Islamic Asset Allocation Fund. Financial Statements for the Quarter Ended September 30, 2015

Transcription

1 Islamic Asset Allocation Fund Financial Statements for the Quarter Ended September 30,

2 The (FIAAF) is an open-ended shariah compliant mutual fund. FIAAF seeks to provide long-term capital appreciation optimizing through broad mix of asset classes encompassing shariah compliant equity, fixed income & money market instruments.

3 Fund Information 04 Mission Statement 05 Report of the s of the Management Company 06 Condensed Interim Statement of Assets and Liabilities 09 Condensed Interim Income Statement 10 Condensed Interim Distribution Statement 11 Condensed Interim Statement of Cash Flows 12 Condensed Interim Statement of Movement in Unit Holders Fund 13 14

4 Mr. Nauman Ansari, Chairman Mr. Razi-ur-Rahman Khan, Mr. Osman Khan, Syed Ibad-ur-Rehman Chishti, Mr. Enamullah Khan, Chief Executive Officer Chief Financial Officer & Company Secretary of the Management Company Mr. Umairullah Khan Mr. Razi-ur-Rahman Khan, Chairman Mr. Osman Khan, Member Syed Ibad-ur-Rehman Chishti, Member HR Committee Mr. Osman Khan, Chairman Mr. Razi-ur-Rahman Khan, Member Mr. Enamullah Khan, Member Central Depository Company of Pakistan Limited, CDC House, 99B, Block B, S.M.C.H.S., Main Shahrah-e-Faisal, Karachi. NIB Bank Limited Soneri Bank Limited Bank Alfalah Limited Faysal Bank Limited The Bank of Punjab Askari Bank Limited UBL Ameen - Islamic Banking Deloitte Yousuf Adil, Chartered Accountants

5 The endeavours to provide investors with an opportunity to earn long-term capital appreciation optimizing through broad mix of asset classes encompassing shariah compliant equity, fixed income & money market instruments.

6 The Board of s of the Faysal Asset Management Limited, the management company of the (FIAAF), is pleased to present the un-audited condensed interim financial information of FIAAF for the period ended September 30,. The Fund commenced its operations from September 9,. FINANCIAL HIGHLIGHTS Quarter Ended September 30, Total income (loss) (4.688) Operating expenses (0.500) Loss before tax (5.188) Element of income (4.932) Taxation Loss after tax NAV per unit (Rs. Per unit) (4.932) ECONMIC REVIEW The economy carried on the wave of continued resilience and recovery in 1QFY16 with some remarkable achievements. Inflation hit the lowest level in 42 years at an average of 1.61% YoY in 1QFY16 which prompted another round of monetary easing as State Bank of Pakistan cut the policy rate in September by another 50 bps to take the benchmark Discount Rate to 6.5% and Policy Rate to 6.0%. Initiation of the projects under China Pak Economic Corridor (CPEC) agreement, surging foreign exchange reserves, successful reviews with IMF, inflow of workers remittances during the month of Eid, issuance of Eurobond and receipt of CSF inflows boosted the economic recovery. Inflationary outlook remained benign with headline inflation clocking in at an average of 1.61% YoY in 1QFY16 against 7.52% YoY in the same period last year. The significant decline in 1QFY16 decline was due to sharp decline in transport inflation which moved into a negative territory at an average of 11.6% YoY in 1QFY16 as compared to +4.9% in the same period last year following tumbling international crude oil prices. Moreover, heavy weight food inflation (34.8%) increased at a moderate pace of average 0.3% YoY in 1QFY16 against 6.60% in the same period last year keeping 1QFY16 CPI suppressed owing to smooth supply of perishable food items throughout the year coupled with muted imported inflation on account of stable exchange rate along with lower prices of major international commodities. On the External Account, which has been the weakest link in Pakistan s economy,

7 considerable improvement was witnessed owing to significant shrinkage of current account deficit from USD 1,631 million (2.4% of GDP) in 1QFY15 to USD 109 million (0.1% of GDP) in 1QFY16, benefiting from a robust growth in workers remittances (up by 21.53% YoY), higher inflows under Coalition Support Fund (CSF), and a sharp reduction in oil prices (25% YoY), SBP s liquid FX reserves more than doubled the level seen a year ago standing at USD 18.3 billion seen at the end of 1QFY16 as compared to USD 13.5 billion in the same period last year. Another feature that added rosiness in the picture was the successful completion of Eight Reviews under the IMF program which is broadly on track since the agreement entered into in September IMF approved Eighth Review under EFF (Extended Fund Facility) in September which further surged up the foreign exchange reserves of the country. Moreover, with the issue of Eurobond worth USD 500 million with the international institutions, financial and capital account under current account got a positive trigger to further support the CAD. Going forward, economy is expected to grow at 5.5% in FY16, inflation to remain in single digit at % (SBP s target), foreign exchange reserves to surge to USD 20 billion by 2018 owing to proceeds from successful approval of IMF s tranches and privatization mandates, lower international oil prices to provide breather to the external account further alleviating pressures on the economy, remittances to stand at elevated positions, and CSF inflows to be on track. EQUITY REVIEW The Bourse closed the first quarter with a QoQ loss of 6.14% and closed at 32, points. Despite first month performance of 3.9% MoM and average daily turnover registering a jump of 18% MoM beating the historical trend of market activities during the month end of Ramadan and EID season, the bourse could not maintain momentum as over August, China devalued its currency by 2% due to slow economic progress which caused panic and resulted in foreign investors divesting their positions in the region. KSE was hit hard and saw the bourse losing 1,400 points in a single day. The only positive out of the current scenario was the fact that the present market sentiments were driven by external factors and local economic indicators remained positive which could facilitate in improving investor s confidence. Unfortunately by the end of August rumors broke out that certain brokers have come under the radar of NAB for malpractices which provided further downward pressure and any hope of market regaining lost footing looked bleak. Post July the market recorded a MoM loss of 2.84% & 7.02% in August and September respectively with low trading volumes. Clarification from the NAB regarding the scope of investigation and cut in policy rate by the State Bank failed to provide the much needed respite. During the first Quarter of FY16 the Mutual Funds were net sellers with USD 6.48mn which seemed likely as the funds cleared out positions to reduces losses and improve cash balance to invest in scrip with strong fundamentals. Foreign investors were net sellers as well with

8 8 USD mn due to reasons mentioned above. However, Banks/DFI s provided the needed support to the volumes and were net buyers with USD 18.79mn. Among the sectors Oils & Gas, Travel & Leisure, Fixed Line Telecommunication, Forestry (Paper and Board) and Automobile and Parts were the top 5 non-performers for the Quarter ended September 30th, loosing 26.95%, 25.49%, 5.15%, 9.11% and 7.27% respectively. Top 5 performing sector for the quarter were Software and Computer Services (25.95%), Support Services (24.09%), Life Insurance (20.97%), Tobacco (13.46%) and Leisure Goods (10.45%). Going forward we expect foreign selling to continue but not with the same momentum observed in the first quarter. Our strategy is focused towards taking advantage of the present situation and investing in securities with strong fundamentals with a medium to long term view. FUND PERFORMANCE During the first quarter of the current fiscal year Faysal Asset Management launched its new fund on September 8th,. Your Fund generated return of -2.63% as the overall equity remained weak. Due to the Fund being in the early stage of its life cycle and depressed market condition made the management to maintain cash position with 39.63% allocated to Equities by the end of the first quarter. Going forward your Fund will increase its equity exposure in growth oriented, strong fundamental Shariah compliant stocks as we expect the market situation to reverse in the coming quarter. FUND RANKING Since the FIAAF commenced its operations from September 9,, the Fund s performance ranking has not yet been assigned. ACKNOWLEDGEMENT The Board of s of the Management Company thanks the unit holders for their confidence in the Management, 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. For and on behalf of the Board Karachi: October 28, Enamullah Khan Chief Executive Officer

9 9 Condensed Interim of Assets and Liabilities FAYSALStatement ISLAMIC ASSET ALLOCATION FUND CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES As at September 30, AS AT SEPTEMBER 30, Note ASSETS Balance with banks Investments Dividend, deposits and other receivables Preliminary expenses and floatation costs Total assets September 30, (Un-Audited) (Rupees) ,262,393 74,472,800 3,283,705 1,915, ,934, ,901,566 48, ,044 5,211,709 LIABILITIES Payable to the Management Company Payable to the Central Depository Company of Pakistan Limited - Trustee Accrued expenses and other liabilities Total liabilities NET ASSETS 182,722,345 Unit holders' fund (as per statement attached) 182,722,345 Contingencies and commitments 14 (Number of units) Number of units in issue 1,876,546 Net assets value per unit (Rupees) The annexed notes from 1 to 19 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief ExecChief utiveexecutive Officer

10 10 FAYSAL ISLAMIC ASSET ALLOCATION FUND Condensed Interim Income Statement CONDENSED INTERIM INCOME STATEMENT FOR THE PERIOD ENDED 30, For the Quarter Ended September 30,SEPTEMBER (Un-Audited) INCOME Net gain on investments: - Net capital gain on sale of investments classified as - at fair value through profit or loss' - held-for-trading - Net unrealised loss on revaluation of investments classified as 'at fair value through profit or loss' - held-for-trading For the period from September 9 to September 30, (Un-Audited) Note (Rupees) 37,160 (5,265,708) (5,228,548) Dividend income on investment classified as at fair value through profit or loss' - held-for-trading Return on bank balances Total income 165, ,661 (4,687,887) EXPENSES Remuneration of the Management Company Sales tax on management fee Provision for indirect taxes and duties Remuneration of Central Depository Company of Pakistan Limited - Trustee Sales tax on Trustee fee Brokerage charges Bank charges Annual fee - Securities and Exchange Commission of Pakistan Auditors' remuneration Legal and professional charges Fees and subscriptions Settlement charges, federal excise duty and capital value tax Printing charges and other expenses Amortization of preliminary expenses and floatation costs Total expenses Net loss from operating activities 230,221 32,231 41,991 42,192 5,907 51,400 1,392 10,935 18,986 15,068 11,223 15,068 23, ,983 (5,187,870) Element of income and capital gains included in prices of units issued less those in units redeemed 255,652 Net loss for the period before taxation (4,932,218) Taxation - 15 Net loss for the period after taxation (4,932,218) - Other comprehensive income for the period Total comprehensive loss for the period (4,932,218) The annexed notes from 1 to 19 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Execu tive Executive Officer Chief

11 11 Condensed Interim Distribution Statement ISLAMIC ASSET ALLOCATION FUND For the Quarter EndedFAYSAL September 30, (Un-Audited) CONDENSED INTERIM DISTRIBUTION STATEMENT FOR THE PERIOD ENDED SEPTEMBER 30, For the period from September 9 to September 30, (Un-Audited) (Rupees) - Undistributed income brought forward Net loss for the period after taxation (4,932,218) Accumulated loss carried forward [includes unrealised loss on investments of Rs. 5,265,708] (4,932,218) The annexed notes from 1 to 19 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Executive

12 12 FAYSAL ISLAMIC ASSET ALLOCATION FUND Condensed Interim Cash Flow CONDENSED INTERIM CASH FLOWStatement STATEMENT FOR THE PERIOD ENDED 30, For the Quarter Ended September 30,SEPTEMBER (Un-Audited) For the period from September 9 to September 30, (Un-Audited) (Rupees) CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period before taxation (4,932,218) Adjustment for non-cash and other items: Net gain on investments: - Net capital gain on sale of investments classified as - at fair value through profit or loss' - held-for-trading - Net unrealised loss on revaluation of investments classified as 'at fair value through profit or loss' - held-for-trading Dividend income - on investments classified as 'at fair value through profit or loss' - held-for-trading Return on bank balances Amortization of preliminary expenses and floatation costs Element of income and capital gains included in prices of units issued less those in units redeemed (37,160) 5,265,708 (165,000) (375,661) 23,369 (255,652) (476,614) (Increase) / decrease in assets Prepayments, deposits and other receivables (2,743,099) Increase / (decrease) in liabilities Payable to the Management Company Payable to the Central Depository Company of Pakistan Limited - Trustee Accrued expenses and other liabilities 2,963,041 48, ,044 3,273,184 53,471 Proceeds from sale of investments Payments made against purchase of investments Return received on bank balances Net cash used in operating activities 971,940 (8 0, 6 7 3, ) 55 (79,647,822) CASH FLOWS FROM FINANCING ACTIVITIES Amounts received against issue of units Payments made against redemption of units Net cash generated from financing activities Net increase in cash and cash equivalents during the period Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 207,612,557 (1 9, 7 0 2, ) 187,910, ,262, ,262,393 The annexed notes from 1 to 19 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief ExecutivChief e OffExecutive icer

13 13 Condensed Interim Statement of Movement in Unit Holders Fund For the Quarter Ended FAYSAL September 30, (Un-Audited) ISLAMIC ASSET ALLOCATION FUND CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNITHOLDERS' FUND FOR THE PERIOD ENDED SEPTEMBER 30, For the period from September 9 to September 30, (Un-Audited) (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 Amounts received on issue of units * 207,612,557 Amounts paid on redemption of units ** (19,702,342) 187,910,215 Element of income and capital gains included in prices of units sold less those in units redeemed - net (255,652) 37,160 (5,265,708) 296,330 (4,932,218) Net capital gain on sale of investments Net unrealised loss on revaluation of investments Other net income for the period Other comprehensive income for the period Total comprehensive loss for the period 182,722,345 Net assets at the end of the period (Number of units) 2,076,253 * Number of units issued 199,707 ** Number of units redeemed The annexed notes from 1 to 19 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Executive Chief Executive Officer

14 14 FAYSAL ISLAMIC ASSET ALLOCATION FUND For the Quarter Ended 30, (Un-Audited) NOTES TO September THE CONDENSED INTERIM FINANCIAL INFORMATION FOR THE PERIOD ENDED SEPTEMBER 30, 1. LEGAL STATUS AND NATURE OF BUSINESS (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 12, It has been constituted under a Trust Deed, dated May 18,, 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 and CDC as the Trustee, also a company incorporated under the Companies Ordinance, The Fund commenced its operations from September 9,. Accordingly, there are no comparatives in condensed interim statement of assets and liabilities, condensed interim income statement, condensed interim statement of comprehensive income, condensed interim distribution statement, condensed interim statement of movement unit holders fund and condensed interim cash flows statement. The Fund is a Shariah Compliant open-end asset allocation fund and is listed on the Karachi 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. The policy of the Fund is to invest in a mix of Shariah Compliant equity securities, fixed income and money market instruments. The Fund is categorised as an "Asset Allocation Scheme" as per the circular 07 of 2009 issued by Securities and Exchange Commission of Pakistan. JCR - VIS has awarded an "AM3+" asset manager rating to the Management Company as of June 11,. 2. STATEMENT OF COMPLIANCE This condensed interim financial information has been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Ordinance, 1984, the requirements of the Trust Deed, the NBFC Rules, the Non Banking Finance Companies and Notified Entities Regulation, 2008 (the NBFC Regulations) and directives issued by the SECP. Wherever the requirements of the Trust Deed, the NBFC Rules, the NBFC Regulations or the directives issued by the SECP differ with the requirements of IFRS, the requirements of the Trust Deed, the NBFC Rules, the NBFC Regulations or the requirements of the said directives prevail. 3. BASIS OF PREPARATION 3.1 This condensed interim financial information has been prepared under the historical cost convention, except for certain investments and derivatives which are accounted for as stated in notes 4.3 and 4.4 below. 3.2 The condensed financial information are presented in Pak rupees, which is the Fund's functional and presentation currency. 4. SIGNIFICANT ACCOUNTING POLICIES 4.1 New accounting standards / amendments and IFRS interpretations that are effective for the year ended June 30, The following standards, amendments and interpretations are effective for the year ended June 30,. These standards, interpretations and the amendments are either not relevant to the Fund's operations or are not expected to have significant impact on the Fund's financial statements other than certain additional disclosures.

15 15 For the Quarter Ended September 30, (Un-Audited) - Amendments to IAS 19 Employee Benefits: Employee contributions - Amendments to IAS 32 Financial Instruments: Presentation - Offsetting financial assets and financial liabilities - IAS 36 Impairment of Assets - Recoverable amount disclosures for non-financial assets - IAS 39 Financial Instruments: Recognition and measurement - Novation of derivatives and continuation of hedge accounting - IFRIC 21 - Levies 4.2 New accounting standards / amendments and IFRS interpretations that are not yet effective The following standards, amendments and interpretations are only effective for accounting periods, beginning on or after the date mentioned against each of them. These standards, interpretations and the amendments are either not relevant to the Company's operations or are not expected to have significant impact on the Company's financial statements other than certain additional disclosures. Effective from accounting period beginning on or after Amendments to IAS 16 and IAS 38 Clarification of acceptable methods of depreciation and amortization January 01, 2016 Amendments to IAS 16 and IAS 41 Agriculture: Bearer plants January 01, 2016 IAS 27 (Revised 2011) Separate Financial Statements. IAS 27 (Revised 2011) will concurrently apply with IFRS 10. January 01, IAS 28 (Revised 2011) Investments in Associates and Joint Ventures January 01, IFRS 10 Consolidated Financial Statements January 01,. Earlier adoption is encouraged. IFRS 11 Joint Arrangements January 01, IFRS 12 Disclosure of Interests in Other Entities January 01, IFRS 13 Fair Value Measurement Certain annual improvements have also been made to a number of IFRSs. January 01, Other than the aforesaid standards, interpretations and amendments, the International Accounting Standards Board (IASB) has also issued the following standards which have not been adopted locally by the Securities and Exchange Commission of Pakistan: IFRS 1 First Time Adoption of International Financial Reporting Standards IFRS 9 Financial Instruments IFRS 14 Regulatory Deferral Accounts IFRS 15 Revenue from Contracts with Customers Investments The investments of the Fund, upon initial recognition, are classified as investment at fair value through profit or loss, available-for-sale or held to maturity investments as appropriate. All investments, are initially measured at fair value plus, in the case of investments not at fair value through profit or loss, transaction costs that are directly attributable to acquisition.

16 16 For the Quarter Ended September 30, (Un-Audited) All regular way purchases / sales of investments that require delivery within the time frame established by the regulation of market convention are recognised on the trade date, i.e. the date on which the Fund commits to purchase / sell the investment. Regular way purchases / sales of investments require delivery of securities within the period generally established by the regulation or market convention such as "T+2". At fair value through profit or loss This category has two sub-categories, namely; financial instruments held-for-trading, and those designated at fair value through profit or loss upon initial recognition. - Investments which are acquired principally for the purposes of generating profit from short-term fluctuation in price or are part of the portfolio in which there is recent actual pattern of short-term profit taking are classified as held-for-trading. - Investments designated at fair value through profit or loss upon initial recognition include those group of financial assets which are managed and their performance evaluated on a fair value basis, in accordance with the documented risk management / investment strategy. These investments are initially recognised at fair value, being the cost of the consideration given. After initial measurement, investment at fair value through profit or loss are carried at fair value and the gains or losses on revaluation are recognised in the income statement. Held to maturity investments Investment securities with fixed maturities and fixed or determinable payments are classified as 'held-to-maturity investments' when management has both the intention and ability to hold to maturity. After initial measurement, such investments are carried at amortised cost less any provision for impairment except for in case of debt securities and government securities, which are carried at fair value in accordance with the requirements of the NBFC Regulations. Available-for-sale investments Investments which are not classified in any of the preceding categories are classified as available-for-sale investments. After initial measurement, such investments are measured at fair value with unrealised gain or loss recognised directly in the unit holders' fund until the investment is derecognised or determined to be impaired at which time the cumulative gain or loss previously recognised in unit holders' fund is taken to the income statement. Loans and receivables These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Fair value of investments is determined as follows: Listed shares These are valued on the basis of closing market prices quoted on the respective stock exchanges. Basis of valuation of Sukuk Certificates The investment of the Fund in debt securities is valued on the basis of rates determined by the Mutual Funds Association of Pakistan (MUFAP) in accordance with the methodology prescribed by SECP for valuation of debt securities vide its Circular No. 1 of 2009 dated January 06, In the determination of the rates, MUFAP takes into account the holding pattern of these securities and categorises them as traded, thinly traded and non-traded securities. The circular also specifies the valuation process to be followed for each category as well as the criteria for the provisioning of non-performing debt securities.

17 17 For the Quarter Ended September 30, (Un-Audited) Basis of valuation of GoP Ijara Sukkuk The investment of the Fund in government of pakistan Ijara Sukkuk certificates isvalued at the average rate quoted on a widely used electronic quotation system. 4.4 Loans and receivables Subsequent to initial recognition financial assets classified as loans and receivables are carried at amortised cost using the effective interest method. 4.5 Issue and redemption of units Units issued are recorded at the offer price prevalent on the day on which application form, (complete in all respects) is received. The offer price represents the net asset value of units at the end of the day plus the allowable sales load. The sales load is payable to the Management Company as processing fee. Issue of units is recorded on acceptance of application for sale. Units redeemed are recorded at the redemption price, prevalent on the day on which the redemption form (complete in all respects) is accepted. The redemption price represents the net asset value of units at the end of the day. Redemption of units is recorded on acceptance of application for redemption. 4.6 Provisions Provisions are recognised when the Fund has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made. Provisions are regularly reviewed and adjusted to reflect the current best estimate. 4.7 Net Asset Value (NAV) per unit The net asset value per unit disclosed in the statement of assets and liabilities is calculated by dividing the net assets of the Fund by the number of units in issue at the year end. 4.8 Revenue recognition - Gain or loss on sale of investments is accounted for in the year in which it arises. - Dividend income on equity securities are recognised in the income statement when the right to receive the dividend is established. - Unrealised gains or losses arising on revaluation of investments classified as 'at fair value through profit or loss' are included in the income statement in the period in which they arise. - Income on government securities, debt securities, return on certificates of investment, profit on clean placements, and return on bank balances are recognised on a time proportion basis using effective interest rate method.

18 18 For the Quarter Ended September 30, (Un-Audited) 4.9 Element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed An equalisation account called the "element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed" (the element) is created in order to prevent the dilution of per unit income and distribution of income already paid out on redemption. The element is arrived at by comparing the unit prices with opening Ex - NAV at the beginning of the financial year. The element so computed is recognised in the income statement except to the extent that the amount represented by unrealised appreciation / diminution arising on available-for-sale investments is included in distribution statement. The net element of income / loss and capital gains / losses included in prices of units sold less those in units redeemed during an accounting period is transferred to the income statement Taxation The Fund is exempt from taxation under clause 99 of Part I of the 2nd Schedule to the Income Tax Ordinance, 2001, subject to the condition that not less than 90% of its accounting income excluding realised and unrealised capital gains for the year is distributed amongst the unit holders Cash and cash equivalents Cash and cash equivalents comprise cash at banks and short-term deposits with an original maturity of three months or less. Cash and cash equivalents are carried in the statement of assets and liabilities at cost Distribution to unit holders Distribution to unit holders made subsequent to the statement of assets and liabilities date are considered as non-adjusting events and are recognised in the financial statements in the period in which such dividends are declared and approved by the Board of s of the Management Company Financial assets and financial liabilities All financial assets and financial liabilities are recognised at the time when the Fund becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to receive cash flows related to the asset expire. Financial liabilities are derecognised when they are extinguished, that is, when the obligation specified in the contract is discharged, cancelled or expires. Any gain or loss on derecognition of the financial assets and financial liabilities is taken to income statement currently. Financial assets carried in the statement of assets and liabilities include bank balances, term deposits receipts, return on bank balances and term deposits receipts, profit on debt securities, dividends, deposits, investments and receivable against sale of investments. Financial liabilities carried in the statement of assets and liabilities include payable to Management Company, remuneration payable to the Trustee and accrued and other liabilities excluding statutory liabilities.

19 19 For the Quarter Ended September 30, (Un-Audited) 4.14 Impairment of financial assets An assessment is made at each statement of assets and liabilities date to determine whether there is objective evidence that a specific financial asset may be impaired. If such evidence exists, any impairment loss, is recognised in the income statement. Impairment is determined as follows: (a) for assets carried at amortised cost, impairment is based on estimated cash flows discounted at the original effective interest rate. (b) for assets carried at fair value, impairment is the difference between cost and fair value. (c) for assets carried at cost, impairment is present value of future cash flows discounted at the current market rate of return for a similar financial asset. For available-for-sale equity investments, reversal of impairment losses are recorded as increase in cumulative changes in fair value through unit holders' fund. In addition, a provision is made to cover impairment for specific groups of assets where there is a measurable decrease in estimated future cash flows Offsetting of financial assets and liabilities Financial assets and financial liabilities are only offset and the net amount reported in the statement of assets and liabilities when there is a legally enforceable right to set off the recognised amount and the Fund intends to either settle on a net basis, or to realise the asset and settle the liability simultaneously. 5. ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of financial statements requires management to make estimates, judgments and assumptions that effect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making judgments about carrying values of assets and liabilities. The estimates and underlying assumptions are reviewed on an ongoing basis. Judgments made by management in the application of accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment are explained in notes 4.3 and 4.16 to the financial statements. 6 BALANCES WITH BANKS Cash at bank - PLS savings accounts September 30, Rupees Note (Un- Audited) ,262, ,472, These carry mark-up ranging from 4.18% to 6.80% per annum. 7 INVESTMENTS At fair value through profit or loss - held-for-trading Listed equity securities

20 , ,000 22,000 22,000 6,000 6, ,000 5, , , ,000 20,000 20, ,000 79,738,507 2,894,853 2,894,853 14,935,450 14,935,450 11,013,570 11,013,570 10,459,895 10,459,895 10,650,095 10,650,095 10,333,690 10,333,690 19,450,954 19,450,954 74,472,800 2,667,500 2,667,500 14,367,500 14,367,500 9,910,500 9,910,500 9,429,000 9,429,000 10,534,000 10,534,000 9,625,800 9,625,800 17,938,500 17,938, % 7.86% 5.42% 5.16% 5.77% 5.27% 9.82% Net assets 3.58% 19.29% 13.31% 12.66% 14.14% 12.93% 24.09% Total investments 0.01% 0.19% 0.14% 0.05% 0.01% 0.02% 0.12% Investee company paid-up capital Investment as % of This investment includes securities with fair value aggregating to Rs million which have 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 the Securities and Exchange Commission of Pakistan. September 5, ,000 Food producers Al Shaheer Corporation Limited General Industrials Packages Limited 300,000 Software and Computer Services Systems Limited 20,000 Construction and materials (cement) Lucky Cement Limited Gas Water and Multiutilities Sui Northern Gas Pipelines Company Limited 20,000 Chemicals ICI Pakistan Limited Oil and gas Hascol Petroleum Limited 134, Number of shares Carrying Market Value Bonus / right Value as at as at Purchased Disposed off As at shares September 30, September 30, during the during the September 30, received period period during the (Rupees) (Rupees) period As at Note September 9, * Ordinary shares having a face value of Rs.10 each unless stated otherwise. Name of the Investee Company Listed equity securities - held for trading 20 For the Quarter Ended September 30, (Un-Audited)

21 21 For the Quarter Ended September 30, (Un-Audited) Note 8 DIVIDEND, DEPOSITS AND OTHER RECEIVABLES - considered good 165,000 Dividend Income receivable Security Deposit with National Clearing Company of Pakistan Limited Security Deposit with Central Depository Company of Pakistan Limited Return receivable on bank balances Advance Income Tax 9 2,500, , , ,099 3,283,705 PRELIMINARY EXPENSES AND FLOATATION COSTS 1,938,525 (23,369) 1,915,156 Preliminary expenses and floatation costs Amortized during the period 10 September 30, (Un-Audited) (Rupees) PAYABLE TO THE MANAGEMENT COMPANY Management fee payable 10.1 Sales tax payable on management fee Front end load payable Preliminary expenses and floatation costs reimburseable Others - Deposit with banks, NCCPL and CDC Payable to Management Company 230,221 32,231 60,589 1,938,525 2,640,000 4,901, 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 3% 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 2% per annum of the daily net asset value of the Fund. 11 PAYABLE TO THE CENTRAL DEPOSITORY COMPANY OF PAKISTAN LIMITED - TRUSTEE Trustee fee payable Sales tax payable on Trustee fee 42,192 5,907 48,099 The Trustee is entitled to a monthly remuneration for services rendered to the Fund under the provisions of the Tr the tariff specified therein, based on the daily net asset value of the Fund. 12 ACCRUED EXPENSES AND OTHER LIABILITIES SECP annual fee payable Brokerage payable Accrued liabilities Profit payable to Pre-IPO Investors Provision for indirect taxes and duties ,935 46,412 65,334 97,372 41, ,044

22 22 For the Quarter Ended September 30, (Un-Audited) 12.1 This represents annual fee payable to the Securities and Exchange Commission of Pakistan in accordance with the NBFC Regulations, whereby the Fund is required to pay SECP annually an amount equal to 0.095% (June 30, 2014: 0.095%) per annum of the daily net asset value of the Fund 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, 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 decided to retain and continue with the provision of FED and related additional taxes in the books of account aggregating to Rs. 41,991 as at September 30, being charge for the period. In case, the suit is decided against the Fund the same would be paid to the Management Company, which will be responsible for submitting the same to the taxation authorities. Had the said provision of FED and related additional taxes were not been recorded in the books of account of the Fund, the NAV of the Fund would have been higher by Re per unit as at September 30,. 13 CONTINGENCIES AND COMMITMENTS There were no contingencies as at September 30, except as disclosed in relevant notes to the financial statements. COMMITMENTS 14 NIL 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) 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 has intention to distribute not less than 90 percent of its annual accounting income to avail the tax exemption. Accordingly, no provision for current and deferred tax has been made in this condensed interim financial information.

23 23 For the Quarter Ended September 30, (Un-Audited) 15 TRANSACTIONS WITH CONNECTED PERSONS / RELATED PARTIES 15.1 Connected persons / related parties include Faysal Asset Management Limited being the Management Company, Central Depository Company of Pakistan Limited being the Trustee, Faysal Bank Limited, 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: September 30, (Un-Audited) (Rupees) Transactions during the period Faysal Asset Management Limited (Management Company) Remuneration for the Management Company Sales tax on management fee Issue of 227,243 units Redemption of 101,020 units Sales load Central Depository Company of Pakistan Limited (Trustee of the Fund) Remuneration of the Trustee Sales Tax on Trustee fee 230,221 32,231 22,724,264 10,000,000 60,589 42,192 5,907 Unit holders holding 10% or more units Burj Bank Limited Issue of 500,000 units Profit on bank deposit 50,000,000 37,740 Muller & Philipps Pakistan (Pvt) Limited - Staff Provident Fund Issue of 240,000 units 24,000,000

24 24 For the Quarter Ended September 30, (Un-Audited) Outstanding balances September 30, (Un-Audited) (Rupees) Faysal Asset Management Limited - (Management Company) Remuneration payable to the Management Company 230,221 Sales tax on management fee payable 32,231 Units in issue 126,222 units 12,290,269 Sales load payable 60,589 Preliminary expenses and floatation costs reimburseable 1,938,525 Others - Deposit with banks, NCCPL and CDC Payable to Management Company 2,640,000 Central Depository Company of Pakistan Limited (Trustee of the Fund) Remuneration payable to the Trustee Sales tax on Trustee fee payable 42,192 5,907 Unit holders holding 10% or more units Burj Bank Limited Units in issue 500,000 Balance in bank deposit accounts 48,685, ,980 Muller & Philipps Pakistan (Pvt) Limited - Staff Provident Fund Units in issue 240,000 23,368,800

25 23 For the Quarter Ended September 30, (Un-Audited) 16 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Fund s objective in managing risk is the creation and protection of unit holders value. Risk is inherent in the Fund s activities, but it is managed through monitoring and controlling activities which are primarily set up to be performed based on limits established by the Management Company, Fund's constitutive documents and the regulations and directives of the SECP. These limits reflect the business strategy and market environment of the Fund as well as the level of the risk that Fund is willing to accept. The Board of s of the Management Company supervises the overall risk management approach within the Fund. The Fund is exposed to market risk, liquidity risk and credit risk arising from the financial instruments it holds Market risk Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as equity prices, profit rates, foreign exchange rates and debt security prices. (i) Equity price risk Equity price risk is the risk of volatility in share prices resulting from their dependence on market sentiments, speculative activities, supply and demand for shares and liquidity in the market. The equity price risk exposure arises from the Fund's investment in equity securities. Management of the Fund estimates that a 5% increase or decrease in the overall equity prices in the market with all other factors remaining constant would result in increase or decrease of Fund's net assets by Rs million. However, in practice, the actual results may differ from the sensitivity analysis. The Management Company manages the above market risks through diversification of investment portfolio and placing limits on individual and aggregate exposures in accordance with the internal risk management policies and regulations laid down by the SECP. The analysis of Fund's concentration on equity price risk is disclosed in note 7.1 to these financial statements. (ii) Profit rate risk Profit rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market profit rates. As of September 30,, the Fund's exposure to the risk of changes in market profit rates relates primarily to bank balances. The bank balances are subject to profit rates as declared by the respective banks on periodic basis. As at September 30, approximately 59.25% of the Fund's financial assets are subject to profit rates. The Fund is not exposed to fixed rate financial assets. Therefore, a change in their interest rates at the reporting date would not have any impact on the income and net assets of the Fund. Management of the Fund estimates that an increase of 100 basis points in the profit rate, with all other factors remaining constant, would increase the Fund's income and increase the net assets of the Fund by Rs million and a decrease of 100 basis points would result in a decrease the Fund's income and decrease the net assets of the Fund by the same amount. However, in practice, the actual results may differ from the sensitivity analysis. (iii) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Fund does not have any financial instruments in foreign currencies and hence is not exposed to such risk.

26 24 For the Quarter Ended September 30, (Un-Audited) 16.2 Liquidity risk Liquidity risk is defined as the risk that the Fund will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk arises because of the possibility that the Fund could be required to pay its liabilities earlier than expected. The Fund is exposed to cash redemptions of its redeemable units on a regular basis. Units are redeemable at the unit holders' option based on the Fund s net asset value per unit at the time of redemption calculated in accordance with the Fund s constitutive documents. The table below summarises the maturity profile of the Fund's financial liabilities based on contractual undiscounted payments. September 30, Financial liabilities Payable to the Management Company Remuneration payable to the Trustee Accrued and other liabilities 16.3 More than More than one three months More than one month and year upto three and upto one month year (Rupees) Upto One Month 290,810 42, , ,120 4,578,525 4,578, Total 4,869,335 42, ,118 5,120,645 Credit risk Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Fund by failing to discharge its obligation. The Fund s policy is to enter into financial contracts with reputable counter parties in accordance with the internal guidelines, offering document and regulatory requirements. The table below analyses the Fund's maximum exposure to credit risk. The maximum exposure is shown gross, before the effect of mitigation through the use of collateral agreements at reporting date: September 30, Rupees Bank balances Return receivable on bank balances and term deposits receipts Dividend receivable Security deposit 108,262, , ,000 2,600, ,402,999 Concentration of credit risk exists when changes in economic or industry factors affect the group of counterparties whose aggregate credit exposure is significant in relation to the Fund s total credit exposure. The Fund s portfolio of financial assets is broadly diversified and transactions are entered into with diverse credit worthy counterparties thereby mitigating any significant concentration of credit risk. The table below analyses the credit quality of the Fund's exposure: Rating category AA A- to A+ Unrated Sep 30, % The table below analyses the Fund's concentration of credit risk by industrial distribution: September 30 % of assets exposed to Commercial banks Others

27 23 For the Quarter Ended September 30, (Un-Audited) 16.4 Unit Holders' Fund The capital of the Fund is represented by the net assets attributable to holders of redeemable units. The capital structure depends on the issuance and redemption of units. The Fund s objective when managing unit holders fund is to safeguard the Fund s ability to continue as a going concern in order to seek maximum preservation of unit holders fund and an optimum rate of return by investing in avenues having good credit rating and liquidity and to maintain a strong capital base to support the development of the investment activities of the Fund. The Fund has no restrictions or specific capital requirements on the subscription and redemption of units. In accordance with the risk management policies, the Fund endeavours to invest the subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemption requests, such liquidity being augmented by short-term borrowings or disposal of investments where necessary. Under the NBFC regulations 2008, the minimum size of an open end scheme shall be one hundred million rupees at all the times during the life of the scheme Fair value hierarchy The Fund uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted prices in active markets for identical assets. Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. As at September 30,, the Fund held the following financial instruments which were measured at fair value: Investments classified as 'at fair value through profit or loss' Listed equity securities - held-for-trading Preference shares - unlisted September 30, Level 1 Level 2 Level 3 Total (Rupees) ,472,800 74,472, ,472,800 74,472,800 During the period ended September 30, there were no transfers between level 1 and level 2 fair value measurements, and no transfers into and out of level 3 fair value measurements. 17 FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm's length transaction. Consequently differences can arise between carrying values and the fair value estimates. Underlying the definition of fair value is the presumption that the Fund is a going concern without any intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. 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 and liabilities is considered not significantly different from book value as the items are short-term in nature.

28 24 For the Quarter Ended September 30, (Un-Audited) 18 GENERAL Figures are rounded off to the nearest Rupee. 19 DATE OF AUTHORISATION FOR ISSUE This condensed interim financial information was authorised for issue on October 28, by the Board of s of the Management Company. For Faysal Asset Management Limited (Management Company) Chief Executive

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