revaluation of debt security prices during the first quarter of FY 10~11. However the successful restructuring of previously defaulting debt

securities in cement sector, showed a positive development towards market recovery.

Money Market ReviewThe money market during the quarter remained mostly liquid with the overnight rates ranging from 10.50% to 11.50%. The T-bill for 3, 6

and 12 months were trading between the ranges of 12.45%-12.55%, 12.60%-12.70% and 12.75%-12.85% respectively. However, hike in

the Discount Rate resulted in spike on T-bill yields as witnessed by 12 months T-bill traded above 12.85% in the market.

During the period, SBP continues to monitor the market liquidity and kept its focus on interest rate volatility as reflected by Open Market

Operations. Whereas the Money Market hit the floor rate many times due to extra liquidity available in the system.

DAWOOD CAPITAL MANAGEMENT LIMITED

Fund Manager's Report - Septembert 2010

Muhammad Saleem Munshi Chief Investment Officer

Muhammad Ahmed Fund Manager

Mustansir Shabbar Member

Muhammad Aamir Siddiqui Secretary

* Limit Breach

FUND STATISTICS PERFORMANCE STATISTICS

DMMF TOP TEN DEBT SECURITIES FUND MANAGER'S COMMENTS

During the month of Septemeber, DMMF again

witnessed a healthy positive return of 17.02% pa.

This was due to reversals and capital gains against

defaulting debt instruments that have now been

paying their due amounts making DMMF an

extremely attractive investments for investors

looking to take the advantage of the reversals and

capital gains. DMMF will continue to progress in the

same manner in up coming months as well.

DAWOOD MONEY MARKET FUND

Fund Manager's Report - September 2010

INVESTMENT OBJECTIVE

To preserve the investor’s capital w hile providing a return

greater than that offered by other investments of similar risk

profile through investments in a portfolio of money market

instruments.

Name of Fund Dawood Money Market Fund

Structure Open End

Industry Category Fixed Income

Benchmark Avg. 6 Month KIBOR (Subject to SECP Approval)

Trustee & Custodian Bank AL Habib

Auditor M. Yousuf Adil Saleem & Co.

Registrar Gangjees Registrar Services

Legal Advisor Bawaney & Partners

Launch Date 19-May-2003

Listing KSE

Duration Perpetual

Management Fee 1.00% per annum

Sales Load 1% Front End

Pricing Mechanism Forward

Leverage Nill

Risk Profile Medium

AMC Rating AM4+

Stability Rating Not Rated

Returns Aug-10 Sep-10

DMMF 18.70% 17.02%

Benchmark 12.82% 12.91%

Alpha 5.88% 4.11%

1 Month 3 Months 6 Months YTD

17.02% 23.56% 35.28% 23.56%

HISTORIC RETURNS

Asset Mix Aug-2010 Sep-2010

Placements 12.86% 12.75%

Debt Securities 68.71% 64.07%

Govt. Securities 6.31% 6.27%

Cash & Eq. 6.72% 13.37%

Others 5.41% 3.54%

Placements, 12.86%

Debt Securities,

68.71%

Govt. Securities,

6.31%

Cash & Eq., 6.72%

Others,4.29%

Aug-2010

Placements, 12.75%

Debt Securities,

64.07%

Govt. Securities,

6.27%

Cash & Eq., 13.37%

Others,4.29%

Sep-2010

Credit Quality Aug-2010 Sep-2010

A 24.95% 26.27%

A- 1.86% 0.00%

A+ 13.30% 6.34%

AA 14.14% 14.10%

BBB 8.56% 0.00%

Less Than BBB 0.00% 5.74%

Unrated 5.90% 11.62%

0.00% 7.00% 14.00% 21.00% 28.00%

A

A-

A+

AA

BBB

Less Than BBB

Unrated

26.27%

0.00%

6.34%

14.10%

0.00%

5.74%

11.62%

Sep

-201

0

Investee Company Type %

Engro Fertilizer Limited TFC 14.27%

Optimus Limited TFC 11.55%

Trust Investment Bank Limited TFC 8.86%

Escort Investment Bank Limited TFC 6.42%

Kohat Cement Company Limited SUKUK 5.92%

Invest Capital and Investment Bank Ltd. TFC 5.81%

NIB Bank Limited TFC 4.88%

Invest Capital and Investment Bank Ltd. TFC 4.14%

Grays Leasing Company Limited TFC 1.69%

Trakker Pakistan Limited TFC 1.28%

Net Assets PKR 387.52 Million

NAV PKR 69.0216

Wt. Avg. Time To Maturity 3.14 Years

Standard Deviation 0.72%

Sharpe Ratio 1.06

Information Ratio 1.05

VAMI 1.05

Name of Investment Type Value before

provision

Provision

(if any)

Value after

provision

% Net

Assets

% Gross

Assets

Engro Fertilizer Limited * TFC 55,303,042 - 55,303,042 14.27% 14.10%

Optimus Limited * TFC 44,760,159 - 44,760,159 11.55% 11.41%

Kohat Cement Company Limited SUKUK 30,598,050 7,649,513 22,948,538 5.92% 5.85%

Dewan Cement Limited TFC 150,000,000 150,000,000 - 0.00% 0.00%

New Allied Electronics Industries Limited TFC 28,283,312 28,283,312 - 0.00% 0.00%

Invest Capital and Investment Bank Ltd. TFC 22,500,000 - 22,500,000 5.81% 5.74%

Invest Capital and Investment Bank Ltd. TFC 16,044,131 - 16,044,131 4.14% 4.09%

Grays Leasing Company Limited TFC 6,562,500 - 6,562,500 1.69% 1.67%

Invest Capital Investment Bank Ltd. * COM 50,000,000 - 50,000,000 12.90% 12.75%

Saudi Pak Leasing Co. Ltd COI 99,866,669 99,866,669 - 0.00% 0.00%

T o tal 503,917,863 285,799,494 218,118,369 56.29% 55.62%

DETAILS OF NON COMPLIANT INVESTMENT

* Limit Breach

FUND STATISTICS PERFORMANCE STATISTICS

DIF TOP TEN DEBT SECURITIES FUND MANAGER'S COMMENTS

During the month of September, DIF NAV increased by 17.03%

as compared to its benchmark which was increased by 1.10%.

Thus DIF has outperformed its benchmark by 15.93%. This was

due to reversals and capital gains against non performing assets

that have now been paying their due amounts making DIF an

extremely attractive investments for investors looking to take

advantage of the reversals and capital gains.

DAWOOD ISLAMIC FUND

Fund Manager's Report - September 2010

Musharika, 17.08%

Debt Securities,

37.43%

Cash & Eq., 27.92%

Equities, 13.17%

Others,4.29%

Au

g-2

01

0

INVESTMENT OBJECTIVE

To provide Riba-Free "Halal M unafa!" to investors by

investing maximum 25% of net assets in equities, w hile the high

percentage of non-equity income provides stability.

Equity Allocation Jul-2010 Aug-2010

Oil & Gas 10.89% 9.79%

Pharma & Bio Tech 2.22% 1.90%

Chemicals 1.39% 1.35%

Telecom 0.00% 0.13%

Name of Fund Dawood Islamic Fund

Structure Open End

Industry Category Islamic Asset Allocation

Trustee & Custodian CDC Pakistan Limited

Auditor M. Yousuf Adil Saleem & Co.

Registrar Gangjees Registrar Services

Legal Advisor Bawaney & Partners

Launch Date 14-Jul-2007

Listing KSE

Duration Perpetual

Management Fee 1.50% per annum

Sales Load 1.50% Front End

Pricing Mechanism Forward

Leverage Nill

Risk Profile Medium

AMC Rating AM4+

Benchmark 25% KMI-30 + 75% Savings Rate(Subject to SECP Apprval)

Shariah Advisors Prof. Mufti Munib-ur-Rehman

Mufti Syed Sabir Hussain

Mufti Syed Zahid

1 Month 3 Months 6 Months YTD

17.03% 17.85% 30.39% 17.85%

HISTORIC RETURNS

Returns Aug-2010 Sep-2010

DIF -1.05% 17.03%

Benchmark -0.89% 1.10%

Alpha -0.16% 15.93%

Asset Mix Aug-2010 Sep-2010

Musharika 16.88% 14.87%

Debt Securities 36.99% 39.75%

Cash & Eq. 27.59% 29.38%

Equities 13.01% 11.48%

Others 5.53% 4.52%

Musharika, 14.87%

Debt Securities,

39.75%

Cash & Eq., 29.38%

Equities, 11.48%

Others,4.29%

Se

p-2

010

Credit Quality Aug-2010 Sep-2010

AA 0.00% 10.07%

AA- 11.41% 0.00%

A- 9.70% 7.01%

A+ 8.26% 6.61%

Less Than A- 1.62% 10.77%

Unrated 6.01% 5.30%

0.00% 3.00% 6.00% 9.00% 12.00%

AA

A-

A+

Less Than A-

Unrated

10.07%

7.01%

6.61%

10.77%

5.30%

Sep

-201

0

Oil & Gas, 9.67%

Pharma & Bio Tech, 1.88%

Chemicals, 1.34%

Telecom, 0.12%

Au

g-20

10 Oil & Gas, 10.04%

Pharma & Bio Tech, 1.84%

Chemicals, 1.29%

Sep

-201

0

Investee Company Type %

Maple Leaf Cement Factory Limited SUKUK 13.49%

Engro Fertilizer Limited SUKUK 12.61%

Shahmurad Sugar Mills Limited SUKUK 8.78%

Pak Elektron Limited SUKUK 8.28%

Kohat Cement Company Limited SUKUK 6.64%

Total 49.81%

Net Assets PKR 272.65 Million

NAV PKR 116.6079

Wt. Avg. Time To Maturity 4.85 Years

Standard Deviation 9.73%

Sharpe Ratio 0.50

Information Ratio 0.52

Sortino Ratio 8.02

VAMI 1.18

Name of Investment Type Value before

provision

Provision

(if any)

Value after

provision

% of Net

Assets

% Gross

AssetsM aple Leaf Cement Factory Limited SUKUK 48,167,561 11,376,953 36,790,608 13.49% 10.77%

Kohat Cement Company Limited SUKUK 24,150,000 6,037,500 18,112,500 6.64% 5.30%

New Allied Electronics Industries Limited SUKUK 5,027,500 5,027,500 - 0.00% 0.00%

B.R.R. Guardian M odaraba COM 1,119,495 335,849 783,646 0.29% 0.23%

Invest Capital Investment Bank Ltd. * COM 50,000,000 - 50,000,000 18.34% 14.64%

T o tal 128,464,556 22,777,802 105,686,754 38.76% 30.94%

DETAILS OF NON COMPLIANT INVESTMENT