NAFA PENSION FUND MISSION STATEMENT

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2 MISSION STATEMENT To rank in the top quartile in performance of NAFA FUNDS relative to the competition, and to consistently offer Superior risk-adjusted returns to investors. Page 01

3 Contents FUND'S INFORMATION DIRECTORS' REPORT AUDITORS REPORT TO THE PARTICIPANTS ON REVIEW OF INTERIM FINANCIAL INFORMATION CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES CONDENSED INTERIM INCOME STATEMENT CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME CONDENSED INTERIM STATEMENT OF MOVEMENT IN PARTICIPANTS' SUB FUNDS CONDENSED INTERIM CASH FLOW STATEMENT NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMAITON Page 02

4 Mr. Mudassir Husain Khan Mr. Tariq Jamali Mr. Abdul Hadi Palekar Dr. Foo Chiah Shiung (Kelvin Foo) Mr. Humayun Bashir Ms. Anupama Sawhney* * SECP s approval is in process Chief Financial Officer Mr. Khalid Mehmood Mr. Tariq Jamali Dr. Foo Chiah Shiung (Kelvin Foo) Human Resource and Remuneration Committee Mr. Kamal Amir Chinoy Mr. Abdul Hadi Palekar Ms. Anupama Sawhney* Chairman Member Member Habib Bank Limited Sindh Bank Limited JS Bank Limited MCB Bank Limited The Bank of Punjab BankAlHabib Limited Zarai Taraqiati Bank Limited Soneri Bank Limited United Bank Limited Bankislami (Pakistan) Limited Dubai Islamic Bank Limted HabibMetro Bank Limited Page 03

5 Auditors KPMG Taseer Hadi & Co. Chartered Accountants Sheikh Sultan Trust Building No.02 Beaumont Road, Karachi , Pakistan. Legal Advisor M/s Jooma Law Associates 205, E.I. Lines, Dr. Daudpota Road, Karachi. 7th Floor Clifton Diamond Building, Block No. 4, Scheme No. 5, Clifton Karachi. UAN: NFA ( ), (Toll Free): , Fax: (021) Website: Lahore Office: 7-Noon Avenue, Canal Bank, Muslim Town, Lahore. UAN: Fax: Islamabad Office: Plot No. 395, 396 Industrial Area, I-9/3 Islamabad. UAN: Phone: Fax: Peshawar Office: Opposite Gul Haji Plaza, 2nd Floor National Bank Building University Road Peshawar, UAN: (nfa) Fax: Multan Office: Page 04

6 DIRECTORS REPORT The Board of Directors of NBP Fullerton Asset Management Limited is pleased to present the reviewed financial statements of NAFA Pension Fund (NPF) for the Half Year ended December 31, Fund s Performance This is the half yearly report of NAFA Pension Fund (NPF) for the financial year Fund Size (Rs. in mln) NAV Per Unit (Rs.) July 02, 2013 NAV Per Unit (Rs.) December 31, 2017 Annualized Return Since Launch July 02, 2013 NPF- Sub-fund % NPF- Sub-fund % NPF- Sub-fund % Net of management fee & all other expenses During 1HFY18, the stock market remained in a corrective mode. The euphoria surrounding the up-gradation of KSE-100 Index from MSCI Frontier to MSCI Emerging petered out and the ongoing heightened political noise took center stage. In addition to this, deteriorating external account position also weighed on investors sentiments that resulted in a sizeable decline of 13% in the KSE-100 Index during the period under review. Political uncertainty, rising current account deficit, and tension in the US Pakistan relationship were key reasons for the stock market decline. To augment the precarious external account position the government issued international bond of USD2.5bn in addition to the measured PKR devaluation of around 5% against the US Dollar, which allayed the concerns of the market to some extent. Foreign investors remained net sellers during the period with net foreign portfolio outflow of USD155 million while Companies, Insurance, and Banks/DFIs remained net buyers in the market. In terms of sector performance, Oil & Gas Exploration, Fertilizer, Commercial Banks, and Textile sectors fared better compared with the market, while Cement, Refinery, Engineering, and Chemical sectors lagged behind. State Bank of Pakistan (SBP) pursued accommodative monetary policy stance and left the policy rate unchanged at 5.75% during the period under review. SBP cited the following reasons to support its policy: a) strong economic activity corroborated by pick up in industrial output; b) gains in production of major crops; c) growth in private sector credit off-take; d) improvement in export growth; e) notable increase in foreign direct investments; and f) CPEC related investment activity gathering pace. SBP also highlighted gathering risks to the external account emanating from expected increase in commodity/global oil prices, confluence of declining remittances and mounting external debt levels (that may imperil the near to medium-term sustainability of the BoP position). Owing to stable policy rate and significant liquidity injections by the SBP, sovereign yields remained flat during the period with investors preference tilted towards short tenors considering upside risks to inflation and interest rates. With pickup in private sector investment activity, we have seen increased issuance of corporate debt securities - primarily Banking/Financial sector TFCs during the period. Trading activity in corporate debt securities (TFCs & Sukuks) increased significantly with a cumulative trade value of around Rs. 8.7 billion as compared to Rs. 4.7 billion during the same period last year. The asset allocation of the Funds as on December 31, 2017 is as follows: Page 05

7 Asset Allocation (% of Net Assets) Sub-fund 31-Dec % Cash Equivalents - Net 6.59% % Sub-fund 31-Dec-17 Cash Equivalents - Net 40.47% T-Bills 25.57% TFCs/Sukuks 14.80% Placements with Banks & DFIs 19.16% % Sub-fund 31-Dec-17 Cash Equivalents - Net 50.74% T-Bills 12.12% Placements with Banks & DFIs 37.14% % Acknowledgement The Board takes this opportunity to thank its valued unit-holders for their confidence and trust in the Pension Fund Manager, and providing the opportunity to serve them. It also offers its sincere gratitude to the Securities & Exchange Commission of Pakistan and State Bank of Pakistan for their patronage and guidance. The Board also wishes to place on record its appreciation for the hard work, dedication and commitment shown by the staff and the Trustee. On behalf of the Board of NBP Fullerton Asset Management Limited Chief Executive Director Date: February 22, 2018 Place: Karachi. Page 06

8 26.0% 8.2% 5.9% Page 07

9 93.41% 6.59% % 40.47% 25.57% 14.80% 19.16% % 50.74% 12.12% 37.14% % Page 08

10 Report on review of Condensed Interim Financial Information to the Participants Introduction We have reviewed the accompanying condensed interim statement of assets and liabilities of NAFA Pension Fund ( the Fund ) as at 31 December 2017 and the related condensed interim income statement, condensed interim statement of comprehensive income, condensed interim statement of movement in participants funds, condensed interim cash flow statement and notes to the accounts for the six months period then ended (here-in-after referred to as the interim financial information ). Pension Fund Manager is responsible for the preparation and presentation of this interim financial information in accordance with approved accounting standards as applicable in Pakistan for Interim Financial Reporting. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for Interim Financial Reporting. Other matters The figures for the three months period ended 31 December 2017 in the condensed interim financial information have not been reviewed and we do not express a conclusion on them. Date: February 22, 2018 Karachi KPMG Taseer Hadi & Co. Chartered Accountants Muhammad Nadeem Page 09

11 Note Condensed Interim Statement of Assets and Liabilities As at 31 December December June 2017 Unaudited Audited Others Others (Rupees) Assets Bank balances 7 68,920, ,397, ,623,213 2,029, ,970,014 77,447, ,092, ,082,871 3,252, ,874,934 Investments 8 916,056, ,521, ,131,222-1,395,708,725 1,013,270, ,822, ,209,609-1,345,302,768 Dividend receivable 3,955, ,955,025 2,577, ,577,650 Profit receivables 909,168 1,915,959 1,026,319-3,851,446 26,463 1,754, ,892-2,131,805 Receivable against sale of investments ,591, ,591,204 Advance and deposit 3,036, , ,000-3,576,290 3,036, , ,029-3,576,319 assets 992,877, ,274, ,880,754 2,029,083 1,894,061,500 1,097,950, ,108, ,743,401 3,252,253 2,000,054,680 Liabilities Payable to NBP Fullerton Asset Management Limited - Pension Fund Manager 9 1,441, , ,442 48,905 2,924,597 1,625, , ,048 1,310,578 4,272,056 Payable to Central Depository Company of Pakistan Limited - Trustee ,668 57,656 70, , ,127 56,961 60, ,807 Payable to Securities and Exchange Commission of Pakistan 164,615 67,336 78, , , , , ,393 Accrued expenses and other liabilities 11 10,451,946 2,659,992 2,318,479 1,980,178 17,410,595 10,286,335 2,542,703 2,412,855 1,941,675 17,183,568 liabilities 12,194,904 3,436,559 3,250,654 2,029,083 20,911,200 12,346,711 3,379,148 3,282,712 3,252,253 22,260,824 Net assets 980,682, ,837, ,630,100-1,873,150,300 1,085,603, ,729, ,460,689-1,977,793,856 Participants' funds (as per statement attached) 980,682, ,837, ,630,100-1,873,150,300 1,085,603, ,729, ,460,689-1,977,793,856 Contingency and commitment 12 Number of units in issue 13 3,434,400 2,693,834 3,841,705 3,276,556 3,102,258 3,533,149 Net assets value per unit Rupees The annexed notes 1 to 17 form an integral part of this condensed interim financial information. For NBP Fullerton Asset Management Limited (Pension Fund Manager) Chief Financial Officer Chief Executive Officer Director Page 10

12 Condensed Interim Income Statement (Unaudited) For the six months period ended 31 December 2017 Note (Rupees) Income Dividend income 27,494, ,494,004 18,324, ,324,637 (Loss) / gain on sale of investments - net (45,123,212) (269,005) 4,795 (45,387,422) 30,140,267 (84,600) (7,097) 30,048,570 Markup / return on bank deposits 2,620,895 4,049,698 6,188,462 12,859,055 1,345,674 3,088,358 9,016,057 13,450,089 Income from term deposits receipts - 80,215 3,187,483 3,267, ,268,595 2,268,595 Income from term finance certificates and sukuk - 2,123,169-2,123,169-1,727,097-1,727,097 Income from government securities - 6,798,423 5,621,180 12,419,603-7,773, ,011 7,963,455 Net unrealised (diminution) / appreciation on re-measurement of investments classified as 'financial assets at fair value through profit or loss' 8.8 (127,950,211) (324,682) (13,924) (128,288,817) 171,670,232 (433,080) (9,550) 171,227,602 (loss) / income (142,958,524) 12,457,818 14,987,996 (115,512,710) 221,480,810 12,071,219 11,458, ,010,045 Expenses Remuneration of NBP Fullerton Asset Management Limited - Pension Fund Manager 9.1 7,482,500 3,060,713 3,590,449 14,133,662 5,343,859 2,947,627 2,665,581 10,957,067 Sindh Sales Tax on remuneration of Pension Fund Manager , , ,758 1,837, , , ,525 1,424,419 Federal Excise Duty on remuneration of Pension Fund Manager Remuneration to Central Depository Company of Pakistan Limited - Trustee 745, , ,045 1,410, , , ,558 1,095,707 Sindh Sales Tax on remuneration of Trustee ,866 39,789 46, ,331 69,470 38,319 34, ,442 Annual fee - Securities and Exchange Commission of Pakistan 164,615 67,336 78, , ,565 64,848 58, ,056 Auditors' remuneration 76,762 76,762 76, ,286 91,816 91,816 91, ,448 Securities transaction costs 630,874 1, , , ,634 Settlement and bank charges 169,472 33,222 61, ,966 82,666 33,672 80, ,503 Legal and professional charges 15,088 14,904 15,088 45,080 15,088 14,904 15,088 45,080 Others 7,546 7,544 7,544 22,634 7,544 7,544 7,543 22,631 expenses 10,361,572 4,005,432 4,702,584 19,069,588 7,396,730 3,876,685 3,566,572 14,839,987 Net (loss) / income from operating activities (153,320,096) 8,452,386 10,285,412 (134,582,298) 214,084,080 8,194,534 7,891, ,170,058 Element of income / (loss) and capital gains / (losses) included in prices of - units issued less those in units redeemed - net ,726,268 (194,064) 347,379 9,879,583 Provision for Sindh Workers' Welfare Fund (169,048) (205,708) (374,756) Net (loss) / income for the period (153,320,096) 8,283,338 10,079,704 (134,957,054) 223,810,348 8,000,470 8,238, ,049,641 The annexed notes 1 to 17 form an integral part of this condensed interim financial information For NBP Fullerton Asset Management Limited (Pension Fund Manager) 2016 Page 11 Chief Financial Officer Chief Executive Officer Director

13 Condensed Interim Income Statement (Unaudited) For the three months period ended 31 December Note (Rupees) Income Dividend income 21,423, ,423,027 11,984, ,984,236 (Loss) / gain on sale of investments - net (23,940,297) (253,416) 662 (24,193,051) 24,214,321 (6,212) (7,097) 24,201,012 Markup / return on bank deposits 1,251,722 2,003,683 3,387,184 6,642, ,064 1,666,189 3,236,548 5,506,801 Income from term deposits receipts - 80,215 1,663,666 1,743, ,268,595 2,268,595 Income from term finance certificates - 1,073,080-1,073, , ,862 Income from government securities - 3,237,537 2,665,118 5,902,655-3,766, ,011 3,956,826 Net unrealised (diminution) / appreciation on re-measurement of investments classified as 'financial assets at fair value through profit or loss' 8.8 (28,044,392) (87,859) (219) (28,132,470) 102,256,604 (313,387) (9,550) 101,933,667 (loss) / income (29,309,940) 6,053,240 7,716,411 (15,540,289) 139,059,225 5,947,267 5,678, ,684,999 Expenses Remuneration of NBP Fullerton Asset Management Limited - Pension Fund Manager 9.1 3,633,313 1,526,001 1,850,832 7,010,146 2,917,420 1,495,530 1,348,394 5,761,344 Sindh Sales Tax on remuneration of Pension Fund Manager , , , , , , , ,975 Federal Excise Duty on remuneration of Pension Fund Manager Remuneration to Central Depository Company of Pakistan Limited - Trustee 363, , , , , , , ,134 Sindh Sales Tax on remuneration of Trustee ,233 19,838 24,061 91,132 37,926 19,442 17,530 74,898 Annual fee - Securities and Exchange Commission of Pakistan 79,933 33,572 40, ,223 64,183 32,902 29, ,750 Auditors' remuneration 38,381 38,381 38, ,143 45,908 45,908 45, ,724 Securities transaction costs 293, , , ,189 Settlement and bank charges 22,464 5,162 19,320 46,946 75,714 5,612 19, ,694 Legal and professional charges 15,088 14,904 15,088 45,080 15,088 14,904 15,088 45,080 Others 7,546 7,544 7,544 22,634 7,544 7,544 7,543 22,631 expenses 4,972,776 1,996,899 2,421,635 9,391,310 4,118,979 1,965,814 1,793,626 7,878,419 Net (loss) / income from operating activities (34,282,716) 4,056,341 5,294,776 (24,931,599) 134,940,246 3,981,453 3,884, ,806,580 Element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed - net ,796,062 (225,563) 572,199 8,142,698 Provision for Sindh Workers' Welfare Fund (81,127) (105,895) (187,022) Net (loss) / income for the period (34,282,716) 3,975,214 5,188,881 (25,118,621) 142,736,308 3,755,890 4,457, ,949,278 The annexed notes 1 to 17 form an integral part of this condensed interim financial information. For NBP Fullerton Asset Management Limited (Pension Fund Manager) Chief Financial Officer Chief Executive Officer Director Page 12

14 Condensed Interim Statement of Comprehensive Income (Unaudited) For the six months period ended 31 December (Rupees) Net (loss) / income for the period (153,320,096) 8,283,338 10,079,704 (134,957,054) 223,810,348 8,000,470 8,238, ,049,641 Other comprehensive income for the period comprehensive (loss) / income for the period (153,320,096) 8,283,338 10,079,704 (134,957,054) 223,810,348 8,000,470 8,238, ,049,641 The annexed notes 1 to 17 form an integral part of this condensed interim financial information. For NBP Fullerton Asset Management Limited (Pension Fund Manager) Page 13 Chief Financial Officer Chief Executive Officer Director

15 Condensed Interim Statement of Comprehensive Income (Unaudited) For the three months period ended 31 December (Rupees) Net (loss) / income for the period (34,282,716) 3,975,214 5,188,881 (25,118,621) 142,736,308 3,755,890 4,457, ,949,278 Other comprehensive income for the period comprehensive (loss) / income for the period (34,282,716) 3,975,214 5,188,881 (25,118,621) 142,736,308 3,755,890 4,457, ,949,278 The annexed notes 1 to 17 form an integral part of this condensed interim financial information. For NBP Fullerton Asset Management Limited (Pension Fund Manager) Chief Financial Officer Chief Executive Officer Director Page 14

16 Condensed Interim Statement of Movement in Participants' Funds (Unaudited) For the six months period ended 31 December 2017 Note (Rupees) Net assets at beginning of the period 1,085,603, ,729, ,460,689 1,977,793, ,943, ,792, ,032,998 1,272,769,186 Amount received on issuance of units ,445,415 45,580, ,779, ,805, ,978,013 59,262,392 68,454, ,695,183 Amount paid on redemption of units (61,740,477) (94,475,884) (84,275,832) (240,492,193) (41,130,601) (36,335,357) (39,923,632) (117,389,590) Reallocation among sub-funds 2,694,120 (9,280,370) 6,586,250-18,361,420 (23,502,008) 5,140,588-48,399,058 (58,175,267) 40,089,707 30,313,498 97,208,832 (574,973) 33,671, ,305,593 Element of (income) / loss and capital (gains) / losses included in prices of units issued less those in units redeemed - net (9,726,268) 194,064 (347,379) (9,879,583) (loss) / gain on sale of investments - net (45,123,212) (269,005) 4,795 (45,387,422) 30,140,267 (84,600) (7,097) 30,048,570 Net unrealised (diminution) / appreciation on re-measurement of investments classified as financial assets 'at fair value through profit or loss' (127,950,211) (324,682) (13,924) (128,288,817) 171,670,232 (433,080) (9,550) 171,227,602 Other net income for the period 19,753,327 8,877,025 10,088,833 38,719,185 21,999,849 8,518,150 8,255,470 38,773,469 comprehensive (loss) / income for the period (153,320,096) 8,283,338 10,079,704 (134,957,054) 223,810,348 8,000,470 8,238, ,049,641 Net assets at end of the period 980,682, ,837, ,630,100 1,873,150, ,236, ,412, ,596,176 1,633,244,837 Net assets value per unit at beginning of the period Net assets value per unit at end of the period The annexed notes 1 to 17 form an integral part of this condensed interim financial information. For NBP Fullerton Asset Management Limited (Pension Fund Manager) Page 15 Chief Financial Officer Chief Executive Officer Director

17 Condensed Interim Cash Flow Statement (Unaudited) For the six months period ended 31 December 2017 Note Rupees CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) / income for the period (153,320,096) 8,283,338 10,079,704 - (134,957,054) 223,810,348 8,000,470 8,238, ,049,641 Adjustments: Net unrealised diminution / (appreciation) on re-measurement of investments classified as 'financial assets at fair value through profit or loss' 127,950, ,682 13, ,288,817 (171,670,232) 433,080 9,550 - (171,227,602) Loss / (gain) on sale of investments - net 45,123, ,005 (4,795) - 45,387,422 (30,140,267) 84,600 7,097 - (30,048,570) Element of (income) / loss and capital (gains) / losses included in prices of units issued less those in units redeemed - net (9,726,268) 194,064 (347,379) - (9,879,583) Amortization of preliminary expenses and flotation costs ,753,327 8,877,025 10,088,833-38,719,185 12,273,581 8,712,214 7,908,091-28,893,886 (Increase) / decrease in assets Investments (75,858,739) (65,292,715) (82,930,742) - (224,082,196) (110,247,716) 94,202,908 (77,909,506) - (93,954,314) Dividend receivable (1,377,375) - - (1,377,375) 140, ,630 Profit receivables (882,705) (161,509) (675,427) - (1,719,641) 9,514 1,358,718 52,118-1,420,350 Receivable against sale of investments 1,591, ,591,204 (7,924,909) (7,924,909) Advance deposit and other receivables (441,558) (339,644) - - (781,202) (76,527,615) (65,454,224) (83,606,140) - (225,587,979) (118,464,039) 95,221,982 (77,857,388) - (101,099,445) (Decrease) / increase in liabilities Payable to NBP Fullerton Asset Management Limited - Pension Fund Manager (183,699) 1,519 96,394 (1,261,673) (1,347,459) 390,416 30,245 75, ,983 1,313,748 Payable to Central Depository Company Limited (12,459) ,024 - (1,740) 41,279 4,574 8,783-54,636 Payable to Securities and Exchange Commission of Pakistan (121,260) (62,092) (44,100) - (227,452) (36,899) (49,586) (29,779) - (116,264) Payable against purchase of investments ,995, ,995,487 Accrued expenses and other liabilities 165, ,289 (94,376) 38, ,027 8,354 (43,671) 40,383 (66,069) (61,003) (151,807) 57,411 (32,058) (1,223,170) (1,349,624) 7,398,637 (58,438) 94, ,914 8,186,604 Net cash (used in) / generated from operating activities (56,926,095) (56,519,788) (73,549,365) (1,223,170) (188,218,418) (98,791,821) 103,875,758 (69,854,806) 751,914 (64,018,955) CASH FLOWS FROM FINANCING ACTIVITIES Amount received on issuance of units 107,445,415 45,580, ,779, ,805, ,978,013 59,262,392 68,454, ,695,183 Amount paid on redemption of units (61,740,477) (94,475,884) (84,275,832) - (240,492,193) (41,130,601) (36,335,357) (39,923,632) - (117,389,590) Reallocation among sub-funds 2,694,120 (9,280,370) 6,586, ,361,420 (23,502,008) 5,140, Net cash flows from / (used in) financing activities 48,399,058 (58,175,267) 40,089,707-30,313,498 97,208,832 (574,973) 33,671, ,305,593 Net (decrease) / increase in cash and cash equivalents during the period (8,527,037) (114,695,055) (33,459,658) (1,223,170) (157,904,920) (1,582,989) 103,300,785 (36,183,072) 751,914 66,286,638 Cash and cash equivalents at beginning of the period 77,447, ,092, ,082,871 3,252, ,874,934 35,484,998 53,743, ,598,669 2,533, ,361,354 Cash and cash equivalents at end of the period 7 68,920, ,397, ,623,213 2,029, ,970,014 33,902, ,044, ,415,597 3,285, ,647, Others 2016 Others The annexed notes 1 to 17 form an integral part of this condensed interim financial information. For NBP Fullerton Asset Management Limited (Pension Fund Manager) Chief Financial Officer Chief Executive Officer Director Page 16

18 Notes to the Condensed Interim Financial Information For the six period ended 31 December LEGAL STATUS AND NATURE OF BUSINESS NAFA Pension Fund ( the Fund ) was established under a Trust Deed, dated 12 October 2012, between NBP Fullerton Asset Management Limited as the Pension Fund Manager and Central Depository Company of Pakistan Limited (CDC) as the Trustee. The Fund was authorized by the Securities and Exchange Commission of Pakistan (SECP) as a pension fund on 16 November The Pension Fund Manager has been licensed to act as a Pension Fund Manager under the Voluntary Pension System Rules, 2005 (VPS Rules) through a certificate of registration issued by SECP. The registered office of the Pension Fund Manager is situated at 7th floor, Clifton Diamond Building, Block No. 4, Scheme No. 5, Clifton, Karachi. The Fund is an unlisted open end pension scheme and offers units for public subscription on a continuous basis. The units are non-transferable except in the circumstances mentioned in VPS Rules and can be redeemed by surrendering to the Fund. Further, as per the offering document, no distribution of income or dividend is not allowed from any of the sub-funds. The objective of the Fund is to provide individuals with a portable, individualized, funded (based on defined contribution), flexible pension scheme, assisting and facilitating them to plan and provide for their retirement. The Fund consists of three sub-funds namely, NAFA Pension Fund ( ), NAFA Pension Fund ( ) and NAFA Pension Fund ( ) (collectively the s ). The Investment policy for each of the sub-funds are as follows: - The sub-fund consists of a minimum 90% of net assets invested in listed equity securities, investment in a single company is restricted to lower of 10% of Net Asset Value (NAV) of equity sub-fund or paid-up capital of the investee company. Investment in a single stock exchange sector is restricted to the higher of 30% of NAV of equity sub-fund or index weight, subject to a maximum of 35% of NAV of equity sub-fund. Remaining assets of the equity sub-fund may be invested in government treasury bills or government securities having less than one year time to maturity, or be deposited with scheduled commercial banks having at least 'A' rating. - The consist of tradable debt securities with weighted average duration of the investment portfolio of the not exceeding five years. At least twenty five percent (25%) of the net assets of debt sub-fund shall be invested in securities issued by the Federal Government. Upto twenty five percent (25%) may be deposited with banks having not less than AA Plus rating with a stable outlook. Exposure to securities issued by companies of a single sector shall not exceed 20% except for banking sector for which the exposure limit shall be upto 30% of net assets of a debt sub-fund. Deposit in a single bank shall not exceed 20% of net asset of the debt sub-fund. Composition of the remaining portion of the investments shall be according to the criteria mentioned in the offering document. - The sub-fund consists of short-term debt instruments with weighted average time to maturity not exceeding ninety days. There is no restriction on the amount of investment in securities issued by the Federal Government and deposit with commercial banks having 'A Plus' or higher rating. Investment in securities issued by provincial or city government, government corporate entities with A or higher rating or a government corporations with 'A plus' or higher rating shall be in proportion as defined in offering document. Page 17

19 The Fund offers six types of allocation schemes, as prescribed by the SECP under VPS Rules, to the contributors of the Fund namely High Volatility, Medium Volatility, Low Volatility, Lower Volatility, Customized Allocation and Life Cycle Allocation. The participants of the Fund voluntarily determine the contribution amount, subject to the minimum limit fixed by the Pension Fund Manager. The Participant has the option to select any one from the Allocation Schemes or products being offered by the Pension Fund Manager at the date of opening his / her Individual Pension Account. The Participant may change the Allocation Scheme not more than twice a year. Thereafter, the contribution amount may be paid by the contributor on a periodic basis such as annual, semi annual, quarterly or monthly basis or with any other frequency. Under the provisions of the Offering Document of the fund, Contributions received from or on behalf of any Participant by Trustee in cleared funds on any business day shall be credited to the Individual Pension Account of the Participant after deducting the Front-end Fees, any premia payable in respect of any schemes selected by the Participant pursuant to the offering document and any bank charges in respect of the receipt of such Contributions. The net Contribution received in the Individual Pension Account shall be used to allocate such number of Units of the relevant s in accordance with the Allocation Policy selected by the Participant as is determined in accordance with the Trust Deed and the Units shall be allocated at Net Asset Value notified by the Pension Fund Manager at the close of that business day. Pakistan Credit Rating Agency (PACRA) has assigned management quality rating of AM1 to the Pension Fund Manager while the Fund is currently not rated. Title to the assets of the Fund are held in the name of CDC as the Trustee of the Fund BASIS OF PREPARATION Statement of compliance This condensed interim financial information has been prepared in accordance with the requirements of the International Accounting Standard 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance, 1984, the Voluntary Pension Rules, 2005 (the VPS Rules), and directives issued by the Securities and Exchange Commission of Pakistan (SECP). Wherever the requirements of the VPS Rules or directives issued by the SECP differ with the requirements of the IFRS, the requirements of the VPS Rules or the directives issued by the SECP shall prevail (Refer 4.2.2) This condensed interim financial information does not include all the information and disclosures required in the annual financial statements and should therefore be read in conjunction with the annual financial statements of the Fund as at and for the year ended 30 June However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Fund's financial position and performance since the last financial statements. Functional and presentation currency This condensed interim financial information is presented in Pak Rupees, which is the Fund's functional and presentation currency. All financial information presented in Pak Rupees has been rounded off to the nearest of rupees, except otherwise stated SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted and the methods of computation of balances used in the preparation of this condensed interim financial information are the same as those applied in the preparation of the annual financial statements of the Fund for the year ended 30 June 2017 except for the changes in accounting policies as explained in notes Up to 30 June 2017, the element of income / (loss) and capital gains / (losses) included in the prices of units issued less those in units redeemed to the extent that it is represented by income earned during the accounting period is recognized in income statement and to the extent that it is represented by unrealised appreciation / (diminution) arising during the year on available for sale securities is included in distribution statement. Page 18

20 Effective from 1 July 2017, the Fund has discontinued to record the element of income in line with the requirements of Voluntary Pension Scheme (VPS) Rules 2005 and the industry practice. As required by IAS 8: 'Accounting Policies, Changes in Accounting Estimates and Errors', a change in accounting policy requires retrospective application as if that policy had always been applied. However, Pension Fund Manager has applied the above changes in accounting policy prospectively from 1 July 2017 in view of clarification provided by SECP vide its dated 7 February 2018 to mutual fund industry. Accordingly, corresponding figures have not been restated. Had the element of income been recognised as per the previous accounting policy, the loss of the Sub Fund would have been higher by Rs million and the income of the Sub Fund and Sub Fund would have been lower by Rs million and higher by Rs million respectively, net off charge for SWWF in respect of element of income loss and consequently NAV per unit would have been lower by Rs and higher by Rs for Sub Fund and Sub Fund. However the change in accounting policy does not have any impact in NAV per unit on Sub Fund NEW AMENDED AND REVISED STANDARDS AND INTERPRETATIONS OF IFRS Amendments to published approved accounting standards that are effective in the current period There are certain amendments to the approves accounting standards that are mandatory for accounting periods beginning on or after 01 July 2017 but are considered not to be relevant or do not have any significant effect on the Fund's operations and are, therefore, not detailed in this condensed interim financial information Standards and amendments to published approved accounting standards that are not yet effective During the current period the SECP has adopted IFRS 9: 'Financial Instruments' and IFRS 15: 'Revenue from Customers', which are applicable with effect from 1 July The management is currently assessing the impacts of these standards on the Fund's future financial statements. There are certain other new standards, interpretations and amendments to the approved accounting standards that are mandatory for the Fund's annual accounting periods beginning on or after 1 July The Fund is currently in the process of analysing the potential impact of changes required in classification and measurement of financial instruments and the other impact on adoption of the Standards. However, these are not expected to have any significant impacts on the Fund's operations and are, therefore, not detailed in this condensed interim financial information. The Companies Act, 2017 was enacted on 30 May 2017 and SECP vide its circular 23 of 2017 has clarified that the companies whose financial year closes on or before 31 December 2017 shall prepare their financial statements in accordance with the provisions of the repealed Companies Ordinance, Hence, the provision of the Companies Act, 2017 will be applicable for the preparation of financial statements for the reporting periods ending after 31 December The Companies Act, 2017 requires certain additional disclosures and Section 235 of the repealed Companies Ordinance, 1984 relating to treatment of surplus arising out of revaluation of assets has not been carried forward in the Companies Act, The amendments are not likely to have an impact on the Fund's financial statements except extended disclosures. USE OF ESTIMATES AND JUDGEMENTS The preparation of condensed interim financial information requires management to make judgements, estimates and assumption that affect the application of accounting policies and reported amount of assets and liabilities, income and expenses. Actual result may differ from these estimates. The significant judgements made by management in applying the accounting policies and the key sources of estimation uncertainty were the same as those that applied to annual financial statements as at and for the year ended 30 June FINANCIAL RISK MANAGEMENT The Fund's financial risk management objectives and policies are consistent with that disclosed in the financial statements as at and for the year ended 30 June Page 19

21 7 BANK BALANCES 31 December June 2017 Unaudited Audited Note Others Others (7.2) (7.2) (Rupees) Savings accounts ,920, ,397, ,623,213 2,029, ,970,014 77,447, ,092, ,082,871 3,252, ,874, These accounts carry rate of return ranging from 3.75% to 6.75% per annum (30 June 2017: 3.75% to 7.43%) per annum. 7.2 This represents collection accounts maintained by the Fund. The balances in these accounts represent front-end fee alongwith Government levies and withholding tax payable to the Pension Fund Manager and the tax authorities respectively (refer note 1). 8 INVESTMENTS Investments by category Note 31 December 2017 Unaudited Sub Fund 30 June 2017 Audited (Rupees) At fair value through profit or loss - held for trading Listed equity securities ,056, ,056,275 1,013,270, ,013,270,959 Government securities - Treasury Bills ,476,561 61,084, ,561, ,689,413 89,752, ,441,563 - Pakistan Investment Bonds ,847,699-13,847,699 Term Finance Certificates ,544,667-49,544,667-48,285,088-48,285,088 Sukuk 8.5-8,000,000-8,000, ,056, ,021,228 61,084,471 1,134,161,974 1,013,270, ,822,200 89,752,150 1,269,845,309 Loans and receivables Term deposit receipts ,500, ,046, ,546, ,457,459 75,457, ,056, ,521, ,131,222 1,395,708,725 1,013,270, ,822, ,209,609 1,345,302,768 Page 20

22 8.1 Listed equity securities Held by Shares of listed companies - fully paid up ordinary shares of Rs. 10 each unless stated otherwise value value Name of the investee company Bonus / As at Purchases Sales As at 31 as a value as a percentage right issue value as at 31 1 July during the during the December percentage as a of issued during the December of net assets percentage 2017 period period 2017 capital of the period 2017 of the subfund of investment investee of the sub- company (Number of shares) (Rupees) (%) Automobile assembler Al Ghazi Tractor Limited 2,150-2, Honda Atlas Cars (Pakistan) Limited 29,400 5,100-19,150 15,350 7,865, Sazgar Engineering Works Limited 29, , Pak Suzuki Motor Company Limited 13, , Indus Motor Company Limited 10, ,200 9,450 15,877, Millat Tractors Limited 14, ,720 12,780 14,973, ,200 5,100-66,720 37,580 38,716, Cable & electrical goods Pak Elektron Limited 201, ,500 64,750 3,074, , ,500 64,750 3,074, Pharmaceuticals Abbott Laboratories (Pakistan) Limited 14, ,650 8,000 5,580, GlaxoSmithKline (Pakistan) Limited 20, ,860 3,501, GlaxoSmithKline Consumer Healthcare Pakistan Limited 6, , The Searle Company Limited (note 8.1.2) 19,278-1,856 10,000 11,134 3,505, Ferozsons Laboratories Limited 14, ,500 2,955, Highnoon Laboratories Limited , ,591-1,856 22,908 54,539 15,562, Cement Pioneer Cement Limited 107,200 44,000-23, ,700 8,060, Fauji Cement Company Limited 303, , ,000 73,000 1,825, Maple Leaf Cement Factory Limited 138,000-4, , Lucky Cement Limited 56, ,800 45,550 23,568, D. G. Khan Cement Company Limited 123, ,700-64, ,300 22,638, Fecto Cement Limited 49, , Attock Cement (Pakistan) Limited 68, ,200 12,344, Kohat Cement Company Limited 47,000 93,500-21, ,200 16,921, , ,200 4, , ,951 85,359, Page 21

23 value value Name of the investee company Bonus / As at Purchases Sales As at 31 as a value as a percentage right issue value as at 31 1 July during the during the December percentage as a of issued during the December of net assets percentage 2017 period period 2017 capital of the period 2017 of the subfund of investment investee of the sub- company Fertilizers (Number of shares) (Rupees) (%) Engro Fertilizer Limited 258, , , ,500 41,343, Fauji Fertilizer Bin Qasim Limited 197, , Fauji Fertilizer Company Limited - 182,000-30, ,000 12,024, Engro Corporation Limited 117,000 86,900-34, ,800 46,652, Dawood Hercules Corporation Limited 100,000 22,300-3, ,100 13,324, , , ,800 1,051, ,345, Chemicals Akzo Nobel Pakistan 42, ,400 9,031, Dynea Pakistan Limited 69, ,000 6,063, , ,400 15,094, Automobile parts and accessories Agriauto Industries Limited 3, ,400 1,081,268 Thal Limited (Face value of Rs. 5 each) 4,500 28,600-12,600 20,500 10,473, Baluchistan Wheels Limited 88, ,500 9,757, ,300 28,700-12, ,400 21,311, Commercial Banks United Bank Limited 166,660 45,300-18, ,860 36,439, Allied Bank Limited 178,300 14, ,800 16,384, MCB Bank Limited 151, ,900 99,200 21,062, Habib Bank Limited 155, , , ,728 50,749, Faysal Bank Limited 3, , ,905 13,689, Bank Alfalah Limited - 864, ,500 36,741, Bank Al-Habib Limited 134, ,000 65,150 3,802, ,043 1,826, ,200 2,363, ,868, Insurance Pakistan Reinsurance Company Limited 149, ,000 23, , , ,000 23, , Page 22

24 value value Name of the investee company Bonus / As at Purchases Sales As at 31 as a value as a percentage right issue value as at 31 1 July during the during the December percentage as a of issued during the December of net assets percentage 2017 period period 2017 capital of the period 2017 of the subfund of investment investee of the sub- company Paper and Board (Number of shares) (Rupees) (%) Century Paper and Board Mills Limited 208, , ,500 9,226, , , ,500 9,226, Power generation and distribution The Hub Power Company Limited 195, , ,600 30,357, Kot Addu Power Company Limited 236, , ,500 6,279, , , , ,100 36,636, Textile Composite Nishat (Chunian) Limited 193, , , ,000 9,611, Nishat Mills Limited 177,000 33,000-16, ,500 28,928, Kohinoor Textile Mills Limited 192,475-11, ,953 13,511, Sapphire Fibres Mills Limited 6, ,200 5,037, Dawood Lawrancepur Limited 40, ,900 7,689, Crescent Textile Mills Limited 108, , ,500 3,208, , ,500 11, , ,053 67,987, Oil and Gas exploraton companies Pakistan Petroleum Limited. 256,178 82,000-34, ,078 62,612, Pakistan Oilelds Limited. 70,500 61,100-37,000 94,600 56,216, Oil and Gas Development Company Limited 186, , ,700 50,090, Mari Petroleum Company Limited 29,980 8,300-13,680 24,600 35,691, , ,800-84, , ,611, Refinery Attock Refinery Limited 11,300 14,500-25, , ,300 14,500-25, , Oil and gas marketing companies Attock Petroleum Limited 7, ,800 4,080, Hascol Petroleum Limited (note 8.1.2) , Pakistan State Oil Company Limited (note 8.1.2) 71,730 36,500 15,806 53,000 71,036 20,821, Shell Pakistan Limited 29, ,000 8,908, Sui Northern Gas Pipelines - 155,500-7, ,000 14,002, , ,000 15,832 60, ,162 47,892, Page 23

25 value value Name of the investee company Bonus / As at Purchases Sales As at 31 as a value as a percentage right issue value as at 31 1 July during the during the December percentage as a of issued during the December of net assets percentage 2017 period period 2017 capital of the period 2017 of the subfund of investment investee of the sub- company Engineering (Number of shares) (Rupees) (%) Amreli Steels Limited 222, , ,000 13,713, Crescent Steels and Allied Products 20,400-19,000 1, , Mughal Iron and Steel Industries Limited (note 8.1.2) 107,310 45,000-27, ,810 7,251, ,210 45, , ,210 21,143, Technology and communication Avanceon Limited 183, ,000 36,500 1,262, Systems Limited 211, ,500 15,634, , , ,000 16,896, Food and personal care products Rafhan Maize Products Limited , Al-Shaheer Corporation Limited (note 8.1.2) 208, ,000 80,552 1,789, , ,000 80,572 1,925, Sugar and Allied Industries Faran Sugar Mills Limited 67,500 3, ,500 4,582, ,500 3, ,500 4,582, Glass and ceramics Ghani Glass Limited - 28, ,000 1,794,800 Tariq Glass Limited 131, ,500 12,491, Shabbir Tiles and Ceramics Limited 876, , ,500 3,130, ,007,500 28, , ,000 17,416, Miscellaneous Tri-Pack Films Limited 43, ,000 6,018, Synthetic Products Enterprises Limited 141,250 12, ,750 9,292, ,250 12, ,750 15,311, ,325,129 3,967,800 33,229 3,314,270 8,011, ,056, Carrying value before fair value adjustment as at 31 December ,044,006,486 Page 24

26 These represent gross bonus shares as per Fund s entitlement declared by the investee company. Finance Act, 2014 has brought amendments in the Income Tax Ordinance, 2001 whereby the bonus shares received by the shareholder are to be treated as income and a tax at the rate of 5 percent is to be applied on value of bonus shares determined on the basis of day end price on the first day of closure of books. The tax is to be collected at source by the investee company which shall be considered as final discharge of tax liability on such income. However, the Pension Fund Manager of the Fund jointly with other asset management companies and Mutual Fund Association of Pakistan, has filed a petition in Honourable Sindh High Court to declare the amendment brought in Income Tax Ordinance, 2001 with reference to tax on bonus shares for collective investment schemes as null and void and not applicable on the funds based on the premise of exemption given to mutual funds under clause 57 (3) (viii) of Part I of Second Schedule of the Income Tax Ordinance, 2001 The Honourable Sindh High Court has granted stay order till the final outcome of the case. However, the investee company(s) has withheld the share equivalent to 5% of bonus announcement amounting to Rs million (30 June 2017: million) and not yet deposited with Government Treasury. Pension Fund Manager is of the view that the decision will be in recorded the bonus shares on gross basis. Investments include shares with market value of Rs million (30 June 2017: Rs million) which have been pledged with National Clearing Company of Pakistan Limited for guaranteeing settlement of the Fund's trades in accordance with Circular no. 11 dated 23 October 2007 issued by the Securities and Exchange Commission of Pakistan. 8.2 Government securities - Treasury bills Held by Issue date Tenor value Matured / value as a As at Purchases As at 31 value as at as a percentage sold percentage 1 July during the December 31 of during the of net assets 2017 period 2017 December total investment period of the subfund 2017 of sub-fund Face value (Rupees) (Rupees) (%) Treasury Bills 19 January Months - 75,000,000 75,000, April Months 14,000,000-14,000, April Months 91,000,000 20,000, ,000, June Months - 145,000, ,000, June Months - 135,000, ,000, July Months - 130,000, ,000, August Months - 93,000,000 93,000, August Months - 194,000, ,000, September Months - 135,000, ,000, October Months - 20,000,000 20,000, October Months - 50,000,000-50,000,000 49,852, November Months - 50,000,000-50,000,000 49,624, ,000,000 1,047,000,000 1,052,000, ,000,000 99,476, Carrying value before fair value adjustment at 31 December ,498,095 Page 25