MEEZAN ISLAMIC FUND

Yet another effort to facilitate investors to earn Riba free income

By SHABBIR H. KAZMI
Oct 20 - 26, 2003

Recently Shaukat Aziz, Federal Minister for Finance and Economic Affairs, formally launched the Meezan Islamic Fund. It is an open-end mutual fund and backed by sponsors' commitment to facilitate investors to earn Riba fee income. This fund will mainly invest in a diversified portfolio of securities that are Shariah compliant.

Speaking at a well attended ceremony the Minister said that the launch of a Shariah compliant instrument will contribute positivelyand broaden the base of equities market with the greater participation of retail/small investors keen in earning Riba free return on their investment.

Earlier welcoming the guests, Irfan Siddiqui, Chairman Al Meezan Investment Management land President Meezan Bank said, "Meezan Islamic Fund is another addition to the range of products being offered by Meezan Bank. It will give our customers an opportunity to increase their overall return on their investment. The Fund will ensure an investment policy that is strictly in accordance with approved Islamic principles and completely Riba free".

Zaigam Mahmood Rizvi, Chairman MUFAP said, "The fund besides providing all the other benefits associated of investing in mutual funds, gives the added comfort of being backed by renowned sponsors, professional fund managers, credible Shariah Advisors, and a carefully selected investment portfolio".

Mohammad Shaoib, CEO of Al Meezan Investment Management said, "An average investor does not have the expertise to select the right scrip for investment. Mutual fund managers are trained investment professionals who provide greater risk adjusted returns.

Al Meezan Investment Management, the Management Company of Meezan Islamic Fund, is a joint venture of Meezan Bank and Pak Kuwait Investment Company. Meezan Islamic Fund is an open-end fund and units will be offered and redeemed on a continuous basis. Units will be priced on the basis of Net Asset Value to be announced on daily basis.

The Investment Policy of Fund envisages at least 50% of net assets to comprise of listed securities, the maximum investment in any one sector not to exceed 30% of net assets and the maximum investment in any company not to exceed 15% of net assets. As a policy, Fund will not invest in bearer securities, commodities and real estate.

During the Pre-IPO stage of Meezan Islamic Fund, subscription of over Rs 500 million was received in seven days against the requirement of Rs 250 million. This is a record subscription as far as private sector pre-IPOs for mutual funds are concerned. Financial institutions, insurance companies, pension and provident funds, other corporates as well as individual investors have contributed seed capital.

A sum of Rs 519.8 million was received as subscription from 'core investors' against the proposed issue of 10.396 million units and deposited in an account titled CDC-Trustee Meezan Islamic Fund maintained with Meezan Bank Limited that is operated by the Central Depository Company of Pakistan (CDC) as the trustee. According to clause 14.5 of the trust deed, the core units will not be redeemable for a period of two years from the date of subscription.

INVESTORS OF CORE UNITS

(Rs in millions)

INVESTOR

AMOUNT

Meezan Bank

125.0

Pak Kuwait Investment

125.0

Muslim Commercial Bank

50.0

National Insurance Company

50.0

PICIC

25.0

Engro Chemical Pakistan (Provident Fund)

20.0

Habib Bank

15.0

Al Meezan Investment

10.3

Al Zamin Leasing Modaraba

10.0

Arif Habib Securities

10.0

Bank of Khyber

10.0

Security Leasing

10.0

Shirazee Investment

10.0

Soneri Bank

10.0

Others

39.5

Total

519.8

The Securities and Exchange Commission of Pakistan has authorized flotation of eight new open-end mutual funds in the last one and a half years. This clearly demonstrates the strong potential for the mutual funds in the country. These funds follow diversified investment strategies. Their investment range from specific to diversified, conventional to Islamic and equity to debt instruments to cater to the needs of different segments of investors.

The mutual funds are also playing a vital role in the development of stock markets and consequently contributing significantly to the economy of the country. Mutual funds play a key role by facilitating small investors who do not posses the necessary skills to directly invest in capital market. Meezan Islamic Fund is expected to serve as a catalyst in further developing of mutual fund sector in the country.