LAKSON INCOME FUND · The LIF outperformed the average income fund by 346bps. As of December 31, 2011, the LIF portfolio is invested 58% in T-Bills, 24% in TDRs, 12% in short term

LAKSON INCOME FUND

CONTENTS

Fund’s Information 1

Review Report of the Directors of the Management Company 3

Trustee Report to the Unit Holders 6

Report on Review of Condensed Interim Financial Information to the Unit Holders 7

Condensed Interim Statement of Assets and Liabilities 8

Condensed Interim Income Statement 9

Condensed Interim Statement of Comprehensive Income 10

Condensed Interim Distribution Statement 11

Condensed Interim Statement of Movement in Unit Holders' Fund 12

Condensed Interim Cash Flow Statement 13

Notes to the Condensed Interim Financial Information 14

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LAKSON INCOME FUND

Fund’s InformationManagement Company Lakson Investments Limited

Head OfficeLakson Square Building No.2,Sarwar Shaheed Road,Karachi-74200, Pakistan.Phone: (9221) 3569.8000Fax: (9221) 3568.1653Web site: www.li.com.pkE-mail: [email protected]

Board of Directors ofthe Management Company Mr. Iqbal Ali Lakhani - Chairman

Mr. Babar Ali Lakhani - Chief Executive OfficerMr. A. Aziz H. EbrahimMr. Mahomed J. JafferMr. Sher Afgan MalikMr. Muhammad Abdul QadirMr. Daniel Scott SmallerMr. Zahid Zakiuddin

Chief Financial Officer &Company Secretaryof the Management Company Mr. Amir Mobin

Audit Committee Mr. Iqbal Ali Lakhani - ChairmanMr. A. Aziz H. EbrahimMr. Sher Afgan MalikMr. Zahid Zakiuddin

Trustee Central Depository Company of Pakistan LimitedCDC House, 99-B, Block-B, S.M.C.H.S.,Main Shahra-e-Faisal,Karachi, Pakistan.

Auditors KPMG Taseer Hadi & Co.Chartered AccountantsSheikh Sultan Trust Building No.2,Beaumont Road,Karachi - 75530, Pakistan

Bankers to the Fund Allied Bank LimitedAskari Bank LimitedBank Al-Falah LimitedFaysal Bank LimitedHabib Bank LimitedHabib Metropolitan Bank LimitedMCB Bank LimitedNational Bank of PakistanStandard Chartered Bank (Pakistan) LimitedUnited Bank Limited

Legal Adviser Fazleghani AdvocatesF-72/I, Block 8, KDA-5,Kehkashan, Clifton,Karachi, Pakistan.

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LAKSON INCOME FUND

Registrar Lakson Investments LimitedLakson Square Building No.2,Sarwar Shaheed Road,Karachi-74200, Pakistan

Distributors Alfalah Securities (Pvt.) LimitedBurj Capital LimitedElixir Securities (Pvt.) LimitedIGI Investment Bank LimitedPearl Securities (Pvt.) LimitedVector Capital (Pvt.) Limited

Rating by PACRA AA-(f) : Fund Stability RatingAM3 + : Management Company Quality Rating

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LAKSON INCOME FUND

Review Report of the Directors of the Management CompanyFor the Half Year ended December 31, 2011

The Board of Directors of Lakson Investments Limited, the Management Company of the LaksonIncome Fund ("LIF") is pleased to submit its review report together with Condensed Interim FinancialStatements for the half year ended December 31, 2011.

Fund Objective

The investment objective of the Scheme is to provide competitive total returns through investmentin a diversified portfolio of fixed income securities. The Scheme shall invest in various fixed incomesecurities with a mix of short term, medium term, and longer term maturities depending on theassessment by the Management Company of interest rate trends and prospective returns.

Fund Profile

LIF is an open end income fund which invests in Investment-grade Debt Securities, GovernmentSecurities, Certificate of Investments, Clean Placements, Term Deposit Receipts, and other fixed incomeinstruments. The overall duration of the portfolio is kept below 4 years while at least 25% of NetAssets are kept in the form of cash or Treasury Bills of maximum 90 days maturity. LIF is managedthrough a team-driven, top-down process utilizing active sector rotation, duration and yield curvemanagement. Economic conditions are constantly monitored to forecast interest rate changes. Theadded value for LIF comes from identifying opportunities to shift investments between variousmaturities and between different instruments. LIF is allowed to borrow up to 15% of Net Assets tomeet redemptions however LIF did not utilize this facility during the period under review.

Fund performance

During the 1HFY12 the assets under management of the Lakson Income Fund ("LIF") increased by26.57% from PKR 1.00 billion to PKR 1.27 billion. The LIF yielded an annualized return of 12.28% inthe 1HFY12 compared to the Benchmark (average return of all income funds) return of 8.83% p.a.The LIF outperformed the average income fund by 346bps. As of December 31, 2011, the LIF portfoliois invested 58% in T-Bills, 24% in TDRs, 12% in short term sukuks and 6% in TFCs while the weightedaverage maturity of the LIF portfolio stands at 222 days. The Standard Deviation, a measure of thevolatility of the fund's performance, of monthly returns of the LIF since inception is just 1.58% comparedto 5.30% for the Benchmark.

Income Distribution

The Chief Executive Officer of the management company under the authority of the Board of Directorshas announced interim distributions of PKR 5.6645 per unit (5.6645% of face value of PKR 100/-)during the half year ended December 31, 2011 amounting to PKR 62.88 million (PKR 57.31 million ofBonus distribution and PKR 5.57 million of cash distribution).

Earning per Unit (EPU)

EPU has not been disclosed as we feel the determination of weighted average units for calculatingEPU is not practicable for open end funds.

Economic Review

Pakistan has faced tough economic challenges in the past few years triggered by natural disasters,external shocks, political uncertainty, energy shortages and security problems. FY12 was expectedto be a better year in terms of economic performance but huge fiscal deficit, weak external accountposition, continued energy shortages and recurrence of floods have dented the prospects. Agriculturesector which is the backbone of our economy is facing many challenges this year due to floods, taxationon inputs, and the lower global commodity prices. Manufacturing sector too continued to post belowpar performance as chronic power shortages and higher input costs limited growth in industrial activity.Amongst various textile sectors, only output of cotton yarn and cotton cloth grew during 1QFY12.

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LAKSON INCOME FUND

In view of these challenges, the State Bank of Pakistan (“SBP”) adopted an expansionary monetarypolicy stance and cut the discount rate by a cumulative 200bps to 12.00% during the 1HFY12. TheGovernment is the largest beneficiary of this monetary easing as a 100bps cut in the discount rateprovides a relief of around PKR 60 billion to the Government on its domestic borrowing. The SBP’sdecision was influenced by a decline in headline inflation and the Government’s efforts to containborrowing from the SBP. The Federal Bureau of Statistics (“FBS”) changed the base year for thecalculation of price indices and altered the weights of different groups in the Consumer Price Index(“CPI”). As a result of these changes, the headline inflation averaged at 10.89% during the 1HFY12compared to an average of 14.30% in the 1HFY11. During the 1HFY12, Money Supply depicted agrowth of 5.67% compared to a growth of 8.97% in the 1HFY11. Net Government borrowing for thebudgetary support stood at PKR 756 billion during the 1HFY12 compared to PKR 308 billion in the1HFY11. Despite a higher Government borrowing, the Money Supply growth was lower due to a PKR140 billion contraction in the Net Foreign Assets (“NFA”). The SBP had to finance a portion of theCurrent Account deficit from its own reserves which caused a contraction in the NFA.

On the external side, Current Account posted a hefty deficit of USD 2.2 billion during the 1HFY12compared to a surplus of USD 8.0 million in the same period last year. The Trade Balance on Goodsand Services recorded a 45.9% YoY jump to USD 8.9 billion in the 1HFY12 due to the decline ininternational cotton prices and persistently high global oil prices. The workers’ remittances, however,maintained consistent growth trend during the 1HFY12 and were up 20% YoY, reaching USD 6.33billion. The Foreign Direct Investment (“FDI”) maintained its downward trajectory in the period underreview, shrinking by 37% YoY to USD 532 million. The external account thus recorded a deficit of USD1.79 billion in the 1HFY12 compared to a surplus of USD 975 million in the 1HFY11. Resultantly, theforeign exchange reserves of the country declined to USD 17.0 billion by December ‘11 after peakingat USD 18.3 billion in July ’11. After witnessing relative stability during FY11, Pak Rupee depreciatedby 4.4% against US Dollar during the 1HFY12.

Fixed Income Market Review

The money market remained tight during the 1HFY12 and the overnight repo rates averaged 12.37%compared to 11.92% in the 1HFY11. A contraction in the NFA and a decline in the banking sectordeposits during the first five months of FY12 kept the market liquidity tight. The SBP had to injectliquidity on regular intervals through Open Market Operations ("OMOs") to accommodate theGovernment borrowing from the banking system for budgetary support. The amount injected by theSBP through OMOs reached PKR 360 billion in November '11 and consistently remained above PKR250 billion before easing off to PKR 174 billion in December '11. All the market interest rates witnesseda decline in the 1HFY12 as a result of a cumulative 200bps cut in the discount rate. The benchmark6-month KIBOR declined by 176bps during the 1HFY12 and averaged at 12.74%. A decline in KIBORbodes well for the private sector credit off-take as the corporate borrowing rate is linked with KIBOR.The SBP conducted 13 T-bill auctions during the 1HFY12 on behalf of Ministry of Finance ("MoF") witha cumulative target amount of PKR 1.76 trillion and accepted bids worth PKR 1.75 trillion. The acceptedamount in T-Bill auctions was slightly lower than the target amount as the participation in T-Bill auctionswas very low in December '11 and in one auction the MoF had to reject all bids. The cut off yieldsfor the 3, 6 and 12-month T-bills declined by 166, 206 and 201 bps during the 1HFY12 as a result of200bps cut in the discount rate. The SBP also conducted five PIB auctions during the 1HFY12 andraised PKR 106.92 billion on behalf of the MoF. The secondary market yields on Government securitieswitnessed an average decline of 133bps during the 1HFY12 as a result of monetary easing by the SBP.The banks offered high rates on short term deposits in December '11 to attract deposits to improvetheir balance sheet positions. The rates offered by the banks were in the range of 12.25%-12.75%for one month deposits. Activity in the bonds market was very low and was limited to only a few TFCsmainly issued by commercial banks. A recovery was also witnessed in the prices of high credit qualityTFCs as some preference for TFCs was seen over Government securities due to declining yields.

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LAKSON INCOME FUND

Future Outlook

A persistent energy shortage continues to be the single most important hurdle in economic recoverywhile the recent ease in the monetary policy should bring some respite for the private sector. TheGovernment needs to embark upon a structural reform process to improve revenue mobilization, cutthe wasteful and low-priority expenditures, and reform the energy sector by eliminating untargetedsubsidies. In the absence of foreign inflows, external account is expected to remain under furtherpressure due to the debt repayment starting in 2012. If the large fiscal deficit persists going forwardthen it will become increasingly difficult for the SBP to continue accommodative monetary policy.

Acknowledgement

The Board is thankful to its valued investors, the Securities and Exchange Commission of Pakistan, theState Bank of Pakistan, the Trustee of the Fund-Central Depository Company of Pakistan Limited andthe management of the Lahore Stock Exchange for their continued cooperation and support. TheDirectors of the Management Company also acknowledge the efforts put in by the team of theManagement Company for the growth and the prudent management of the Fund.

For and on Behalf of the Board

Babar Ali LakhaniDated: February 17, 2012 Chief Executive Officer

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LAKSON INCOME FUND

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LAKSON INCOME FUND

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LAKSON INCOME FUND

Condensed Interim Statement of Assets and LiabilitiesAs at 31 December 2011

Chief Executive Officer Director

For Lakson Investments Limited(Management Company)

31 December 30 June2011 2011

(Unaudited) (Audited)Note (Rupees)

Assets

Bank balances 6 306,780,643 103,217,486Investments 7 964,122,496 903,703,945Profit receivable on bank balances 8,823,213 2,695,431Deposit and prepayment 203,451 100,000Deferred formation cost 1,049,411 1,233,242Total assets 1,280,979,214 1,010,950,104

Liabilities

Remuneration payable to the Management Company 8 1,867,995 1,255,485Remuneration payable to the Trustee 163,243 141,015Annual fee payable to Securities and Exchange Commission of Pakistan 417,768 596,133Dividend payable 923,845 -Accrued expenses and other liabilities 9 4,054,821 2,757,696Total liabilities 7,427,672 4,750,329

Net assets 1,273,551,542 1,006,199,775

Unit holders' funds (as per the statement attached) 1,273,551,542 1,006,199,775

(Number)

Number of units in issue 12,686,497 9,946,564

(Rupees)

Net assets value per unit 100.3863 101.1605

The annexed notes from 1 to 13 form an integral part of these condensed interim financial information.

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LAKSON INCOME FUND

Condensed Interim Income Statement (Unaudited)For the six months period ended 31 December 2011



Half year Ended Quarter Ended31 December 31 December

2011 2010 2011 2010Note ----------------------------(Rupees)--------------------------

Income

Mark-up income 72,389,432 37,892,682 38,263,898 22,152,501Gain on sale of held for trading investments - net 1,848,313 136,985 1,746,236 135,124Unrealised appreciation in the fair value of investments - held for trading - net 2,521,685 57,079 706,638 387,493Element of income and capital gains in prices of units sold less those in units redeemed - net 2,344,286 10,435,775 2,416,939 8,536,360

79,103,716 48,522,521 43,133,711 31,211,478Expenses

Remuneration to the Management Company 8 9,692,209 4,506,448 5,274,812 2,605,081Remuneration to the Trustee 900,784 600,860 471,339 347,344Annual fee to the Securities and Exchange Commission of Pakistan 417,768 225,322 227,363 130,254Auditors' remuneration 113,832 117,008 63,559 50,412Fees and subscription 120,656 115,946 60,328 57,971Printing charges 30,163 43,471 15,081 18,266Brokerage expenses 19,510 12,969 12,591 3,404Amortisation of deferred formation cost 183,831 184,335 91,916 92,168Workers' Welfare Fund 9.1 1,350,299 854,200 737,253 558,053Bank and settlement charges 110,033 6,161 54,102 3,947

12,939,085 6,666,720 7,008,344 3,866,900

Net income for the period 66,164,631 41,855,801 36,125,367 27,344,578


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LAKSON INCOME FUND

Condensed Interim Statement of Comprehensive Income (Unaudited)For the six months period ended 31 December 2011




2011 2010 2011 2010----------------------------(Rupees)--------------------------


Other comprehensive income - - - -

Total comprehensive income for the period 66,164,631 41,855,801 36,125,367 27,344,578


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LAKSON INCOME FUND

Condensed Interim Distribution Statement (Unaudited)For the six months period ended 31 December 2011



Undistributed income at beginning of the period - realised 11,292,694 13,067,161 2,255,789 16,208,498Undistributed income / (Accumulated loss) at beginning of the period - unrealised 250,666 1,367,074 1,815,047 (330,414)Undistributed income at beginning of the period 11,543,360 14,434,235 4,070,836 15,878,084

Final distribution at the rate of Rs 0.9979 (2010: Rs 2.9932) per unit approved on 4 July 2011 (2010: 6 July 2010) - Cash distribution (980,437) (729,825) - - - Issue of bonus units (8,945,241) (12,337,549) - -

(9,925,678) (13,067,374) - -


Interim distributions during the period 10 - Cash distribution (5,565,366) (2,321,424) (2,850,524) (2,321,424) - Issue of bonus units (57,315,121) (38,557,880) (32,443,853) (38,557,880)

3,284,144 976,497 830,990 (13,534,726)

4,901,826 2,343,358 4,901,826 2,343,358

Undistributed income at the end of the period - realised 2,380,141 2,286,279 2,380,141 2,286,279Undistributed income at the end of the period - unrealised 2,521,685 57,079 2,521,685 57,079Undistributed income at the end of the period 4,901,826 2,343,358 4,901,826 2,343,358



2011 2010 2011 2010Note ----------------------------(Rupees)--------------------------

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LAKSON INCOME FUND


Condensed Interim Statement of Movement in Unit Holders' Fund (Unaudited)For the six months period ended 31 December 2011

(Management Company)For Lakson Investments Limited


2011 2010 2011 2010Note ----------------------------(Rupees)--------------------------

Net assets at the beginning of the period 1,006,199,775 451,002,913 1,017,644,094 573,950,111

Cash received on issue of 2,592,806 (2010: 6,025,629) units and 2,590,718 (2010: 4,577,729) units for the half year and quarter respectively 262,020,117 615,600,905 261,810,496 468,557,905Cash paid on redemption of 513,219 (2010: 1,351,666) units and 362,896 (2010: 995,808) units for the half year and quarter respectively (51,942,892) (137,895,318) (36,760,952) (101,917,533)

210,077,225 477,705,587 225,049,544 366,640,372

Element of income and capital gains in prices of units sold less those in units redeemed - net (2,344,286) (10,435,775) (2,416,939) (8,536,360)

Final distribution at the rate of Rs. 0.9979 (2010: Rs 2.9932) per unit approved on 4 July 2011 (2010: 6 July 2010) - Cash distribution (980,437) (729,825) - - - Issue of bonus units (8,945,241) (12,337,549) - -

(9,925,678) (13,067,374) - -

Issue of 89,307 (2010: 122,991) bonus units as final distribution 8,945,241 12,337,549 - -


Interim distributions during the period 10 - Cash distribution (5,565,366) (2,321,424) (2,850,524) (2,321,424) - Issue of bonus units (57,315,121) (38,557,880) (32,443,853) (38,557,880)Net income for the period less distribution 3,284,144 976,497 830,990 (13,534,726)

Issue of 571,038 (2010: 384,700) bonus units and 322,942 (2010: 384,700) bonus units as for the half year and quarter respectively 57,315,121 38,557,880 32,443,853 38,557,880

Net assets as at end of the period 1,273,551,542 957,077,277 1,273,551,542 957,077,277

Net assets value per unit at the beginning of the period 101.1605 103.3062 100.4016 102.8451

Net assets value per unit at end of the period 100.3863 100.2454 100.3863 100.2454


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LAKSON INCOME FUND

Condensed Interim Cash Flow Statement (Unaudited)For the six months period ended December 31, 2011

DirectorChief Executive Officer



2011 2010 2011 2010Note ----------------------------(Rupees)--------------------------

CASH FLOWS FROM OPERATING ACTIVITIES


Adjustments for non-cash and others items:Amortisation of formation cost 183,831 184,335 91,916 92,168Unrealised (appreciation) in the fair value ofinvestments - 'held for trading' - net (2,521,685) (57,079) (706,638) (387,493)Element of income and capital gains in pricesof units sold less those in units redeemed - net (2,344,286) (10,435,775) (2,416,939) (8,536,360)

61,482,491 31,547,282 33,093,706 18,512,893(Increase) / decrease in assetsInvestments (57,896,866) (25,500,500) (8,606,143) (25,469,904)Placement - 35,000,000 - -Receivable against reverse repurchase transaction - - - 50,000,000Profit receivable on bank balances (6,127,782) (732,082) (4,877,118) (1,860,705)Deposit and prepayment (103,451) 85,945 60,329 58,183

(64,128,099) 8,853,363 (13,422,932) 22,727,574Increase / (decrease) in liabilitiesPayable to the Management Company 612,510 (1,381,635) 420,499 310,516Remuneration payable to the Trustee 22,228 59,559 22,859 41,401Annual fee payable to Securities and ExchangeCommission of Pakistan (178,365) 51,926 227,363 130,254Accrued expenses and other liabilities 1,297,125 799,226 631,245 588,718

1,753,498 (470,924) 1,301,966 1,070,889

Net cash used in operating activities (892,110) 39,929,721 20,972,740 42,311,356

CASH FLOWS FROM FINANCING ACTIVITIESReceived on issue of units 262,020,117 615,600,905 261,810,496 468,557,905Paid against redemption of units (51,942,892) (137,895,318) (36,760,952) (101,917,533)Cash dividend paid (5,621,958) (1,332,128) (2,857,204) (602,303)Net cash from financing activities 204,455,267 476,373,459 222,192,340 366,038,069

Net increase in cash and cash equivalents duringthe period 203,563,157 516,303,180 243,165,080 408,349,425

Cash and cash equivalents at beginning ofthe period 103,217,486 91,636,330 63,615,563 199,590,085Cash and cash equivalents at end of the period 306,780,643 607,939,510 306,780,643 607,939,510

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LAKSON INCOME FUND

Notes to the Condensed Interim Financial Information (Unaudited)For the six months period ended 31 December 2011

1. LEGAL STATUS AND NATURE OF BUSINESS

The Lakson Income Fund (the "Fund") was established under the Trust Deed executed on 18August 2009 between the Lakson Investments Limited as its Management Company and theCentral Depository Company of Pakistan Limited (CDC) as its Trustee. The Fund has beenregistered as a Notified Entity on 18 September 2009 by the Securities and Exchange Commissionof Pakistan (SECP) in accordance with the Non-Banking Finance Companies and Notified EntitiesRegulations, 2008 (NBFC Regulations). The Management Company of the Fund has been licensedby SECP to undertake Asset Management and Investment Advisory Services as a Non-BankingFinance Company under the Non-Banking Finance Companies (Establishment and Regulation)Rules, 2003 (NBFC Rules). The registered office of the Management Company is located at 14- Ali Block, New Garden Town, Lahore

The Fund is an open end mutual fund and is listed on Lahore Stock Exchange. Units are offeredfor public subscription on a continuous basis. The units are transferrable and can be redeemedby surrendering them to the Fund.

The Fund primarily invests in Government Securities, Certificate of Investment, Certificates ofDeposits, Term Deposits Receipts, Commercial Papers, reverse repo, preference shares, spreadtransactions and corporate debt securities (subject to the guidelines given by SECP).

Title to the assets of the Fund is held in the name of Central Depository Company of PakistanLimited as Trustee of the Fund.

2. BASIS OF PREPARATION

2.1 Statement of compliance

This condensed interim financial information has been presented in condensed form inaccordance with the approved accounting standards as applicable in Pakistan for interimfinancial reporting. They do not include all the information required for full annual financialstatements, and should be read in conjunction with the financial statements of the Fund as atand for the year ended 30 June 2011.

This condensed interim financial information comprise of condensed interim statement ofassets and liabilities as at 31 December 2011 and the related condensed interim incomestatement, condensed interim statement of comprehensive income, condensed interimdistribution statement, condensed interim cash flow statement, condensed interim statementof movement in unit holder's fund, and notes thereto, for the six months period ended 31December 2011.

This unaudited condensed interim financial information is being submitted to the unit holdersas required under Regulation 38 (g) of the Non-Banking Finance Companies and Notified EntitiesRegulations, 2008 (NBFC Regulations). However, a limited scope review has been carried outby the auditors in accordance with the requirements of clause (xxi) of the Code of CorporateGovernance issued by the Securities and Exchange Commission of Pakistan.

2.2 Functional and presentation currency

This condensed interim financial information is presented in Pak Rupees which is the functionaland presentation currency of the Fund. Figures have been rounded off to the nearest rupees.

3. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of this condensed interim financialinformation are the same as those applied in the preparation of the published financialstatements as at and for the year ended 30 June 2011.

LAKSON INCOME FUND

15

4. ACCOUNTING ESTIMATES

The preparation of condensed interim financial information requires management to makejudgments, estimates and assumptions that affect the application of accounting policies andreported amount of assets and liabilities, income and expenses. Actual results may differ fromthese estimates.

The significant judgments made by management in applying the accounting policies and thekey sources of estimation uncertainty were the same as those that were applied to financialstatements as at and for the year ended 30 June 2011.

5. FINANCIAL RISK MANAGEMENT

The Fund's financial risk management objectives and policies are consistent with those disclosedin the annual audited financial statements for the year ended 30 June 2011.

7.1 Held for trading investments - Government Securities

6. BANK BALANCES - local currency

In profit and loss sharing accounts 6.1 6,780,643 3,217,486In term deposits 6.2 300,000,000 100,000,000

306,780,643 103,217,486

6.1 These accounts carry profit rates ranging between 5% to 12% (30 June 2011: 5% to 11.50%)per annum.

6.2 These term deposits carry profit rates ranging between 12.30% to 12.70% (30 June 2011:13.90%) per annum and will mature between 16 January 2012 to 08 March 2012.

7. INVESTMENTS

Held For TradingGovernment Securities 7.1 737,529,790 829,398,330Term Finance Certificate - Listed 7.2 55,396,946 54,305,615Term Finance Certificate - Unlisted 7.3 21,195,760 20,000,000

Available for saleShort term Sukuk Certificates 7.5 150,000,000 -

964,122,496 903,703,945


(Unaudited) (Audited)(Rupees)

Government Securities

Number ofholdings at

beginning ofthe period

Acquiredduring the

period

Disposed /matured

during theperiod


end ofthe period

Carrying value as at

31 December2011

Market value as at

31 December2011

Unrealized appreciation / (diminution)

Market valueas percentageof net assets

Market valueas percent-age of totalinvestment

2,914

5,650

-

3,270

9,070

5,150

5,184

10,570

2,600

1,000

4,150

2,550

99,206,896

403,927,111

233,986,088737,120,095

829,521,891

99,192,200

403,996,760

234,340,830737,529,790

829,398,330

(14,696)

69,649

354,742409,695

(123,561)

7.79

31.72

18.40 57.91

82.43

10.29

41.90

24.3176.50

91.78

Total

Total as at 30 June 2011

NoteTreasury Bills - 3 months (face value of Rs. 100,000 each) 7.1.1Treasury Bills - 6 months (face value of Rs. 100,000 each) 7.1.2Treasury Bills - 12 months (face value of Rs. 100,000 each) 7.1.3

----------------------(Rupees)---------------------- ------Percentage (%)------

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LAKSON INCOME FUND

7.1.1 These represent 3 months Treasury bills of Government carrying a fixed mark-up rate 11.7825%(30 June 2011: 13.4389% to 13.50%) and will mature on 26 January 2012. The face value of

Treasury bills held as at 31 December 2011 amounted to Rs. 100 million.

7.1.2 These represent 6 months Treasury bills of Government carrying a fixed mark-up rate rangingfrom 11.8070% to13.2559% (30 June 2011: 13.5800% to 13.7128%) and maturing between 07February 2012 to 17 May 2012. The face value of Treasury bills held as at 31 December 2011

amounted to Rs. 415 million.

7.1.3 These represent 12 months Treasury bills of Government carrying a fixed mark-up rate rangingfrom 11.7845% to 13.3639% and maturing between 06 September 2012 to 01 November 2012.The face value of Treasury bills held as at 31 December 2011 amounted to Rs. 255 million.

7.2 Held for trading investments - Term Finance Certificates (listed debt securities)



Acquiredduring the

period

Matured /disposed

during theperiod


end ofthe period


31 December2011

Market value as at

31 December2011

Unrealizedappreciation /(diminution)



Name of Security

NoteCommercial BanksUnited Bank Limited (face value of Rs.5,000 each) 7.2.1NIB Bank Limited (face value of Rs.5,000 each) 7.2.2

FertilizerEngro Fertilizer Limited (face value of Rs.5,000 each) 7.2.3

Financial ServicesOrix Leasing Pakistan Limited - III privately placed (face value of Rs.100,000 each) 7.2.4

3,000

3,000

1,000

200

- -

- -

- -

- -

- -

- -

- -

- -

3,000

3,000

1,000

200

14,853,084

14,557,766

5,073,866

20,000,000 54,484,716

53,931,388

14,934,244

14,680,484

5,073,518

20,708,700 55,396,946

54,305,615

81,160

122,718

(348)

708,700 912,230

374,227

1.17

1.15

0.40

1.63 4.35

5.40

1.55

1.52

0.53

2.15 5.75

6.01Total as at 30 June 2011

----------------------(Rupees)---------------------- -------Percentage (%)-------

7.2.1 These represent listed term finance certificates and carry a rate of mark-up equal to the baserate of 6 months Karachi Inter Bank Offer Rate (KIBOR) per annum (plus margin of 0.85% for

the first five periods and 1.35% for the remaining period) receivable semi-annually in arrears with no floor or cap and will mature in February 2018. These term finance certificates are unsecured. The rating of the instrument is AA.

7.2.2 These represent listed term finance certificates and carry a rate of mark-up equal to the baserate of 6 months Karachi Inter Bank Offer Rate (KIBOR) per annum plus margin of 1.15%

receivable semi-annually in arrears with no floor or cap and will mature in March 2016. Theseterm finance certificates are unsecured. The rating of the instrument is A+.

7.2.3 This represents listed term finance certificates and carry a rate of mark-up equal to the base rate of 6 months Karachi Inter Bank Offer Rate (KIBOR) per annum plus margin of 2.40% receivable semi-annually in arrears with no floor or cap and will mature in March 2016. These

term finance certificates are secured against future fixed assets and properties of the company.The rating of the instrument is AA.

7.2.4 These represent listed term finance certificates and carry a rate of mark-up equal to the baserate of 3 months Karachi Inter Bank Offer Rate (KIBOR) per annum plus margin of 2.15%

receivable quarterly in arrears with no floor or cap and will mature in June 2014. These term finance certificates are secured against first exclusive charge over the specific leased assets and

associated lease rental receivables. The rating of the instrument is AA.

17

LAKSON INCOME FUND

7.3 Held for trading investments - Term Finance Certificates (un listed debt securities)

7.3.1 These represent un listed term finance certificates and carry a rate of mark-up rate of 15.00%for the first five periods and 15.50% for the remaining period receivable semi-annually in arrearswith no floor or cap and will mature in June 2021. These term finance certificates are unsecuredand have a face value of Rs. 5000 each. The rating of the instrument is AA.

7.4 The term "listed" indicated in note 7.2 refer to listing in the stock exchange. However their rates are quoted by MUFAP.

7.5 Available-for-sale - Short term Sukuks Certificates

7.5.1 These represent short term sukuk certificates having a face value of Rs. 5000 each and carry a rate of mark-up equal to the base rate of 6 months of Karachi Inter Bank Offer Rate (KIBOR)

plus margin of 1.1%. These sukuk certificates will mature on 03 February 2012. The rating of the entity is AA+.

7.5.2 These represent short term sukuk certificates having a face value of Rs. 5000 each and carry a rate of mark-up equal to the base rate of 6 months of Karachi Inter Bank Offer Rate (KIBOR)

plus margin of 1.1%. These sukuk certificates will mature on 26 June 2012. The rating of the entity is AA+.

8. REMUNERATION TO THE MANAGEMENT COMPANY

The Management Company is entitled to remuneration for services rendered to the Fund underthe provisions of the Non-Banking Finance Companies and Notified Entities Regulations, 2008,of an amount not exceeding three percent per annum of the average annual net assets of the

Fund during first five years of the Fund's existence and thereafter an amount equal to two percent per annum of such assets of the Fund. Currently, the Management Fee is charged @ 1.5% of the average annual net assets of the Fund. Effective from 1 July 2011, through The

Sindh Sales Tax on Services Act, 2011, sales tax @ 16% is imposed on the Fund management services. Remuneration to the Management Company charged to the Fund during the periodincludes the imposed tax.

NoteCommercial BanksBank Al Habib Limited -IV privately placed (face value of Rs.5,000 each) 7.3.1

----------------------(Rupees)---------------------- --------Percentage (%)--------



Acquiredduring the

period

Matured /disposed

during theperiod


end ofthe period


31 December2011

Market value as at

31 December2011




4,000 - - 4,000 19,996,000 21,195,760 1,199,760 1.66 2.20 19,996,000 21,195,760 1,199,760 1.66 2.20

Total as at 30 June 2011 20,000,000 20,000,000 - 1.99 2.21

Name of Security

NoteHub Power Company Limited 7.5.1Kot Addu Power Company Limited 7.5.2



Acquiredduring the

period

Matured /disposed

during theperiod


end ofthe period


31 December2011

Market value as at

31 December2011




- 20,000 - 20,000 100,000,000 100,000,000 - 7.85 10.37 - 10,000 - 10,000 50,000,000 50,000,000 - 3.93 5.19

150,000,000 150,000,000 - 11.78 15.56

----------------------(Rupees)---------------------- --------Percentage (%)--------

Name of Security

18

LAKSON INCOME FUND

9 ACCRUED EXPENSES AND OTHER LIABILITIES (Rupees)Auditors' remuneration 85,547 125,000Payable to Workers' Welfare Fund 9.1 3,913,029 2,562,730Brokerage payable 8,818 3,443NCCPL payable 15,000 15,000Rating fee payable - 15,892Other liabilities 32,427 35,631

4,054,821 2,757,696


(Unaudited) (Audited)

9.1 The Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance,1971 (WWF Ordinance). As a result of this amendment it is alleged that all Collective InvestmentSchemes / mutual funds (CISs) whose income exceeds Rs.0.5 million in a tax year, have beenbrought within the scope of the WWF Ordinance, thus rendering them liable to pay contributionto WWF at the rate of two percent of their accounting or taxable income, whichever ishigher. In this regard, a constitutional petition has been filed by certain CISs through theirtrustees in the Honorable High Court of Sindh, challenging the applicability of WWF to the CISs,which is pending adjudication.

Subsequent to the year ended June 30, 2010, a clarification was issued by the Ministry of Labourand Manpower (the Ministry) which stated that mutual funds are not liable to contribute toWWF on the basis of their income. This clarification was forwarded by Federal Board of Revenue(FBR) (being the collecting agency of WWF on behalf of the Ministry) vide its letter datedOctober 06, 2010 to its members for necessary action. Based on this clarification, the FBR alsowithdrew notice of demand which it had earlier issued to one of the mutual funds for collectionof WWF. However, the FBR vide its letter dated January 04, 2011 has cancelled its earlier letterdated October 06, 2010 ab initio and issued show cause notices to certain mutual funds forcollecting WWF. In respect of such show cause notices, certain mutual funds have been grantedstay by Honorable High Court of Sindh on the basis of the pending constitutional petition inthe said court as referred above.

Subsequent to 30 June 2011, the Honourable Lahore High Court (LHC) in a ConstitutionalPetition relating to the amendments brought in the WWF Ordinance,1971 through the FinanceAct, 2006, and the Finance Act, 2008, has declared the said amendments as unlawful andunconstitutional and struck themdown. Further MUFAP took the opinion of the legal councilcontesting the case on behalf of mutual fund on the impact of the decision of (LHC). The councilvide is letter dated December 12, 2011 opined that in light of recent judgments, there are goodchances for the constitutional petition to be decided in favor of mutual fund. The ManagementCompany is hopeful that the decision of the LHC,will lend further support to the ConstitutionalPetition which is pending in the Sindh High Court (SHC)

In view of above stated facts and considering the vagaries of litigation. The managementcompany as a matter of abundant caution has decided to continue to maintain the provisionfor WWF amounting to Rs 3.913 million upto 31 December 2011.

19

LAKSON INCOME FUND

------- For the period ended 31 December 2010 -------Date of distributions Distribution No. of Bonus Bonus Cash

per unit Units Issued --------- (Rupees) ---------4 October 2010 2.4702 131,340 13,183,192 602,30331 December 2010 2.9152 253,360 25,374,688 1,719,121

5.3854 384,700 38,557,880 2,321,424

------- For the period ended 31 December 2011 -------Date of distributions Distribution No. of Bonus Bonus Cash

per unit Units Issued --------- (Rupees) ---------30 July 2011 0.8598 76,609 7,673,417 844,75129 August 2011 0.9563 85,876 8,609,905 939,56429 September 2011 0.9471 85,610 8,587,946 930,52528 October 2011 1.0151 106,855 10,747,680 997,33528 November 2011 0.9459 107,415 10,793,089 929,34629 December 2011 0.9403 108,673 10,903,084 923,845

5.6645 571,038 57,315,121 5,565,366

10 INTERIM DISTRIBUTIONS DURING THE PERIOD

11. TAXATION

The Fund's income is exempt from Income Tax as per clause (99) of part I of the Second Scheduleof the Income Tax Ordinance, 2001 subject to the condition that not less than 90% of theaccounting income for the year as reduced by capital gains whether realised or unrealised isdistributed amongst the unit holders. Furthermore, as per regulation 63 of the Non-BankingFinance Companies and Notified Entities Regulations, 2008, the fund is required to distribute90% of the net accounting income other than unrealized capital gains to the unit holders. Themanagement intends to distribute at least 90% of the income earned by the year end by thisFund to the unit holders. The Fund is also exempt from the provisions of Section 113 (minimumtax) under Clause 11A of Part IV of the Second Schedule to the Income Tax Ordinance, 2001.Accordingly, no provision has been made in these condensed interim financial information.

12. TRANSACTIONS AND BALANCES WITH CONNECTED PERSONS / RELATED PARTIES

Related parties include Lakson Investments Limited being the Management Company, CentralDepository Company of Pakistan Limited (CDC) being the trustee, Siza Services (Private) Limitedbeing holding company of the Management Company, associated companies of the ManagementCompany, Key Management personnel and other funds being managed by the ManagementCompany.

Remuneration to the Management Company and the Trustee is determined in accordance withthe provisions of Non-Banking Finance Companies and Notified Entities Regulations, 2008, andthe Trust Deed respectively. Other transactions are in normal course of business, at contractedrates and terms determined in accordance with the market rates.

Transactions and balances with related parties other than those disclosed elsewhere are asfollows:

20

LAKSON INCOME FUND


(Unaudited) (Audited)

Lakson Investments Limited - Management Company of the FundRemuneration payable 1,867,995 1,255,485Sale load payable 85 -Units held as at the period / year end 745,502 (June 2011: 753,834) units 74,838,207 76,258,229

Central Depository Company of Pakistan Limited - Trustee of the FundRemuneration payable 163,243 141,015Security deposit 100,000 100,000

Directors of the Management Company

Mr. Babar Ali LakhaniUnits held as at the period / year end*5,577 (June 2011: 5,210) units 559,881 527,083

*5,577 units held in joint account with spouse Ms. Zil Lakhani.

Key management personnel and Employees of the Management CompanyUnits held as at the period / year end 2,033 (June 2011: 64) units 204,044 6,438

Associated Companies / Undertaking of the Management Company

Siza (Private) Limited Units held as at the period / year end 6,815,066 (June 2011: 6,740,594) units 684,139,245 681,881,856

Clover (Pakistan) Limited Employees Contributory Provident FundUnits held as at the period / year end 18,780 (June 2011: 17,579) units 1,885,263 1,778,302

Colgate Palmolive (Pakistan) Limited Employee Contributory Provident FundUnits held as at the period / year end 169,021 (June 2011: 158,211) units 16,967,365 16,004,718

Colgate Palmolive (Pakistan) Limited Employee Gratuity FundUnits held as at the period / year end 93,900 (June 2011: 87,895) units 9,426,314 8,891,510

Accuray Surgical Limited Employee Contributory Provident Fund Units held as at the period / year end 12,520 (June 2011: 11,719) units 1,256,842 1,185,535

12.1 Balance as at period / year end

(Rupees)

21

LAKSON INCOME FUND

Cyber Internet Services (Private) Limited Employee Contributory Provident Fund Units held as at the period / year end 131,435 (June 2011: 123,029) units 13,194,296 12,445,715

GAM Corporation (Private) Limited Employees Contributory Provident FundUnits held as at the period / year end 37,545 (June 2011: 35,144) units 3,768,979 3,555,145

Princeton Travels (Private) Limited Contributory Provident Fund

Units held as at the period / year end 15,024 (June 2011: 14,063) units 1,508,210 1,422,642

Siza Foods (Private) Limited Contributory Provident Fund Units held as at the period / year end 81,380 (June 2011: 76,176) units 8,169,472 7,705,975

Century Insurance Company LimitedUnits held as at the period / year end 1,555,972 (June 2011: 551,330) units 156,198,290 55,772,791

Century Insurance Company Limited Employee Contributory Provident FundUnits held as at the period / year end 18,780 (June 2011: 17,579) units 1,885,263 1,778,302


(Unaudited) (Audited)(Rupees)

Half year Ended31 December

2011 2010(Unaudited)

(Rupees)12.2 Transactions during the period

Lakson Investments Limited - Management Company of the FundBonus - 50,949 (2010: 62,571) units - -Redemption - 59,281 (2010: Nil) units 6,000,000 -

Directors of the Management CompanyMr. Babar Ali LakhaniIssue of units - 10 (2010: Nil) units 1,044 -Bonus - 356 (2010: Nil) units - -

Key management personnel and Employees of the Management CompanyIssue of units - 2,027 (2010: Nil) units 204,759 -Bonus - 40 (2010: 59) units - -Redemption - 99 (2010: 312) units 10,000 31,386

LAKSON INCOME FUND

22

Associated Companies / Undertaking of the Management Company

Siza (Private) LimitedIssue of units - 3,765 (2010: 4,353,159) units 384,827 195,600,905Bonus - 446,107 (2010: 330,064) units - -Redemption - 375,400 (2010: Nil) units 38,000,000 -

Clover (Pakistan) Limited Employees Contributory Provident FundBonus - 1,201 (2010: 1,326) units - -

Colgate Palmolive (Pakistan) Limited Employee Contributory Provident FundBonus - 10,810 (2010: 11,935) units - -

Colgate Palmolive (Pakistan) Limited Employee Gratuity FundBonus - 6,005 (2010: 6,631) units - -

Accuray Surgical Limited Employee Contributory Provident Fund Bonus - 801 (2010: 884) units - -

Cyber Internet Services (Private) Limited Employee Contributory Provident Fund Bonus - 8,406 (2010: 9,281) units - -

GAM Corporation (Private) Limited Employees Contributory Provident FundBonus - 2,401 (2010: 2,651) units - -

Princeton Travels (Private) Limited Contributory Provident FundBonus - 961 ( 2010: 1,061) units - -

Siza Foods (Pvt) Limited Contributory Provident FundBonus - 5,205 (2010: 5,747) units - -

Century Insurance Company LimitedIssue of units - 973,653 (2010: Nil) units 100,000,000 -Bonus - 79,737 (2010: 41,591) units - -Redemption - 48,747 (2010: Nil) units 4,932,892 -

Century Insurance Company Limited Employees Contributory Provident FundBonus - 1,201 (2010: 1,326) units - -

Half year Ended31 December

2011 2010(Unaudited)

(Rupees)

12.3 Other transactions during the period

Lakson Investments Limited - Management Company of the fundRemuneration for the period 9,692,209 4,506,448 5,274,812 2,605,081Sales Load for the Period 513 - 513 -

Central Depository Company of Pakistan Limited- Trustee of the FundRemuneration for the period 900,784 600,860 471,339 347,344Settlement charges 3,024 3,186 1,500 1,686

13. GENERAL

13.1 This condensed interim financial information is unaudited and has been reviewed by the auditors. Furthermore, the figures for the quarter ended 31 December 2011 in these condensed interim financial

information where ever appeared have not been reviewed by the auditors.

13.2 This condensed interim financial information was authorised for issue on 17 February 2012 by the Boardof Directors of the Management Company.


2011 2010 2011 2010----------------------------(Rupees)--------------------------

LAKSON INCOME FUND

23

LAKSON INCOME FUND · The LIF outperformed the average income fund by 346bps. As of December 31, 2011, the LIF portfolio is invested 58% in T-Bills, 24% in TDRs, 12% in short term

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