Condensed Interim Financial Information for the Nine Months & Quarter Ended March 31, 2014

Transcription

1 Condensed Interim Financial Information for the Nine Months & Quarter Ended March 31, 2014

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4 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 Distribution Statement Condensed Interim Statement of Cash Flows Condensed Interim Statement of Movement in Unit Holders Fund Notes to the Condensed Interim Financial Information

5 Dubai Islamic Bank Limited National Bank of Pakistan Al-Baraka Bank Limited

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7 The Board of Directors of the Faysal Asset Management Limited, the management company of the Faysal Islamic Savings Growth Fund (FISGF), is pleased to present the un-audited condensed interim financial information of FISGF for the nine months and quarter ended March 31, FINANCIAL HIGHLIGHTS Quarter Ended March 31 Nine Months Ended March 31 Total Income Operating Expenses (4.465) (4.466) (13.874) (11.974) Profit Before Tax Taxation Profit After Tax NAV per unit (Rs. Per unit) ISLAMIC MARKET REVIEW: During the quarter under review, the State Bank of Pakistan held two monetary policies (Jan 14 and Mar 14) in which the key policy rate remained unchanged at 10%. Over the period, headline inflation reduced substantially to average 8.1% as opposed to average of 9.7% for previous quarter. Notwithstanding the respite available in the form of positive real interest rates, the State Bank of Pakistan exercised monetary caution on the back of IMF guidelines and need to stabilize the Pak Rupee. The Central Bank kept the Islamic market highly liquid by not conducting any Ijara auction over the period. The last auction was held back in March 2013 and since then three Ijara Sukuks have matured with approximately PKR 137bn re-injected into the system. With another GoP Ijara Sukuk scheduled to mature in May, secondary market yields are expected to slide further. During the quarter, Karachi Electric issued Corporate Sukuks amounting to PKR 5,750 million. The IPO period for the issue was originally allotted approximately three months; however, the issue was fully subscribed within first two days owing to excess market liquidity. Furthermore, Corporate Sukuks traded at high premiums in the secondary market as institutional investors were prompt in replacing maturing assets (and fresh injections) with secondary market assets at absorbent offer levels. Going forward, the Ijara market is likely to take queue from any surprise announcement regarding Ijara auction. That said, this impact is likely to be limited since the auction target and subsequent acceptance of bids is expected to be lower than the prevalent liquidity in the system.

8 FUND PERFORMANCE Faysal Islamic Savings Growth Fund generated a net return of 9.10% in the third quarter of FY14 against its benchmark yield of 7.01%. During the quarter FISGF successfully subscribed to majority of power sector Sukuk issues which should raise the net return of the fund in the coming months. In line with the envisaged strategy, FISGF shall continue to increase exposure towards high yielding corporate Sukuks to further enhance yield of the fund without compromising on the credit quality. FUND RATING JCR-VIS has awarded the fund stability rating of AA-(f) for Faysal Islamic Savings Growth Fund (FISGF). This rating denotes High degree of stability in Net Asset Value. The credit rating also signifies the strength of the credit quality of financial instruments in the portfolio. It also denotes low portfolio risk, duration risk and interest rate risk INCOME DISTRIBUTION The Board of directors has approved fund interim distribution at the rate of 0.25% (i.e Rs per unit of par value of Rs.100 each) for the quarter ended March 31, 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: April 28, 2014 Enamullah Khan Chief Executive Officer

9 8 Condensed Interim Statement of Assets and Liabilities As at March 31, 2014 Assets Note (Un-Audited) (Audited) March 31, June 30, (Rupees) Bank balances and term deposit receipt 4 314,260, ,353,572 Investments 5 356,465, ,468,441 Prepayments, deposits and other receivables 6 7,750,351 9,443,502 Preliminary expenses and floatation costs 665,790 1,079,530 Total assets 679,141, ,345,045 Liabilities Payable to the Management Company 7 1,060,812 1,137,854 Remuneration payable to the Trustee 95, ,715 Accrued and other liabilities 8 5,163,622 4,117,947 Total liabilities 6,320,208 5,365,516 Net assets 672,821, ,979,529 Unit holders fund (as per the statement attached) 672,821, ,979,529 Contingencies and Commitments (Number of units) Number of units in issue 6,539,816 7,654, (Rupees) Net asset value per unit The annexed notes from 1 to 14 form an integral part of this condensed interim financial information.

10 9 Condensed Interim Income Statement For the Nine Months And Quarter Ended March 31, 2014 (Un-Audited) Nine months ended Quarter ended March 31, March 31, March 31, March 31, Note (Rupees) Income Profit earned on government securities and sukuk certificates 24,651,864 34,878,785 9,148,604 13,172,334 Return on bank balances and term deposit receipts 22,698,590 14,767,984 6,645,642 4,719,293 Net gain on investments classified as 'at fair value through profit or loss' - Net capital gain / (loss) on sale of investments 1,730,028 2,574,873 1,586,707 (525,330) - Net unrealised gain / (loss) on revaluation of investments 2,668,830 (704,670) 2,123,289 (1,509,340) Total income 51,749,312 51,516,972 19,504,242 15,856,957 Expenses Remuneration of the Management Company 7,879,687 7,298,531 2,502,468 2,832,803 Sales Tax on management fee 1,462,490 1,167, , ,249 Provision for federal excise duty on management fee 1,260, ,395 - Remuneration of the Trustee 891, , , ,051 Brokerage charges 59, ,500 12,700 65,000 Bank charges 31,771 17,044 12,382 7,858 Auditors' remuneration 352, , , ,000 SECP annual fee 395, , , ,632 Legal and professional charges 27,616 45,040-14,794 Fees and subscriptions 150, ,134 54,319 44,387 Settlement charges, federal excise duty and capital value tax 3,000 4,504 1,500 1,500 Amortisation of preliminary expenses and floatation costs 413, , , ,900 Printing charges and other expenses 187, ,804 61,644 61,643 Provision for Workers' Welfare Fund , , , ,229 Total expenses 13,874,215 11,973,831 4,464,870 4,466,046 Net income from operating activities 37,875,097 39,543,141 15,039,372 11,390,911 Element of (loss) / income and capital (losses) / gains included in prices of units sold less those in units redeemed - net (730,469) 4,945,400 (315,403) 1,654,313 Net income for the period before taxation 37,144,628 44,488,541 14,723,969 13,045,224 Taxation Net income for the period after taxation 37,144,628 44,488,541 14,723,969 13,045,224 Other comprehensive income for the period Total comprehensive income for the period 37,144,628 44,488,541 14,723,969 13,045,224 The annexed notes from 1 to 14 form an integral part of this condensed interim financial information.

11 10 Condensed Interim Distribution Statement For the Nine Months Ended March 31, 2014 (Un-Audited) March 31, March 31, (Rupees) Undistributed income brought forward [includes unrealised loss on investments of Rs.913,349 (2012: unrealised gain of Rs.72,935)] 16,150,927 14,655,334 Final bonus distribution for the year ended June 30, Rs (2012: Rs. 2.00) per unit declared for distribution on July 05, 2013 (7,752,172) (8,031,453) Final cash dividend for the year ended June 30, Rs (2012: Rs. 2.00) per unit declared for distribution on July 05, 2013 (1,432,830) (2,386,548) Interim bonus distribution for the month of July 31, Re (2012: Rs. Nil) per unit declared for distribution on August 01, 2013 (2,521,002) - Interim cash dividend for the month of July 31, Re (2012: Rs. Nil) per unit declared for distribution on August 01, 2013 (537,311) - Interim bonus distribution for the month of August 31, Re (2012: Rs. Nil) per unit declared for distribution on September 02, 2013 (2,628,697) - Interim cash dividend for the month of August 31, Re (2012: Rs. Nil) per unit declared for distribution on September 02, 2013 (537,311) - Interim bonus distribution for the quarter ended September 30, Re (2012: Rs. 2.5) per unit declared for distribution on October 29, 2013 (3,202,078) (11,499,628) Interim cash dividend for the quarter ended September 30, Re (2012: Rs. 2.5) per unit declared for distribution on October 29, 2013 (656,714) (2,985,062) Interim bonus distribution for the month of October 31, Re (2012: Rs. Nil) per unit declared for distribution on November 01, 2013 (1,756,013) - Interim cash dividend for the month of October 31, Re (2012: Rs. Nil) per unit declared for distribution on November 01, 2013 (358,207) - Interim bonus distribution for the month of November 30, Re (2012: Rs. Nil) per unit declared for distribution on December 02, 2013 (2,828,749) - Interim cash dividend for the month of November 30, Re (2012: Rs. Nil) per unit declared for distribution on December 02, 2013 (597,012) - Interim bonus distribution for the quarter ended December 31, Re (2012: Rs. 1.75) per unit declared for distribution on February 24, 2014 (4,383,763) (11,462,239) Interim cash distribution for the quarter ended December 31, Re (2012: Rs. 1.75) per unit declared for distribution on February 24, 2014 (858,619) (2,089,544) Interim bonus distribution for the month of January 31, Re (2013: Rs. Nil) per unit declared for distribution on February 03, 2014 (2,396,153) Interim cash distribution for the month of January 31, Re (2013: Rs. Nil) per unit declared for distribution on February 03, 2014 (483,311) Interim bonus distribution for the month of February 28, Re (2013: Rs. Nil) per unit declared for distribution on March 03, 2014 (2,862,740) Interim cash distribution for the month of February 28, Re (2013: Rs. Nil) per unit declared for distribution on March 03, 2014 (558,103) Net income for the period after taxation 37,144,628 44,488,541 Undistributed income carried forward 16,944,770 20,689,401 [includes unrealised gain on investments of Rs. 2,668,830 (2013: unrealised loss on investments of Rs. 704,670)] The annexed notes from 1 to 14 form an integral part of this condensed interim financial information.

12 11 Condensed Interim Statement of Cash Flows For the Nine Months Ended March 31, 2014 (Un-Audited) March 31, March 31, Note (Rupees) CASH FLOWS FROM OPERATING ACTIVITIES Net income for the period before taxation 37,144,628 44,488,541 Adjustments for non-cash and other items: Net gain on sale of investments classified as 'at fair value through profit or loss' (1,730,028) (2,574,873) Net unrealised gain on revaluation of investments classified as 'at fair value through profit or loss' (2,668,830) 704,670 Profit earned on government securities and sukuk certificates (24,651,864) (34,878,785) Return on bank balances and term deposit receipts (22,698,590) (14,767,984) Element of loss / (income) and capital losses / (gains) included in prices of units sold less those in units redeemed - net 730,469 (4,945,400) Amortisation of preliminary expenes and floatation costs 413, ,740 (13,460,475) (11,560,091) Decrease in assets Prepayments, deposits and other receivables 95, ,134 Increase / (Decrease) in liabilities Payable to the Management Company (77,042) (1,807,608) Remuneration payable to the Trustee (13,941) 36,739 Accrued and other liabilities 1,045, , ,692 (840,115) (12,410,686) (12,295,072) Proceeds from sale / redemption of investments 540,345, ,041,803 Payment made against purchase of investments (511,049,000) (1,239,104,000) Profit received on government securities 18,475,745 25,032,045 Profit received on unlisted debt securities - 1,349,753 Profit received on sukuk certificates 1,851,661 - Return received on bank balances and term deposit receipts 21,726,991 15,163,687 Net cash generated from / (used in) operating activities 58,939,786 (221,811,784) CASH FLOWS FROM FINANCING ACTIVITIES Amounts received against issue of units 170,715, ,548,894 Payments made against redemption of units (314,729,670) (307,616,306) Dividend paid (6,019,418) (7,461,154) Net cash (used in) / generated from financing activities (150,033,278) 207,471,434 Net decrease in cash and cash equivalents during the period (91,093,492) (14,340,350) Cash and cash equivalents at the beginning of the period 405,353, ,086,319 Cash and cash equivalents at the end of the period 4 314,260, ,745,969 The annexed notes from 1 to 14 form an integral part of this condensed interim financial information.

13 12 Condensed Interim Statement of Movement in Unit Holders Fund For the Nine Months Ended March 31, 2014 (Un-Audited) March 31, March 31, (Rupees) Net asset value per unit at the beginning of the period Net asset value per unit at the end of the period Net assets at the beginning of the period 784,979, ,520,940 Amounts received on issue of units * 170,715, ,548,894 Amounts paid on redemption of units ** (314,729,670) (307,616,306) (144,013,860) 214,932,588 Element of loss / (income) and capital losses/ (gain) included in prices of units sold less those in units redeemed - net 730,469 (4,945,400) Final cash dividend for the year ended June 30, Rs (2012: Rs. 2.00) per unit declared for distribution on July 05, 2013 (1,432,830) (2,386,548) Interim cash dividend for the month of July 31, Re (2012: Rs. Nil) per unit declared for distribution on August 01, 2013 (537,311) - Interim cash dividend for the month of August 31, Re (2012: Rs. Nil) per unit declared for distribution on September 02, 2013 (537,311) - Interim cash dividend for the quarter ended September 30, Re (2012: Rs. 2.5) per unit declared for distribution on October 29, 2013 (656,714) (2,985,062) Interim cash dividend for the month of October 31, Re (2012: Rs. Nil) per unit declared for distribution on November 01, 2013 (358,207) - Interim cash dividend for the month of November 30, Re (2012: Rs. Nil) per unit declared for distribution on December 02, 2013 (597,012) - Interim cash distribution for the quarter ended December 31, Re (2012: Rs. 1.75) per unit declared for distribution on February 24, 2014 (858,619) (2,089,544) Interim cash distribution for the month of January 31, Re (2013: Rs. Nil) per unit declared for distribution on February 03, 2014 (483,311) - Interim cash distribution for the month of February 28, Re (2013: Rs. Nil) per unit declared for distribution on March 03, 2014 (558,103) - Net capital gain on sale of investments 1,730,028 2,574,873 Net unrealised gain / (loss) on revaluation of investments 2,668,830 (704,670) Other net income for the period 32,745,770 42,618,338 Other comprehensive income for the period - - Total comprehensive income for the period 37,144,628 44,488,541 Net assets at the end of the period 672,821, ,535, (Number of units) * Number of units issued (including bonus units 297,801 issued during the period ended March 31, 2014 and 304,917 bonus units issued during the period ended March 31, 2013) 1,970,916 5,403,765 ** Number of units redeemed 3,085,270 2,943,676 The annexed notes from 1 to 14 form an integral part of this condensed interim financial information.

14 13 Notes to the Condensed Interim Financial Information For The Nine Months Ended March 31, 2014 (Un-audited) 1. LEGAL STATUS AND NATURE OF BUSINESS Faysal Islamic 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 June 04, It has been constituted under a Trust Deed, dated April 22, 2009, 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 incorporated under the Companies Ordinance, The Fund is a Shariah Compliant open ended Islamic income fund and offers units for public subscription on a continuous basis. The units are transferable and can also be redeemed by surrendering to the Fund. The units are listed on the Karachi Stock Exchange Limited (KSE). The Fund was launched on June 14, The principal activity of the Fund is to invest in Shariah Compliant money market and debt securities having good credit quality rating and liquidity. The Fund is categorised as a "Islamic Income Scheme" as per the Circular 07 of 2009 issued by Securities and Exchange Commission of Pakistan. The JCR - VIS Credit Rating Company Limited (JCR - VIS) has assigned a " AA- (f)" fund ranking to Faysal Islamic Savings Growth Fund as of August 02, JCR - VIS has awarded an "AM3+" asset manager rating to the Management Company as of December 27, BASIS OF PREPARATION This condensed interim financial information has been prepared in accordance with the requirements of International Accounting Standard 34: Interim Financial Reporting, the Trust Deed, the NBFC Rules, Non- Banking Finance Companies and Notified Entities Regulations, 2008 (NBFC Regulations) and directives issued by SECP. In case where requirements differ, the requirements of the Trust Deed, the NBFC Rules, the NBFC Regulations or the directives issued by the SECP prevail. The 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 financial statements of the Fund for the year ended June 30, ACCOUNTING POLICIES AND ESTIMATES The accounting policies, basis of accounting estimates applied and methods of computation adopted in the preparation of this condensed interim financial information and financial risk management objectives and policies are the same as those applied in the preparation of the annual financial statements of the Fund for the year ended June 30, 2013, except as described in note 3.1.

15 14 Notes to the Condensed Interim Financial Information For The Nine Months Ended March 31, 2014 (Un-audited) 3.1 During the period, following amendments, interpretations and improvements to the accounting standards became effective: Standard, interpretation or amendment IFRS 7 Presentation of Financial Statements Presentation of items of comprehensive income Amendments enhancing disclosures about offsetting of financial assets and financial liabilities IAS 19 IFRIC 20 Employee Benefits (Revised) Stripping Costs in the Production Phase of a Surface Mine Improvements to Accounting Standards Issued by the IASB IAS 1 IAS 16 IAS 32 IAS 34 Presentation of Financial Statements - Clarification of the requirements for comparative information Property, Plant and Equipment Clarification of Servicing Equipment Financial Instruments: Presentation Tax Effects of Distribution to Holders of Equity Instruments Interim Financial Reporting Interim Financial Reporting and Segment Information for Total Assets and Liabilities The adoption of the above standards, amendments, interpretations and improvements did not have any effect on this condensed interim financial information of the Fund. 3.2 The significant judgements made by management in applying the accounting policies and the key sources of estimation uncertainty were the same as those applied to the financial statements for the year ended June 30, BANK BALANCES & TERM DEPOSIT RECEIPT Note (Un-Audited) (Audited) March 31, June 30, (Rupees) Cash at bank - PLS saving accounts ,260, ,353,572 Term Deposit Receipt ,000, ,260, ,353, These carry mark-up ranging from 7.00% to 7.90% (June 30, 2013: 6.00% to 8.75%) per annum. 4.2 This carries mark-up at the rate of 10.15% per annum and has maturity on May 05, INVESTMENTS At fair value through profit or loss - held-for-trading Sukuk Certificates ,668,830 - Designated 'at fair value through profit or loss' Government Securities ,125,000 Held to Maturity Commercial Paper - Sukuk certificates ,492,121 74,343,441 Certificate of Musharika - Sukuk certificates ,304, ,465, ,468,441

16 15 Notes to the Condensed Interim Financial Information For the Nine Months Ended March 31, 2014 (Un-audited) 5.1 Sukuk Certificates - at fair value through profit or loss - held-for-trading Name of Investee company Rate of Return per annum As at July 01, 2013 Purchased during the period Number of Certificates Sold during the period Redeemed during the period As at March 31, 2014 Carrying Value Balance as at March 31, 2014 Market Value Unrealised Gain / (Loss) on Revaluation Maturity Carrying value as percentage of total investments Carrying Value as percentage of net assets Sukuk Certificates WAPDA 3rd Sukuk 10.56% - 21,600 4,200-17,400 85,000,000 87,668,830 2,668,830 October, % 12.63% KE Azam Sukuk III 12.81% - 19, ,800 99,000,000 99,000,000 - March, % 14.71% - 41,400 4,200-37, ,000, ,668,830 2,668, % 27.35% Significant terms and conditions of Sukuk Certificates are as follows: Name of Security Number of Certificates held Face Value Per Certificate (Rupees) Mark-up Rate (per annum) Maturity Secured / Unsecured Rating Sukuk Certificates - Unlisted WAPDA 3rd Sukuk 17,400 5, % + 6 months KIBOR October, 2021 Secured AAA Sukuk Certificates - Listed KE Azam Sukuk III 19,800 5, % + 3 months KIBOR March, 2019 Secured A+ 5.2 Government Securities - designated 'at fair value through profit or loss' Particulars Rate of Return per annum Maturity As at July 01, 2013 Purchased during the period Face Value Balance as at March 31, 2014 Sold during the period Matured during the period As at March 31, 2014 Carrying Value Market Value Unrealised Gain / (Loss) on Revaluation Market Value as percentage of total investments Market Value as percentage of net assets (Rupees) GOP Ijara Sukuks GOP Ijara (April 30,2012) ,000,000-50,000, GOP Ijara (Sept 18,2012) ,000, ,000, GOP Ijara (Nov 15,2010) ,000,000 70,000, ,000, ,000,000 70,000, ,000, Commercial Papers - Sukuk Certificates (Secured) - held to Maturity Name of the Investee Company Rate of Return per annum As at July 01, 2013 Face value Balance as at March 31, 2014 Purchased during the period Matured during the period As at March 31, 2014 Carrying Value (Rupees) Maturity Rating Face Value as percentage of total investments Face Value as percentage of net assets Hub Power Company Limited - 72,000,000-72,000, Lalpir Power Company Limited 10.72% - 95,000,000-95,000,000 99,492,121 April 22, 2014 A % 14.12% 72,000,000 95,000,000 72,000,000 95,000,000 99,492, % 14.12% 5.4 Certificate of Musharika - Sukuk certificates (secured) - held to Maturity Name of the Investee Company Rate of Return per annum As at July 01, 2013 Face value Balance as at March 31, 2014 Purchased during the period Matured during the period As at March 31, 2014 Carrying Value (Rupees) Maturity Rating Face Value as percentage of total investments Face Value as percentage of net assets Meezan Bank Limited ,000,000 70,000, Standard Chartered Modarba 10.00% - 69,000,000-69,000,000 70,304,384 July, 2014 A % 10.26% - 139,000,000 70,000,000 69,000,000 70,304, % 10.26% 5.5 Details of Non-Compliant Investments Name of Non-Compliant investment Note Type of Investment Value of Investment Limit of Investment in a single Company as a percentage of net assets Investment as at period end as a percentage of Gross assets Net assets Standard Chartered Modarba Certificate of Musharika 69,000,000 10% 10.16% 10.26% The above exposure is in excess of the limit prescribed by the NBFC Regulations and disclosure for breach of exposure limit is made as required by the circular no 16 of 2010 dated July 07, 2010 by SECP. However, the NBFC Regulations allow three months time period to regularize these exposures.

17 16 Notes to the Condensed Interim Financial Information For the Nine Months Ended March 31, 2014 (Un-audited) 6. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES - considered good Note (Un-Audited) (Audited) March 31, June 30, (Rupees) Prepayments 49, ,958 Security deposit - Central Depository Company of Pakistan Limited 100, ,000 Profit receivable on government securities - 7,177,348 Profit receivable on Sukuk Certificates 4,607,695 - Return receivable on bank balances and term deposit 2,992,795 2,021,196 7,750,351 9,443, PAYABLE TO THE MANAGEMENT COMPANY Management fee payable , ,091 Sales tax on management fee payable 201, ,763 1,060,812 1,137, The Management Company is entitled to a remuneration for services rendered to the Fund under the provisions of the NBFC Regulations during the first five years of a Fund s existence of an amount not exceeding three percent of the average annual net assets of the Fund and thereafter of an amount equal to two percent of such assets. The Management Company has charged its remuneration at the rate of 1.5% per annum of the daily net asset value of the Fund (June 30, 2013: 1.5% per annum). 8. ACCRUED AND OTHER LIABILITIES SECP annual fee payable 395, ,334 Accrued liabilities 697, ,739 Provision for Workers' Welfare Fund 8.1 3,528,013 2,769,959 Provision for federal excise duty on remuneration of the Management Company ,167 92,915 5,163,622 4,117, Through the Finance Act, 2008, an amendment was made in section 2(f) of the Workers' Welfare Fund Ordinance, 1971 (the WWF Ordinance) whereby the definition of 'Industrial Establishment' has been made applicable to any establishment to which West Pakistan Shops and Establishment Ordinance, 1969 applies. As a result of this amendment, it is alleged that all Collective Investment Schemes (CISs) / mutual funds whose income exceeds Rs.0.5 million in a tax year have been 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 is higher. In this regard, a constitutional petition has been filed by certain CISs through their trustees in the Honourable High Court of Sindh (SHC), challenging the applicability of WWF to the CISs, which is pending adjudication. In August 2011, the Lahore High Court (LHC) issued a judgement in response to a petition in similar case whereby the amendments introduced in WWF Ordinance through Finance Acts, 2006 and 2008 have been declared unconstitutional and therefore struck down. However, during March 2013, the SHC larger bench issued a judgement in response to various petitions in similar cases whereby the amendments introduced in the Workers Welfare Fund Ordinance, 1971 through Finance Act, 2006 and 2008 respectively (Money Bills) have been declared constitutional and overruled a single-member bench judgement issued in August MUFAP's legal counsel is of the view that the stay granted to mutual funds in respect of recovery of WWF remains intact and the constitutional petitions filed by the Mutual Funds to challenge the Workers Welfare Fund contribution have not been affected by the Judgement passed by the larger bench of SHC. As the matter relating to levy of WWF is currently pending in the SHC, the Management Company, as a matter of prudence, has decided to retain and continue with the provision for WWF amounting to Rs.3.53 million (June 30, 2013: Rs.2.77 million) in this condenced interim financial information.had the provision not been made, the net asset value per unit of the Fund would have been higher by Re (0.52%) per unit (June 30,2013: Rs.0.36 (0.35%) per unit).

18 Notes to the Condensed Interim Financial Information For The Nine Months Ended March 31, 2014 (Un-audited) 8.2 As per the requirements of the Finance Act 2013, Federal Excise Duty (FED) at the rate of 16% on the services of the Management Company has been applied effective June 13, The Management Company is of the view that since the remuneration is already subject to provincial sales tax, further levy of FED results in double taxation, which does not appear to be the spirit of the law. The matter has been collectively taken up by the Management Company jointly with other Asset Management Companies and Central Depository Company of Pakistan Limited on behalf of schemes through a constitutional petition filed in the Honourable Sindh High Court (SHC) during September 2013 which is pending adjudication. However, the SHC has issued a stay order against the recovery of FED. The Fund, as a matter of abundant caution, has charged FED in its financial statements with effect from June 13, CONTINGENCIES AND COMMITMENTS There were no contingencies and commitments outstanding as at March 31, TAXATION The income of the fund is exempt from income tax under Clause 99 of Part I of the Second Schedule to the Income Tax Ordinance, 2001 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 Management Company intends to distribute not less than 90 percent of its annual accounting income, if any, to comply with the above clause at year end. Accordingly, no provision for current and deferred tax has been made in this condensed interim financial information. In March 2014, the taxation officers, in case of certain funds, have amended the assessment under Section 120 of the Income Tax Ordinance, These orders have, in form, denied the exemption to the income of the fund under Clause 99 of Part 1 of the Second Schedule to the Ordinance, however the context and the discussion with the Federal Board of Revenue reveal that a different viewpoint, not supported by law, is being adopted for the tax effect and incidence of the distribution made by the fund by way of bonus units. There seems to be an apparent contradiction as tax effect and incidence on bonus unit if any, being a issue related to income of the recipient of distribution does not effect the validity of exemption to the fund. This industry issue has been examined by legal experts and tax advisors and there is unanimity of view that under the present regulations, including the provisions of Clause 99, tax department s contentions are primarily erroneous and not tenable under the law. Appropriate appellate and executive remedies are being adopted to resolve the matter. No provision has been made in these accounts for the demands raised in the orders as the management company is confident that no tax incidence arises to the fund under the present clear regulations on the matter TRANSACTIONS WITH CONNECTED PERSONS / RELATED PARTIES Connected persons / related parties include Faysal Asset Management Limited being the Management Company, Central Depository Company of Pakistan Limited 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. The details of significant transactions carried out by the Fund with connected persons / related parties and balances with them at period end are as follows: (Un-Audited) March 31, March 31, Transactions during the period Faysal Asset Management Limited (Management Company) Remuneration of Management Company 7,879,687 7,298,531 Sales tax on management fee 1,462,490 1,167,765 Preliminary expenses and floatation costs - paid during the period - 2,183,340 FED paid during the period 718,722 - Faysal Bank Limited (Group company / Associated Company) Redemption of 150,000 units (2013: Nil units) 15,338,400 - Cash dividend paid 5,007,600 6,250,000 Central Depository Company of Pakistan Limited - (Trustee of the Fund) Remuneration of Trustee 891, ,199 Settlement charges 3,000 4,504 Directors and Key Management Personnel of the Management Company Bonus issue of Nil units (2013: 81 units) - 8,188

19 18 Notes to the Condensed Interim Financial Information For The Nine Months Ended March 31, 2014 (Un-audited) Units holders having 10% or more units Farnaz Mustafa Khalid: (Un-Audited) March 31, March 31, Redemption of Nil units (2013: 789,540 units) - 81,006,767 Bonus issue of Nil units (2013: 33,940 units) - 3,437,605 The Bank of Khyber - Islamic Banking Issue of Nil units (2013: 751 units) - 76,145 Hamdard Lab. Waqf Pakistan Limited Bonus issue of 44,804 units (2013 : Nil units) 4,566,310 - Issue of 196,734 units (2013 : Nil units) 20,000,000 - Outstanding balances (Un-Audited) (Audited) March 31, June 30, (Rupees) Faysal Asset Management Limited (Management Company) Remuneration payable to the management Company 859, ,091 Sales tax on management fee payable 201, ,763 Faysal Bank Limited (Group company / Associated Company) Units in issue 850,000 units (June 2013: 1,000,000 units) 87,448, ,555,800 Central Depository Company of Pakistan Limited - (Trustee of the Fund) Remuneration payable to the Trustee 95, ,715 Security Deposit 100, ,000 Units holders having 10% or more units HAMDARD Lab. Waqf Pak Ltd. Units in issue 963,454 units (2013: Nil units) 99,120, SUBSEQUENT EVENT The Chief Executive Officer on behalf of the Board of Directors on April 02, 2014 and the Board of Directors of the Management Company in their meeting held on April 28, 2014 have declared an interim payouts at the rate of 0.60% i.e. Rs per unit and 0.25% i.e. Rs per unit respectively (March 31, 2013: 1.85% i.e Rs per unit). This condensed interim financial information of the Fund for the period ended March 31, 2014 does not include the effect of the payout which will be accounted for in the financial statements of the Fund subsequent to the period end. 13. GENERAL 13.1 Figures are rounded off to the nearest rupee. 14. DATE OF AUTHORISATION FOR ISSUE This condensed interim financial information were authorised for issue on April 28, 2014 by the Board of Directors of the Management Company.

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