FUND MANAGER S REPORT. MUFAP s recommended format

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1 FUND MANAGER S REPORT May 12 ECONOMIC OUTLOOK A careful analysis of the current economic conditions highlights prudence of the policy makers since most macroeconomic indicators have stabilized in the outgoing month. With the latest inflationary figure (+12.29% YoY) on the slightly higher side, it is evident that subsidy reduction can and will have a significant bearing on economic stringencies. The increase is primarily due to the hike in power tariff coupled with swelling prices in recreational basket. With the FY-2013 budget at the doorstep, the Government is on track to miss most of the targets set for FY-2012, barring inflation target originally budgeted at 11%. The overall macroeconomic picture does not seem conducive for monetary easing at this point; leading us to anticipate an upward interest rate trajectory, especially in second quarter FY Furthermore, with strict fiscal austerity being the need of the hour, the government is bent on narrowing the gap between revenue and expenditure since domestic borrowing as a measure of deficit monetization is becoming an extremely expensive alternative. Nonetheless, increased flow of remittance of over USD 1bn per month continues to provide the much needed short-term support to the fiscal deficit. On the national account front, external account has remained slightly stable at USD 3.3bn over July to April 2012, with added support expected from declining international oil prices and lower oil import bill over 4QFY12. Going forward, we believe that for a sustainable fiscal and monetary management, the government will strive to introduce revenue-enhancing measures coupled with renewed efforts to curtail expenditure thereby minimizing the subsidies and administrative expenses in FY Such initiatives, if implemented successfully, will reduce the stress on the fiscal position, alleviate reliance on domestic borrowing and encourage the dried-up private credit off take in the economy. MONEY MARKET REVIEW The phenomenon of increased reliance on domestic borrowing and the consequent crowing out of credit off-take for private sector continued in May 2012; resorted to by the government to fill the widening fiscal deficit. In the outgoing month, the market was relatively liquid despite gradual decrease in OMO amount. The increased money supply pushed the yields in shorter tenor treasury bills down while the yields in longer tenors remained stable during the month. After the release of April CPI at 11.27% YoY, yields on 10 Year PIBs shot up, before stabilizing at 13.28% within 6 to 7 trading days. With the close of the fiscal year upon us, we anticipate liquidity tightening and higher yields over June 2012 on account of monetary demand. Investors are expected to remain tilted heavily towards shorter tenor government securities owing to expectation of hike in interest rate by 2QFY13. EQUITY MARKET REVIEW The MAY FACTOR came into play once again for the equity market as the month registered a decline of 1.5% MoM. Over the past 20 years, the local equity market has slid 11 times during the month of May, with the negative return averaging -11.6% over those 11 years. The only other month to equal this statistic is the month of August with 11-years average return of -6.7%. Along with the index level, average daily volume traded shrunk by 38% to 194 million shares on account of budget apprehensions, especially expectations regarding higher taxation on commercial banks, mutual funds and money market instruments. Investor sentiments were further weakened by declining Arab crude prices, which slumped by 8.6% over the outgoing month in turn boding ill for the oil-heavy (~37%) benchmark index. Political audibility remained high during the month as criticism of PM Gilani picked up pace. PML-N remains a fierce critic of the PPP faction, with the former boycotting multiple assemblies and summits to demonstrate the party s stance. Developments were slow on the geo-political front as well, with US and Pakistan still at loggerheads over the conditions for resuming NATO container transit. To complicate matters, the US congress recently approved a 50% cut in Pakistan s periodic financial assistance, citing imprisonment of Dr. Shakeel Afridi as the primary reason. Going forward, the ultimate direction of the equity market would be gauged by the budgetary factors for FY However, following the 20-year pattern with which this review began, we conclude that a lethargic MAY is usually followed by a modestly positive June and a resilient July. MUFAP s recommended format

2 Type Money Market Scheme Stability Rating AA+(f) (JCRVIS) low Launch Date 13th December 2010 Ernst & Young Ford Rhodes Sidat Hyder Management Fee 10% of Gross Earning or minimum 1.25% of Net Assets Front/Back end Load Benchmark 50% 3 month T-Bills and 50% Average 3 months deposit rate of AA rated and above banks Pricing Mechanism Backward NAV per Unit (PKR) Net Assets (PKR mn) 1, Faysal Money Market (FMMF) seeks to provide stable and competitive returns in line with the money markets exhibiting low volatility consistent with capital preservation by constructing a liquid portfolio of low risk short term investments yielding competitive returns. Information (CAGR Annualized % p.a) FY12 to Date Month-on Month Since Inception Benchmark (YTD) (Holding Period Annualized % p.a) May' 12 Apr' 12 FY12 to Date Month-on-Month Benchmark (YTD) Asset Allocation Total Assets Risk-qu uants Alpha % Standard Deviation % VaR % Sortino N/A Information Ratio Weighted Average Maturity (Days) 45 Asset Quality (% of Total Assets) Government Securities AAA 0.05 AA AA Investment Committee Acting Manager FMMF Vs Benchmark Manager The Scheme has maintained provisions against Workers' Welfare liability to the tune of Rs. 3,262,558, if the same were not made the NAV per unit/ return of the Scheme would have been higher by Re.0.20 (0.19%). For details investors are advised to read note 10.2 of latest financial Your fund yielded 10.48% in May 2012 beating the benchmark by 55bps. Consecutive unanticipated hikes in CPI have driven up yields of longer tenor securities, with shorter tenor yields relatively firm. Considering this stability along with the prevalent interest rate risk emanating from the upcoming monetary policy announcement, excess cash placed in daily products was deployed into 3m T-bills while maintaining supreme asset quality without hampering returns. management continues to safeguard the fund from interest rate volatility and generate attractive returns for investors by prudently allocating funds to high yielding money market instruments.

3 Information Type Income scheme Stability Rating A+(f) (JCRVIS) Low Launch Date 12th May 2007 A.F Ferguson & Co. Management Fee 1.50% Front/Back end Load Benchmark 75% 6M KIBOR & 25% 3M PKRV NAV per Unit (PKR) Net Assets(PKR mn) 2, To generate competitive returns by investing primarily in debt and fixed income instruments having investment grade credit rating. (CAGR Annualized % p.a) May' 12 Apr' 12 FY12 to Date Month-on Month Since Inception Benchmark (Holding Period Annualized % p.a) May' 12 Apr' 12 FY12 to Date Month-on-Month Benchmark (YTD) Asset Allocation of Total Assets Alpha 0.001% Ris sk-quants Standard Deviation % VaR % Sortino Information Ratio Weighted Average Maturity (Years) 0.14 set Quality of Total Ass (% Assets) T-Bills AA AA AA FSGF Vs Benchmark Investment Committee Acting Manager Manager The Scheme has maintained provisions against Workers' Welfare liability to the tune of Rs. 45,493,709, if the same were not made the NAV per unit/ return of the Scheme would have been higher by Rs.2.02 (1.97%). For details investors are advised to read note 8.1 of latest financial FSGF yielded an annualized compounded return of 10.70% for the month of May, taking the yearly return to 11.13%. Considering the elevated levels of 10 year PIB, exposure in the bond was offloaded and excess funds were placed at attractive rates offered by banks and DFIs. The fund continues to maintain primary investments in cash (11%), TDR/COI (25%), TFC/CP (21%) and T-bills (43%), whereby the portfolio has been aligned with the upcoming monetary policy. Going forward, management will strive to enhance returns by placing funds in AA rated investment instruments and actively look for trading opportunities.

4 Information Type Islamic Income Scheme Stability Rating A+(f) (JVR-VIS) low Launch Date 14th June 2010 Ernst & Young Ford Rhodes Sidat Hyder Management Fee 1.50% Front/Back end Load Benchmark Average 6M deposit rate of 3 Islamic Banks NAV per Unit (PKR) Net Assets (PKR mn) (CAGR Annualized % p.a) FY12 to Date Month-on Month Since Inception Benchmark (YTD) (Holding Period Annualized % p.a) May'12 Apr'12 FY12 to Date Month-on-Month Benchmark (YTD) Asset Allocation (% of Total Assets) Faysal Islamic Savings Growth (FISGF) seeks to provide maximum possible preservation of capital and a reasonable rate of return via investing in Shariah Complaint money market and debt securities having good credit quality rating and liquidity -quants Risk- Alpha % Standard Deviation % VaR % Sortino Information Ratio Weighted Average Maturity (Years) 0.44 t Quality f Total sets) Asset (% of Ass Government Securities AAA AA AA A 0.01 Investment Committee Acting Manager FISGF Vs Benchmark Manager The Scheme has maintained provisions against Workers' Welfare liability to the tune of Rs. 1,490,977, if the same were not made the NAV per unit/ return of the Scheme would have been higher by Re.0.29 (0.29%). For details investors are advised to read note 10.2 of latest financial Your fund was able to uplift its yield even further this month, generating 9.83% via investments in CP Sukuks, Ijarah Sukuks and high yield daily product accounts. The monthly yield has resulted in YTD return of 11.25%. In light of the upcoming Ijarah Sukuk auction in June, the management intends to increase its exposure to Ijarah Instruments once again, especially now that the price-downtrend has dissipated. Going forward, the fund will keep focusing on daily Islamic bank placements, CPs and selective Ijara Sukuks.

5 Information Type Aggressive Income Stability Rating A(f) (JCRVIS) Medium Launch Date 10th October 2005 A.F Ferguson & Co. Management Fee 1.50% Front End Load 1% Back End Load Benchmark 90% 1 Yr KIBOR and 10% average of most recent published 3 month deposit rates of top 3 scheduled Commercial Bank by deposit size NAV per Unit (PKR) Net Assets (PKR mn) Faysal Income & Growth (FIGF) seeks to provide its investors with optimal yields through a diversified portfolio consisting of both long-term fixed instruments as well as short term money market securities. Ris sk-quants Investment Committee Alpha % Standard Deviation % VaR % Sortino Information Ratio Weighted Average Maturity (Years) 1.64 Acting Manager Manager Asset Quality (% of Total Assets) TFC/SUKU K Holdings (as % of T. Assets) (CAGR Annualized % p.a) Apr'12 FY12 to date Month-on Month Since Inception Benchmark (YTD) (Holding Period Annualized % p.a) Apr'12 FY12 to Date Month-on-Month Benchmark (YTD) Asset Allocation of Total Assets Gov.Securities PIBs 8.88 Ijara 9.54 AA AA AA D 0.26 NR 7.95 Kohat Cement 3.10 Telecard 0.26 Askari TFC FSGF Vs Benchmark Non Compliance Name of Instrument Pakistan International Container Terminal Rating required Existing Rating Type of Instrument Total exposure % of Net Assets % of Total Assets % of Debt issue Not required A+ Preference shares 21,153, % 4.03% 11.19% The holds 11.19% of the issue size of the preference shares issued by Pakistan International Container Terminal Limited which is in excess of limit prescribed by the NBFC Regulation 2008 against issue size. SECP has granted approval to hold the security till 31 July The Scheme has maintained provisions against Workers Welfare liability to the tune of Rs. 5,210,765, if the same were not made the NAV per unit/ return of the Scheme would have been higher by Rs.1.07 (1.01%). For details investors are advised to read note 7.1 of the latest financial Over May, FIGF performance turned below expectations on account of trading-based downside in preference shares of Pakistan International Container Terminal. Notwithstanding the one-off price impact, the fund continues to maintain a healthy YTD return of over 13%. Your fund continues to diversify into high yielding instruments, primarily high yield LOPs/COIs/TDRs, PIBs and TFCs. Going forward; this strategy will be reflected from higher overall yields for the fund..

6 Information Type Asset Allocation Scheme Moderate to High Risk Launch Date 24th July 2006 Ernst & Young Ford Rhodes Sidat Hyder Management Fee 2% Front/Back end Load 3.0% (Front end Load) Benchmark* KSE100 Index / 6M KIBOR NAV per Unit (PKR) Net Assets (mn) * weighted average of 6M KIBOR & percentage invested in equities Faysal Asset Allocation (FAAF) endeavors to provide investors with an opportunity to earn long-term capital appreciation optimizing through broad mix of asset classes encompassing equity, fixed income & money market instruments Risk-quants Investment Committee Alpha % Beta Standard Deviation % VaR % Treynor Acting Manager Manager Top 5 Sector Allocations (% of T. Assets) Top 10 Holdings (% of T. Assets) Asset Quality (as % of Total Assets) May' 12 Apr' 12 FY12 to Date Month-on-Month Benchmark (YTD) Asset Allocation Total Assets May' 12 Industrial Engineering Oil & Gas Personal Good Chemicals Electricity Millat Tractor Limited 8.19 HUBCO SUKUK 7.80 Maple Leaf Cement 5.19 Pakistan State Oil 4.61 Nishat Mills Limited 4.49 Japan Power Generation Limited 3.84 Trust Investment Bank 3.82 Sui Northern Gas Pipeline 1.78 Lafarge Pakistan Cement Limited 1.56 Lotte Pakistan PTA 1.45 AA AA AA BBB D 5.19 Non Compliance Rating Existing Type of Value of Investment Provision (If Value of Investment after % of Net % of Total Name of Instrument required Rating Instrument before provisioning any) provision Assets Assets Maple Leaf Cement BBB D TFC 27,137,433 10,494,327 16,643, Trust investment Bank Limited BBB BBB- TFC 12,231,385-12,231, The Scheme has maintained provisions against Workers' Welfare liability to the tune of Rs. 2,259,143, if the same were not made the NAV per unit/ return of the Scheme would have been higher by Re.0.50 (0.72%). For details investors are advised to read note 10.2 of latest financial Your fund generated a return of 0.44% over May 2012, primarily on account of realization of outstanding gains in equities. In line with the MAY Factor, exposure in your fund was reduced from equities, especially the oil sector, in order to avoid portfolio attrition from an anticipated market slump. In hindsight, the decision proved to be the right one as the index receded by 1.5% MoM, while crude oil slid by 11.4% MoM. Statistically, equity exposure was curtailed from 45% to 31%, led by a steep divestment of Oil & Gas stake (down by 4.3 percentage points to 5.7%). Going forward, your fund will likely maintain exposure in fixed income securities with insignificant risk to substitute the flat equity movements with steady income. That said, focus on equities remains relentless with the fund ready to capitalize on any unexpected uptrends.

7 Type Balanced Scheme Moderate Launch Date 19 April 2004 Ernst & Young Ford Rhodes Sidat Hyder Management Fee 2% Front/Back end Load 2.25% (Front end Load) Benchmark* KSE100 Index / 6M KIBOR NAV per Unit (PKR) Net Assets (mn) * weighted average of 6M KIBOR & percentage invested in equities Faysal Balanced Growth (FBGF) endeavors to provide investors with an opportunity to earn income and long-term capital appreciation by investing in a large pool of funds representing equity / non equity investments in a broad range of sectors and financial instruments Information Risk-quants Investment Committee Alpha % Beta Standard Deviation % VaR % Treynor Non Compliance Name of Instrument Rating required Acting Manager Manager Existing Rating Type of Instrument Value of Investment before provisioning Top 5 Sector Allocations (% of T. Assets) Top 10 holdings (% of T. Assets) Asset Quality (as % of Total Assets) May' 12 Apr' 12 FY12 to Date Month-on Month Since Inception Benchmark (YTD) Asset Allocation of Total Assets May' 12 Apr' 12 Households Industrial Engineering Industrial Transportation Chemicals Oil & Gas Pak Elektron Ltd- Preference Shares Millat Tractors Limited 9.45 Pakistan int'l Container Terminal 8.98 Hubco CP Sukuk 8.59 Telecard 5.78 Pakistan State Oil 4.76 United Bank 4.19 Nishat Mills Limited 4.05 Sui Norther Gas Pipeline 3.17 Kot Addu Power Company 3.09 AA AA AA D 5.78 Provision (If any) Value of Investment after provision % of Net Assets % of Total Assets Telecard A- D TFC 36,770,073 23,316,135 13,453, % 5.78% Preference 37,490,000 Pak Electron A- D Shares - 37,490, % 16.10% Rating required Existing Rating Type of Instrument Total exposure % of Net Assets % of Total Assets % of debt issue Name of Instrument Pakistan International Container Terminal ** A- A+ Preference shares 20,902, % 8.98% 11.06% *SECP had granted extension to regularize this exposure till 30 September ** The holds 11.06% of the issue size of the preference shares issued by Pakistan international container terminal Limited which is in excess of limit prescribed by the NBFC regulation 2008 against issue size. SECP has granted approval to hold the security till 31 July The Scheme has maintained provisions against Workers' Welfare liability to the tune of Rs. 4,431,825, if the same were not made the NAV per unit/ return of the Scheme would have been higher by Re.0.34 (0.53%). For details investors are advised to read note 9.2 of latest financial Although the fund performed competitively over the month, returns were marginally reduced by non-recurring impact from movement in PICT preference shares. In line with the management s earlier strategy for May, equity exposure was reduced from 35% to 31.23%, with liquid funds maintained in near zero-risk daily bank products. Going forward, your fund aims to manage fund exposure by closely monitoring geo-political and economic developments in order to capitalize on opportunities and avert down-trending markets.

8 Sortino Ratio The Sortino ratio measures the risk-adjusted return of an investment asset. It is a modification of the Sharpe ratio but penalizes only those returns falling below a user-specified target, or required rate of return, while the Sharpe ratio penalizes both upside and downside volatility equally. Trynor Ratio Treynor ratio is a measurement of the returns earned in excess of that which could have been earned on a riskless investment (i.e. Treasury Bill) (per each unit of market risk assumed). Treynor ratio (sometimes called reward-to-volatility ratio) relates excess return over the risk free rate to the additional risk taken; however systematic risk instead of total risk is used. The higher the Treynor ratio, the better the performance under analysis. Alpha (α) How much excess returns fabricate by an instrument or portfolio over the benchmark. A positive alpha is the extra return awarded to the investor for taking additional risk rather than accepting the market return. Beta (β) A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market and vice versa. Information Ratio A ratio of portfolio returns above the returns of a benchmark (usually an index) to the volatility of those returns. This ratio will identify if a manager has beaten the benchmark by a lot in a few months or a little every month. The higher the IR the more consistent a manager is. Standard deviation It shows how much variation exists from the average (mean, or expected value). A low standard deviation indicates that the data points tend to be very close to the mean and vice versa. Value at Risk (VaR) VaR refers to the particular amount of money, the maximum amount we are likely to loss over some period, at some specific confidence level. For example if a portfolio of stocks has a VaR of 2% at the confidence level of 95% of Rs. 1 million, there is 5% probability that portfolio loss could exceed Rs. 20,000 in a day. *See clause Number 6.1 offering document for details Disclaimer: This publication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any fund. All investments in mutual funds are subject to market risks. The NAV based prices of units and any dividends/returns thereon are dependant on forces and factors affecting the capital markets. These may go up or down based on market conditions. Past performance is not necessarily indicative of future results