Table of Contents

LETTER OF ACKNOWLEDGMENT...................................................................................................................ii EXECUTIVE SUMMARY....................................................................................................................................iii What is UBL Fund Managers Limited?..................................................................................................................1 What are Mutual Funds? ........................................................................................................................................1 ............................................................................................................................................................................1 What is an Asset Management Company?.............................................................................................................1 ............................................................................................................................................................................1 Who is a Fund Manager?........................................................................................................................................1 What is SECP?........................................................................................................................................................1 What are the different categories of funds? ...........................................................................................................2 What is an "open-end fund"? .................................................................................................................................3 What is a "close-end fund"? ...................................................................................................................................3 Investment Avenues:...............................................................................................................................................3 Money Market:....................................................................................................................................................3 Capital Market / Equity Market:.........................................................................................................................5 International Investments:...................................................................................................................................5 Modes of Payments/Remittances:...........................................................................................................................5 Cheques:..............................................................................................................................................................6 Pay Orders:..........................................................................................................................................................6 Demand Drafts.....................................................................................................................................................6 SBP Cheque.........................................................................................................................................................6 Online Transfer....................................................................................................................................................7 IBCA (Inter Branch Credit Advice)....................................................................................................................7 Cash Management...............................................................................................................................................8 Net Banking.........................................................................................................................................................8 SWIFT Transfer...................................................................................................................................................8 FDD (Foreign Currency Demand Draft).............................................................................................................8 Clearing Modes:..................................................................................................................................................9 Introduction of NIFT...........................................................................................................................................9 Normal Clearing (Clearing)................................................................................................................................9 Same Day Clearing............................................................................................................................................10 Intercity Clearing...............................................................................................................................................10 Collection / OBC (Outward Bills for Collection).............................................................................................11 FBC (Foreign Bills for Collection)...................................................................................................................11

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LETTER OF ACKNOWLEDGMENT

To: From: Date: Subject:

Mr. Michael Simon Yasir Rizvi (10-2611) November 23, 2011 Introduction to Business Finance Report the attached report, entitled Introduction to

I am submitting

Business Finance Report in accordance with your compliance of November 23, 2011. The report conducts the detailed information about UBL Fund Managers Limited. The report is flowered smoothly form beginning to end; I hope that all the readers will get the best out of my efforts. I am grateful to Mr. Michael Simon for giving me the opportunity to do so and also thankful to UBL Fund Managers Limited Officials for supporting me a lot and for helping me in the time of need.

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EXECUTIVE SUMMARY
This report contains all the details about UBL Fund Managers Limited (Settlement Department) at Operation Office.

UBL Fund Managers Limited is an AMC (Asset Management Company) created in the year 2002 to manage and float mutual funds and provide investment advisory services. It is a company registered with Securities & Exchange Commission of Pakistan (SECP) under the NBFC rules 2003 to manage and float mutual funds and provide investment advisory services.

A mutual fund is a scheme that invests in a diversified portfolio of securities such as stocks and fixed-income securities. I also learned there different kinds of funds which are Equity Funds, Money Market Funds, Balanced Funds, Islamic Funds. I also learned different kinds of investment avenues such as Money Market, Capital Market / Equity Market, International Investments. I also learned several kinds of modes of Payments/Remittances Cheques, Pay Orders, Demand Drafts, SBP Cheque, Online Transfer, IBCA (Inter Branch Credit Advice), Cash Management, Net Banking, SWIFT Transfer, FDD (Foreign Currency Demand Draft).

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What is UBL Fund Managers Limited?

UBL Fund Managers Limited is an AMC (Asset Management Company) created in the year 2002 to manage and float mutual funds and provide investment advisory services.

What are Mutual Funds?

A mutual fund is a scheme that invests in a diversified portfolio of securities such as stocks and fixed-income securities. People who buy units (in the case of an open-end fund) / shares (in the case of a closedend fund) of a mutual fund are its owners/ unit holders who club their money together in a pool - the fund. The funds are managed by the Asset Management Company (AMC).

What is an Asset Management Company?

It is a company registered with Securities & Exchange Commission of Pakistan (SECP) under the NBFC rules 2003 to manage and float mutual funds and provide investment advisory services.

Who is a Fund Manager?

A fund manager is the person hired by the AMC who is responsible for investing a mutual fund's assets, implementing its investment strategy, and managing the day-to-day portfolio trading.

What is SECP?

It is the supreme regulatory authority working under the federal government entrusted with the overall control of corporate and legal structure in Pakistan which includes Asset Management Companies,

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Leasing Companies, Housing Finance Companies, and Development Financial Institution (DFI) etc.

What are the different categories of funds?

There are several fund categories - prominent ones include:

Equity Funds: Equity Funds invest primarily in the stocks of various

types of companies. The types of stocks in which an equity fund will invest will depend upon the fund's investment objectives, policies, and strategies.

Income Funds: Income funds aim towards providing a regular

stream of income to the investor. To accomplish this goal they invest in medium to long term instruments such as Term Finance Certificates (TFC), government securities, and a combination of short term CFS (Continuous Funding System) and high yielding deposits.

Money Market Funds: The aim of this fund is to provide easy

liquidity, preservation of capital and moderate income, making them ideal for corporate and individual investors as a means to park their surplus funds for short time periods. Major part of the investment in this fund is placed in short instruments like Continuous Funding System (CFS), high yielding deposits, and call market placements. A relatively smaller portion may be invested in Term Finance Certificates (TFC) and Government Securities.

Balanced Funds: The strategy of balanced funds is to combine

securities from different asset classes in varying proportions to help manage moderate risk and consistent return. These funds generally tend to invest up to 65% in equity securities and the remaining in fixed income instruments.

Islamic Funds: Islamic Funds invest in Shariah Compliant securities

and are advised and monitored by a Shariah Advisory Council.

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What is an "open-end fund"?

A mutual fund that constantly redeems/ buys back units and has no limit to the number of units it can issue and has no limit on the amount to be invested. For an open ended fund, units are surrendered to the AMC for redemption purposes.

What is a "close-end fund"?

A mutual fund where units are only traded through the stock exchange at their quoted value.

Investment Avenues:
We have following Investment Avenues, where we invest according to the fund types: Money Market Capital Market / Equity Market International Investments

Money Market: Money Market comprises of all Commercial Banks, Investment Banks, Leasing Companies, Modaraba etc. We invest in following Money Market instruments: TFC (Term Finance Certificates) / SUKUK (Islamic Bonds)

Term Finance Certificate means a debt instrument issued for the purpose to raise fund in the form of redeemable capital. Clean Placements / Letter of Placements Clean placement means fund placement without any security or collateral.

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REPO / Reverse REPO

_This is a mode of financing in which the seller (financial institution) of the securities agrees to repurchase them subsequently from the purchaser (financial institution) at a fixed rate and on a specified date. _____The agreement / transactions is called a Reverse-Repo for Lender and Borrower is called Repo. Government Securities (T-Bills and PIB) T-Bills These are short-term debt instrument issued by the government treasury to raise funds for the government or to regulate money supply through open market operations of the central bank. The market transactions are managed by the State Bank of Pakistan on behalf of the treasury. PIB These are long term (3, 5, 10, 15 & 20 years maturity) debt obligations issued by the government, offering a risk free investment to the bond holders at premium interest rates depending on the maturity of the bond. Interest on PIBs is paid through bank accounts. Commercial Papers Commercial papers are unsecured promissory notes of relatively low risk and short maturity of 3 to 9 months, issued by highly rated large corporations who usually maintain backup credit lines with their banks to ensure payment at maturity i.e. notes, bills, and acceptances arising out of commercial, industrial or agricultural transactions of short - term maturity, self liquidating and used as trade financing instruments for non-speculative purposes.

TDR (Term Deposit Receipts) / COI (Certificate of Investment)

Deposit of certain amount for a specified period of time (generally 6 to 12 months) at a particular rate of return with commercial banks is generally

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termed as Term Deposit Receipt. At start bank provides a receipt showing all term and conditions (Amount, Rate, Start Date, Maturity Date etc.). Capital Market / Equity Market is generally termed as Stock Exchange, where sale and purchase of shares of different companies take place. Capital Market / Equity Market: Following instruments are available for investments in Capital Market / Equity Market:

Ready Market / Regular Market CFS (Continuous Funding System)/MK II Arbitrage / Spread Transactions

International Investments: According to FE Circular No.11, dated August 12, 2005 issued by State Bank of Pakistan. Locally established Mutual Funds can invest abroad 30% of its funds size, subject to a cap of US$=15,000,000/= and prior approval of SECP.

Modes of Payments/Remittances:
1. Cheques 2. Pay Orders 3. Demand Drafts 4. SBP Cheque 5. Online Transfer 6. IBCA (Inter Branch Credit Advice) 7. Cash Management 8. Net Banking 9. SWIFT Transfer 10. FDD (Foreign Currency Demand Draft)

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Cheques: Cheque is a payment instrument use to pay a specific amount from one party to another. For banks where the Cheque drawn on, it serves as Debit Voucher. Key Points to fill and check out the Cheque: 1. Date 2. Beneficiary Name 3. Amount (in digits) 4. Amount (in words) 5. Title of Account / Signature 6. Crossing (A/C Payee Only) 7. Cutting / Overwriting should be authenticated by complete signatures Pay Orders: Pay Order is also an instrument use to pay specific amount from one party to second party. This instrument is used for payments within city (i.e. if beneficiary is in Karachi and remitter is also residing in Karachi or have account at any bank in Karachi, then Pay Order is the right instrument for such payments). Demand Drafts This instrument is used for payments outside the city. For example, if beneficiary is residing in Lahore or have account at any bank in Lahore and the remitter is located at Karachi, then Demand Draft should be used for such payments. SBP Cheque SBP Cheque is used for payment from One Financial Institution to another Financial Institution, which has accounts with State Bank of Pakistan. These accounts generally referred as SGLA (Subsidiary General Ledger

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Account). This mode of payment is generally used by Commercial Banks, Non Banking Financial Institutions, Brokerage Houses, Exchange Companies, having SGLA with State Bank of Pakistan. SBP Cheque generally deposit directly at State Bank instead of depositing through Clearing / Same Day Clearing. There is a restriction from State Bank that SBP Cheques can not be used for third party payments. Cut off timing for depositing SBP Cheques is 02:30 P.M. Online Transfer Online Transfer facility generally used if remitter and beneficiary are maintaining accounts with the same bank but different branches. For example Mr. A is maintaining account at UBL Lahore Branch and wants to make a payment favoring Mr. B and Mr. B is maintaining account with UBL Karachi Branch, then Mr. A can transfer the amount from Lahore to Karachi through Online Transfer. Following mandatory details of remote account are required for Online Transfer: 1) Branch Name 2) Branch Code 4) Amount 5) Beneficiary Name : UBL Corporate Branch, Karachi : 0525 : 100-6105-7 : SYED MUHAMMAD AOUN RIZVI : Rs.5, 000/= (Rupees Five Thousands only)

3) Complete Account No.

IBCA (Inter Branch Credit Advice) IBCA stands for Inter Branch Credit Advice (generally termed as Credit Advice or Advice). All requirements are same as Online Transfer, but this instrument is used when Online Connectivity Linked down or the remitter/beneficiary branch is offline. Secondly, funds are generally applied in next working days (i.e. after receiving IBCA at beneficiary branch).

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Cash Management In this mode of payment, investor deposits his instruments in the designated branch (any where in Pakistan) and upon realization of funds, this amount transfer to Main Collection Account (MCA) and then finally transfer to Main Operating Account (MOA) of respective funds accounts, maintaining at UBL Corporate Branch, Karachi (0525). This entire activity performed through Online Banking. Net Banking Currently, this facility is being provided for our existing clients / unit holders, who are registered for Net Banking at UBL Web-Site. Investor can invest by login UBL Web-Site (www.UBL.com.pk) in any of our funds. UBL IT Division informs UBLFM, through email, regarding all Net Banking Transactions (Investments) and accordingly, UBLFM issue units for the said clients/investors. SWIFT Transfer This mode of payment is used for Foreign Currency Remittances (both inwards and outwards) through some specified SWIFT Codes provided by SWIFT (Society for Worldwide Interbank Financial Telecommunications). Every bank in the world has its own unique SWIFT Code through which Foreign Currency amount transfer within banks. Instrument generally used for SWIFT Transfers is known as SWIFT Message / TT Message (Telegraphic Transfer). FDD (Foreign Currency Demand Draft) For example, if someone wants to send USD=1,000/= from USA, he will provide following information to his bank / branch (at USA) for SWIFT Transfer: 1) Beneficiary Name 2) Account No. 3) Bank Name : SYED MUHAMMAD AOUN RIZVI : 100-6105-7 (Beneficiary) : United Bank Limited

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4) Branch Name : Corporate Branch, Karachi, Pakistan 5) Branch Code 6) Amount 7) SWIFT Code : 0525 : USD=1,000/= : UNILPKKA

Clearing Modes: Introduction of NIFT All types of clearings are being managed by NIFT (National Institutional Facilitations Technologies (Pvt.) Limited). NIFT is a joint venture between a consortium of six major banks and private sector. It is responsible for the establishment and management of automated clearinghouse facilities in Pakistan. NIFT is proactively involved in the modernization of payment systems in Pakistan. Types of Clearing: Normal Clearing (Clearing) Same Day Clearing Intercity Clearing Collection / OBC (Outward Bills for Collection) FBC (Foreign Bills for Collection)

Normal Clearing (Clearing) Clearing (Normal Clearing) generally used for payments if beneficiary is maintaining account with bank other than remitters bank. For this, beneficiary deposit the instrument in his banks account on Day-1. Instrument, through NIFT, deliver to the payee branch / bank next working day (say Day-2) where payee branch confirmed NIFT for clearance / non clearance of the said instrument. It is important to note that on Day-2, these funds will be considered as Float Amount / Unavailable Amount till the confirmation of funds clearance received from

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NIFT (which is generally receive at 05:00 P.M. on Day-2). In Normal Clearing deposit timings are from 09:00 A.M to 04:00 P.M. If instruments are returned / bounced, NIFT delivers back the original instruments to the initiating branch. Now, it is the responsibility of beneficiary to pick up the instrument from the said branch, along with OBJECTION MEMO. Same Day Clearing Through Same Day Clearing, funds are cleared on Day-1 (at around 03:00 PM). Deposit timings are restricted as per following details: Monday to Thursday Friday & Saturday : : 09:00 A.M to 10:30 A.M 09:00 A.M to 10:00 A.M

For this, beneficiary deposit the instrument in his banks account on Day1. Instrument, through NIFT, deliver to the payee branch / bank on Same Day-1 (at around 12:00) where payee branch confirms NIFT for clearance / non clearance of the said instrument. NIFT, then confirm the status of clearance to the beneficiary bank / branch till 03:00 P.M on Same Day-1. If instruments are returned / bounced through Same Day Clearing, NIFT delivers back the original instruments to the initiating branch. Now, it is the responsibility of beneficiary to pick up the instrument from the said branch, along with OBJECTION MEMO. It is important to note that there are selected branches for Same Day Clearing. For this NIFT issue a list of authorized Same Day Clearing Branches / Banks for all banks. Intercity Clearing This type of clearing is used for intercity clearance of funds. For example, if I have an account at UBL, Karachi and have an instrument drawn on ABL, Lahore Branch, then I will deposit the Cheque in Intercity Clearing.

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Through Intercity Clearing, funds are cleared within 3 days, depending on the location of the drawn on branch. All branches / banks are not authorized for Intercity Clearing. Collection / OBC (Outward Bills for Collection) This type of clearing is also used for outstation instruments. These instruments deposit in the branch, then forward to OBC Department (Centralized at Head Office / Main Branch). After consolidation, OBC send the instruments to the regional OBC Departments (i.e. instruments drawn on Lahore Branch, send to Lahore Region). Regional OBC Department, lodge the instruments in Clearing and after realization of funds, send the confirmation and amount (through IBCA / Online) to the initiating OBC Office (Head Office), where they send out the amount to the concerned branch. After receiving confirmation and amount from OBC (Head Office), concerned branch credit the amount to the respective account. Realization of funds, through OBC, can take 7 to 10 days, depending upon the location of the payee branch. FBC (Foreign Bills for Collection) This type of clearing is used for Foreign Currency Instruments, which are drawn on outside Pakistan. These instruments deposit in the branch, then forward to FBC Department (Centralized at Head Office / Main Branch). After consolidation, FBC send the instruments to the regional FBC Departments (i.e. instruments drawn on USA, send to UBL New York). Regional FBC Department, lodge the instruments in Clearing and after realization of funds, send the confirmation and amount (SWIFT Message) to the initiating FBC Office (Head Office), where they send out the amount to the concerned branch. After receiving confirmation and amount from FBC (Head Office), concerned branch credit the amount to the respective account.

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Realization of funds, through FBC, can take 14 to 20 days, depending upon the location of the payee branch.

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