Savings Growth Fund. Financial Statements for the Quarter Ended September 30, 2017

Transcription

1 Savings Growth Fund Financial Statements for the Quarter Ended September 30, 2017

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3 Fund Information Mission Statement Report of the Directors of the Management Company Condensed Interim Statement of Assets and Liabilities Condensed Interim Income Statement Condensed Interim Statement of Comprehensive Income Condensed Interim Cash Flow Statement Condensed Interim Statement of Movement in Unit Holders Fund Notes to the Condensed Interim Financial Information

4 4 Faysal Savings Growth Fund Faysal Asset Management Limited Mr. Salman Ahmed Usmani, Chairman Mr. Osman Khan, Director Syed Ibad-Ur-Rehman Chishti, Director Mr. Mohammad Zahid Ahmed, Director Mr. Farooq Hassan, Director Mr. Razi-Ur-Rahman Khan, Director/CEO Chief Financial Officer and Company Secretary of the Management Company Mr. Naved Hanif Mr. Osman Khan, Chairman Syed Ibad-Ur-Rehman Chisti, Member Mr. Farooq Hassan, Member HR Comittee Mr. Osman Khan, Chairman Syed Ibad-Ur-Rehman Chishti, Member Mr. Razi-Ur-Rahman Khan, Member Central Depository Company of Pakistan Limited, Bank Alfalah Limited Faysal Bank Limited Askari Bank Limited United Bank Limited Habib Metropolitan Bank Limited Allied Bank Limited Habib Bank Limited JS Bank Limited Deloitte Yousuf Adil, Chartered Accountants

5 Faysal Savings Growth Fund 5

6 6 Faysal Savings Growth Fund The Board of Directors of the Faysal Asset Management Limited, the Management Company of the Faysal Savings Growth Fund (FSGF), is pleased to present the un-audited condensed interim financial information of FSGF for the quarter ended September 30, FINANCIAL HIGHLIGHTS Quarter Ended September Total income Operating expenses Net income before tax Element of income Taxation Net income after tax NAV per unit (Rs. per unit) (18.953) (26.351) ECONOMIC REVIEW: The China-Pakistan Economic Corridor (CPEC) which is still work-in-progress has already started to help Pakistan climb several rungs on the ladder of global competitiveness and economic progress. Pakistan is a resource-rich and labor abundant economy, but relatively poor infrastructure, acute energy shortfall, low Foreign Direct Investment (FDI) and narrow manufacturing base have created barriers for global integration and industrialization in Pakistan. These bottlenecks have restrained productivity over the years. In such circumstances, the investment of $59 billion under the project of China-Pakistan Economic Corridor (CPEC) is a blessing in disguise that is supposed to revive the economy of Pakistan. When market forces fail to bring convergence in the economy, government intervention to overcome the situation becomes necessary. For Pakistan, this vital role of savior is being played by CPEC, which aims to fulfill the investment saving gap, improve the industrial base and shape the manufacturing sector. Moreover, the LSM Index inclined by 13% YoY during Jul 17, which was the highest since Mar 16. Pakistan s burgeoning youth and their freewheeling attitude toward rising incomes have turned the nation into the world s fastest growing retail market. Bloomberg predicted the market to expand 8.2% per annum through as disposable income has doubled since 2010, according to research group Euromonitor International. The size of the middle class is estimated to surpass that of the U.K. and Italy in the forecast period, it said. Pakistan s improving security environment, economic expansion at near 5% and cheap consumer prices are driving shoppers to spend up big. Almost two-thirds of the nation s million people are aged under 30, according to the Jinnah Institute, an Islamabad-based think tank. Not only that, Pakistan s ranking in terms of Economic Freedom of the World 2017 report has improved by 10 notches and it stood at 127th position out of total 159 countries,

7 Faysal Savings Growth Fund 7 where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives. Average CPI based inflation during the first quarter of the current fiscal year (July-September) witnessed increase of 3.39% compared to July-September ( ). Furthermore, Economic indicators CAD receded by 73% MoM to USD 550mn in Aug 2017, thus reducing the investors concern on sustainability of Balance of Payments. Moreover, the LSM Index inclined by 13% YoY during Jul 17, which was the highest since Mar 16. FDI escalated to $234 million in Aug 2017, while foreign exchange reserves of the country stood at $ billion. Of course, Pakistan s major problem is growing public debt, as debt services loan installments and interest would consume about 33% of federal revenue. Unprecedented growing public debt, on one hand, limits the capacity to build a strong defensive capability, and on the other hand, limits fiscal space to invest in human development and infrastructure. Pakistan faces challenges of a growing debt burden, fiscal deficit, trade deficit, and current account deficit, which are not of any less importance than the threats to internal and external security. MONEY MARKET REVIEW SBP announced 2 MPS Monetary Policy Statements during 01QFY18 and in both MPS announcements SBP maintained status quo policy rate at 5.75% given the continuously expanding fiscal deficit, rapidly declining exports, decline in remittance inflows and improvement in inflation outlook on the back of improved prices of perishables. During the period Jul 17 Sep 17 money market continued to remain illiquid and SBP conducted eighteen OMO Injections where the total injected amount was PKR 17,619bn and the total participation amount was PKR 18,400bn. The weighted average rate of the injected amount during the said period was 5.77%. During the period under discussion No OMO - Mop up were conducted. SBP conducted 07 T-bill auctions in the 01QFY18 where the total accepted amount was PKR 4,294.28bn where the total stipulated target of SBP was PKR 3,900bn and the cuts offs remained stable over the said period as in last auction cut-offs were; 3M %, 6M % and 12M %. Similarly, during the 01QFY18, one PIB auctions was conducted where SBP realized bids worth PKR 52.41bn against total target of PKR 100bn. The major focus was 3yr followed by 5yr and 10yr by market participants. Moreover, this suit conveyed various investors to foresee SBP s reluctance to accumulate at higher levels, given excess amount borrowed from T-bills. This mindset was clearly witnessed in subsequent two auctions, as both were rejected. Central Directorate of National Savings (CDNS) has proposed launching dollar denominated bond for attracting investment from millions of overseas Pakistanis to generate $500 to $700 million during the current fiscal year to lure small investors working overseas and possessing meager savings. The government is planning to unveil a scheme to attract remittances from abroad. Pakistan s nationalized and commercial banks would be incentivized to establish

8 8 Faysal Savings Growth Fund joint ventures with branches of international banks at selected destinations to lure Pakistanis living abroad to send money through official banking channels. FUND PERFORMANCE Faysal Savings Growth Fund generated return of 4.32% during the 1QFY18. By the end of 1QFY18, your fund allocated investments in cash (67.49%), Margin Trading System (3.60%), TFCs (20.70%), T-Bills (4.49%) and Commercial Papers (3.07%). Going forward, your fund would strive to maintain a balanced mix of short term and long term securities keeping in view the direction of interest rates. FUND RANKING Pakistan Credit Rating Agency Limited (PACRA) has assigned AA-(f) stability rating of AA-(f) to Faysal Savings Growth Fund. The rating denotes High degree of stability in Net Asset Value. ACKNOWLEDGEMENT The Board of Directors of the Management Company thanks the Securities and Exchange Commission of Pakistan for its valuable support, assistance and guidance. The Board also thanks the employees of the Management Company and the Trustee for their dedication and hard work and the unit holders for their confidence in the Management. For and on behalf of the Board Karachi: October 19, 2017 Razi-Ur-Rahman Khan Chief Executive Officer

9 Faysal Savings Growth Fund 9 Condensed Interim Statement of Assets and Liabilities As at September 30, 2017 Assets Note September 30, June 30, (Un-audited) (Audited) (Rupees) Bank balances 5 2,239,788,004 1,899,005,223 Investments 6 937,816, ,355,514 Receivable against Margin Trading System (MTS) 119,461, ,962,884 Prepayments, deposits and other receivables 21,386,494 23,754,738 Receivable against issuance of units - 21,793,283 Total assets 3,318,451,809 3,233,871,642 Liabilities Payable to the Management Company 7,619,132 6,097,747 Remuneration payable to the Trustee 328, ,038 Accrued and other liabilities 7 29,110,543 30,436,216 Dividend payable 11,246 48,558,754 Total liabilities 37,069,607 85,378,755 Net assets 3,281,382,202 3,148,492,887 Unit holders' fund (as per statement attached) 3,281,382,202 3,148,492,887 Contingencies and commitments (Number of units) Number of units in issue 31,820,410 30,865, (Rupees) Net assets value per unit The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

10 10 Faysal Savings Growth Fund Condensed Interim Income Statement For the Quarter Ended September 30, 2017 (Un-Audited) For the quarter ended September 30, Income Note (Rupees) Profit earned on debt and government securities classified as 'at fair value through profit or loss' - held-for-trading 24,935,656 27,640,251 Mark-up earned on letter of placements, commercial papers and clean placements - classified as 'held to maturity' 1,234,036 3,066,850 Income from Margin Trading System (MTS) 5,623,081 23,397,857 Return on bank balances and term deposit receipts 26,030,333 29,474,498 Net (loss) on investments classified as 'at fair value through profit or loss' - held-for-trading: - Net capital (loss) / gain on sale of investments (149,995) 2,466,381 - Net unrealised loss on revaluation of investments 6.4 (1,517,230) (8,414,470) (1,667,225) (5,948,089) Total income 56,155,881 77,631,367 Expenses Remuneration of the Management Company 12,744,146 17,515,878 Sales tax on Management fee 1,656,739 2,277,064 Reimbursement of expense to the Management Company 769,462 1,195,137 Remuneration of the Trustee 936,448 1,206,859 Sales tax on Trustee fee 121, ,892 Brokerage charges 79, ,703 Bank charges 28,657 29,108 Auditors' remuneration 150, ,305 SECP annual fee , ,794 Fees and subscription 75,941 87,708 Settlement charges and federal excise duty 915,244 2,532,491 Printing charges and other expenses 78,200 73,508 Provision for Sindh Workers' Welfare Fund (SWWF) ,183 - Total expenses 18,953,418 26,351,447 Net income from operating activities 37,202,463 51,279,920 Element of income and capital gains included in prices of units sold less those in units redeemed - net - 5,162,207 Net income for the period before taxation 37,202,463 56,442,127 Taxation Net income for the period after taxation 37,202,463 56,442,127 Allocation of net income for the period Income already paid on units redeemed (4,409,505) - 32,792,958 56,442,127 Accounting income available for distribution - Relating to capital gains - 2,466,381 - Excluding capital gains 32,792,958 53,975,746 32,792,958 56,442,127 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

11 Faysal Savings Growth Fund 11 Condensed Interim Statement of Comprehensive Income For the Quarter Ended September 30, 2017 (Un-Audited) For the Quarter ended September 30, (Rupees) Accounting income available for distribution 32,792,958 56,442,127 Other comprehensive income for the period - - Total comprehensive income for the period 32,792,958 56,442,127 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management company) Chief Financial Officer Chief Executive Officer Director

12 12 Faysal Savings Growth Fund Condensed Interim Cash Flow Statement For the Quarter Ended September 30, 2017 (Un-Audited) For the quarter ended September 30, Note (Rupees) CASH FLOWS FROM OPERATING ACTIVITIES Net income for the period before taxation 37,202,463 56,442,127 Adjustments for non-cash and other items: Net loss on investments classified as 'at fair value loss' - held-for-trading: - Net capital loss / (gain) on sale of investments 149,995 (2,466,381) - Net unrealised loss on revaluation of investments 1,517,230 8,414,470 Profit earned on debt and government securities classified as 'at fair value through profit or loss' - held-for-trading (24,935,656) (27,640,251) Mark-up earned on letter of placements, commercial papers and clean placements - classified as 'held to maturity' (1,234,036) (3,066,850) Income from Margin Trading System (MTS) (5,623,081) (23,397,857) Return on bank balances and term deposit receipts (26,030,333) (29,474,498) Element of income and capital gains included in prices of units sold less those in units redeemed - net - (5,162,207) (18,953,418) (26,351,447) (Increase) / decrease in assets Prepayments, deposits and other receivables (5,967,427) 21,199 Increase / (decrease) in liabilities Payable to the Management Company 1,521,385 6,647,678 Remuneration payable to the Trustee 42,648 42,501 Accrued and other liabilities (1,325,673) (2,830,057) 238,360 3,860,122 Proceeds from sale / redemption / maturity of investments 79,106,419 1,335,819,483 Payments made against purchase of investment (220,234,153) (3,419,462,949) Amount received / (payments) made against Margin Trading System (MTS) 371,501,596 (399,335,105) Profits and returns received 66,158,777 48,927,823 Net cash generated from / (used in) operating activities 271,850,154 (2,456,520,874) CASH FLOWS FROM FINANCING ACTIVITIES Amounts received against issuance of units 906,712,144 1,930,423,576 Payments made against redemption of units (789,232,009) (931,396,889) Dividend paid (48,547,508) - Net cash generated from financing activities 68,932, ,026,687 Net increase / (decrease) in cash and cash equivalents during the period 340,782,781 (1,457,494,187) Cash and cash equivalents at beginning of the period 1,899,005,223 2,599,358,891 Cash and cash equivalents at end of the period 5 2,239,788,004 1,141,864,704 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

13 Faysal Savings Growth Fund 13 Condensed Interim Statement of Movement in Unit Holders Fund For the Quarter Ended September 30, 2017 (Un-Audited) For the quarter ended September 30, (Rupees) Net assets value per unit at beginning of the period Net assets value per unit at end of the period Net assets at the beginning of the period 3,148,492,887 4,111,374,426 Amounts received on issue of units * 884,918,861 1,519,403,997 Amounts paid on redemption of units ** (789,232,009) (765,000,712) 95,686, ,403,285 Element of income and capital gains included in prices of units sold less those in units redeemed - net - (5,162,207) Income already paid on units redeemed 4,409,505 - Total comprehensive income for the period 32,792,958 56,442,127 Net assets at end of the period 3,281,382,202 4,917,057,631 Distribution for the period Undistributed income brought forward - Realised 46,836,312 53,051,737 - Unrealised 4,568,470 (11,720,605) 51,404,782 41,331,132 Accounting income available for distribution - Relating to capital gains - 2,466,381 - Excluding capital gains 32,792,958 53,975,746 32,792,958 56,442,127 Undistributed income carried forward 84,197,740 97,773,259 - Realised 81,171, ,790,130 - Unrealised 3,026,199 (5,016,871) 84,197,740 97,773, (Number of units) * Number of units issued (including Nil bonus units issued during the period ended September 30, 2017 and September 30, 2016) 8,648,373 14,847,400 ** Number of units redeemed 7,693,584 7,478,782 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

14 14 Faysal Savings Growth Fund Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 1. LEGAL STATUS AND NATURE OF BUSINESS Faysal Savings Growth Fund (the Fund) has been established under the Non-Banking Finance Companies (Establishment and Regulation), Rules 2003 (the NBFC Rules) and has been authorised as a unit trust scheme by the Securities and Exchange Commission of Pakistan (SECP) on February 27, It has been constituted under a Trust Deed, dated December 28, 2006 between Faysal Asset Management Limited (the Management Company), a company incorporated under the Companies Ordinance, 1984 and Central Depository Company of Pakistan Limited (CDC) as the Trustee, also a company incorporated under the Companies Ordinance, The Fund is an open-ended income fund and is listed on the Pakistan Stock Exchange Limited. Units are offered for public subscription on a continuous basis and the units are transferable and can be redeemed by surrendering them to the Fund. Title to the assets of the fund are held in the name of CDC as a Trustee of the Fund. The Fund was launched on May 07, The objective of the Fund is to seek maximum possible preservation of capital and a reasonable rate of return via investing primarily in money market and debt securities having good credit rating and liquidity. The Fund is categorised as an "Income Scheme" as per the Circular No. 7 of 2009 issued by SECP. The Pakistan Credit Rating Agency Limited (PACRA) has assigned a "AA-(f)" stability rating to Faysal Savings Growth Fund as of July 12, JCR - VIS has awarded an "AM3+" asset manager rating to the Management Company as of October 12, STATEMENT OF COMPLIANCE 2.1 This condensed interim financial information of the Fund has been prepared in accordance with the requirements of the International Accounting Standard 34: Interim Financial Reporting the requirements of the Trust Deed, the NBFC Rules, the Non Banking Finance Companies and Notified Entities Regulation, 2008 (the NBFC Regulations), Companies Act, 2017 and directives issued by the SECP. In case requirements differ, the requirements of the Trust Deed, the NBFC Rules, the NBFC Regulations the Companies Act, 2017 or the directives issued by the SECP shall prevail. 2.2 The Companies Ordinance, 1984 has been repealed after the enactment of the Companies Act, 2017 (the Act) on May 30, However, the SECP vide its Circular No.23 dated October 4, 2017 allowed Companies whose financial year closes on or before December 31, 2017 to prepare the financial statements in accordance with the provisions of the repealed Companies Ordinance, The Act does not impact the condensed interim financial information of the Fund for the period ended September 30, BASIS OF MEASUREMENT 3.1 This condensed interim financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the annual financial statements of the Fund for the year ended June 30, This condensed interim financial information are presented in Pak rupees, which is the Fund's functional and presentation currency.

15 Faysal Savings Growth Fund 15 Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Except for change in note 4.1, the accounting policies and methods of computation adopted in the preparation of this condensed interim financial information and the significant judgements made by the management in applying the accounting policies and key sources of estimation uncertainity are the same as those applied in the preparation of the financial statements as at and for the year ended June 30, The Fund s financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended June 30, Change in accounting policy - element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed The SECP vide its statutory notification (S.R.O) No.756(I) / 2017 dated August 3, 2017, has introduced certain amendments in Schedule V of the NBFC Regulations, resulting in change in the treatment of element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed, earlier the element was recognized in the income statement to the extent that it is represented by income earned during the year and unrealized appreciation / (diminution) arising during the year on available for sale securities was included in the Distribution Statement. As per the aforesaid SRO "element of income is a transaction of capital nature and receipt and payment of element of income is taken to the unit holder's fund." As a result the Fund has made certain changes in this condensed interim financial information as mentioned in note BANK BALANCES Note September 30, June 30, (Un-audited) (Audited) (Rupees) Cash at bank - PLS savings accounts 5.1 2,239,788,004 1,899,005, These carry mark-up ranging between 3.75% to 6.50% (June 30, 2017: 3.75% to 6.50%) per annum and include balance of Rs million (June 30, 2017: Rs million) held with Faysal Bank Limited (a related party). 6. INVESTMENTS Note September 30, June 30, 2,017 2,017 (Un-audited) (Audited) (Rupees) 'At fair value through profit or loss' - held-for-trading Debt securities ,835, ,144,715 Government securities ,052,448 99,935,665 Held to maturity Commercial paper ,927,775 26,275, ,816, ,355,514

16 16 Faysal Savings Growth Fund Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 6.1 Debt securities - 'at fair value through profit or loss' - held-for-trading Name of investee company Note Term finance certificates - unlisted As at July 01, 2017 Number of certificates Purchased during the period Disposed / redeemed during the period As at September 30, 2017 Carrying value Balance as at September 30, 2017 Market value Unrealised gain on revaluation Rupees Market value as percentage of total investments Market value as percentage of net assets Market value as percentage of size of issue Commercial banks Habib Bank Limited - TFC * ,810-1, % 0.00% 0.00% Bank AL-Habib Limited - TFC * ,000 20,000-40, ,688, ,578,980 (109,625) 21.49% 6.14% 5.04% The Bank of Punjab - TFC * , , ,974, ,435, , % 3.98% 3.26% JS Bank Limited - PPTFC ** , , ,000, ,120,000 1,120, % 4.91% 4.03% Askari Bank Limited - TFC * ,000 3,100-18,100 91,965,912 91,597,672 (368,240) 9.77% 2.79% 2.29% JSCL TFC ,000-20, ,000, ,104,000 2,104, % 3.11% 6.81% September 30, ,310 43,100 2, , ,628, ,835,800 3,207, % 20.93% 21.43% June 30, ,576, ,144,715 4,568, Significant terms and conditions of debt securities are as follows: Name of security Number of certificates Face value per unit (Rupees) Redeemed face value per unit (Rupees) Mark-up rate (per annum) Maturity Secured / unsecured Rating Habib Bank Limited - TFC - 100,000 99, % + 6M KIBOR February, 2026 Secured AAA Bank AL-Habib Limited - TFC 40,000 5,000 4, % + 6M KIBOR March, 2026 Secured AA The Bank of Punjab - TFC 1, ,000 99, % + 6M KIBOR December, 2026 Secured AA- JS Bank Limited - PPTFC 32,000 5,000 5, % + 6M KIBOR December, 2023 Secured A+ Askari Bank Limited - TFC 18,100 5,000 4, % + 6M KIBOR September, 2024 Secured AA- JSCL TFC 20,000 5,000 5, % + 6M KIBOR July, 2022 Secured AA+ * Term finance certificate ** Privately placed term finance certificate

17 Faysal Savings Growth Fund 17 Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 6.2 Government securities - 'at fair value through profit or loss' - held-for-trading Name of security As at July 01, 2017 Purchased during the period Face value As at September 30, 2017 Balance as at June 30, 2017 Unrealised loss on revaluation Sold during the Matured during Market period the period Carrying value value Rupees Market value as percentage of total investments Market value as percentage of net assets Market treasury bills Market treasury bills - 3 months (note 6.2.1) 100,000,000 50,000, ,000, ,233, ,052,448 (181,084) 15.89% 4.54% September 30, ,000,000 50,000, ,000, ,233, ,052,448 (181,084) 15.89% 4.54% June 30, ,935,424 99,935, The investment of Rs. 100,000,000 has been pledged with National Clearing Company of Pakistan Limited as security against settlement of the Fund's trades in terms of Circular No. 11 dated October 23, 2007 issued by SECP. 6.3 Commercial paper - held to maturity Name of investee company As at July 01, 2017 Purchased during the period Face value Matured during the period As at September 30, 2017 Carrying value as at September 30, (Rupees) Maturity Rating Face value as percentage of total investments Face value as percentage of net assets Face value as percentage of issue size JS Global Capital limited 27,000, ,000,000 26,790, Nov-17 AA 2.88% 0.82% 2.70% Crescent Steel and Allied Products - 80,000,000-80,000,000 75,137, Aug-18 A2 8.53% 2.44% 8.00% September 30, ,927,775 June 30, ,275,134

18 18 Faysal Savings Growth Fund Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 6.4 Net unrealised gain on investments classified as 'at fair Note value through profit or loss' - held-for-trading: September 30, June 30, (Un-audited) (Audited) (Rupees) Market value of investments 835,888, ,080,380 Less: Cost of investments 832,862, ,511,910 3,026,199 4,568,470 Net unrealised (loss) / gain on investments at beginning of the period (4,568,470) (7,323,531) Realised on disposal during the period 25,041 7,323,531 (4,543,429) - (1,517,230) 4,568, ACCRUED AND OTHER LIABILITIES SECP annual fee payable ,208 2,701,361 Accrued liabilities 3,738,465 3,759,167 Zakat payable 33,331 33,331 Provision for Sindh Workers' Welfare Fund (SWWF) 7.2 6,420,174 5,660,992 Provision for indirect taxes and duties ,281,365 18,281,365 29,110,543 30,436, This represents annual fee payable to the SECP in accordance with the NBFC Regulations, whereby the Fund is required to pay SECP annually an amount equal to 0.075% (June 30, 2017: 0.075%) per annum of the daily net assets value of the Fund. 7.2 The Finance Act, 2008 had introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a result of which it was construed that all Collective Investment Schemes (CISs) / mutual funds whose income exceeded Rs.0.5 million in a tax year were brought within the scope of the WWF Ordinance, thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever was higher. In light of this, the Mutual Funds Association of Pakistan (MUFAP) filed a constitutional petition in the Honourable Sindh High Court (SHC) challenging the applicability of WWF on CISs which is pending adjudication. Similar cases were disposed of by the Peshawar and the Lahore High Courts in which these amendments were declared unlawful and unconstitutional. However, these decisions were challenged in the Supreme Court of Pakistan (SCP). Subsequently, the Finance Act, 2015 introduced an amendment under which CISs / mutual funds have been excluded from the definition of industrial establishment subject to WWF under the WWF Ordinance. Consequently, mutual funds are not subject to this levy after the introduction of this amendment which is applicable from tax year Accordingly, no further provision in respect of WWF was made with effect from July 01, On November 10, 2016 SCP has passed a judgment declaring the amendments made in the Finance Acts, 2006 and 2008 pertaining to WWF as illegal citing that WWF was not in the nature of tax and could; therefore, not have been introduced through money bills. Accordingly, the aforesaid amendments have been struck down by the SCP. The Federal Board of Revenue has filed a petition in the SCP against the said judgment, which is pending hearing. While the petitions filed by the CISs on the matter are still pending before the SHC, MUFAP (collectively on behalf of the asset management companies and their CISs) has taken legal and tax opinions on the of the SCP judgement on the CISs petition before the SHC. Both legal and tax advisors consulted were of the view that the judgment has removed the very basis on which the demands were raised against the CISs. Therefore, there was no longer any liability against the CISs under the WWF Ordinance and that all cases pending in the SHC or lower appellate forums will now be disposed of in light of the earlier judgement of the SCP. Furthermore, as a consequence of the 18th amendment to the Constitution of Pakistan, in May 2015 the Sindh Workers Welfare Fund Act, 2014 (SWWF Act) had been passed by the government of Sindh as a result of which every industrial establishment located in the Province of Sindh, the total income of which in any accounting year is not less than Rs 0.5 million, is required to pay Sindh Workers Welfare Fund (SWWF) in respect of that year a sum equal to two percent of such income. The matter was taken up by the MUFAP with the Sindh Revenue Board (SRB) collectively on behalf of various asset management companies (including the Management Company of the Fund) whereby it was contested that mutual funds should be excluded from the ambit of the SWWF Act as these were not industrial establishments but were pass through investment vehicles and did not employ workers. The SRB held that mutual funds were included in the definition of financial institutions as per the Financial Institution (Recovery of Finances) Ordinance, 2001 and were, hence, required to register and pay SWWF under the SWWF Act. Thereafter, MUFAP has taken up the matter with the Sindh Finance Ministry to have CISs / mutual funds excluded from the applicability of SWWF.

19 Faysal Savings Growth Fund 19 Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) In view of the above developments regarding the applicability of WWF and SWWF on CISs / mutual funds, MUFAP has recommended the following to all its members on January 12, 2017: - based on legal opinion, the entire provision against WWF held by the CISs till June 30, 2015, to be reversed on January 12, 2017; and - the provision in respect of SWWF should be made on a prudent basis with effect from the date of enactment of the SWWF Act, 2014 (i.e. starting from May 21, 2015) on January 12, Accordingly, the provision for SWWF is being made on a daily basis going forward. The above decisions were communicated to SECP and the Pakistan Stock Exchange Limited on January 12, 2017 and the SECP vide its letter dated February 01, 2017 has advised MUFAP that the adjustments relating to the above should be prospective and supported by adequate disclosures in the financial statements of the CISs / mutual funds. Accordingly, the Fund has recorded these adjustments in its books on January 12, The provision for SWWF is now being made on a daily basis. Had the provision for SWWF not been recorded in the condensed interim financial information of the Fund, the net asset value of the Fund as at September 30, 2017 would have been higher by Re.0.20 per unit. 7.3 There is no change in the status of the appeal filed by the Federal Board of Revenue in the Supreme Court of Pakistan in respect of levy of Federal Excise Duty at the rate of 16% on the services of the Management Company, as reported in note 14.3 to the annual financial statements of the Fund for the year ended June 30, Had the provision not been made, the net assets value per unit of the Fund would have been higher by Rs.0.57 per unit (June 30, 2017: Rs.0.59 per unit). 8. CONTINGENCIES AND COMMITMENTS Margin Trading System (MTS) transactions entered into by the Fund which have not been settled as at period end Purchase transactions September 30, June 30, (Un-audited) (Audited) (Rupees) ,773,550 Sale transactions 23,846,851 64,104, TAXATION The income of the fund is exempt from income tax under Clause (99) of Part 1 of the Second Schedule to the Income Tax Ordinance, 2001 (Clause 99) and regulation 63 of the Non Banking Finance Companies and Notified Entities Regulations, 2008 subject to the condition that not less than 90 percent of the accounting income for the year, as reduced by capital gains, whether realized or unrealized, is distributed amongst the unit holders. The Fund is also exempt from the provisions of section 113 (minimum tax) under clause II A of Part IV to the Second Schedule of the Income Tax Ordinance, Since the management intends to distribute the income earned by the Fund during the period to the unit holders in cash in the manner as explained above, accordingly, no provision for taxation has been made in this condensed interim financial information for the period ended September 30, TRANSACTIONS WITH CONNECTED PERSONS / RELATED PARTIES 10.1 Connected persons / related parties include Faysal Asset Management Limited being the Management Company, CDC being the Trustee, other collective investment schemes managed by the Management Company, Faysal Asset Management Limited - Staff Provident Fund, Faysal Asset Management Limited - Staff Gratuity Fund, Faysal Bank Limited, Faysal Bank Limited - Staff Provident Fund, Faysal Bank Limited - Staff Gratuity Fund and other entities under common management and / or directorship and the directors and officers of the Management Company and the Trustee The transactions with connected persons are in the normal course of business, at contracted rates.

20 20 Faysal Savings Growth Fund Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) 10.3 The details of significant transactions carried out by the Fund with connected persons / related parties and balances with them atperiod end are as follows: Transactions during the period For the quarter ended September 30, (Un-audited) (Rupees) Faysal Asset Management Limited (Management Company) Remuneration of the Management Company 12,744,146 17,515,878 Sales tax on Management fee 1,656,739 2,277,064 Reimbursement of expense to the Management Company 769,462 1,195,137 Faysal Bank Limited (Group / Associated Company) Return on PLS savings accounts 200, ,772 Redemption of Nil units (2016: 475,970 units) - 48,705,837 Bank charges - 4,391 Directors and Key Management Personnel of the Management Company Redemption of 3,834 units (2016: Nil units) 391,796 - Central Depository Company of Pakistan Limited - (Trustee of the Fund) Remuneration of the Trustee 936,448 1,206,859 Sales tax on Trustee fee 121, ,892 Settlement charges 181, ,974 Unit holder holding 10% or more Gulf Palace Hotel Issue of Nil units (2016: 4,888,541 units) - 500,000,000 Outstanding balances September 30, June 30, (Un-audited) (Audited) (Rupees) Faysal Asset Management Limited (Management Company) Management fee payable 4,119,626 3,454,208 Sales tax payable on Management fee 535, ,053 Reimbursement of expenses payable to the Management Company 2,963,948 2,194,486 * Faysal Bank Limited (Group / Associated Company) Balance in PLS savings accounts 4,754,885 1,627,704 Return receivable on PLS savings accounts - 43,436 Units in issue 6,478,940 units (June 30, 2017: 6,478,940 units) 668,108, ,916,669

21 Faysal Savings Growth Fund 21 Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) September 30, June 30, (Un-audited) (Audited) (Rupees) Faysal Islamic Asset Allocation Fund - (Fund under common management) Receivable from Faysal Islamic Asset Allocation Fund - 21,793,283 Central Depository Company of Pakistan Limited - (Trustee of the Fund) Remuneration payable to the Trustee 290, ,680 Sales tax payable on Trustee fee 38,265 33,358 Security deposit 100, ,000 Directors and Key Management Personnel of the Management Company Units in issue NIl units (June 30, 2017: 3,834 units) - 391,106 Unit holder holding 10% or more FCCL Emlpoyees Provident Fund Units in issue 308,424 units (June 30, 2017: 308,424 units) 31,804,683 31,462,332 Adamjee Life Assurance Co. Ltd Units in issue 3,097,260 units (June 30, 2017: 3,097,260 units) 319,389, ,951,493 * Faysal Bank Limited also holds more than 10% units in the Fund. 11. FAIR VALUE OF FINANCIAL INSTRUMENTS IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements and disclosures about fair value measurement where such measurements are required as permitted by otherifrss. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). Financial assets which are tradable in an open market are revalued at the market prices prevailing on the statement of assets and liabilities date. The estimated fair value of all other financial assets andfinancial liabilities is considered not significantly different from book value. The following table shows financial instruments recognized at fair value, analyzed between those whose fair value is based on: Level 1: Level 2: Level 3: quoted prices in active markets for identical assets or liabilities; those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and those with inputs for the asset or liability that are not based on observable market data (unobservable inputs).

22 22 Faysal Savings Growth Fund Notes to the Condensed Interim Financial Information For the Quarter Ended September 30, 2017 (Un-Audited) September 30, 2017 'At fair value through profit and loss' - held-fortrading Other financial liabilities Total (Rupees) Financial liabilities Payable to the Management Company - 7,083,574 7,083,574 Remuneration payable to the Trustee - 290, ,421 Accrued and other liabilities - 3,738,465 3,738,465 Dividend payable - 11,246 11,246-11,123,706 11,123,706 June 30, 2017 'At fair value through profit and loss' - held-fortrading Other financial liabilities Total (Rupees) Financial liabilities Payable to the Management Company - 5,648,694 5,648,694 Remuneration payable to the Trustee - 252, ,680 Accrued and other liabilities - 3,759,167 3,759,167 Dividend payable - 48,558,754 48,558,754-58,219,295 58,219, GENERAL 12.1 Expense ratio As per Directive 23 of 2016 dated July 20, 2016 issued by SECP, the total expense ratio of the Fund is 2.24% as on September 30, 2017 which includes 0.37% representing Government Levies, Provision for SWWF and SECP fee The SECP vide its statutory notification (S.R.O) No.756(I) / 2017 dated August 3, 2017, has introduced certain amendments in Schedule V of the NBFC Regulations, resulting in certain changes in the presentation of Income Statement and Statement of Movement in Reserves or Unit Holders' Fund, and deletion of Distribution Statement. The same is applicable on the financial statements beginning on or after July 1, Accordingly, the financial and other impacts due to the applicability of the amended NBFC Regulations, 2008, if any, have been incorporated from this financial period. Had the above mentioned changes not been made in the condensed interim financial information the net loss for the period would have been lower by Rs million Figures are rounded off to the nearest rupee. 13. DATE OF AUTHORISATION FOR ISSUE This condensed interim financial information was authorised for issue on October 19, 2017 by the Board of Directors of the Management Company. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

23 Faysal Savings Growth Fund 23

24 24 Faysal Savings Growth Fund

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26 26 Faysal Savings Growth Fund (26.351) Quarter Ended September (18.953)

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