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Tri-Star Mutual Fund Limited
Annual Report 1999
Company Information
Board of Directors: Mr. Mohammed Ahmad Ismail Chairman
Mr. Habib Jamal Director
Mr. Rashid Ahmad Director
Mr. Jawed Ahmad Siddiqui Director
Mr. Asad Ahmad Director
Mr. Jawed Dost Mohammad Director
Mr. Tahir Ahmad Chief Executive
Investment Adviser: Tri-Star Investments (Pvt) Ltd
F/498, S.I.T.E.,
Karachi.
Auditors: Hyder Bhimji & Co.
Chartered Accountants
Bankers: Bank AI-Habib Ltd.
Citibank N.A
Habib Bank Ltd.
Registrar & Certificate F/498, S.I.T.E.,
Transfer Office: Karachi-75700,
Registered Office: F/498, S.I.T.E.,
Karachi-75700.
Notice of Meeting
Notice is hereby given that the Seventh Annual General Meeting of TRI-STAR MUTUAL FUND LTD., will
be held on Friday, 31st December, 1999 at F/498, S.I.T.E., Karachi at 9.30 A.M. to transact the following
business:
1. Recitation from the Holy Quran.
2. To receive, consider and adopt the annual audited accounts for the year ended 30th June, 1999
together with the Directors' Report and Auditors' Report thereon.
3. To appoint Auditors of the Company and to fix their remuneration. The present Auditors M/s.
Hyder Bhimji & Co. Chartered Accountants retire and being eligible, offer themselves for
reappointment.
4. To transact any other business with the permission to the Chair.
By and on behalf of the Board
Dated: 9th December, 1999
Place: Karachi. Fund Secretary
NOTES:
1. The Certificate Transfer books of the Fund will remain closed from 23rd December, 1999 to 31st
December, 1999 (both days inclusive).
2. A member entitled to attend the Annual General Meeting is entitled to appoint a proxy and vote
in his place at the meeting. Proxies in order to be effective must be received at the registered
office of the Fund at F/498, S.I.T.E, Karachi duly stamped, signed and witnessed not later than
48 hours before the meeting.
3. Members are requested to notify any change in their addresses immediately.
Directors' Report
The Board of Directors have pleasure in presenting the seventh Annual Report together with the audited
accounts for the year ended June 30, 1999.
FINANCIAL RESULTS:
During the period under review, your Fund earned Rs 328.337 as Dividend Income and capital gain of
Rs.64,400 occurred in investments. The market conditions remain depressed during the current year as
well. The Fund followed the policy of staying at the side line during first half of the year. The Karachi Stock
Exchange 100 index stood at 1055 points on June 30, 1999 as compared to 880 points on June 30, 1998
i.e. increase of 175 points.' After meeting administrative and other expenses the net profit before taxation
came to Rs.37,791. The investment policy of the fund was directed towards low level of portfolio turnover
As your Fund was floated at the time when stock market was bullish and KSE 100 Index was at around
2,600 points, the portfolio investment was made at the then prevailing market rates which have come
down gradually over a period of time. It is prudent to wait for market to rebound and achieve greater
heights than ever before.
The financial results are summarised as follows:
1999 1998
(Rupees) (Rupees)
Income 328,337 518,373
Capital Gain/(Loss) 64,400 (809,574)
------------------ ------------------
392.74 (291,201)
Less: Operating Expenses 354,946 949,197
------------------ ------------------
Profit/(Loss) for the Year 37,791 (1,240,398)
========== ==========
The Board of Directors have not recommended any dividend for the year.
MARKET REVIEW AND FUTURE OUTLOOK
The year began with negative sentiments as the market had gone down by approx 44% from June 30,
1997 to June 30, 1998. The nuclear test by Pakistan in May, 1998 in response to India's nuclear test
resulted in imposition of economic sanctions, coupled with IPP Government tussle and adverse economic
conditions affected the stock market very badly. The affect of recent change of PML Government on stock
market is yet to be seen.
We hope complete lifting of economic sanction, resolution of IPP-Government tussle and economic
reforms by Government will improve the economic conditions and the stock market.
THE YEAR 2000 COMPLIANCE OF COMPUTER SYSTEM
The management is aware of the computer software problem known as "The Millennium Bug", and has
made necessary arrangements to be ready for the year 2000.
AUDITORS
The present auditors M/s. Hyder Bhimji & Co., are due for retirement and being eligible offer themselves
for re-appointment.
ACKNOWLEDGMENTS
Your directors would like to record their appreciation of the dedication and hard work of the staff and
officers of the Fund.
By and on behalf of the Board
TAHIR AHMAD
Karachi: December 9, 1999. Chief Executive
Auditors' Report to the Certificate Holders
We have examined the annexed balance sheet of Tri-Star Mutual Fund Ltd., as at June 30, 1999 and the
related Profit and Loss Account and the Statement of Changes in Financial Position (Cash Flow
Statement) together with the Notes to the accounts for the year then ended. Our examination was made
in accordance with the generally, accepted auditing procedures as were considered necessary in the
circumstances and we state that we have obtained all the information and explanations which to the best
of our knowledge and belief were necessary for the purpose of audit and after due verification thereof,
subject to the annexed note 6.3, we report that:
a) In our opinion proper books of accounts have been kept by the Company as required by the
Companies Ordinance, 1984 and Rule 16 of the Investment Companies and Investment Adviser's
Rules 1971.
b) In our opinion:
i. The Balance Sheet and Profit & Loss Account together with the Notes thereon have been
drawn up in-conformity with the Companies Ordinance, 1984 and in accordance with the
provisions of the Investment Companies and Investment Adviser's Rules, 1971, and are
in agreement with the books of account and are further in accordance with accounting
policies consistently applied.
ii. the expenditure incurred was for the purpose of the Company's business.
iii. the business conducted, investments made and expenditure incurred during the year
were in accordance with Investment Policy of the company and Investment Companies
and Investment Adviser's Rules, 1971.
iv. the company has not contravened the provisions of Rule 8 of the Investment Companies
and Investment Adviser's Rules, 1971; and
c) in our opinion and to the best of our information and according to the explanation given to us, the
Balance Sheet and the Profit & Loss Account and the Cash Flow Statement together with the
Notes forming part thereof give the information required by the Companies Ordinance, 1984 and
Investment Companies and Investment Adviser's Rules, 1971 in the manners so required and
respectively give a true and fair view of the state of the Company's affairs as at June 30, 1999
and of the profit and changes in financial position for the year ended on that date;
d) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
S/d-
HYDER BHIMJI & CO.
Karachi: December 8, 1999. Chartered Accountants
Balance Sheet As at June 30, 1999
1999 1998
Note (Rupees) (Rupees)
CAPITAL & RESERVES
AUTHORISED CAPITAL
20,000,000 Certificates of Rs. 10/- each 200,000,000 200,000,000
========== ==========
ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
5,000,000 Certificates of Rs. 10/- each fully paid
issued for cash 50,000,000 50,000,000
Accumulated Loss (8,657,279) (8,695,070)
------------------ ------------------
41,342,721 41,304,930
CURRENT LIABILITIES
Current maturity of deferred Expenditure 3.1 -- 554,664
Due to investment adviser-An Associated Company 4 292,464 226,574
Trade creditors, accrued expenses and other liabilities 5 196,980 147,980
Provision for taxation 3,135 3,135
------------------ ------------------
492,579 932,353
------------------ ------------------
41,835,300 42,237,283
========== ==========
INVESTMENTS - Marketable Securities 6 41,713,233 42,040,808
CURRENT ASSETS
Advances, Pre-payments and other receivables 7 109,921 141,645
Cash and bank balances 8 12,146 54,830
------------------ ------------------
122,067 196,475
------------------ ------------------
41,835,300 42,237,283
========== ==========
NOTE: The annexed notes form an integral part of these accounts.
TAHIR AHMAD ASAD AHMAD
KARACHI: December 7, 1999. Chief Executive Director
Profit and Loss Account
For the year ended June 30, 1999
1999 1998
Note (Rupees) (Rupees)
INCOME 9 328,337 518,373
CAPITAL GAIN/(LOSS) 10 64,400 (809,574)
------------------ ------------------
392,737 (291,201)
Less: OPERATING EXPENSES
Administrative 11 73,750 626,314
Financial 12 36,481 96,315
Remuneration of Investment Adviser 4.1 244,715 226,568
------------------ ------------------
354,946 949,197
------------------ ------------------
Profit/(Loss) for the year 37,791 (1,240,398)
Accumulated (Loss) brought forward (8,695,070) (7,454,672)
------------------ ------------------
Accumulated (Loss) carried forward (8,657,279) (8,695,070)
========== ==========
NOTE: The annexed notes form an integral part of these accounts.
TAHIR AHMAD ASAD AHMAD
Chief Executive Director
KARACHI: December 7, 1999.
STATEMENT OF CHANGES IN FINANCIAL POSITION
Cash Flow Statement
For the year ended June 30, 1999
1999 1998
(Rupees) (Rupees)
Cash Flow From Operating Activities
Profit/(Loss) before taxation 37,791 (1,240,398)
Add: Item not involving movement of fund:
Amortization of deferred expenditure -- 554,664
Financial Expenses 36,481 96,315
Profit/Loss on sale of investment (64,400) 809,574
------------------ ------------------
9,872 220,155
Less: Financial Expenses paid (96,465) (130,608)
------------------ ------------------
(86,953) 89,547
(Increase)/Decrease in current assets 31,724 (31,724)
Increase/(Decrease) in current liabilities 174,874 (726,355)
------------------ ------------------
120,005 (668,532)
========== ==========
Investing Activities
Purchase of Investments (296,525) (1,482,450)
Sale proceed of Investments 688,500 2,726,926
------------------ ------------------
391,975 1,244,476
========== ==========
Financing Activities
Re-payment of Deferred Expenditure (554,664) (554,660)
------------------ ------------------
Net Cash Flow (42,684) 21,284
Cash and Bank Balance at the beginning of the year 54,830 33,546
------------------ ------------------
Cash and Bank Balance at the end of the year 12,146 54,830
========== ==========
Notes to the Accounts
For the year ended June 30, 1999
1. STATUS AND NATURE OF BUSINESS
The Fund was incorporated as public limited Company under Investment Companies and
Investment Adviser's Rules, 1971. The Fund has entered into an agreement with an associated
company, Tri-Star Investments (Pvt) Ltd., to act as its "Investment Adviser". The Fund is listed
on Karachi and Islamabad Stock Exchanges.
2. ACCOUNTING POLICIES
The significant accounting policies are summarized below:
2.1 The accounts of the Company are prepared under the historical cost convention.
2.2 Investments-Marketable Securities
i. Investments are valued at cost.
ii. Profit or loss on sale of Investment is accounted for in the year in which it arise.
ii. Full provision is made against permanent diminution in the value of investment
2.3 Revenue Recognition
i. Dividend Income is recorded at the time of the closure of share transfer books of the
company declaring the dividend and is shown net of zakat deducted.
ii. Sales and purchases of securities are recognised on the date of contract. Capital gain
on sale of investment is taken to income of the period in which it arises.
2.4 Deferred Expenditure
The expenditure incurred on the incorporation and on the issue of shares to public, of the
investment company, has been deferred and is being amortized over a period of five years.
1999 1998
(Rupees) (Rupees)
3. DEFERRED EXPENDITURE PAYABLE
Balance on 1st July 554,664 1,109,324
Less: Paid during the year 554,664 554,660
Transferred to current maturity 3.1 -- 554,664
------------------ ------------------
-- 1,109,324
------------------ ------------------
-- --
========== ==========
The deferred expenditure is re-imbursable to the Investment Adviser over a period of 5 years with
interest @10% per annum.
1999 1998
(Rupees) (Rupees)
4. DUE TO INVESTMENT ADVISER
TRI-STAR INVESTMENTS (PVT) LTD.
AN ASSOCIATED COMPANY
Opening Balance 226,574 1,018,635
Add: 2 Percent of net assets 244,715 226,568
Add: Interest on deferred expenditure 36,181 96,165
------------------ ------------------
507,470 1,341,368
Less: Paid during the year 215,006 1,114,794
------------------ ------------------
292,464 226,574
========== ==========
4.1 The remuneration of investment adviser at 2 percent of net assets of the company as at the
end of its year of accounts in term of clause 11(a) of the Investment Company and
Investment Adviser's Rules, 1971 has been determined as follows:
ASSETS
Marketable Securities at market value 12,606,283 12,064,273
Advances, Pre-payments and other Receivables 109,921 141,645
Cash and Bank Balances 12,146 54,830
------------------ ------------------
12,728,350 12,260,748
========== ==========
LIABILITIES
Deferred Expenditure payable -- 554,664
Due to Investment Adviser-An associated company 292,464 226,574
Trade Creditors, accrued expenses and other liabilities 196,980 147,980
Provision for Taxation 3,135 3,135
------------------ ------------------
492,579 932,353
------------------ ------------------
Net Assets 12,235,771 11,328,395
------------------ ------------------
2 percent of net assets 244,715 226,568
========== ==========
5. TRADE CREDITORS, ACCRUED EXPENSES AND
OTHER LIABILITIES
Income Tax Deducted at source 8,913 1,413
Audit Fee 19,000 7,500
Custodian Fee 164,067 134,067
Others 5,000 5,000
------------------ ------------------
196,980 147,980
========== ==========
6. INVESTMENTS - Marketable Securities
These Securities are shares/certificates of Rs. 10/- each.
Number of Shares Balance as at June 30, 1999 Percentage in Relation to
Name of Company Balance As Purchases Bonus Sales Number At Cost At Market Own Investee Companies
At July 1 shares of (Rupees (Rupees) Assets Paid-up Number of
1998 Shares 6.1 Capital Shares
6.2
FINANCIAL COMPANIES
MUTUAL FUNDS AND BANKS ETC:
Askari Bank Ltd. 4,013 -- -- -- 4,013 124,660 48,357 0.30 0.01 0.004
Askari Leasing Ltd: 24,000 -- -- -- 24,000 457,143 206,400 1.09 0.19 0.100
Bank Al-Habib Ltd. 4,000 -- 3,712 -- 7,712 152494 138,816 0.36 0.04 0.015
Citi Corp. Investment Bank Ltd 12,000 -- -- -- 12,100 986104.00 163,350 2.36 0.99 0.121
Foreign Exchange Bearer Certificate (7.3) 3,600,000 -- -- -- 3,600,000 3,933,000 3,708,000 9.40 -- --
First Tri-Star Modaraba 412,500 -- -- -- 412,500 4,886,250 515,625 11.68 3.47 2.930
LTV Capital Modaraba 137,500 -- -- 137,500 -- -- -- -- -- --
Muslim Commercial Bank Ltd 16,760 -- -- -- 16,760 1036874 341,904 2.48 0.06 0.009
Punjab Modaraba 40,000 -- -- 40,000 -- -- -- -- -- --
Second Tri-Star Modaraba 468,000 -- -- -- 468,000 4812000 491,400 11.50 3.74 3.636
Soneri Bank Ltd. 13,380 -- 1,338 -- 14,718 496860.00 179,560 1.19 0.10 0.029
Union Leasing Ltd. 4,500 -- 675 -- 5,175 98975 15,525 0.24 0.05 0.025
TEXTILE SPINNING;
Faisal Spinning Mills Ltd. 74,000 -- -- -- 74,000 2,206,265 728,900 5.27 2.21                    0.740
TEXTILE COMPOSITE:
Crescent Textile Mills Ltd. 26,647 -- 1,332 -- 27,979 1,247,946 225,231 2.98 0.31 0.069
Nishat Mills Ltd. 48,000 30,500 -- -- 78,500 773,725 745,750 1.85 0.07 0.071
SYNTHETIC & RAYON:
Dewan Salman Fibre Ltd. 31,740 -- 4,761 -- 36,501 3,876,641 918,000 9.27 0.24 0.023
Tri-Star Polyester Ltd. 190,000 -- -- -- 190,00 4,755,700 332,500 11.37 2.22 0.885
INSURANCE:
Commercial Union Life Assur. 37,000 -- -- -- 37,000 381,150 286,750 0.91 0.13 0.123
FUEL & ENERGY:
Shell Pakistan Ltd. 6,469 -- -- -- 6,469 1,465,340 1,073,854 3.50 0.42 0.018
Sui Northern Gas Co. Ltd. 38,088 -- -- -- 38,088 1,092,150 316,130 2.61 0.03 0.010
Tri-Star Power Ltd. 119,000 -- -- -- 119,000 4,964,750 226,100 11.87 3.31 0.793
CHEMICAL & PHARMACEUTICAL:
Engro Chemical (Pak) Ltd. 21,045 -- 1,609 -- 22,654 2,541,156 1,674,131 6.07 0.21 0.187
Hoechst Marion Roussel 10,000 -- -- -- 10,000 1,424,050 270,000 3.40 2.05 0.144
MISCELLANEOUS:
Tri Pack Films Ltd 20,000 -- -- 20,000 -- -- -- --
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
1999 5,358,742 30,500 13,427 197,500 5,205,169 41,713,233 12,606,283 99.71
========== ========== ========== ========== ========== ========== ========== ==========
1998 5,140,350 282,500 20,292 84,400 5,358,742 42,040,808 12,064,273 99.53
========== ========== ========== ========== ========== ========== ========== ==========
6.1 Own assets as defined in section 17(2) of the Investment Companies end Investment Adviser's Rules, 1971.
6.2 The percentage in relation to Investee companies paid-up capital has been worked out in relation to the acquisition cost
of the respective shares of the company.
6.3 In September, 1996 the Income Tax Authorities raided Funds' premises and took away by force all records, documents,
and valuable securities including FEBC's/bearer NIT units of all Group Companies which included FEBC'S of the Fund,
without lawful authority and without making any inventory. This raid caused a serious disruption in Fund's business. The
Fund has filed a suit against the Income Tax authorities in the Hon'ble High Court of Sindh challenging the said act as
illegal. The Hon'ble Court of Sindh held vide its order dated 31.07.98 that the presence of irregularities end malafides in
the acts of the Income Tax Department cannot be ruled out. Further the remaining two ingredients namely balance of
convenience and causing irreparable loss and injury also exists in favour of Fund. Further the Income Tax Department
was directed to submit their report keeping in view of provision of section 146(c) of the Income Tax Ordinance,1979
declaring how much more time they would need to return the impounded documents and record. Inspire of the orders of
the Hon'ble High Court of Sindh, the Income Tax Department has neither returned the record nor any FEBC's/valuables.
The Fund has filed a contempt application against the department and the matter is subjudice.
6.4 In view of the above, FEBC's were not made available to auditors for physical verification.
1999 1998
(Rupees) (Rupees)
7. ADVANCES, PRE-PAYMENTS AND OTHER RECEIVABLES
Advance Income Tax 109,921 109,921
Dividend Income Receivable -- 31,247
------------------ ------------------
109,921 141,645
========== ==========
8. CASH AND BANK BALANCES
Cash in hand 5,482 7,098
Cash at bank Current Account 6,655 47,723
Cash at bank PLS Account 9 9
------------------ ------------------
54,830 12,146
========== ==========
9. INCOME
Dividend Income 328,337 518,373
========== ==========
10. CAPITAL GAIN/(LOSS)
Sale of investments 688,500 2,726,926
Cost of Sales
Opening Balance 42,040,808 44,094,858
Add: Purchases 296,525 1,482,450
------------------ ------------------
42,337,333 45,577,308
Less: Closing Stock (41,713,233) (42,040,808)
------------------ ------------------
Cost of Sales 624,100 3,536,500
------------------ ------------------
Capital Gain/(Loss) 64,400 (809,574)
========== ==========
11. ADMINISTRATIVE EXPENSES
Listing Fee 31,250 31,250
Custodian Fee 30,000 30,000
Amortization of deferred expenditure -- 554,664
Auditors' remuneration 11.1 11,500 7,500
Misc. Expenses 1,000 2,900
------------------ ------------------
73,750 626,314
========== ==========
11.1 AUDITOR'S REMUNERATION
Audit Fee 7,500 7,500
Out of Pocket Expenses 2,000 --
Prior year Out of Pocket Expenses 2,000 --
------------------ ------------------
11,500 7,500
========== ==========
12. FINANCIAL EXPENSES
Interest on deferred expenditure 36,181 96,165
Bank Charges 300 150
------------------ ------------------
36,481 96,315
------------------ ------------------
13. ASSOCIATED UNDERTAKINGS
13.1 Transaction with Associated Undertakings
i. Interest on deferred expenditure payable 36,181 96,165
ii. Remuneration for services 244,715 226,568
iii. Deferred expenditure reimbursed -- 554,664
13.2 .The aggregate maximum balance at the end of any month during the year, due to associated
undertaking was Rs.739,572 (1998: Rs.1,582,717).
14. GENERAL
14.1 Figures have been rounded off to nearest rupee.
14.2 Previous year's figures have been re-arranged, wherever necessary, if any to facilitate.
comparison.
TRI-STAR INVESTMENTS (PVT) LTD.
INVESTMENT ADVISER
STATEMENT OF INCOME AND EXPENDITURE IN RELATION TO INVESTMENT COMPANY
FOR THE YEAR ENDED JUNE :30, 1999
1999 1998
(Rupees) (Rupees)
INCOME
Remuneration from Tri-Star Mutual Fund Ltd. 244,715 226.57
an Associated Undertaking
Interest on deferred expenditure 36,181 96,165
------------------ ------------------
280,896 322,733
========== ==========
LESS: OPERATING EXPENSES
Salary and allowances 46,701 106,132
Postage, Telephone and Telegram 49,098 119,704
Printing and Stationery 53,200 49,630
Travelling and Conveyance 1,500 25,433
Audit Fee 8,000 5,000
Fee and subscription 75,057 75,470
Advertisement 9,680 9,126
Entertainment 1,719 1,725
Amortization of deferred cost -- 18,663
Depreciation 7,821 9,623
Other expenses 800 --
Bank charges 448 510
------------------ ------------------
254,024 421,016
------------------ ------------------
Profit/(Loss) for the year 26,872 (98,253)
========== ==========
PATTERN OF CERTIFICATE HOLDINGS
AS AT JUNE 30, 1999
NUMBER OF CERTIFICATE HOLDINGS TOTAL
CERTIFICATE FROM TO CERTIFICATES
HOLDER HELD
422 1 -- 100 42,200
3,602 101 -- 500 1,665,500
567 501 -- 1000 563,000
450 1001 -- 5000 1,141,000
33 5001 -- 10000 256,300
6 10001 -- 15000 71,800
2 15001 -- 20000 33,500
1 30001 -- 35000 32,900
1 65001 -- 70000 67,700
1 495001 -- 500000 500,000
1 625001 -- 630000 626,100
------------------ ------------------
5,086 5,000,000
========== ==========
CATEGORIES OF NUMBER OF CERTIFICATES
CERTIFICATE HOLDERS CERTIFICATE HELD PERCENTAGE
HOLDERS
1. JOINT STOCK COMPANIES 6 55,200 1.10
2. FINANCIAL INSTITUTIONS 1 18,000 0.36
3. INVESTMENT COMPANIES 4 1,194,300 23.89
4. INDIVIDUALS 5075 3,732,500 74.65
------------------ ------------------ ------------------
TOTAL 5086 5,000,000 100.00
========== ========== ==========
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