Report of the Shariah Advisory Board. Independent Auditors Report to the Unit Holders. Statement of Assets and Liabilities

Transcription

1

2 Fund Information Fund Manager Report Fund Performance Table Report of the Trustee Statement of Compliance Review Report to the Unit Holders on Statement of Compliance Report of the Shariah Advisory Board Independent Assurance Report to the Unit Holders of the Fund Independent Auditors Report to the Unit Holders Statement of Assets and Liabilities Income Statement Statement of Comprehensive Income Distribution Statement Statement of Movement in Unit Holders Funds Cash Flow Statement Notes to Financial Statement 21 44

3 AIPPFV AlAmeen Islamic Principal Preservation Fund V INVESTMENT OBJECTIVE The objective of the fund is to earn a potentially high return through dynamic asset allocation between Shariah Compliant Equities and Shariah Compliant Income/Money Market based Collective Investment Schemes, while providing principal preservation of the Initial Investment Value at completion of the duration of fund. Management Company Trustee UBL Fund Managers Limited Central Depository Company of Pakistan Limited 99B, BlockB, S.M.C.H.S., Main ShahraeFaisal, Karachi. Tel: (9221) Distribution Company United Bank Limited (for detail of others, please visit our website: Auditors Legal Advisor Bankers BDO Ebrahim & Co. Mohsin Tayebaly & Co. United Bank Limited Management Company Rating Fund Rating AM2+ (JCR VIS) Not yet rated AlAmeen Islamic Principal Preservation Fund V 01 Annual Report 15

4 FUND MANAGER S REPORT ALAMEEN ISLAMIC PRINCIPAL PRESERVATION FUNDV (AIPPFV) i) Description of the Collective Investment Scheme category and type Islamic Fund of Funds Scheme / Openend ii) Statement of Collective Investment Scheme s investment objective The objective of AlAmeen Islamic Principal Preservation Fund V is to earn a potentially high return through dynamic asset allocation between Shariah Compliant Equities and Shariah Compliant Income/Money Market based Collective Investment Schemes, while providing capital preservation of the Initial Investment Value at completion of the duration of fund. iii) Explanation as to whether the Collective Investment Scheme achieved its stated objective The Collective Investment Scheme aims to provide capital protection at completion of the duration; the performance so far till end June 15 reflects that the fund is on track to achieve its stated objective of earning potentially high returns while providing capital preservation of the initial investment value. iv) Statement of benchmark(s) relevant to the Collective Investment Scheme Weighted Average Daily Return of KMI30 Index and 3M Deposit Rates of Islamic Banks (AA & above) based on the Fund s actual participation in the Equity & MM/Income Component. v) Comparison of the Collective Investment Scheme s performance during the period compared with the said benchmarks Monthly Yield Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15 FYTD AIPPFV Benchmark 0.37% 0.03% 7.81% 5.29% 3.35% 0.28% 10.47% 5.31% 7.23% 7.00% 3.34% 0.52% 1.27% 1.43% 1.70% 7.29% vi) Description of the strategies and policies employed during the period under review in relation to the Collective Investment Scheme s performance AIPPFV is a fundoffunds scheme which primarily invests in the AlAmeen Shariah Stock Fund (ASSF) and the AlAmeen Islamic Cash Fund (AICF) through a Constant Proportion Portfolio Insurance (CPPI) trading strategy. CPPI based trading strategy periodically changes allocation between equity and fixed income investments based on performance of respective investment vehicles and their future outlook vii) Disclosure of the Collective Investment Scheme s asset allocation as at the date of the report and particulars of significant changes in asset allocation since the last report (if applicable) Asset Allocation (% of Total Assets) Jun14 Jun15 Equity Funds Money Market Funds Others Cash Leverage Total viii) Analysis of the Collective Investment Scheme s performance FY 15 Return: 1.70% Standard Deviation (12m trailing): N/A Sharpe Ratio (12m trailing): N/A 0% 0% 0% 0% Nil 0% 18% 79% 3% 0% Nil 100% AlAmeen Islamic Principal Preservation Fund V 02 Annual Report 15

5 ix) Changes in total NAV and NAV per unit since the last review period or since commencement (in case of newly established Collective Investment Schemes) Net Asset Value NAV per unit 30Jun15 30Jun14 Change 30Jun15 30Jun14 Change Rupees (000) % Rupees % 942, ,451 (2.2) (1.70) x) Disclosure on the markets that the Collective investment Scheme has invested in including review of the market(s) invested in and performance during the period The Fund is a principalprotected fund which has invested in ASSF (equity fund) and AICF (moneymarket fund). Thus, the underlying assets of AIPPFV are equity and moneymarket CIS and the market reviews are as follows: Debt Market Review FY15 With softening international crude oil prices (with its trickle down impact on domestic fuel prices), stability in exchange rate and better production of minor crops, headline inflation moderated to 4.53% in FY15, decelerating from 8.62% in FY14. Moreover, a sizeable reduction in government s borrowing from the Central Bank also contained inflation expectations. In April, CPI slowed to 2.1%YoY, the lowest reading after September Food inflation dropped to mere 2.41% on the back of lower commodity prices and limited impact of floods on supplies of perishable products in August last year. Non Food inflation also reduced to 3.56% in FY15. Core measures of inflation also witnessed downward trajectory where the Non Food Non Energy (NFNE) measure which is somewhat sticky in nature trimmed to 6.59% in comparison to 8.3% posted in same period last year. Taking cues from lower inflation, the Central Bank reinitiated the monetary easing in Nov 15 where the policy rate was slashed by 50bps to 9.5% after maintaining it at 10% in last seven monetary policies. Policy stance was consistently maintained and discount rate was further reduced successively in next three monetary policies to reach at historic low of 7% in May 15 (cumulative reduction of 300bps) in an effort to stimulate the stagnant economy. In twelve PIB auctions conducted during the period, the government mopped up PKR~965bn (PKR 2.037trn in FY14) against target of PKR 900bn. Consequently, the outstanding amount for the PIBs in the market increased to PKR 4.104trn. Participation in the auctions was largely skewed towards three and five year paper with the participation ratio of 51% and 27% respectively. Cut off yields in June auction trimmed to 8.09%, 8.99% for three and five year PIB instruments respectively. Weighted average borrowing cost reduced to 10.42% in FY15 against 12.25% in corresponding period last year. The yield curve based on government securities of various maturities has shifted downwards in line with the decrease in discounts rates during FY15. Since the initiating of monetary easing by the SBP in November last year, Secondary market yields for the long term and short term PIB instruments have come off by ~200bps and ~300bpps respectively. The spread between annualized yields of 1year Tbills (6.98% p.a.) and 10year PIBs (9.97% p.a.) stood at ~3% as of 30 June, 2015 which from a historical perspective is on the higher side. AlAmeen Islamic Principal Preservation Fund V 03 Annual Report 15

6 Stock Market Review FY15 The equity market continued its bull run and the benchmark KSE 100 index during FY15 increased by 16.0%. In addition to this, FY15 stood as a remarkable year as the average daily trading volumes and values rose to a 6year high at 215.9mn shares and US$ 107.6mn respectively. Rising volumes witnessed during the year were a result of new offerings and improving investor s confidence. Interestingly, the aforementioned performance of KSE100 index came despite a negative return by index heavy weight sectors. Oil & Gas sector amid a 44% decline in the international oil prices led to a subdued performance and declined by 25% YoY. In addition to this, performance of the banking sector also remained lackluster owing to a soft interest rate environment and regulatory overhang. During FY15, Mutual funds (US$ mn net buy), NBFC s (US$ 68.2mn net buy) and FIPI (US$ 38.6mn net buy) along with other organizations (US$ 40.9mn net buy) remained net buyers at the bourse. Conversely selling came from Banks (US$ 137.9mn net sell), Companies (US$ 97.0mn net sell) and individuals which sold equities worth US$ 24.5mn. Improving macros led by multi decade low interest rates, low inflation, increased foreign exchange reserves and contained fiscal deficit were the key positives for FY15 which helped the market to generate performance. Also in the outgoing year, inflation clocked in at 4.6% significantly lower than the target of 8% set by the Government. In view of improving macros and declining inflation, the SBP adopted an accommodative monetary policy and reduced the policy rate by 300bps to multi decade low of 7%. Thanks to sharp decline in current account deficit, issue of Sukuk bond and IMF payments, the foreign exchange reserves increased by US$ 4.2bn in FY15 to reach at US$ 18.2bn at close of FY15. Thus an overall improvement in macroeconomic indicators led to a ratings upgrade by Moody s in June 2015 from Caa1 to B3. Performance detractors stood as the index heavyweights during FY15 where Oil and Gas and Bank having a cumulative weight of 39% closed with negative returns. Amongst all 32 sectors, 6 sectors with cumulative index weight of 45% remained in the negative territory as they yielded negative returns of 17%. These included Oil and Gas (ve 25% YoY), Fixed Line (ve 19% YoY), Tobacco (ve 17% YoY) and Commercial banks (ve 6% YoY). On the other hand, 26 sectors which made up for 55% of the market weight registered 34% YoY growth. Amongst the ones which posted gains, key sectors included Autos (+ve 94% YoY), Electricity (+ve 63% YoY), Construction & Materials (+ve 47% YoY) and Chemicals (+ve 41% YoY). Despite the continuous bullrun in the last few years, improving macros and corporate sector profitability will provide better visibility of Pakistan to foreign investors and help in an upward rerating of Pakistan equities. xi) Disclosure on distribution (if any), comprising: particulars of income distribution or other forms of distribution made and proposed during the period; and statement of effects on the NAV before and after distribution is made Distribution Per unit Declared on Bonus Cash Per Unit Cum NAV Ex NAV Rupees (000) Rupees i) Description and explanation of any significant changes in the state of affairs of the Collective Investment Scheme during the period and up till the date of the manager s report, not otherwise disclosed in the financial statements There were no significant changes in the state of affairs during the year under review. ii) Breakdown of unit holdings by size Range of Units AIPPFV , , , , , , , , & Above Total Number of Investors AlAmeen Islamic Principal Preservation Fund V 04 Annual Report 15

7 iii) Disclosure on unit split (if any), comprising: There were no unit splits during the period. iv) Disclosures of circumstances that materially affect any interests of unit holders Investment are subject to credit and market risk. v) Disclosure if the Asset Management Company or its delegate, if any, receives any soft commission (i.e. goods and services) from its broker(s) or dealer(s) by virtue of transactions conducted by the Collective Investment Scheme. No soft commissions are received by the AMC from its brokers or dealers by virtue of transactions conducted by the Collective Investment Scheme. AlAmeen Islamic Principal Preservation Fund V 05 Annual Report 15

8 FUND PERFORMANCE TABLE AlAmeen Islamic Principal Preservation Fund V Net Assets as at 30 June Rupees in '000 Net Asset Value per unit at 30 June Rupees Class A Units Return of the Fund Percentage Total Return of the Fund Capital Growth (per unit) Average Annual Return Percentage Since Launch / One Year Offer / Repurchase During the Year Rupees Highest Price per Unit Class A Units ,859 Offer Redemption* (1.70) (1.70) (1.70) Offer Redemption* Lowest Price per Unit Class A Units Offer Redemption* *Redemption Prices are net of Backend Load Portfolio Composition Percentage of Net Assets as at 30 June Portfolio Composition by Category Percentage Bank Balances Money Market Funds Equity Funds Portfolio Composition by Market Percentage Mutual Funds 100 Note: The launch date of the Fund is 26 December 2014 DISCLAIMER: Past performance is not necessarily indicative of future performance. Unit prices and investment returns may go down as well as up. AlAmeen Islamic Principal Preservation Fund V 06 Annual Report 15

9 TRUSTEE REPORT TO THE UNIT HOLDERS AlAmeen Islamic Principal Preservation Fund V Report of the Trustee pursuant to Regulation 41(h) and clause 9 of Schedule V of the NonBanking Finance Companies and Notified Entities Regulations, 2008 We Central Depository Company of Pakistan Limited, being the Trustee of Al Ameen Islamic Principal Preservation Fund V (the Fund) are of the opinion that UBL Fund Managers Limited being the Management Company of the Fund has in all material respects managed the Fund during the period from December 26, 2014 to June 30, 2015 in accordance with the provisions of the following: (i) Limitations imposed on the investment powers of the Management Company under the constitutive documents of the Fund; (ii) The pricing, issuance and redemption of units are carried out in accordance with the requirements of the constitutive documents of the Fund; and (iii) The NonBanking Finance Companies (Establishment and Regulations) Rules, 2003, the NonBanking Finance Companies and Notified Entities Regulations, 2008 and the constitutive documents of the Fund Muhammad Hanif Jakhura Chief Executive Officer Central Depository Company of Pakistan Limited Karachi September 18, 2015 AlAmeen Islamic Principal Preservation Fund V 07 Annual Report 15

10 STATEMENT OF COMPLIANCE BY UBL FUND MANAGERS LIMITED WITH THE BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE FOR THE YEAR ENDED 30 JUNE 2015 This statement is being presented to comply with the Code of Corporate Governance (the Code) contained in chapter XI of Listing Regulations of Islamabad Stock Exchange for the purpose of establishing a framework of good governance, whereby a listed entity is managed in compliance with the best practices of Corporate Governance. The Board of Directors (the Board) of UBL Fund Managers Limited (the Management Company), which is an unlisted public company, manages the affairs of AlAmeen Islamic Principal Preservation Fund V (the Fund). The Fund being a unit trust open end scheme does not have its own Board of Directors. The Management Company has applied the principles contained in the Code to the Fund, whose units are listed as a security on the Islamabad Stock Exchange, in the following manner: 1. The Management Company encourages representation of independent nonexecutive directors. All the directors, except the Chief Executive Officer of the Management Company are nonexecutive directors, two of which are independent nonexecutive directors. Category Independent Directors Executive Directors Non Executive Directors Name Mr. Tariq Kirmani Mr. Shabbir Hussain Hashmi Mr. Mir Muhammad Ali, CFA Mr. Zia Ijaz Mr. Zulfiqar Alavi Syed Furrukh Zaeem Mirza Muhammad Sadeed Hassan Barlas The independent directors meets the criteria of independence under clause i (b) of the CCG. 2. The existing directors have confirmed that none of them are serving as a director in more than seven listed companies, including the Management Company. 3. All the resident directors of the Management Company have confirmed that they are registered as taxpayers and none of them have defaulted in payment of any loan to a banking company, a DFI or an NBFC or, being a member of a stock exchange, have been declared as a defaulter by that stock exchange. 4. During the financial year , 5 following directors namely Mr. Muhammad Hanif Akhai, Mr. Rayomond Kotwal, Mr. Jamal Nasir and Syed Ali Hasnain resigned from the Board while Mr. Saeed Iqbal did not participate in the reelection of the Board of Directors held on Sep 29, 2014 and in their places Mr. Zia Ijaz, Mr. Zulfiqar Alavi, Syed Furrukh Zaeem and Mirza Muhammad Sadeed Barlas were inducted on the Board. All of the above casual vacancies are filled up by the new directors within 90 day period. 5. The Management Company has prepared a 'Code of Conduct' and has ensured that appropriate steps have been taken to disseminate it throughout the company along with its supporting policies and procedures. AlAmeen Islamic Principal Preservation Fund V 08 Annual Report 15

11 6. The Management Company has developed a vision/ mission statement, corporate strategy and significant policies for the Fund that has been approved by the Board. A complete record of particulars of significant policies along with the dates on which these were approved or amended has been maintained. 7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and terms and conditions of employment of the CEO have been taken by the Board. 8. The meetings of the Board were presided over by the Chairman and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. 9. The related party transactions have been placed before the Audit Committee and approved by the Board of Directors with necessary justification for nonarm s length transaction and pricing methods for transaction that were made on terms equivalent to those that prevail in the arm s length transactions only if such terms can be substantiated. 10. In order to apprise the directors on their duties and responsibilities and the requirements of the Code, the Management Company has a process in place to conduct formal orientations for new directors. Furthermore, three directors on the Board have completed the Director Training Program (DTP) and are certified directors, while two Independent directors are exempt from the DTP under the Code of Corporate Governance The directors are well conversant with the relevant laws applicable to the Fund and the Management Company, its policies and procedures and provisions of memorandum and articles of association and are aware of their duties and responsibilities. 11. There was no new appointment of CFO, Company Secretary and Head of Internal Audit during the year. 12. The Directors' report relating to the Fund for the year ended 30 June 2015 has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. 13. The financial statements of the Fund were duly endorsed by the CEO and CFO of the Management Company before approval of the Board. 14. The Directors, CEO, and executives do not hold any interest in the units of the Fund and shares of the Management Company other than disclosed in the Directors' Report. 15. The Management Company has complied with all the applicable corporate and financial reporting requirements of the Code. 16. The Board has formed a Board Audit Committee. It comprises of four members, all of whom are nonexecutive directors of the Management Company including the chairman of the Committee who is an independent nonexecutive director. 17. The meetings of the Board Audit Committee were held at least once in every quarter and prior to the approval of interim and final results of the Fund as required by the Code. The terms of reference have been approved in the meeting of the Board of Directors and the Committee has been advised to ensure compliance with those terms of reference. 18. The Management Company has inhouse internal audit function. The internal audit team is considered suitably qualified and experienced for the purpose and is conversant with the policies and procedures of the Fund and they are involved in the internal audit function on full time basis. 19. The Board has formed a Human Resource and Compensation Committee. It comprises of four members, of whom three are nonexecutive directors, one is an executive director and the chairman of the Committee is an independent non executive director AlAmeen Islamic Principal Preservation Fund V 09 Annual Report 15

12 20. The statutory auditors of the Fund have confirmed that they have been given a satisfactory rating under the Quality Control Review program of the Institute of Chartered Accountants of Pakistan (ICAP), that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Management Company or units of the Fund and that the firm and all its partners are in compliance with the International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistavn. 21. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 22. The 'closed period', prior to the announcement of interim/final results, and business decisions, which may materially affect the market price of Fund's securities, was determined and intimated to directors, employees and stock exchange(s). 23. Material/price sensitive information has been disseminated among all market participants at once through stock exchange(s). 24. We confirm that all other material principles contained in the Code have been complied with. MIR MUHAMMAD ALI, CFA Karachi. Chief Executive Dated: August 24, 2015 AlAmeen Islamic Principal Preservation Fund V 10 Annual Report 15

13 REVIEW REPORT TO THE UNIT HOLDERS ON THE STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES OF THE CODE OF CORPORATE GOVERNANCE We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors of UBL Fund Managers Limited, the Management Company of ALAMEEN ISLAMIC PRINCIPAL PRESERVATION FUND V ( the Fund ) for the period from December 26, 2014 to June 30, 2015 to comply with the requirements of Listing Regulation No. XI of the Islamabad Stock Exchange where the Fund is listed. The responsibility for compliance with the Code is that of the Board of Directors of the Management Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Management Company s compliance with the provisions of the Code and report if it does not and to highlight any noncompliance with the requirements of the Code. A review is limited primarily to inquiries of the Management Company s personnel and review of various documents prepared by the Management Company to comply with the Code. As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Management Company's corporate governance procedures and risks. The Code requires the Management Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval its related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not. Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Management Company's compliance, in all material respects, with the best practices contained in the Code as applicable to the Fund for the period from December 26, 2014 to June 30, BDO Ebrahim & Co. Chartered Accountants KARACHI Date: 24 August 2015 AlAmeen Islamic Principal Preservation Fund V 11 Annual Report 15

14 REPORT OF THE SHARIAH ADVISORY BOARD We, the Shariah Advisors of the fund are issuing this report in accordance with the rules and regulations. The scope of the report is to express an opinion on the Shariah Compliance of the Funds activities. In the capacity of Shariah Advisors, we have prescribed criteria and procedures to be followed in ensuring Shariah Compliance in every investment. It is the responsibility of the Management Company of the fund to establish and maintain a system of internal controls to ensure compliance with the Shariah guidelines. Our responsibility is to express an opinion, based on our review, to the extent where such compliance can be objectively verified. A review is limited primarily to inquiries of the Management Company s personnel and review of various documents prepared by the Management Company to comply with the prescribed criteria. In light of the above, we hereby certify that: i. We have reviewed and approved the modes of investments of AIPPFV in light of the shariah guidelines. ii. All the provisions of the Scheme and investments made on account of AIPPFV by UBL Fund Managers are Shariah compliant and in accordance with the criteria established. iii. On the basis of information provided by the management, all operations of AIPPFV for the period ended 30 June 2015 have been in compliance with the Shariah principles. During the year, Nil amount has been recognized as charity. May Allah give us strength to work in accordance with Quran and Sunnah and forgive our mistakes. Mufti Muhammad Hassaan Kaleem Member, Shariah Advisory Board Mufti Muhammad Najeeb Khan Member, Shariah Advisory Board KARACHI DATE: 30 July 2015 AlAmeen Islamic Principal Preservation Fund V 12 Annual Report 15

15 INDEPENDENT ASSURANCE REPORT TO THE UNIT HOLDERS OF THE FUND IN RESPECT OF THE FUND S COMPLIANCE WITH THE SHARIAH RULES AND PRINCIPLES We have performed our independent assurance engagement of AlAmeen Islamic Principal Preservation Fund V the Fund to assess the Fund s compliance with the Shariah Guidelines prescribed by the Shariah Advisor of the Fund for the period from December 26, 2014 to June 30, Management s responsibility for Shariah compliance Management Company of the Fund is responsible for the appointment of Shariah Advisor of the Fund and for compliance with the Shariah Guidelines prescribed by the Shariah Advisor. This responsibility includes: designing, implementing and maintaining internal control to ensure compliance with the Shariah Guidelines issued by the Shariah Advisor of the Fund. Our responsibility Our responsibility is to express our conclusion on the compliance based on our independent assurance engagement, performed in accordance with the International Standards on Assurance Engagements (ISAE 3000) Assurance Engagement other than Audits or Review of Historical Financial Information. This standard requires that we comply with ethical requirements and plan and perform the engagement to obtain reasonable assurance whether the Fund has complied with the guidelines issued by the Shariah Advisor. The procedures selected depend on our judgement, including the assessment of the risks of material noncompliances with the Shariah guidelines. In making those risk assessments, we have considered internal controls relevant to the entity s compliance with the guidelines in order to design our procedures that are appropriate in the circumstances, for gathering sufficient appropriate evidence to determine that the Fund was not materially noncompliant with the guidelines. Our engagement was not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Conclusion In our opinion, the Fund was in all material respects, in compliance with the Shariah Guidelines issued by the Shariah Advisor of the Fund for the period from December 26, 2014 to June 30, Karachi 24 August 2015 BDO Ebrahim & Co. Chartered Accountants. AlAmeen Islamic Principal Preservation Fund V 13 Annual Report 15

16 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS Report on the financial statements We have audited the accompanying financial statements of AlAmeen Islamic Principal Preservation Fund V ( the Fund ), which comprise of the statement of assets and liabilities as at June 30, 2015 and the income statement, statement of comprehensive income, distribution statement, cash flow statement and statement of movement in unit holders fund for the period from December 26, 2014 to June 30, 2015 and summary of significant accounting policies and other explanatory notes. Management s responsibility for the financial statements The Management Company ( UBL Fund Managers Limited ) of the Fund is responsible for the preparation and fair presentation of these financial statements in accordance with the requirements of the Trust Deed, the NonBanking Finance Companies (Establishment and Regulation) Rules, 2003 (NBFC Rules), the NonBanking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations) and approved accounting standards as applicable in Pakistan. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards as applicable in Pakistan. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, either due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Fund s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the state of the Fund s affairs for the period from December 26, 2014 to June 30, 2015 and of its financial performance, cash flows and transactions for the year then ended in accordance with the approved accounting standards as applicable in Pakistan. Other matters In our opinion, the financial statements have been prepared in accordance with the relevant provisions of the Trust Deed, NBFC Rules and NBFC Regulations. Karachi BDO Ebrahim & Co., Chartered Accountants. 24 August 2015 Audit Engagement Partner: Zulfikar Ali Causer AlAmeen Islamic Principal Preservation Fund V 14 Annual Report 15

17 ALAMEEN ISLAMIC PRINCIPAL PRESERVATION FUND V STATEMENT OF ASSETS AND LIABILITIES AS AT JUNE 30, Note (Rupees in '000) ASSETS Bank balances 5 1,728 Investments 6 946,493 Profit and other receivable 22,814 Preliminary expenses and floatation costs 7 3,719 TOTAL ASSETS 974,754 LIABILITIES Payable to UBL Fund Managers Limited Management Company 8 5,020 Payable to Central Depository Company of Pakistan Limited Trustee Payable to Securities and Exchange Commission of Pakistan Provision for Workers' Welfare Fund 11 Accrued expenses and other liabilities 12 26,395 TOTAL LIABILITIES 31,895 NET ASSETS 942,859 UNIT HOLDERS' FUNDS (As per the statement attached) 942,859 CONTINGENCIES AND COMMITMENTS 13 Number of units NUMBER OF UNITS IN ISSUE 9,591,848 NET ASSETS VALUE PER UNIT (Rupees) The annexed notes 1 to 19 form an integral part of these financial statements. For UBL Fund Managers Limited (Management Company) Mir Muhammad Ali, CFA Chief Executive Syed Furrukh Zaeem Director AlAmeen Islamic Principal Preservation Fund V 15 Annual Report 15

18 ALAMEEN ISLAMIC PRINCIPAL PRESERVATION FUND V INCOME STATEMENT FOR THE PERIOD FROM DECEMBER 26, 2014 TO JUNE 30,2015 For the period from December 26, 2014 to June 30, 2015 Note (Rupees in '000) INCOME Profit on bank balances 2,876 Dividend income 58,701 Loss on sale of investments (30,591) Unrealised loss on revaluation of investment classified at fair value through profit or loss net 6.1 (44,883) Other income 6.1 (44,883) 245 (13,652) EXPENSES Remuneration of Central Depository Company of Pakistan Limited Trustee Annual fee to Securities and Exchange Commission of Pakistan Amortization of preliminary expenses and floatation costs 7 1,281 Auditors' remuneration 220 Other expenses 233 2,758 Operating loss for the period Element of income and capital gains included in the prices of units issued less those in units (16,410) redeemed net 84 Provision for Workers' Welfare Fund 11 Net loss before taxation (16,326) Taxation 14 Net Loss for the period (16,326) The annexed notes 1 to 19 form an integral part of these financial statements. For UBL Fund Managers Limited (Management Company) Mir Muhammad Ali, CFA Chief Executive Syed Furrukh Zaeem Director AlAmeen Islamic Principal Preservation Fund V 16 Annual Report 15

19 ALAMEEN ISLAMIC PRINCIPAL PRESERVATION FUND V STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD FROM DECEMBER 26, 2014 TO JUNE 30,2015 For the period from December 26, 2014 to June 30, 2015 (Rupees in '000) Net loss for the period (16,326) Other comprehensive income for the period Total comprehensive loss for the period (16,326) The annexed notes 1 to 19 form an integral part of these financial statements. For UBL Fund Managers Limited (Management Company) Mir Muhammad Ali, CFA Chief Executive Syed Furrukh Zaeem Director AlAmeen Islamic Principal Preservation Fund V 17 Annual Report 15

20 ALAMEEN ISLAMIC PRINCIPAL PRESERVATION FUND V DISTRIBUTION STATEMENT FOR THE PERIOD FROM DECEMBER 26, 2014 TO JUNE 30,2015 For the period from December 26, 2014 to June 30, 2015 (Unaudited) (Rupees in '000) Undistributed income at the beginning of the period Net loss for the period (16,326) Undistributed loss at the end of the period (16,326) Accumulated income at the end of the period realized 28,557 Undistributed loss at the end of the period unrealized (44,883) Undistributed loss at the end of the period (16,326) The annexed notes 1 to 19 form an integral part of these financial statements. For UBL Fund Managers Limited (Management Company) Mir Muhammad Ali, CFA Chief Executive Syed Furrukh Zaeem Director AlAmeen Islamic Principal Preservation Fund V 18 Annual Report 15

21 ALAMEEN ISLAMIC PRINCIPAL PRESERVATION FUND V STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND FOR THE PERIOD FROM DECEMBER 26, 2014 TO JUNE 30,2015 For the period from December 26, 2014 to June 30, 2015 (Rupees in '000) Net assets at beginning of the period Cash received on issuance of 9,652,991 units 965,308 Cash paid on redemption of 61,142 units (6,039) Element of (income) and capital (gains) included in the prices of units sold less those in units redeemed net (84) Net loss for the period (16,326) Net assets at end of the period 942,859 Net assets value per unit at the end of the period The annexed notes 1 to 19 form an integral part of these financial statements. For UBL Fund Managers Limited (Management Company) Mir Muhammad Ali, CFA Syed Furrukh Zaeem Chief Executive Director AlAmeen Islamic Principal Preservation Fund V 19 Annual Report 15

22 ALAMEEN ISLAMIC PRINCIPAL PRESERVATION FUND V CASH FLOW STATEMENT FOR THE PERIOD FROM DECEMBER 26, 2014 TO JUNE 30,2015 For the period from December 26, 2014 to June 30, 2015 Note (Rupees in '000) CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period before taxation (16,326) Adjustments for noncash items: Amortisation of preliminary expenses and floatation costs 1,281 Profit on bank balances (2,876) Unrealised loss on revaluation of investment classified at fair value through profit or loss net 44,883 Element of (income) and capital (gains) included in the prices of units sold less those in units redeemed net (84) Dividend income (58,701) Realized loss 30,591 15,094 Net cash used in operations before working capital changes (1,232) Increase in assets Investments (1,021,967) Profit and other receivable (22,805) Preliminary expenses and floatation costs (5,000) (1,049,772) Increase in liabilities Payable to UBL Fund Managers Limited Management Company 5,020 Payable to Central Depository Company of Pakistan Limited Trustee 105 Payable to Securities and Exchange Commission of Pakistan 375 Accrued expenses and other liabilities 26,395 31,895 Profit received on bank balances 61,568 Net cash used in operating activities (957,541) CASH FLOWS FROM FINANCING ACTIVITIES Receipts from issuance of units 965,308 Payments on redemption of units (6,039) Net cash generated from financing activities 959,269 Net increase in cash and cash equivalents during the period 1,728 Cash and cash equivalents at the beginning of the period Net cash and cash equivalents at the end of the period 5.2 1,728 The annexed notes 1 to 19 form an integral part of these financial statements. For UBL Fund Managers Limited (Management Company) Mir Muhammad Ali, CFA Chief Executive Syed Furrukh Zaeem Director AlAmeen Islamic Principal Preservation Fund V 20 Annual Report 15

23 ALAMEEN ISLAMIC PRINCIPAL PRESERVATION FUND V NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM DECEMBER 26, 2014 TO JUNE 30, LEGAL STATUS AND NATURE OF BUSINESS Al Ameen Islamic Principal Preservation Fund V (the 'Fund') was established under a Trust Deed executed on September 29, 2014 between UBL Funds Managers Limited, (wholly owned subsidiary company of United Bank Limited) as its Management Company and Central Depository Company of Pakistan Limited, as its Trustee. The Fund has been registered as a notified entity on September 29, 2014 by the Securities and Exchange Commission of Pakistan (SECP) in accordance with the NonBanking Finance Companies and Notified Entities Regulations, 2008 (NBFC Regulations). The Management Company of the Fund has been licensed by SECP as a NonBanking Finance Company under the NonBanking Finance Companies (Establishment and Regulation) Rules, 2003 (NBFC Rules). The registered office of the Management Company is situated at 8th Floor, State Life Building, I.I. Chundrigar Road, Karachi. The Fund is an openend mutual fund and is listed on Islamabad Stock Exchange. Units were offered for public subscription up to the end of public offering period. After initial offering period, the offer of unit was discontinued. However, the subscription in units may be reopened for fresh issuance by the Management Company in accordance with the provisions of the constitutive documents and subject to the necessary approvals. The units are transferable and can be redeemed by surrendering them to the Fund at the option of unit holder. The units of the Fund were initially offered to public (IPO) on December 18, The Fund commenced its operations from December 26, 2014 and the duration of the Fund is twenty four months after which it shall stand automatically dissolved. The Fund is categorized as Fund of Fund Scheme in accordance with Circular No. 7 issued by the Securities and Exchange Commission of Pakistan. The objective of the Fund is to earn a potentially high return through dynamic asset allocation between shariah compliant equities and shariah compliant income / money market based collective investment schemes, while providing principal preservation of initial investment value at completion of the duration of fund. Title to the assets of the Fund are held in the name of Central Depository Company of Pakistan Limited as a Trustee of the Fund. AlAmeen Islamic Principal Preservation Fund V 21 Annual Report 15

24 2. BASIS OF PRESENTATION 2.1 Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984, requirements of Trust Deed, Non Banking Finance Companies (Establishment and Regulation) Rules, 2003 (NBFC Rules, 2003) and NonBanking Finance Companies and Notified Entities Regulations, 2008 ("NBFC Regulations, 2008"). In case the requirements differ, the provisions or directives of the Companies Ordinance, 1984, the requirements of the Trust Deed, NBFC Rules and NBFC Regulations shall prevail. 2.2 Basis of measurement These financial statements have been prepared under the historical cost convention, except that investments are measured at their fair values. These financial statements have been prepared by following accrual basis of accounting except for cash flow information. 2.3 Functional and presentation currency These financial statements are presented in Pakistani Rupees, which is the presentation and functional currency of the Fund. 2.4 Critical accounting estimates and judgments The preparation of financial statements is in conformity with approved accounting standards, as applicable in Pakistan, requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, 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 results of which form the basis of making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgments made by the management in the application of approved accounting standards, as applicable in Pakistan, that have significant effect on the financial statements and estimates with a significant risk of material judgment are discussed below: AlAmeen Islamic Principal Preservation Fund V 22 Annual Report 15

25 Impairment of investments The Fund determines that investments are impaired when there has been a significant or prolonged decline in the fair value below its cost. The determination of what is significant or prolonged requires judgment. In making this judgment, the Fund evaluates among other factors, the normal volatility in prices. In addition the impairment may be appropriate when there is an evidence of deterioration in the financial health of the invested industry and sector performance, changes in technology and operational financial cash flows. Other assets Judgment is also involved in assessing the realisability of the asset balances. 3. NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED APPROVED ACCOUNTING STANDARDS 3.1 Standards or interpretations that are effective in current year but not relevant to the Fund The Fund has adopted the following accounting standards and interpretations which became effective during the year: Effective date (annual periods beginning on or after) IFRIC 21 Levies January 01, Amendments that are effective in current year but not relevant to the Fund The Fund has adopted the amendments to the following accounting standards which became effective during the year: IFRS 2 Sharebased Payment Amendments resulting from Annual Improvements Cycle (definition of 'vesting condition') July 01, 2014 IFRS 3 Business Combinations Amendments resulting from Annual Improvements Cycle (accounting for contingent consideration) and Cycle (scope exception for joint ventures) July 01, 2014 AlAmeen Islamic Principal Preservation Fund V 23 Annual Report 15

26 IFRS 8 Operating Segments Amendments resulting from Annual Improvements July 01, Cycle (aggregation of segments, reconciliation of segment assets) IFRS 10 Consolidated Financial Statements Amendments for investment entities January 01, 2014 IFRS 12 Disclosure of Interests in Other Entities Amendments for investment January 01, 2014 entities IFRS 13 Fair Value Measurement Amendments resulting from Annual Improvements Cycle (scope of the portfolio exception in July 01, 2014 paragraph 52) IAS 16 Property, Plant and Equipment Amendments resulting from Annual Improvements Cycle (proportionate restatement of accumulated July 01, 2014 depreciation on revaluation) IAS 19 Employee Benefits Amended to clarify the requirements that relate to how contributions from employees or third parties that are linked to service July 01, 2014 should be attributed to periods of service IAS 24 Related Party Disclosures Amendments resulting from Annual Improvements Cycle (management entities) July 01, 2014 AlAmeen Islamic Principal Preservation Fund V 24 Annual Report 15

27 Effective date (annual periods beginning on or after) IAS 27 Separate Financial Statements Amendments for investment entities January 01, 2014 IAS 32 Financial Instruments Presentation Amendments relating to the offsetting January 01, 2014 of assets and liabilities IAS 36 Impairment of Assets Amendments arising from recoverable amount disclosures for non financial assets January 01, 2014 IAS 38 Intangible Assets Amendments resulting from Annual Improvements Cycle (proportionate restatement of accumulated depreciation on July 01, 2014 revaluation) IAS 39 Financial Instruments: Recognition and Measurement Amendments for January 01, 2014 novations of derivatives IAS 40 Investment Property Amendments resulting from Annual Improvements July 01, Cycle (interrelationship between IFRS 3 and IAS 40) 3.3 Amendments not yet effective The following amendments and interpretations with respect to the approved accounting standards as applicable in Pakistan would be effective from the dates mentioned below against the respective standard or interpretation: IFRS 5 Noncurrent Assets Held for Sale and Discontinued Operations: Amendments resulting from September 2014 Annual Improvements to January 01, 2016 IFRSs IFRS 7 Financial Instruments: Disclosures Amendments resulting from September 2014 Annual Improvements to IFRSs (Servicing Contracts and Applicability January 01, 2016 of the offsetting amendments in condensed interim financial statements) IFRS 9 Financial Instruments Finalised version, incorporating requirements for January 01, 2018 classification and measurement, impairment, general hedge accounting and derecognition AlAmeen Islamic Principal Preservation Fund V 25 Annual Report 15

28 Effective date (annual periods beginning on or after) IFRS 10 Consolidated Financial Statements Amendments regarding the sale or January 01, 2016 contribution of assets between an investor and its associate or joint venture IFRS 10 Consolidated Financial Statements Amendments regarding the application January 01, 2016 of the consolidation exception IFRS 11 Joint Arrangements Amendments regarding the accounting for acquisitions January 01, 2016 of an interest in a joint operation IFRS 12 Disclosure of Interests in Other Entities Amendments regarding the January 01, 2016 application of the consolidation exception IAS 1 Presentation of Financial Statements Amendments resulting from the January 01, 2016 disclosure initiative IAS 16 Property, Plant and Equipment Amendments regarding the clarification of January 01, 2016 acceptable methods of depreciation and amortisation and amendments bringing bearer plants into the scope of IAS 16 IAS 19 Employee Benefits Amendments resulting from September 2014 Annual January 01, 2016 Improvements to IFRSs IAS 27 Separate Financial Statements (as amended in 2011) Amendments reinstating the equity method as an accounting option for investments in in subsidiaries, January 01, 2016 joint ventures and associates in an entity's separate financial statements IAS 28 Investments in Associates and Joint Ventures Amendments regarding the sale or contribution of assets between an investor and its associate or joint January 01, 2016 venture IAS 28 Investments in Associates and Joint Ventures Amendments regarding the January 01, 2016 application of the consolidation exception IAS 34 Interim Financial Reporting Amendments resulting from September 2014 January 01, 2016 Annual Improvements to IFRSs AlAmeen Islamic Principal Preservation Fund V 26 Annual Report 15

29 Effective date (annual periods beginning on or after) IAS 38 Intangible Assets Amendments regarding the clarification of acceptable January 01, 2016 methods of depreciation and amortisation IAS 39 Financial Instruments: Recognition and Measurement: Amendments to permit an entity to elect to continue to apply the hedge accounting requirements in IAS 39 for a fair value hedge of the interest rate exposure of a portion of a portfolio of financial assets or financial liabilities when IFRS 9 is applied, and to extend the fair value option to certain contracts that meet the 'own use' scope exception January 01, 2018 IAS 41 Agriculture Amendments bringing bearer plants into the scope of IAS 16 January 01, Standards or interpretations not yet effective The following new standards and interpretations have been issued by the International Accounting Standards Board (IASB), which have not been adopted locally by the Securities and Exchange Commission of Pakistan: IFRS 1 IFRS 9 IFRS 14 IFRS 15 First Time Adoption of International Financial Reporting Standards Financial Instruments Regulatory Deferral Accounts Revenue from Contracts with Customers The Fund expects that the adoption of the above amendments and interpretations of the standards will not have any material impact and therefore will not affect the Fund's financial statements in the period of initial application. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below: AlAmeen Islamic Principal Preservation Fund V 27 Annual Report 15

30 4.1 Investments All investments are initially recognised at cost, being the fair value of the consideration given including the transaction cost associated with the investment, except in case of held for trading and at fair value through profit or loss investments, in which case the transaction costs are charged off to the income statement. The Fund classifies its investments in the following categories: Financial asset at fair value through profit or loss: 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. After initial recognition, the above investments are remeasured at fair value determined with reference to the yearend quoted rates. Gains or losses on remeasurement of these investments are recognised in the income statement Available for sale Investments which do not fall under the above categories are classified as availableforsale. After initial recognition, investments classified as availableforsale are remeasured at fair value, determined with reference to the yearend quoted rates. Gains or losses on remeasurement of these investments are recognised directly in the unit holders' funds until the investment is sold, collected or otherwise disposedoff, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in unit holders' funds is included in income statement. 4.2 Preliminary expenses and floatation costs Preliminary expenses and floatation costs represent expenditure incurred prior to the commencement of operations of the Fund. These costs are being amortised over a period of two years commencing from December 26, 2014 (refer note 7 to these financial statements). 4.3 Issuance and redemption of units Units issued are allocated at the offer price, prevalent on the day on which the applications for purchase of units are received (however, units are issued on the receipt of cash / realisation of cheques). The offer price represents the net asset value per unit as at the close of business day plus the allowable front end sales load. The sales load is payable to the Management Company as processing fee. AlAmeen Islamic Principal Preservation Fund V 28 Annual Report 15

31 Units redeemed are recorded at the redemption price, applicable to units for which the Fund receives redemption applications during business hours of that day. The redemption price represents the net asset value per unit as at the close of the business day. Redemption of units is recorded on acceptance of application for redemption. 4.4 Element of income / (loss) and capital gains / (loss) included in prices of units sold less those in units redeemed An equalisation account called the "element of income / (loss) included in prices of units sold less those in units redeemed" is created, in order to prevent the dilution of per unit income and distribution of income already paid out on redemption. Element is recognised in the income statement to the extent that it is represented by income earned during the year. 4.5 Net assets value per unit The net assets 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 period end. 4.6 Taxation The income of Fund is exempt from taxation on accounting income for the period under clause 99 of Part I to the Second Schedule of the Income Tax Ordinance, 2001, subject to the condition that not less than 90 percent of its accounting income excluding realised and unrealised capital gain for the period is distributed amongst the unit holders in cash. The Fund provides for deferred taxation using the balance sheet liability method on all major temporary differences between the amounts used for financial reporting purposes and amounts used for taxation purposes. In addition, the Fund also records deferred tax asset on unutilised tax losses to the extent that it is probable that the related tax benefit will be realised. However, the Fund has not recognised any amount in respect of deferred tax in these financial statements as the Fund intends to continue availing the tax exemption in future years by distributing at least ninety percent of its accounting income for the year as reduced by capital gains, whether realised or unrealised, to its unit holders every year. The Fund is also exempt from the provisions of section 113 (minimum tax) under clause 11A of Part IV of the Second Schedule to the Income Tax Ordinance, Revenue recognition Gains / (losses) arising on sale of investments are included in the income statement on the date at which the transaction takes place. Dividend income is recognised when the right to receive the dividend is established. AlAmeen Islamic Principal Preservation Fund V 29 Annual Report 15

32 Unrealised gains / (losses) arising on revaluation of investments classified as 'at fair value through profit or loss' are included in income statement in the period in which they arise. Profit on bank balances is recognized on accrual basis. 4.8 Financial instruments All the financial assets and liabilities are recognised at the time when the Fund becomes a party to the contractual provisions of the instrument. Any gain or loss on derecognition of the financial asset and financial liabilities is taken to income directly. 4.9 Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are only offset and 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 either to settle on a net basis, or to realise the asset and settle the liability simultaneously Cash and cash equivalents Cash and cash equivalents comprise of bank balances including term deposits with banks. Cash equivalents are short term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value and are held for the purpose of meeting short term cash commitments rather than for investment for other purposes Expenses All expenses including Management fee, Trustee fee and Securities and Exchange Commission of Pakistan fee are recognised in the income statement on accrual basis Impairment Impairment loss on financial assets other than available for sale investments is recognized in the income statement whenever carrying amount of financial asset exceeds its recoverable amount. If in the subsequent period, the amount of an impairment loss recognized decreases the impairment is reversed through income statement. In case of investment classified as availableforsale, a significant or prolonged decline in the fair value of thesecurity below its cost is considered an indicator that the securities are impaired. If any such evidence exists for availableforsale financial assets, the cumulative loss is measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in income statement is removed from equity and recognized in the income statement Provision A provision is recognised in the statement of assets and liabilities when the Fund has a legal or constructive obligation as a result of past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provision are reviewed at each statement of assets and liabilities date and are adjusted to reflect the current best estimate. AlAmeen Islamic Principal Preservation Fund V 30 Annual Report 15

33 Dividend distributions and appropriations are recorded in the period in which the distributions and appropriations are approved Transactions with related parties / connected persons Transactions with related parties / connected persons are based at arm's length at normal commercial rates on the same terms and conditions as applicable to third party transactions. Remuneration to the management company and the trustee is determined in accordance with the provision of Non Banking Finance Companies Rules, 2003, Non Banking Finance Companies and Notified Entities regulations, 2008 and the Trust Deed respectively Other assets Other assets are stated at cost less impairment losses, if any. 5. BANK BALANCES Note 2015 (Rupees in '000) 5.1 PLS Savings account 5.1 1,310 Current Account 418 1,728 Profit rate on this bank account was 6% per annum. 6. INVESTMENTS Unrealesed gain Name of Investee Funds Purchased Market value for the period Market value as a Sold during the As at June 30, Cost at June 30, Percentage of net during the as at June 30, from December October 16, 26 percentage of total period assets period to June 30, investments 2015 (Number of units) (Rupees in '000) Units of Mutual Funds AlAmeen Shariah Stock Fund* 16,089,879 14,530,297 1,559, , ,367 (2,441) 0 19% 19% AlAmeen Islamic Cash Fund* 20,389,630 12,737,687 7,651, , ,125 (42,443) 81% 81% Total 991, ,493 (44,884) % % *These represents investments held in mutual funds managed by UBL Fund Managers Limited which is the Management Company of the Fund. AlAmeen Islamic Principal Preservation Fund V 31 Annual Report 15

34 Note 2015 (Rupees in '000) 6.1 Unrealised loss on revaluation of investment classified at fair value through profit or loss Market value of investments 946,493 Less: cost of investments 991,376 (44,883) 7. PRELIMINARY EXPENSES AND FLOATATION COSTS Preliminary expenses and floatation costs 5,000 Amortisation during the period (1,281) 3, Preliminary expenses and floatation costs represent expenditure incurred prior to the commencement of operations of the Fund. These costs are being amortised over a period of two years (life of the Fund) commencing from December 26, PAYABLE TO THE MANAGEMENT COMPANY Preliminary expenses and flotation cost 5,000 Other payables 20 5, The management company is entitled to remuneration for services rendered to the Fund under the provisions of the NBFC Regulations, of an amount equal to 1 percent of the average daily net assets of the Fund during the life of Fund. Further, as per the requirements of the offering document, the Management Company shall not charge any fee if the Fund makes investment in the CIS managed by the same Management Company. During the period, the Fund has invested in the units of the CIS managed by the same Management Company and accordingly it has not charged any amount on account of the management fee. However, the amount represents the preliminary expenses payable to the Management Company. 8.2 Sindh Sales Tax at the rate of 15% on gross value of management fee including federal duties is also applicable under the provisions of Sindh Sales Tax on Services Act, No sales tax is chargeable in the current period as the Management Company (as disclosed in note 8.1) has not charged any amount on account of management fee during the period from December 26, 2014 to June 30, AlAmeen Islamic Principal Preservation Fund V 32 Annual Report 15

35 9. PAYABLE TO THE TRUSTEE The Trustee is entitled to a monthly remuneration for services rendered to the Fund at 0.13 percent per annum of average daily net assets. 10. ANNUAL FEE TO SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN This represents annual fee payable to SECP in accordance with the NBFC Regulations 2008, whereby the Fund is required to pay SECP an amount at the rate of percent of the average daily net assets of the Fund in accordance with regulation 62 of NBFC regulations PROVISION FOR WORKERS' WELFARE FUND The Finance Act, 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As a result of this amendment it is alleged that all Collective Investment Schemes / mutual funds (CISs) whose income exceeds Rs. 0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In this regard, a constitutional petition has been filed by certain CISs through their trustees in the Honourable High Court of Sindh, challenging the applicability of WWF to the CISs, which is pending adjudication. During the year ended June 30, 2011, a clarification was issued by the Ministry of Labour and Manpower (the Ministry) which stated that Collective Investment Schemes / mutual funds ("CISs") are not liable to contribute to WWF on the basis of their income. However, on December 14, 2010, the Ministry filed its response against the constitutional petition requesting the Court to dismiss the petition. According to the legal counsel who is handling the case there is a contradiction between the aforementioned clarification issued by the Ministry and the response filed by the Ministry in the Court. During the year ended June 30, 2012, the Honourable Lahore High Court (LHC) in a Constitutional Petition relating to the amendments brought in the WWF Ordinance, 1971 through the Finance Act, 2006 and the Finance Act, 2008, had declared the said amendments as unlawful and unconstitutional. In March 2013, a larger bench of the Honourable Sindh High Court (SHC) passed an order declaring that the amendments introduced in the WWF Ordinance, 1971 through the Finance Act, 2006 and the Finance Act, 2008 do not suffer from any constitutional or legal infirmity. However, the Honourable High Court of Sindh has not addressed the other amendments made in the WWF Ordinance, 1971 about applicability of WWF to the CISs which is still pending before the Court. In a recent judgement, Peshawar High Court (PHC) has also held these amendments to be ultra vires as they lacked the essential mandate to be introduced and passed through the Money Bill under the Constitution. The Management Company in consultation with the legal counsel has considered the implications of the above judgement of the SHC and is of the view that the matter will eventually be settled in its favor and WWF will not be levied on the Fund. AlAmeen Islamic Principal Preservation Fund V 33 Annual Report 15

36 Furthermore, in the Finance Act, 2015, the mutual funds have been excluded from the levy of WWF. As this change has been made in the definition of the term 'Industrial Establishment' as defined in the Workers' Welfare Fund Ordinance, 1971, the management is of the view that this change is applicable from July 1, The matter regarding previous years would either need to be clarified by FBR or would be resolved through courts. However, no provision has been made in the financial statements for WWF as the fund has incurred net loss for the period. 12. ACCRUED EXPENSES AND OTHER LIABILITIES Note 2015 (Rupees in '000) Payable against purchase of investments 22,805 Provision for indirect duties and taxes ,243 Auditor remuneration 163 Printing and other payable 109 Legal fee payable 75 26, The Finance Act, 2013 introduced amendments in Table II of the First Schedule to The Federal Excise Act 2005, whereby the services of financial institutions including asset management companies were subjected to Federal Excise Duty (FED) at the rate of 16% effective from June 13, The Management Company is of the view that since the front end load and management fee is already subject to the provincial sales tax, further levy of FED results in double taxation, which does not appear to be the spirit of the law. Further, during the current period, the Management Company along with Mutual Funds Association of Pakistan, Central Depository Company of Pakistan Limited on behalf of some schemes and other asset management companies has filed a constitutional petition in the Honourable High Court of Sindh, to repeal Table II, First Schedule to the Federal Excise Act, 2005, which is currently pending adjudication. However, the SHC has issued a stay order against the recovery of FED. The Fund, as a matter of abundant caution, has made full provision in respect of FED. 13 CONTINGENCIES AND COMMITMENTS There are no contingencies and commitments as at the balance sheet date. 14. TAXATION The Fund's income is exempt from Income Tax as per clause (99) of part I of the Second Schedule of the Income Tax Ordinance, 2001 subject to the condition that not less than 90% of the accounting income for the year as reduced by capital gains whether realised or unrealised is distributed amongst the unit holders in cash. Furthermore, as per regulation 63 of the NonBanking Finance Companies and Notified Entities Regulations, 2008, the Fund is required to distribute 90% of the net accounting income other than capital gains to the unit holders. AlAmeen Islamic Principal Preservation Fund V 34 Annual Report 15

37 The Fund is also exempt from the provisions of Section 113 (minimum tax) under Clause 11A of Part IV of the Second Schedule to the Income Tax Ordinance, No provision has been made in the financial statements as the fund has incurred net loss for the period. 15. TRANSACTIONS WITH CONNECTED PERSONS / RELATED PARTIES Connected persons / related parties comprise of United Bank Limited (holding company of Management Company), UBL Fund Managers Limited (the Management Company), AlAmeen Islamic Financial Services (Private) Limited (subsidiary of Management Company), entities under common management or directorships, Central MCB Financial Depository Services Company (Private) of Pakistan Limited (Trustee) and the Directors and Officers of Management Company. Remuneration to the Management Company and the Trustee is determined in accordance with the provision of Non Banking Finance Companies Rules, 2003, Non Banking Finance Companies and Notified Entities regulations, 2008 and the Trust Deed respectively. Other transactions with the related parties / connected persons have been carried out at agreed / commercial terms. Details of transaction with the related parties and balances with them at the period end are as follows; Management Company Associated Companies Trustee Funds under Common Management Directors and Key Executives Other Connected persons / related parties (Rupees in '000) Transactions during the period from October December 16, to June 30, 2015 Profit on savings accounts 2,879 Bank charges 23 Units issued 100,064 Divided paid Purchase of securities 4,945,023 Sale of securities 3,923,057 Remuneration 649 Dividend received 58,701 Balances held at June 30, 2015 Units held (units in '000') 1,001 Units held (in Rs '000') 98,363 Bank balances 1,728 Securities 946,493 Remuneration payable 105 Other payables 5,020 Profit recievable 9 AlAmeen Islamic Principal Preservation Fund V 35 Annual Report 15

38 16 FINANCIAL INSTRUMENTS BY CATEGORY 17 FINANCIAL RISK MANAGEMENT Loans and receivables Loans and receivables Financial assets 'at fair value through profit or loss' Financial liabilities measured at 'amortised cost' Total On balance sheet financial assets Bank balances 1,728 1,728 Investments 946, ,493 Profit receivable 22,814 22,814 24, , ,035 Financial Financial assets liabilities 'at fair value measured at Total through profit or 'amortised loss' cost' On balance sheet financial liabilities Payable to the Management Comp 5,020 5,020 Payable to the Trustee Accrued and other liabilities 23,152 23,152 28,277 28,277 The Fund s objective in managing risks is the creation and protection of participants' value. Risk is inherent in the Fund s activities, but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. The process of risk management is critical to the Fund s continuing profitability. Monitoring and controlling risks is primarily set up to be performed based on limits established by the internal controls set on different activities of the fund by the Board of Directors through specific directives and constitutive documents. These controls and limits reflect the business strategy and market environment of the Fund as well as the level of the risk that the Fund is willing to accept. In addition, the Fund monitors and measures the overall risk bearing capacity in relation to the aggregate risk exposure across all risks type and activities. The Fund primarily invests in Equities and Money Market based CIS. Such investments are subject to varying degrees of risk. These risks emanate from various factors that include, but are not limited to: Credit risk Liquidity risk Market risk AlAmeen Islamic Principal Preservation Fund V 36 Annual Report 15

39 17.1 Credit risk Credit risk is the risk that a counterparty to a financial instrument will fail to discharge its obligation or commitment that it has entered into with the Fund, resulting in a financial loss to the Fund. At the period end, it arises principally from investments, bank balances, profit receivable on bank deposits and investment in mutual funds. Management of credit risk The Fund's policy is to enter into financial contracts in accordance with the investment guidelines approved by the Investment Committee, its Trust Deed and the requirements of NBFC rules and regulations and guidelines given by SECP from time to time. Credit risk is managed and controlled by the Management Company of the Fund in the following manner: The Fund limits its exposure to credit risk by mainly investing in Equities and Money Market based CIS. Cash is held only with reputable banks (including related party). Exposure to credit risk In summary, compared to the maximum amount included in statement of assets and liabilities, the maximum exposure to credit risk at June 30, 2015 was as follows: Note June 30, 2015 Statement Maximum of assets and exposure liabilities (Rupees in '000) Bank balances 5 1,728 1,728 Investments 6 946, ,493 Profit and other receivable 22,814 22,814 Preliminary expenses and floatation costs 7 3, , ,035 Differences in the balances as per the statement of assets and liabilities and maximum exposures is due to preliminary expenses and floatation cost amounting to Rs million, which does not carry credit risk. None of the above financial assets were considered to be past due or impaired as on June 30, AlAmeen Islamic Principal Preservation Fund V 37 Annual Report 15

40 Credit ratings and Collaterals Details of the credit ratings of the banks are as follows: Bank United Bank Limited Rating AA+ Above rating is assigned by JCRVIS as at June 30, The investments in bank balance is unsecured. Concentration of credit risk Concentration is the relative sensitivity of the Fund s performance to developments affecting a particular industry or geographical location. Concentration of risks arise when a number of financial instruments or contracts are entered into with the same counterparty, or where a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Details of Fund's concentration of credit risk of financial instruments by industrial distribution are as follows: 97% of financial assets aggregating to Rs million are invested in two funds managed by the Management Company. The management believes that underlying assets held by these funds are sufficiently diverse and therefore do not expose the Fund to any major concentration risk Liquidity risk Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations arising from its financial liabilities that are settled by delivering cash or another financial asset, or that such obligations will have to be settled in a manner disadvantageous to the Fund. The Fund is exposed to cash redemptions of its units on a regular basis. Units are redeemable at the holder s option based on the Fund s net asset value per unit at the time of redemption calculated in accordance with the Fund s constitutive document and guidelines laid down by Securities and Exchange Commission of Pakistan (SECP). Management of liquidity risk The Fund's policy is to manage this risk by investing majority of its assets in investments in units issued by CIS that are redeemable on demand as per terms of offering document. AlAmeen Islamic Principal Preservation Fund V 38 Annual Report 15

41 The Fund has the ability to borrow from bank, financial institutions or such other companies as specified by the Securities and Exchange Commission of Pakistan from time to time with prior approval of trustee, for meeting redemption requests. The maximum amount available to the Fund from borrowings is limited to the extent of 15% of net assets or such other limit as specified by the Securities and Exchange Commission of Pakistan at the time of borrowing with repayment with in 90 days of such borrowings. No such borrowings were made during the period. In order to manage the Fund's overall liquidity, the Fund also has the option to withhold daily redemption requests in excess of ten percent of the units in issue and such requests would be treated as redemption requests qualifying for being processed on the next business day. Such procedure would continue until the outstanding redemption requests come down to a level below ten percent of the units then in issue. Further, the Fund also has the ability to suspend redemptions of units with the approval of Board of Directors of the Management Company in extraordinary circumstances. An interval of six working days between the receipt of a redemption request and issuance of against it to the holder provides a cushion in the repayment of ondemand redemption of units. However, during the period no such option was exercised or considered necessary. Maturity analysis for financial liabilities The table below analyses the Fund's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to maturity date and represents the undiscounted cash flows. The amounts in the table are the gross nominal undiscounted cash flows. June 30, 2015 Maturity upto Carrying amount inflow / outflow Upto three months More than three months and upto one year Over one year Total (Rupees in '000) Nonderivative liabilities Payable to the Management Company 5,020 5,020 5,020 Payable to the Trustee Accrued expenses and other liabilities 23,152 23,152 23,152 28,277 28,277 28,277 Units of the Fund are redeemable on demand at the holder's option. However, unit holders typically retain them from medium to longterm Market risk Market risk is the risk that changes in market prices, such as interest rates, equity prices, foreign exchange rates and credit spreads (not relating to changes in the obligor s / issuer s credit standing) will effect the Fund s income or the fair value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. AlAmeen Islamic Principal Preservation Fund V 39 Annual Report 15

42 Management of market risks The Management Company manages market risk by monitoring exposure on marketable securities by following the internal risk management policies and investment guidelines approved by the Investment Committee and regulations laid down by the Securities and Exchange Commission of Pakistan. The maximum risk resulting from financial instruments equals their fair values. The Fund is exposed to interest rate and other price risk Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Currently, the Funds holds profit and loss sharing bank accounts that expose the fund to cash flow interest rate risk. At June 30, 2015, details of the interest rate profile of the Fund's interest bearing financial instruments were as follows: 2015 (Rupees in '000) Variable rate instruments Bank balances in PLS Saving accounts 1,728 Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the period end would have increased / (decreased) the net assets and profits by Rs million. The analysis assumes that all other variables remain constant. The composition of the Fund's investment portfolio and rates announced are expected to change over time. Accordingly, the sensitivity analysis prepared as of June 30, 2015 is not necessarily indicative of the effect on Funds net assets of future movements in interest rates. The fluctuation in interest rate of 100 basis points is reasonably possible in the current economic environment. A summary of the Fund s interest rate gap position, categorised by the earlier of contractual repricing or maturity date is as follows: Assets Mark up / profit rate (% ) Less than one to three month One month to one year Three months to one year Total Rupees in '000 Bank Balances 6% 8% 1,728 1,728 None of the Fund's liability is subject to interest rate risk. AlAmeen Islamic Principal Preservation Fund V 40 Annual Report 15

43 Other price risk Other price risk is the risk that the fair value of the financial instrument will fluctuate as a result of change in market (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or factors affecting all instruments traded in the market. The Fund manages its exposure to price risk by investing in funds as per the trust deed Unit holders' fund management (Capital risk) Capital risk is the risk that the capital of the Fund changes significantly and causes adverse effects on the Fund s existence as going concern. The capital of the Fund is represented by the net assets attributable to unit holders. The amount of net assets attributable to unit holders can change significantly on a daily basis as the Fund is subject to daily issuance and redemptions at the discretion of unit holders. The Fund s objective when managing capital is to safeguard the Fund s ability to continue as a going concern in order to provide returns for unit holders and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the Fund. The Fund is not exposed to externally imposed minimum capital maintenance requirements. In order to maintain or adjust the capital structure, the Fund s policy is to perform the following: Monitors the level of daily issuance and redemptions relative to the liquid assets and adjusts the amount of distributions the Fund pays to unit holders; Redeem and issue units in accordance with the constitutive documents of the Fund, which include the ability to restrict redemptions and require certain minimum holdings and issuance; and The Fund Manager / Investment Committee members and Chief Executive of the company critically track the movement of Assets under Management. The Board of Directors is updated about the fund yield and movement of NAV and total fund size at the end of each quarter Fair value of financial instruments The Fund s accounting policy on fair value measurements of investments is discussed in note 4.1 to these financial statements. AlAmeen Islamic Principal Preservation Fund V 41 Annual Report 15

44 The Fund measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: Level 1: Fair value measurements using quoted price (unadjusted) in an active market for identical assets or liabilities. Level 2: Fair value measurements using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Fair value measurement using inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs). June 30, 2015 Level 1 Level 2 Level 3 Total (Rupees in '000) Financial assets at fair value through profit or loss 946, ,493 Investment in units of Mutual Funds 18 SUPPLEMENTARY NON FINANCIAL INFORMATION The information regarding unit holding pattern, top brokers, members of the Investment Committee, Fund Manager, meetings of the Board of Directors of the Management Company and rating of the Fund and the Management Company are as follows: 18.1 Pattern of unit holding Number of Number of % of Category unit holders units held Total Individuals 443 3,721, Associated companies / directors 1 1,000, Insurance companies 4 789, Banks / DFIs Retirement funds 33 2,642, Public Limited Company 3 345, Others 10 1,092, ,591, AlAmeen Islamic Principal Preservation Fund V 42 Annual Report 15

45 18.2 The members of the Investment Committee S. No. Name Designation Experience in years Qualification 1 Mir Muhammad Ali Chief Executive Officer 25 MBA, MSC, CFA 2 Hasnain Raza Nensey Chief Operating Officer 22 MBA 3 Abdul Rehman Warraich Chief Investment Officer 19 BA, LLB, CFA, FRM 4 Syed Ali Turab Head of Business and Product Development 13 BCS, BE * Abdul Reman Waraich is the fund manager of the fund Other Funds managed by the Fund Manager AlAmeen Islamic Principal Preservation Fund AIPPFIII AlAmeen Islamic Principal Preservation Fund AIPPFIV 18.4 Attendance at the meetings of the board of directors of the Management Company During the year, eight meetings of the Board of Directors of the Management Company were held. The details of the attendance are as under: July 4, 2014 August 20, 2014 Name of Director Meetings Directors: attended Tariq Kirmani P P P P P P P P 8 Tariq Kirmani 8 Mir Muhammad Ali P P P P P P P P 8 Shabbir Hussain Mir Muhammad Hashmi Ali P P 8 P P P P P P 8 Shabbir Hussain Raymond H. Kotwal 1 Hashmi P P 8 P P 4 Saeed Iqbal 2 Raymond H. Kotwal 1 P 4 1 Jamal Nasir 3 Saeed Iqbal 2 1 P P P P 4 Jamal Nasir 3 Muhammad Hanif Akhai 4 4 P P P P 4 Zia Ijaz 5 Muhammad Hanif Akhai 4 4 P P P P 4 Zia Ijaz 5 4 Syed Furrukh Zaeem 6 P P P P 4 Syed Furrukh Zaeem 6 4 Zulfiqar Alavi 7 P P P 3 Zulfiqar Alavi 7 3 Syed Ali Hasnain 8 Syed Ali Hasnain 8 Mirza Muhammad Mirza Muhammad Sadeed Sadeed Hassan Barlas 9 Hassan Barlas 9 Other Persons: Other Persons attending meetings of Board of Directors Aly Osman P P P P P P P P 8 Aly Osman 8 Hasnain R Nensey P P P P P P P 7 Hasnain Raza Nensey 7 1 Resigned 1 Resigned on December on December 17, 17, Retired 2 Retired on September on September 29, 29, Resigned 3 Resigned on February on February 4, , Resigned 4 Resigned on January on January 8, , Appointed 5 Appointed on on December 19, 19, Appointed 6 Appointed on on December 19, 19, Appointed 7 Appointed on on December 19, 19, Appointed 8 Appointed on on September 29, 29, 2014 and Resigned on on November 11, , Appointed 9 Appointed on April on April 28, 28, Rating of the Fund and the Management Company The Fund has not yet been rated. Dates 4 July 20 August 31 October28 Novembe 27 February 13 March 28 April 18 Total May October , November , February , March , April , May , meetings attended JCR VIS has awarded an " AM2+" asset manager rating to the Management Company. AlAmeen Islamic Principal Preservation Fund V 43 Annual Report 15

46 19. GENERAL 19.1 Figures have been rounded off to the nearest thousand rupees unless otherwise stated These financial statements were authorized for issue by Board of Directors of the Management Company on 24 August2015 For UBL Fund Managers Limited (Management Company) Mir Muhammad Ali, CFA Chief Executive Syed Furrukh Zaeem Director AlAmeen Islamic Principal Preservation Fund V 44 Annual Report 15

47