SPRING 2011SPRING 2011

FINANCIAL INSTITUTIONS

Submitted to: Ms. Tazeen Arsalan Submitted By: Rafay Usman (9365) Saher Faruqui (9149)

[INVESTMENT= 12 CROREINVESTMENT= 12

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CRORE]
INSTITUTE OF BUSINESS MANAGEMENTINSTITUTE OF BUSINESS MANAGEMENT INTRODUCTION

The main objective of the report is to invest Rs. 12 crore in different financial assets and securities in order to diversify the risk and earn high but practically possible returns. For this purpose we came across various investment options that were chosen on the basis of the risk and the returns associated with them. In order to get a better understanding of the investment procedures and making the right investment decisions professional advice was taken from bankers, real estate agents and brokers. We have mostly invested our money with the Meezan Bank as it is the best Islamic Bank in the country and we wanted to base our investment on Islamis laws and regulations.

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MEEZAN RUPEE SAVING ACCOUNT:

The Riba-free Rupee Saving Account is a basic banking account for every customer's need. The account provides expected monthly returns along with a variety of free packaged benefits. On agreeing to become a Rupee Saving Account holder, the customer enters into a relationship based on Mudarabah with Meezan Bank. Under this relationship, the customer is an Investor (Rab-ul-Maal) and the Bank is the Manager (Mudarib) of the funds deposited by the customers. The Bank allocates the funds received from the customers to a deposit pool; funds from the pool are utilized to provide financing to customers under Islamic modes that include, but are not restricted to Murabaha, Ijarah, Istisna and Diminishing Musharkah. Meezan Rupee Saving Account can be opened by Individuals, Sole-Proprietorships, Partnerships and Limited Companies.

Account opened Features:

12 crore (120,000,000)

Minimum investment required to open an account is Rs. 10,000/Profit will be calculated on daily product basis Profit will be paid on monthly basis No restriction on withdrawals or number of transactions Globally accepted Meezan VISA Debit Card Can be operated by Individuals, Sole-Proprietorships, Partnerships and Limited Companies.

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INVESTING IN MEEZANS MONTHLY MUDARABAH CERTIFICATE:

The Riba-Free Monthly Mudarabah Certificate (MMC) is a short-term deposit product which has been designed to give you expected monthly returns. Monthly Mudarabah Certificates work on the principle of Mudarabah under which the customer is an Investor (Rab-ul-Maal), and the Bank is the Manager (Mudarib) of the funds deposited by the customer. The Bank allocates the funds received from the customers to a Deposit pool; funds from the pool are utilized to provide financing to customers under Islamic modes . The Monthly Mudarabah Certificate is available for Individuals and businesses including Sole Proprietorships, Partnerships and Limited Companies.

Features:
Minimum Investment required is Rs. 100,000/Investment period is one month with re-investment option available on a continuous basis Monthly profit payment will be made to your Meezan Bank account

PROFIT HISTORY
Mar10 Apr10 May10 Jun10 Jul10 Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 5% 5% 5.02% 5.01% 5% 5.01% 5% 5% 5.01% 5.1% 5.07% 5.07%

Amount Invested Maturity Return (after tax)

1 crore (10,000,000) every month 456300 (4.56%)

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INVESTING IN MEEZANS CERTIFICATE OF ISLAMIC INVESTMENT:

The Certificate of Islamic Investment (COII) is a Mudarabah-based deposit product through which you can invest your savings for periods ranging from 3 months to 5 years and earn Halal profit on a periodic basis. The Certificates of Islamic Investment is an ideal investment for Individuals, Sole Proprietorships, Partnerships and Limited Companies

Features:
Investment can be made for 3 months, 6 months, 1 year, 2 years, 3 years and 5 years Profit payment options are monthly, quarterly or at maturity Minimum investment required for quarterly and on-maturity payment is Rs. 50,000/ Minimum investment required for monthly profit payment is Rs. 200,000/ Pre-mature withdrawal can be made as per approved schedule

PROFIT HISTORY
Tenures Mar-10 Apr-10 Certificate Of Islamic Investment - COII ( Minimum Investment Rs. 50,000/- Profit Payment Maturity ) May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 DecJan-11 Feb-11 10

3 Months 6 Months 1 Year 2 Year 3 Year 5 Year

6.75% 7.07% 9.02% 9.34% 9.93% 11.61%

6.75% 7.08% 9.02% 9.35% 9.93% 11.62%

6.78% 7.11% 9.06% 9.39% 9.97% 11.67%

6.77% 7.10% 9.05% 9.37% 9.96% 11.65 %

6.76% 7.08% 9.03% 9.36% 9.94% 11.63%

6.77 % 7.09 9.04 % 9.37 % 9.95 % 11.65 % %

6.75% 7.08% 9.02% 9.35% 9.93% 11.62%

6.76% 6.77 7.08% % 7.10 9.03% % 9.05 9.35% 9.37 % 9.94% % 9.96 11.63% 11.65 % %

6.89 % 7.22 9.21 % 9.54 % 10.13 % 11.86 % %

7.13% 7.40% 9.40% 9.53% 10.13% 11.87%

7.14% 7.41% 9.41% 9.54% 10.14 11.88 % %

Amount Invested Maturity tenure Rate of return in feb11 Return(after tax)

2 crore (20,000,000) 1year 9.41% 1693800(8.469%)

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INVESTING IN MEEZANS ISLAMIC INCOME MUTUAL FUNDS:

Meezan Islamic Income Fu.nd . Meezan Islamic Income Fund (MIIF) is the Pakistans first Shariah Compliant open end mutual fund which falls in the category of Income Fund. Fund Statistics: Fund Type Risk Level Launch Date Trustee Unit Types Auditors Open End Minimal 15-Jan-07 Central Depository Company A, B & C A.F. Ferguson

Portfolio Duration 3.41 Months Stability Rating A +(f) by JCR-VIS

The objective of MIIF is to provide Halal and consistent stream of income with long-term capital preservation in a Shariah Compliant manner. It provides potential to the investors for capital gains as well as regular income by investing in a diversified portfolio of good quality Islamic Instruments such as Sukuks (Islamic Bonds), Certificate of Islamic Investments, Musharika and Morabaha instruments, Shariah-compliant spread transactions, and other Islamic income products. MIIF meets the requirement of a large number of investors both institutional and individual, who desire Shariah-Compliant investment avenues but want to avoid the risk of direct exposure to the stock market. Salient Features Of MIIF

It aims at capital preservation through prudent fund management It aims at Halal and consistent stream of income which is strictly monitored and approved by Shariah Advisors It provides you an opportunity to start investment with minimum Rs. 5,000/-and then invest at regular intervals with subsequent investment amount as low as Rs. 1,000/- . Its units are readily encashable throughout the year Investment in MIIF enables you to get tax benefit upto Rs. 60,000/- in case of salaried person or upto Rs 75,000/- in case of non salaried person on investments
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upto Rs. 300,000/- under applicable tax laws, if investment is held for a period of one year. It provides diversification of portfolio resulting in lower risk and competitive return on your investment

Besides providing all the other benefits associated with investment in mutual funds, MIIF gives added comfort of being backed by strong sponsors, professional fund managers, credible Shariah advisors and a carefully selected portfolio of investments which ensure financial prudence as well as Shariah Compatibility. All investments in MIIF are screened for Shariah Compliance based on the criteria approved by the Meezan Banks Shariah Supervisory Board, which is headed by eminent Shariah scholar Justice (Retd.) Mufti Muhammad Taqi Usmani. With such a strong and reputed Islamic foundation, Al Meezan Investments uses its fund management expertise to satisfy your investment needs for Halal and Riba-Free returns. Being an open end mutual fund, its units can be purchased or redeemed on a continuous basis. Thus, the investor will have the freedom to enter the fund by purchasing units at the offer price and to exit the fund by redeeming units at the redemption price on any of the dealing days. The par value of MIIF is Rs. 50/- per unit, while the prevailing rates are based on Net Asset Value (NAV) of the day of transaction. Performance History Description Dividend Per Unit (Rs.) *1 2007* 2008 Interim 2.2 3.25 6.50% 9.15% Final 1.35 2.70% Total 4.6 9.20%

% of Face Value (i.e., Rs. 4.40% 50 / unit) Annualized Return * from January 2007 to June 2007

9.93%

*1 Stock dividend to Growth Unit holders and Cash dividend to Income Unit holders

The Fund size has increased till June 30, 2010 by 295% since inception Net Assets stand at Rs. 3,394 million as on June 30, 2010 Cumulative Return of 9.05% since inception as on June 30, 2010

Meezan Islamic Fund (MIF) is not only the largest Shariah compliant equity fund but also the largest Equity Fund in private sector in Pakistan. MIF operates with a clear and well defined investment objective To invest only in Shariah compliant instruments. Under all applicable rules and regulations of the SECP, the fund

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ensures an investment policy that is strictly in accordance with approved Islamic principles and Riba-Free. MIF invests in combination of income and growth stocks of Shariah compliant companies with demonstrated track record of profitability and stable dividend payout history.

Amount Invested= 1 crore (10,000,000) Features:

Risk Diversification MIF reduce the risk of volatility of prices by investing your money in a well defined portfolio of securities. Cost Efficiencies The per unit research and execution costs of a fund manager are also lower due to the large size of portfolio under management. Professional Management Our fund managers are trained investment professionals. Their knowledge provides you and opportunity to earn greater risk adjusted returns. Also by investing in MIF, you pass on the job of continuous monitoring and evaluation of investment opportunities to the Fund manager. Tax Credit Investment in MIF enables you to get tax benefit upto Rs. 60,000/- in case of salaried person or upto Rs 75,000/- in case of non salaried person on investments upto Rs. 300,000/- under applicable tax laws, if investment is held for a period of one year. Healthy Return Apart from tax benefit, MIF also provides you a healthy return on your investment. Affordability A minimum investment of Rs. 5,000 makes MIF an affordable investment for small investors. Subsequent investments can be made with a minimum amount of Rs. 1,000. There is no cap on maximum amount of investment

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INVESTMENT IN PROPERTY:
Property 1:
Location: Bungalow # B-184, Block-6, Gulshan-e-iqbal, Karachi. Area: 400 square yards Current Price: Rs. 15,000,000 Remodeling Cost: Rs. 3,000,000 Commission of estate agent: Rs. 150,000 (1%) Documentation charges: Rs. 120,000 (CVT, Registration charges, City Govt., Stamp Duty) Projected Price: Rs. 23,000,000 Return: Rs 4,730,000 Return on Investment: 25.88% This Bungalow has been purchased in Gulshan-e-iqbal and the total investment on this bungalow is of Rs. 18,270,000 including the remodeling cost, commission and documentations that had to be carried out. Well be selling the bungalow as soon as it has been remodeled and according to the estate agents the value of the property would definitely increase after the renovations.

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Property 2:
Location: Bungalow # fl-1/16, Block-3, Gulshan-e-iqbal, Karachi. Area: 210 square yards Current Price: Rs. 12,500,000 Remodeling Cost: Rs. 2,500,000 Commission of estate agent: Rs. 125,000 (1%) Documentation charges: Rs. 130,000 (CVT, Registration charges, City Govt., Stamp Duty) Projected Price: Rs. 25,000,000 Return: Rs. 9,875,000 Return on Investment: 64.73% This Bungalow has been purchased in Gulshan-e-iqbal and the total investment on this bungalow is of Rs. 15,255,000 including the remodeling cost, commission and documentations that had to be carried out. This Bungalow is a double story west open house and is near to the commercial area that would definitely increase its value. Secondly the remodeling of the bungalow would increase its value as well.

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Property 3:
Location: Plot # D-117, Block-4, Gulshan-e-iqbal, Karachi. Area: 1000 square yards Current Price: Rs. 25,000,000 Commission of estate agent: Rs. 250,000 (1%) Documentation charges: Rs. 80,000 (Transfer charges) Projected Price: Rs. 35,000,000 Return: Rs. 9,670,000 Return on Investment: 38.17% This plot has been purchased in Gulshan-e-iqbal and the total investment on it has been of Rs. 25,330,000 including the commission and documentations that had to be carried out. The property will be sold at a higher price as now a days it has become difficult to find plots in Gulshan-e-Iqbals developed residential areas so well be able to sell it at a higher price that would increase our returns.

Amount Invested= Rs. 61,300,000 Total return on property = Rs. 19,700,000 Rate of Return = 32.13%

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