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In addition to regulating the Securities Market and administering the Companies Ordinance, 1984, the Commission is also responsible for regulating all collective investment schemes as well as modarabas, leasing companies and credit rating agencies. These functions are being carried out under the following laws and rules:-

q Investment Companies and Investment Advisers Rules, 1971 which regulate closed-end mutual funds.
q  Asset Management Companies Rules, 1995 which regulate open-end mutual funds.
q  Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 and Modaraba Companies and Modaraba Rules, 1981.
q  Leasing Companies (Establishment and Regulation) Rules, 1996 framed under section 506 of the Companies Ordinance, 1984 alongwith NBFIs Prudential Regulations issued by the State Bank of Pakistan.
q  Credit Rating Companies Rules, 1995.

This responsibility has been entrusted to the Specialized Companies Division (SCD) which has only recently been set up. During most of the period under review, the responsibility was with ED. While mutual funds are being looked after by a Director, Registrars are responsible for regulation of modarabas and leasing companies. The Modaraba Ordinance vests Registrar (Modaraba) with wide powers enabling him to safeguard interests of Modaraba certificate holders.

In addition to regulatory functions, the Commission also takes the initiative to develop such specialized institutions. Regulatory functions include licensing of these institutions under the relevant laws and rules, monitoring the performance, and examination and analysis of financial statements. Registrars (Leasing) and Registrar (Modaraba) pay special attention to profitability and liquidity of the institutions. They also ensure that the managements of the institutions follow prudent commercial practices and conform to the Prudential Regulations issued by SBP. Registrar (Modaraba) also enjoys powers, which are vested with the Registrar of Companies including filing of documents, maintenance of records, registration of mortgages and providing facility to the public for inspection of records.

MUTUAL FUNDS
According to the Act, all collective investment schemes are to be regulated by the Commission. Investment Companies and Investment Advisers Rules, 1971 regulate closed-end mutual funds while open-end funds are regulated by Asset Management Companies Rules, 1995 which have been framed under the Securities and Exchange Ordinance, 1969. Under the Investment Companies and Investment Advisers Rules 1971, the Commission licenses both investment advisers and the closed end funds.

The history of the mutual funds industry in Pakistan goes back to early 1960s when specialised institutions like National Investment Trust (NIT) and Investment Corporation of Pakistan (ICP) were established for their promotion. As on 30th June, 2000 the total size of the mutual fund industry in Pakistan was Rs. 27.5 billion, out of which open-end funds amount to Rs. 20.5 billion (or 75%) and the remaining 7 billion (or 25%) comprise closed end funds.

OPEN END MUTUAL FUNDS
National Investment (Unit) Trust (NITL), the first open end fund in Pakistan, was established by the Government in 1962. The Trust was constituted under the Trust Deed signed between NITL and National Bank of Pakistan (as its trustee). The Fund, popularly known as NIT, was set up with the objective of mobilizing savings of the public and investing the funds so pooled in the corporate sector of the economy enabling small investors to participate in the growing profitability of the corporate sector, and also to broaden the base of equity ownership in the country. NIT, which continues to be in the public sector, is Rs. 20 billion in size representing about 98% of total open-end funds in the country. Being a public sector fund, regulation of NIT remained outside the purview of the Commission till recently. Since the Act required regulation of all collective investment schemes by the Commission, NIT has now been registered with the Commission albeit the NIT scheme has yet to receive formal authorization which will take place in due course upon completion of requirements stipulated under the Asset Management Companies Rules. These Rules were notified in 1995 to promote open-end funds in accordance with which Unit Trust of Pakistan (UTP), the only private open-end fund in the country, was established in 1997. UTP has been constituted under the Trust Deed, signed between ABAMCO Limited as management company and Muslim Commercial Finance Services (Pvt) Limited as a trustee. ABAMCO, established under the Companies Ordinance, 1984 is sponsored by Jahangir Siddiqui & Co. Limited, AIM Management Group, IFC and some other institutions. UTP has shown steady growth, its size being now Rs. 469 million which is 2% of total mutual fund industry.

CLOSED-END MUTUAL FUNDS
The first closed end mutual fund in the country was established in 1967 by Investment Corporation of Pakistan (ICP) established by the Government under the Ordinance with the objective inter alia of floatation and management of closed end mutual funds. Since 1967, ICP has established 26 closed end mutual funds. In aggregate, the size of ICP-managed 26 funds on 30th June 2000 was Rs.5.7 billion which represents 81% of the total closed end funds in the country.   In 1982, the Government also allowed the private sector to establish and manage closed end funds under the Investment Companies and Investment Advisers Rules, 1971. Golden Arrow was the first closed end fund to be established in the private sector in 1983. As on 30th June 2000, 13 closed end mutual funds managed by the private sector were listed on KSE. Total closed end funds under management of the private sector are Rs. 1.3 billion which is 19% of closed end funds.

KEY STATISTICS OF CLOSED END FUNDS
Name of fund	Listed Capital (Rs. In million)	Par Value	NAV 30 June 2000	Market Value 30 June 2000	Last Dividend %
1st ICP	50	10.00	13.83	7.00	Nil
2nd ICP	50	10.00	12.03	6.75	10
3rd ICP	50	10.00	17.87	10.00	15
4th ICP	50	10.00	43.18	19.90	20
5th ICP	50	10.00	12.47	8.00	Nil
6th ICP	50	10.00	26.24	14.00	20
7th ICP	50	10.00	13.68	9.90	10
8th ICP	50	10.00	28.68	15.50	35
9th ICP	50	10.00	42.50	27.50	50
10th ICP	50	10.00	21.56	9.00	10
11th ICP	50	10.00	19.23	9.50	15
12th ICP	50	10.00	17.47	9.00	15
13th ICP	50	10.00	39.57	20.00	25
14th ICP	50	10.00	15.20	8.50	10
15th ICP	50	10.00	13.96	8.10	Nil
16th ICP	50	10.00	10.85	7.50	Nil
17th ICP	50	10.00	14.68	7.05	Nil
18th ICP	50	10.00	12.04	7.10	Nil
19th ICP	50	10.00	18.82	10.75	10
20th ICP	50	10.00	19.72	9.00	10
21st ICP	50	10.00	5.66	1.80	Nil
22nd ICP	50	10.00	8.60	3.10	Nil
23rd ICP	50	10.00	4.62	1.85	Nil
24th ICP	50	10.00	5.24	1.90	Nil
25th ICP	50	10.00	8.68	3.55	Nil
SEMF	50	10.00	32.34	16.20	18

Name of fund	Listed Capital (Rs. in million)	Par ValueRs.	NAV 30 June 2000 Rs.	Market Value 30 June 2000 Rs.	Last Dividend %
Al Meezan	250	10.00	12.66	10.00	6.4
Asian Stock	100	10.00	5.55	4.00	Nil
BSJS	150	10.00	11.60	5.75	31*
Confidence	100	10.00	12.08	6.50	15
Dominion	50	10.00	3.58	1.05	Nil
First Capital	150	10.00	-	3.00	5(i)*
Golden Arrow	81.05	10.00	4.59	3.00	5
Growth	100	10.00	-	1.25	Nil
KASB	400	10.00	7.85	4.10	Nil
Prudential	60	10.00	-	1.75	Nil
Safeway	30	10.00	3.03	3.00	Nil
Security	100	10.00	12.26	5.25	5(i)*
Tristar	50	10.00	-	1.00	Nil

* Dividend for the year ended June 2000
Investment Advisers are licensed under the Investment Companies and Investment Advisers Rules, 1971 for managing investment portfolios. The Commission monitors the working of the investment advisers and receives annual reports from each adviser. During the period under review, seven licences of Investment Advisors were cancelled on grounds of failure to meet the conditions of licence.