Islamic Asset Allocation Fund. Condensed Interim Financial Information for The Half Year Ended December 31, 2017

Transcription

1 Islamic Asset Allocation Fund Condensed Interim Financial Information for The Half Year Ended December 31, 2017

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

3 Fund Information Mission Statement Report of the Directors of the Management Company Trustee Report to the Unit Holders Auditors Report to the Unit Holders on Review of Interim Financial Information Condensed Interim Statement of Assets and Liabilities Condensed Interim Income Statement Condensed Interim Statement of Comprehensive Income Condensed Interim Cash Flow Statement Condensed Interim Statement of Movement in Unit Holders Fund Notes to the Condensed Interim Financial Information

4 4 Faysal Islamic Asset Allocation Fund Faysal Asset Management Limited Mr. Salman Ahmed Usmani, Chairman Mr. Osman Khan, Director Syed Ibad-Ur-Rehman Chishti, Director Mr. Mohammad Zahid Ahmed, Director Mr. Farooq Hassan, Director Mr. Razi-ur-Rahman Khan, Director/CEO Chief Executive Officer Mr. Razi-ur-Rahman Khan Chief Financial Officer and Company Secretary of the Management Company Mr. Naved Hanif Mr. Osman Khan, Chairman Syed Ibad-ur-Rehman Chishti, Member Mr. Farooq Hassan, Member HR Comittee Mr. Osman Khan, Chairman Syed Ibad-ur-Rehman Chishti, Member Mr. Razi-ur-Rahman Khan, Member Central Depository Company of Pakistan Limited, National Bank Limited - Islamic Banking Dubai Islamic Bank Pakistan Limited Al-Baraka Bank Limited Bank Islami Pakistan Limited Faysal Bank Limited Islamic Banking Meezan Bank Limited EY Ford Rhodes, Chartered Accountants

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

6 6 Faysal Islamic Asset Allocation Fund The Board of Directors of the Faysal Asset Management Limited, the management company of the Faysal Islamic Asset Allocation Fund (FIAAF), is pleased to present the un-audited condensed interim financial information of FIAAF for the Half year and quarter ended December 31, FINANCIAL HIGHLIGHTS Half Year Ended December 31, Quarter Ended December 31, Total (loss) / income (86.132) (36.495) Total expenses (7.117) (3.874) (3.523) (2.140) Net (loss) / income from operating activities (93.249) (40.017) Element of loss and capital losses included in prices of units sold less those in units redeemed - net - (9.638) - (2.843) Net (loss) / income for the period before taxation (93.249) (40.017) Taxation Net (Loss) / income for the period after taxation (93.249) (40.017) NAV per unit (Rs.) ECONOMIC REVIEW The outlook for Pakistan s economy remains bright given materialization and implementation of projects and initiatives undertaken by the government and under the umbrella of CPEC in sectors of energy and transportation / infrastructure. The GDP is expected to grow by 5.5% during FY18, as highlighted by the IMF1and the World Bank2, on the back of reduction in power shortage and resultant improvement in the manufacturing sector. Hence, industrial sector s contribution to GDP growth is expected to increase to 1.4% in FY18 from 0.9% in FY17 while the service sector is expected to contribute 3.6%. The service sector is expected to grow 6.5% during FY18 compared to 5.9% during FY17 with the uptick in growth being charged by improved performance of the commodity producing sector. Significant improvement in leading economic indicators like Corporate Sector Credit Growth (+22% YoY) and growth in power generation (+16% YoY) adds to stronger than expected GDP growth for FY18. Banking advances grew by 19.0% YoY in Oct 17 compared to last 5-year average of 9.9%. We believe there is still significant room available for expansion in private sector credit as advances to deposit ratio (ADR) is still low vis-à-vis historic levels. Monthly generation statistics show that power generation in Pakistan has reached an all-time high of 12,410 Gwh during Aug 17 after generation from new power plants. Per capital

7 Faysal Islamic Asset Allocation Fund 7 electricity consumption in Pakistan is one of the lowest as compared to middle income countries. It stands at 505 KWh in CY17 compared to 514 KWh in CY16. During 5MFY18 headline inflation averaged at 3.59%. Our FY18 estimates for inflation is ~4.5%, accounting on the back of increase in international commodity prices and depreciation impact, though this estimate is still below the government s target of %. Current round of depreciation will not have a significant impact on general inflation as commodities trading at a premium to international prices have a higher weight than commodities directly linked with the greenback. CAD clocked-in at USD 12.1bn at the end of FY17 (~3.8% of GDP) and we project it to settle at USD 15.1bn by the end of FY18 (~4.5% of GDP). Increased investments and stagnant savings have also contributed to the broadening CAD. Funding for the CAD is likely to be sourced from higher foreign direct investment, which is expected to cross USD 3bn, coupled with borrowings from commercial banks, multilateral institutions and bond/sukuk issuance (Pakistan recently issued Euro bond and Sukuk worth USD 2.5bn and investor participation amounted to USD 8.3bn which demonstrates Pakistan s ability to borrow from global financial markets). EQUITY REVIEW PSX was trading at a PER of 12.1x in CY16. Currently, it is trading at a 4 year low PER of 9.3x in CY17E, cheaper than its past 5 years average of 10.3x. Expectations are that forward PER would be 8.5x in CY18F. The last time our market was trading at such a cheap level was in CY12 (8.3x) when deplorable economic conditions (as indicated in the exhibit) despite healthy earnings growth had depressed investor confidence. We view that the decline in market performance was justified as earnings growth did not rationalize the buoyancy reflected by the market (primarily attributable to jubilation over MSCI EM inclusion) and the inflated bubble was bound to burst. The PSX has dwindled~25.4%td since reaching its highest level in May 17. The bloodbath at the equity bourse has been surprising for some, but expected by others. During the first half of CY17, the market elevated to its highest ever level of 52,876 points on 24thMay 17as investors celebrated Pakistan s inclusion into the MSCI EM Index. However, political uncertainty in the aftermath of ex-pm Nawaz Sharif s disqualification, deteriorating macroeconomic landscape of the country particularly on account of increasing pressure on the external account and weak foreign interest contrary to expectations have all contributed to the downfall in the market. During CY17TD, the market has given a negative return for the second time during past nine (9) years and first time during past six (6) years. Average return for past nine (9) years has remained 26% p.a. In 1HFY 18 KMI 30 Index declined by 12.71% during the period market remained in the phase of correction however, it small recovries also kept the market attractive by providing prudent investor s to trade with caution.

8 8 Faysal Islamic Asset Allocation Fund FUND PERFORMANCE Faysal Islamic Asset Allocation Fund generated return of (18.28%) during the 1HFY18. By the end of 1HFY18, your fund s investment in Islamic equity amounted to 53.72% and exposure in Islamic banking was maintained at 35.58%. Going forward, your fund would keep exploring the undervalued equity securities within the Islamic avenue. FUND RANKING The Pakistan Credit Rating Agency Limited (PACRA) has assigned a "4-Star" short term rating to Faysal Islamic Asset Allocation Fund as of September 26, ACKNOWLEDGEMENT The Board of Directors of the Management Company thanks the unit holders for their confidence in the Management, the Securities and Exchange Commission of Pakistan for its valuable support, assistance and guidance. The Board also thanks the employees of the Management Company and the Trustee for their dedication and hard work. For and on behalf of the Board Karachi: February 23, 2018 Razi-ur-Rahman Khan Chief Executive Officer

9 Faysal Islamic Asset Allocation Fund 9 Trustee Report to the Unit Holders

10 10 Faysal Islamic Asset Allocation Fund February 23, 2018

11 Faysal Islamic Asset Allocation Fund 11 Condensed Interim Statement of Assets and Liabilities As at December 31, 2017 (Un-Audited) (Audited) December 31, June 30, Note (Rupees) Assets Bank balances 4 149,332, ,205,217 Investments 5 225,482, ,844,348 Deposits and other receivables 6,628,185 6,495,192 Preliminary expenses and floatation costs 1,042,036 1,237,483 Receivable against sale of investments 37,317,511 20,029,467 Total assets 419,802, ,811,707 Liabilities Payable to the Management Company 1,045,700 4,195,044 Remuneration payable to the Trustee 70, ,559 Accrued and other liabilities 6 3,349,208 3,445,846 Dividend payable - 12,653,133 Payable against purchase of investments 24,399,010 - Payable against redemption of units - 284,056,132 Total liabilities 28,864, ,461,714 Net assets 390,937, ,349,993 Unit holders' fund (as per statement attached) 390,937, ,349, (Number of units) ---- Number of units in issue 4,787,348 3,746, (Rupees) Net assets value per unit The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

12 12 Faysal Islamic Asset Allocation Fund Condensed Interim Income Statement For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) Half year ended Quarter ended December 31, December 31, December 31, December 31, Note (Rupees) (Rupees) Income Return on bank balances 5,273,314 1,279,054 2,731, ,194 At fair value through profit or loss - held-for-trading - Dividend income 5,622,220 1,276,600 3,385, ,600 - Net capital (loss) / gain on sale of investments (68,767,195) 22,462,235 (63,309,073) 5,447,982 - Net unrealised (loss) / gain on revaluation of investments 5.2 (28,260,609) 5,727,500 20,697,106 3,396,497 Total (loss) / income (86,132,270) 30,745,389 (36,494,756) 10,038,273 Expenses Remuneration of the Management Company 4,218,283 1,696,625 2,067, ,255 Sales tax on Management fee 548, , , ,233 Remuneration of the Trustee 422, , , ,438 Sales tax on Trustee fee 54,949 45,625 27,945 22,937 Brokerage charges 433, , , ,432 Bank charges 39,396 41,886 12,851 28,214 SECP annual fee 200,389 80,306 98,190 44,666 Auditors' remuneration 416, , ,141 79,978 Fees and subscription 88,179 96,205 43,638 47,796 Settlement charges, federal excise duty and capital value tax 197, ,493 74, ,375 Printing charges and other expenses 90,988 92,962 45,494 45,493 Reimbursement of expenses to / (from) the Management Company 210,446 (229,210) 103,784 (62,461) Amortisation of preliminary expenses and floatation costs 195, ,447 97,724 97,724 Total expenses 7,116,748 3,873,978 3,522,641 2,140,080 Net (loss) / gain from operating activities (93,249,018) 26,871,411 (40,017,397) 7,898,193 Element of loss and capital losses included in prices of units sold less those in units redeemed - net - (9,637,535) - (2,842,581) Net (loss) / income for the period before taxation (93,249,018) 17,233,876 (40,017,397) 5,055,612 Taxation Net (loss) / income for the period after taxation (93,249,018) 17,233,876 (40,017,397) 5,055,612 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

13 Faysal Islamic Asset Allocation Fund 13 Condensed Interim Statement of Comprehensive income For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) Half year ended Quarter ended December 31, December 31, December 31, December 31, (Rupees) (Rupees) Net (loss) / income for the period after taxation (93,249,018) 17,233,876 (40,017,397) 5,055,612 Other comprehensive income for the period Total comprehensive (loss) / income for the period (93,249,018) 17,233,876 (40,017,397) 5,055,612 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

14 14 Faysal Islamic Asset Allocation Fund Condensed Interim Cash Flow Statement For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) December 31, December 31, Note (Rupees) CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) / income for the period before taxation (93,249,018) 17,233,876 Adjustment for non-cash and other items: Net loss / (gain) on investments 'at fair value through profit or loss' - held-for-trading: - Net capital loss / (gain) on sale of investments 68,767,195 (22,462,235) - Net unrealised loss / (gains) on revaluation of investments 28,260,609 (5,727,500) Dividend income on investments classified as 'at fair value through profit or loss' - held-for-trading (5,622,220) (1,276,600) Return on bank balances (5,273,314) (1,279,054) Amortisation of preliminary expenses and floatation costs 195, ,447 Element of loss and capital losses included in prices of units sold less those in units redeemed - net - 9,637,535 (6,921,301) (3,678,531) Increase in assets Prepayments, deposits and other receivables (105,236) (222,292) Decrease / (increase) in liabilities Payable to the Management Company (3,149,344) (3,151,668) Remuneration payable to the Trustee (40,913) (553) Accrued and other liabilities (96,638) (426,007) (3,286,895) (3,578,228) (10,313,432) (7,479,051) Proceeds from sale of investments 415,884, ,942,177 Payments made against purchase of investments (379,439,837) (482,426,659) Return received on bank balances 5,472,157 1,529,825 Dividend received 5,395,620 1,797,750 Net cash generated from operating activities 36,999,293 47,364,042 CASH FLOWS FROM FINANCING ACTIVITIES Amounts received against issue of units 300,423, ,105,365 Payments made against redemption of units (474,643,189) (388,951,692) Dividend paid (12,653,133) - Net cash used in financing activities (186,872,454) (82,846,327) Net decrease in cash and cash equivalents during the period (149,873,161) (35,482,285) Cash and cash equivalents at beginning of the period 299,205,217 62,359,954 Cash and cash equivalents at end of the period 4 149,332,056 26,877,669 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

15 Faysal Islamic Asset Allocation Fund 15 Condensed Interim Statement of Movement in Unit Holders Fund For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) Period ended December 31, 2017 Period ended December 31, 2016 Undistributed income Unrealised appreciation / (diminution) 'available for sale' investments Total Capital Value Undistributed income Unrealised appreciation / (diminution) 'available for sale' investments Total Capital Value (Rupees) (Rupees) Net assets at beginning of the period 367,626,613 6,723, ,349, ,674,447 (8,071,368) - 192,603,079 Issuance of 3,105,007 units (December 31,2016: 2,837,468 units) Capital value (at net asset value per unit at the beginning of the period) 310,283, ,283, Element of income (9,859,482) - - (9,859,482) Total proceeds on issuance of units 300,423, ,423, ,105, ,105,365 Redemption of 3,500,498 units (December 31,2016: 3,600,218 units) - Capital value (at net asset value per unit at the beginning of the period) (206,240,630) - - (206,240,630) Amount paid out of element of income - Relating to 'Net income for the period after taxation' 15,653, ,653, Relating to 'Other comprehensive income for the period' Refund on units as element of income Total payments on redemption of units (190,587,057) - - (190,587,057) (388,951,692) - - (388,951,692) Element of loss and capital losses included in prices of in prices of units sold less those in units redeemed - net ,637,535-9,637,535 Total comprehensive income for the period - (93,249,018) - (93,249,018) - 17,233,876-17,233,876 Distribution during the period Net income for the period less distribution - (93,249,018) - (93,249,018) - 17,233,876-17,233,876 Net assets at end of the period 477,463,424 (86,525,638) - 390,937, ,828,120 18,800, ,628,163 Distribution for the period Undistributed loss brought forward - Realised - 28,844,267-28,844,267-1,129,530-1,129,530 - Unrealised - n (22,120,887) - (22,120,887) - (9,200,898) - (9,200,898) - 6,723,380-6,723,380 - (8,071,368) - (8,071,368) Accounting income available for distribution - Relating to capital gains ,462,235-22,462,235 - Excluding capital gains - (93,249,018) - (93,249,018) - (5,228,359) - (5,228,359) - (93,249,018) - (93,249,018) - 17,233,876-17,233,876 Undistributed income carried forward - (86,525,638) - (86,525,638) - 9,162,508-9,162,508 - Realised - (57,450,256) - (57,450,256) - 3,435,008-3,435,008 - Unrealised - (29,075,382) - (29,075,382) - 5,727,500-5,727,500 - (86,525,638) - (86,525,638) - 9,162,508-9,162,508 (Rupees) (Rupees) Net asset value per unit at beginning of the period Net asset value per unit at end of the period The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. For Faysal Asset Management Limited (Management company) Chief Financial Officer Chief Executive Officer Director

16 16 Faysal Islamic Asset Allocation Fund Notes to the Condensed Interim Financial Information For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) 1. LEGAL STATUS AND NATURE OF BUSINESS Faysal Islamic Asset Allocation Fund (the Fund) has been established under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 (the NBFC Rules) and has been authorised as a unit trust scheme by the Securities and Exchange Commission of Pakistan (SECP) on June 12, It has been constituted under a Trust Deed, dated May 18, 2015, between Faysal Asset Management Limited (the Management Company), a company incorporated under the Companies Ordinance, 1984 and Central Depository Company of Pakistan Limited (CDC) as the Trustee, also a company incorporated under the Companies Ordinance, The Fund is a Shariah Compliant open-ended asset allocation fund and is listed on the Pakistan Stock Exchange Limited. Units are offered for public subscription on a continuous basis and the units are transferable and can be redeemed by surrendering them to the Fund. Title to the assets of the fund are held in the name of CDC as a Trustee of the Fund. The Fund was launched on September 09, The objective of the Fund is to earn competitive riba free return by investing in various Shariah Compliant asset classes / instruments based on the market outlook. The Fund is categorised as an "Islamic Asset Allocation Scheme" as per the Circular No. 7 of 2009 issued by SECP. The Pakistan Credit Rating Agency Limited (PACRA) has assigned a "4-Star" short term rating to Faysal Islamic Asset Allocation Fund as of September 26, JCR - VIS has awarded an "AM3+" asset manager rating to the Management Company as of October 12, BASIS OF PREPARATION This condensed interim financial information of the Fund has been prepared in accordance with the requirements of the International Accounting Standard 34: Interim Financial Reporting, the requirements of the Trust Deed, the NBFC Rules, the Non Banking Finance Companies and Notified Entities Regulation, 2008 (the NBFC Regulations), the repealed Companies Ordinance, 1984 and directives issued by the SECP. In case requirements differ, the requirements of the Trust Deed, the NBFC Rules, the NBFC Regulations the or the directives issued by the SECP shall prevail. Effective May 30, 2017 the Companies Act, 2017 (the Act) has been promulgated, however, the Securities and Exchange Commission of Pakistan (SECP) vide its circular No. 23 of 2017 dated October 04, 2017 decided that the companies whose financial year closes on or before December 31, 2017 shall prepare their financial statements in accordance with the provisions of the repealed Companies Ordinance, Furthermore, the Institute of Chartered of Pakistan also issued clarification vide its circular dated October 06, 2017 which states that the interim financial statements of companies for the periods ending on or before December 31, 2017 shall also be prepared in accordance with the provisions of the repealed Companies Ordinance, This condensed interim financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the annual financial statements of the Fund for the year ended June 30, This condensed interim financial information is presented in Pakistani Rupees which is the Fund's functional and presentation currency.

17 Faysal Islamic Asset Allocation Fund 17 Notes to the Condensed Interim Financial Information For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, JUDGMENTS AND RISK MANAGEMENT The accounting policies and basis of accounting estimates applied in the preparation of these condensed interim financial information are the same as those applied in the preparation of the annual financial statements of the Fund for the year ended June 30, 2017, except as described in notes 3.1 and New / Revised Standards, Interpretations and Amendments The Fund has adopted the following accounting standards and the amendments and interpretations of IFRSs which became effective for the current period: IAS 7 Statement of Cash Flows - Disclosure Initiative - (Amendment) IAS 12 Income Taxes - Recognition of Deferred Tax Assets for Unrealized losses (Amendments) Improvements to Accounting Standards Issued by the IASB IFRS 12 Disclosure of Interests in Other Entities - Clarification of the scope of the disclosure Requirement The adoption of the above amendments, improvements to accounting standards and interpretations did not have any effect on the financial statements. 3.2 Change in accounting policy - element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed The Securities and Exchange Commission of Pakistan (SECP) through its SRO 756(I)/2017 dated August 03, 2017 has made certain amendments in the NBFC Regulations. The notification includes a definition and explanation relating to "element of income" and excludes the element of income from the expression "accounting income" as described in Regulation 63 (amount distributable to unit holders) of the NBFC Regulations. As per the notification, element of income represents the difference between net assets value per unit on the issuance or redemption date, as the case may be, of units and the net assets value per unit at the beginning of the relevant accounting period. Further, the Regulations also specify that element of income is a transaction of capital nature and the receipt and payment of element of income shall be taken to unit holders' fund. However, to maintain the same ex-dividend net asset value of all units outstanding on the accounting date, net element of income contributed on issue of units lying in unit holders fund will be refunded on units in the same proportion as dividend bears to accounting income available for distribution. Furthermore, the revised Regulations also require certain additional disclosures with respect to 'Income Statement' and 'Statement of Movement in Unit Holders' Fund', whereas disclosure with respect to 'Distribution Statement' has been deleted in the revised Regulations. Previously, an equalisation account called the 'element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed' was created, in order to prevent the dilution of per unit income and distribution of income already paid out on redemption. The net element of income / (loss) and capital gains / (losses) relating to units issued and redeemed during the accounting period which pertained to unrealised appreciation / (diminution) held in the Unit Holder's Fund was recorded in a separate account and any amount remaining in this reserve account at the end of the accounting period (whether gain or loss) was included in the amount available for distribution to the unitholders. The remaining portion of the net element of income / (loss) and capital gains / (losses) relating to units issued and redeemed during an accounting period was recognised in the Income Statement.

18 18 Faysal Islamic Asset Allocation Fund Notes to the Condensed Interim Financial Information For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) As required by IAS 8: 'Accounting Policies, Changes in Accounting Estimates and Errors', a change in accounting policy requires retrospective application as if that policy had always been applied. However, the Management Company has applied the above changes in accounting policy, including the additional disclosures requirements in the 'Income Statement' and 'Statement of Movement in Unit Holders' Fund', prospectively from July 01, 2017 as required by SECP vide its S.R.O. No. 756(I) / 2017 dated August 03, Accordingly, corresponding figures have not been restated. The Distribution Statement for the comparative period has not been presented as it has been deleted as a result of the amendments made in the NBFC Regulations the aforementioned SRO issued by the SECP. Had the element of income been recognised as per the previous accounting policy, the loss of the Fund would have been lower by Rs million. However, the change in accounting policy does not have any impact on the 'Cash flow Statement', the 'net assets attributable to the unit holders' and 'net asset value per unit' as shown in the 'Statement of Assets and Liabilities' and 'Statement of Movement in Unit Holders' Fund'. The change has resulted in inclusion of certain additional disclosures / new presentation requirements in the 'Income Statement' and 'Statement of Movement in Unit Holders' Fund' which have been incorporated in these statements. 3.3 The Fund s financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended June 30, Note (Un-Audited) (Audited) December 31, June 30, (Rupees) BANK BALANCES Cash at bank - PLS savings accounts ,332, ,205, These carry mark-up ranging between 2.40% to 5.75% (June 30, 2017: 2.40% and 5.6%) per annum and include balance of Rs million (June 30, 2017: Rs million) held with Faysal Bank Limited, a related party. 5. INVESTMENTS At fair value through profit or loss' - held-for-trading Shariah compliant listed equity securities ,482, ,844,348

19 Faysal Islamic Asset Allocation Fund 19 Notes to the Condensed Interim Financial Information For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) 5.1 Shariah compliant listed equity securities - held-for-trading Name of the investee company Note * Ordinary shares having a face value of Rs.10 each unless stated otherwise Number of shares As at July 01, 2017 Purchased during the period Bonus / right shares received Disposed off during the period As at December 31, 2017 Cost as at December 31, 2017 Market value as at December 31, 2017 Unrealised gain / (loss) on revaluation (Rupees) Investment as % of Net assets Total investments Investee company paid-up capital Refinery Attock Refinery Limited 30,000 33,000-63, % 0.00% 0.00% National Refinery Limited 25,000 24,500-49, % 0.00% 0.00% % 0.00% 0.00% Oil and gas marketing companies Hascol Petroleum Limited 20,100 5,000 2,000 24,500 2, , ,304 (140,886) 0.16% 0.28% 0.00% Sui Northern Gas Pipelines Limited 265, , , ,000 24,690,443 17,975,900 (6,714,543) 4.60% 7.97% 0.03% Sui Southern Gas Company Limited - 50,000-25,000 25, , ,250 49, % 0.34% 0.00% 26,186,707 19,380,454 (6,806,253) 4.96% 8.60% 0.03% Oil and gas exploration companies Mari Petroleum Company Limited 11,000 12,480-6,980 16,500 25,054,929 23,939,355 (1,115,574) 6.12% 10.62% 0.01% Pakistan Petroleum Limited - 100,000-38,000 62,000 12,426,040 12,766, , % 5.66% 0.00% Pakistan Oil Fields Limited - 80,000-23,000 57,000 34,454,414 33,872,830 (581,584) 8.66% 15.02% 0.02% Oil and Gas Development Company Limited - 246, , ,000 22,227,423 22,790, , % 10.11% 0.00% 94,162,805 93,369,205 (793,600) 23.88% 41.41% 0.05% Chemical ICI Pakistan Limited 10, ,700 11,372,340 8,217,065 (3,155,275) 2.10% 3.64% 0.01% Fertilizer Engro Corporation Limited 105, , ,400 92,500 25,103,451 25,414, , % 11.27% 0.02% Engro Fertilizers Limited 30, , ,103,451 25,414, , % 11.27% 0.02% Cement Lucky Cement Limited 65,000 48,000-88,000 25,000 12,719,008 12,935, , % 5.74% 0.01% Maple Leaf Cement Factory Limited - 35,000-35, % 0.00% Cherat Cement Company Limited - 33,000-28,000 5, , ,550 (87,745) 0.14% 0.25% 0.00% DG Khan Cement Company Limited - 80,000-25,000 55,000 7,131,405 7,354, , % 3.26% 0.01% Kohat Cement Company Limited 27,000 13,000-35,000 5,000 1,228, ,800 (518,998) 0.18% 0.31% 0.00% Pioneer Cement Limited 70,000 10,000-73,000 7, , ,840 (533,509) 0.11% 0.20% 0.00% 22,696,854 21,996,040 (700,814) 5.63% 9.76% 0.03% Food and personal care product Engro Foods Limited 30, , % 0.00% Paper and board Packages Limited 19,350 10,000-29, % 0.00% 0.00% Engineering International Steels Limited 315, , ,000 57,000 6,209,885 6,063,090 (146,795) 1.55% 2.69% 0.01% Crescent Steel & Allied Products Limited 41,900 43,100-55,000 30,000 6,852,928 3,819,300 (3,033,628) 0.98% 1.69% 0.04% Amreli Steels Limited - 108, ,900 5, , ,300 (77,169) 0.12% 0.21% 0.00% Mughal Iron and Steel Industries Limited 67,000 70,000-32, ,000 6,425,062 6,100,500 (324,562) 1.56% 2.71% 0.04% International Industries Limited 46,200 39,000-56,200 29,000 9,638,618 6,963,190 (2,675,428) 1.78% 3.09% 0.02% 29,666,962 23,409,380 (6,257,582) 5.99% 10.38% 0.12% Power generation and distribution The Hub Power Company Limited , ,000-30, ,100 37,359,585 26,763,100 (10,596,485) 6.85% 11.87% 0.03%

20 20 Faysal Islamic Asset Allocation Fund Notes to the Condensed Interim Financial Information For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) Name of the investee company Note Number of shares As at July 01, 2017 Purchased during the period Bonus / right shares received Disposed off during the period As at December Cost as at December 31, 2017 Market value as at December 31, 2017 Unrealised gain / (loss) on revaluation 31, 2017 Net assets Investment as % of Total investments Investee company paid-up Pharmaceuticals The Searle Company Limited ,500 2, ,510 1, , ,683 (242,548) 0.10% 0.17% 0.00% Commercial banks Meezan Bank Limited 9,000 25,000 1,500 9,000 26,500 1,970,350 1,778,150 (192,200) 0.45% 0.79% 0.00% Cable and electrical goods Pak Elektron Limited 35,000 55,000-90, % 0.00% 0.00% Automobile assembler Pak Suzuki Motor Company Limited 6,000 5,000-11, % 0.00% 0.00% Honda Atlas Cars (Pakistan) Limited 1,500 9,000-3,500 7,000 3,836,942 3,586,870 (250,072) 0.92% 1.59% 0.00% 3,836,942 3,586,870 (250,072) 0.92% 1.59% 0.00% Transport Pakistan National Shipping Corporation 4,000 7, ,500 1,584,717 1,193,240 (391,477) 0.31% 0.53% 0.01% December 31, ,482,550 2,034,780 3,700 2,261,440 1,259, ,557, ,482,562 (29,075,382) 57.68% % 0.30% June 30, ,965, ,844,348 (22,120,887) This investment includes bonus shares having market value of Rs.0.06 million withheld by the investee company during previous periods as issuance of bonus shares has been made taxable through Finance Act, Consequently, bonus shares equivalent to 5% (representing tax impact of the bonus announcement) have been withheld by the investee company. The Mutual Funds Association of Pakistan (MUFAP) has filed a petition in the Honorable Sindh High Court (SHC) to declare the amendments brought in the Income Tax Ordinance, 2001 with reference to tax on bonus shares for collective investment schemes as null and void and not applicable on the mutual funds, based on the premise of exemption given to mutual funds under clause 47B and 99 of Second Schedule to the Income Tax Ordinance, The case was dismissed by SHC against MUFAP and various other plaintiffs vide judgement dated September 08, However, MUFAP along with various other mutual funds has filed an appeal before SHC under the section 3 of the Law Reforms Ordinance, The SHC has suspended the operation of the earlier impugned order and has granted stay from tax on bonus shares Following shares have been pledged with National Clearing Company of Pakistan Limited (NCCPL) security against settlement of the Fund's trades in terms of Circular No. 11 dated October 23, 2007 issued by SECP: (Un-Audited) (Audited) (Un-Audited) (Audited) December 31, June 30, December 31, June 30, (Number of shares) (Rupees) Sui Northern Gas Pipelines Limited - 100,000-14,892,000 The Hub Power Company Limited 200, ,000 18,200,000 23,486,000 Engro Fertilizers Limited - 29,000-1,601, , ,000 18,200,000 39,979,960

21 Faysal Islamic Asset Allocation Fund 21 Notes to the Condensed Interim Financial Information For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) 5.2 Net unrealised loss on revaluation of investments 'at fair value through profit or loss' - held-for-trading Note (Un-Audited) (Audited) December 31, June 30, (Rupees) Market value of investments 225,482, ,844,348 Less: Cost of investments (254,557,944) (373,965,235) (29,075,382) (22,120,887) Net unrealised (loss) / gain on investments at beginning of the period 22,120,887 9,200,000 Realised on disposal during the period (21,306,114) (9,200,000) 814,773 - (28,260,609) (22,120,887) 6. ACCRUED AND OTHER LIABILITIES SECP annual fee payable 200, ,467 Brokerage payable 290, ,532 Accrued liabilities 684, ,874 Provision for Sindh Workers' Welfare Fund (SWWF) 6.1 1,493,304 1,493,304 Provision for indirect taxes and duties , ,669 3,349,208 3,445, There is no change in the status of Sindh Workers' Welfare Fund (SWWF) as reported in note 13.2 of the annual financial statements of the fund for the year ended June 30, There is no change in the status of the appeal filed by the Federal Board of Revenue in the Supreme Court of Pakistan in respect of application of Federal Excise Duty at the rate of 16% on the services of the Management Company, as reported in note 13.3 to the annual financial statements of the Fund for the year ended June 30, CONTINGENCIES AND COMMITMENTS There were no contingencies and commitments as at December 31, TAXATION The income of the Fund is exempt from income tax under Clause (99) of Part 1 of the Second Schedule to the Income Tax Ordinance, 2001 (Clause 99) subject to the condition that not less than 90 percent of the accounting income for the year, as reduced by capital gains, whether realized or unrealized, is distributed in cash amongst the unit holders. Furthermore, as per regulation 63 of the NBFC Regulations, the Fund is required to distribute 90% of the net accounting income other than capital gains to the unit holders in cash. The Fund is also exempt from the provision of Section 113 (minimum tax) under clause 11A of Part IV of the Second Schedule to the Income Tax Ordinance, Since the management intends to distribute the income earned by the Fund during the year to the unit holders in cash in the manner as explained above, accordingly, no provision for taxation has been made in this condensed interim financial information for the period ended December 31, EARNINGS PER UNIT Earnings per unit has not been disclosed as the determination of cumulative weighted average number of outstanding units for calculating earnings per unit is not practicable.

22 22 Faysal Islamic Asset Allocation Fund Notes to the Condensed Interim Financial Information For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) 10. TRANSACTIONS WITH CONNECTED PERSONS / RELATED PARTIES 10.1 Connected persons / related parties include Faysal Asset Management Limited being the Management Company, CDC being the Trustee, other collective investment schemes managed by the Management Company, Faysal Asset Management Limited - Staff Provident Fund, Faysal Asset Management Limited - Staff Gratuity Fund, Faysal Bank Limited, Faysal Bank Limited - Staff Provident Fund, Faysal Bank Limited - Staff Gratuity Fund and other entities under common management and / or directorship and the directors and officers of the Management Company and the Trustee, key management personnel, other associated undertaking and unit holder holding more than 10% or more units of the fund at the period end The transactions with connected persons are in the normal course of business, at contracted rates The details of significant transactions carried out by the Fund with connected persons / related parties and balances with them at year end are as follows: Transactions during the period Half year ended (Un-Audited) December 31, December 31, (Rupees) Faysal Asset Management Limited (Management Company) Remuneration of the Management Company 4,218,283 1,696,625 Sales tax on Management fee 548, ,561 Reimbursement of expenses from the Management Company 210, ,210 Issue of 57,604 units (2016: 57,604 units) - 6,000,000 Sales load - 556,926 Faysal Bank Limited (Group / Associated Company) Return on PLS savings account 87,133 7,597 Bank charges 4,435 3,898 Central Depository Company of Pakistan Limited - (Trustee of the Fund) Remuneration of the Trustee 422, ,962 Sales tax on Trustee fee 54,949 45,625 Settlement charges 49,821 55,487 Outstanding balances (Un-Audited) (Audited) December 31, June 30, (Rupees) Faysal Asset Management Limited (Management Company) Management fee payable 660,663 1,015,870 Sales tax payable on Management fee 85, ,068 Sales load payable 88,744 2,796,979 Reimbursement of expenses receivable from / (payable to) the Management Company 210, ,127

23 Faysal Islamic Asset Allocation Fund 23 Notes to the Condensed Interim Financial Information For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) (Un-Audited) (Audited) December 31, June 30, (Rupees) Faysal Bank Limited (Group / Associated Company) Balance in PLS savings account 2,165,733 11,005,190 Central Depository Company of Pakistan Limited - (Trustee of the Fund) Remuneration payable to the Trustee 62,488 98,725 Sales tax payable on Trustee fee 8,158 12,834 Security deposit 100, ,000 Funds under Common Management Faysal Asset Allocation Fund Payable from Faysal Asset Allocation Fund - 226,542,114 Faysal MTS Fund Payable from Faysal MTS Fund - 821,879 Faysal Balanced Growth Fund Payable from Faysal Balanced Growth Fund - 34,898,856 Faysal Savings Growth Fund Payable from Faysal Saving Growth Fund - 21,793, FAIR VALUE OF FINANCIAL INSTRUMENTS IFRS 13 - Fair Value Measurement establishes a single source of guidance under IFRS for all fair value measurements and disclosures about fair value measurement where such measurements are required as permitted by other IFRSs. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). Financial assets which are tradable in an open market are revalued at the market prices prevailing on the statement of assets and liabilities date. The estimated fair value of all other financial assets and financial liabilities is considered not significantly different from book value. The following table shows financial instruments recognized at fair value, analyzed between those whose fair value is based on: Level 1: Level 2: Level 3: quoted prices in active markets for identical assets or liabilities; those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and those with inputs for the asset or liability that are not based on observable market data (unobservable inputs).

24 24 Faysal Islamic Asset Allocation Fund Notes to the Condensed Interim Financial Information For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) Financial assets measured at fair value Carrying amount Deposits and other receivables Cash and cash equivalents Total December 31, 2017 (Un-audited) Fair value Investments Level 1 Level 2 Level 3 Total (Rupees) 'At fair value through profit or loss' - held-for-trading Shariah compliant listed equity securities 225,482, ,482, ,482, ,482,562 Financial assets not measured at fair value Bank balances ,332, ,332, Deposits and other receivables - 5,953,846-5,953, Receivable against sale of investments - 37,317,511-37,317, ,482,562 43,271, ,332, ,085, ,482, ,482,562 Financial assets measured at fair value June 30, 2017 (Audited) Carrying amount Fair value Deposits and other receivables Cash and cash equivalents Total Investments Level 1 Level 2 Level 3 Total (Rupees) 'At fair value through profit or loss' - held-for-trading Shariah compliant listed equity securities 351,844, ,844, ,844, ,844,348 Financial assets not measured at fair value Bank balances ,205, ,205, Deposits and other receivables - 5,926,089-5,926, Receivable against sale of investments - 20,029,467-20,029, ,844,348 25,955, ,205, ,005, ,844, ,844,348

25 Faysal Islamic Asset Allocation Fund 25 Notes to the Condensed Interim Financial Information For the Half Year and Quarter Ended December 31, 2017 (Un-Audited) During the period ended December 31, 2017, there were no transfers between level 1 and level 2 fair value measurements, and no transfer into and out of level 3 fair value measurements. December 31, 2017 'At fair value through profit Other financial and loss' liabilities Total (Rupees) Financial liabilities Payable to the Management Company - 959, ,853 Remuneration payable to the Trustee - 62,488 62,488 Accrued and other liabilities - 577, ,816 Payable against purchase of investments - 24,399,010 24,399,010-25,999,167 25,999,167 June 30, 2017 'At fair value through profit Other financial and loss' liabilities Total (Rupees) Financial liabilities Payable to the Management Company - 4,062,976 4,062,976 Remuneration payable to the Trustee - 98,725 98,725 Accrued and other liabilities - 974, ,811 Payable against redemption of units - 284,056, ,056,132 Dividend payable - 12,653,133 12,653, ,845, ,845, GENERAL The Total Expense Ratio (TER) of the Fund is 3.38% (December 31, 2016: 4.57%) which includes 0.39% (December 31, 2016: 0.57%) representing government levies on the Fund such as sales taxes, annual fee to the SECP, etc. This ratio is within the maximum limit of 4% prescribed under the NBFC Regulations for a collective investment scheme categorised as an Asset Allocation Scheme. In compliance with schedule V of the NBFC Regulations the Directors of the Management Company, hereby declare that this condensed interim financial information gives a true and fair view of the state of the Fund s affairs as at December 31, This condensed interim financial information is un-audited but subject to limited scope review by the auditors. Figures for the quarter ended December 31, 2017 and December 31, 2016 as reported in this condensed interim financial information has not been subject to limited scope review by the external auditors Figures have been rounded off to the nearest rupee. 13. DATE OF AUTHORISATION FOR ISSUE This condensed interim financial information was authorised for issue on February 23, 2018 by the Board of Directors of the Management Company. For Faysal Asset Management Limited (Management Company) Chief Financial Officer Chief Executive Officer Director

26 26 Faysal Islamic Asset Allocation Fund

27 Faysal Islamic Asset Allocation Fund 27 H H

28 28 Faysal Islamic Asset Allocation Fund

29 Faysal Islamic Asset Allocation Fund (2.140) (36.495) (3.523) (40.017) (3.874) (86.132) (7.117) (93.249) (2.843) (40.017) - (40.017) (9.638) (93.249) - (93.249) 81.66

30

31