FUND MANAGER’S REPORT Jun · NESTLE which is a thinly traded stock. On a MoM basis the index...

In June 2011 the CPI dipped by 0.76% on MoM basis reaching 13.13% YTD primarily due to lower than

expected decrease in the perishable item and high base effect. In order to persuade IMF to release the

tranche of $ 1.72bn, government is making all the efforts to manage CPI and other macroeconomic

indicators. One such effort was the tax collection of a whopping amount of PKR 155bn in the last week

of FY2010-2011. The inevitable widening of the trade deficit has been covered by the massive inflow of

remittance since March 2011.

On the External Side FDI dropped by 37% YoY to US$160mn in May-11, but is up 26% MoM. YTD, FDI

is down 29% YoY. Trade deficit for 10MFY11 stood at $9.39bn, down 8% as compared to 10MFY10.

The external inflow other then remittances remained strained as most of the international agencies have

delayed support till IMF issues a letter of comfort for Pakistan. Furthermore, the statement of US

Secretary of State to withdraw Military aid to Pakistan has also built negative sentiments in the

international market.

In later half of July 2011 IMF is scheduled to meet the government officials to monitor the progress on

the implementation of the “conditionalities” imposed by the stand by agreement and has also asked the

government to give clarification on the macroeconomic targets given in the budget of FY2011-2012. We

believe that the inflation numbers will not experience further increase even with more than probable

surge in fuel prices in the upcoming months as the high base effect will also play a vital role in keeping

inflation under control.

Going forward, in FY2011-2012 fiscal deficit will be a cause of concern for the government since the

imminent debt servicing and principle repayment will be too huge for the government’s revenue to

cover.

The money market during the month of June 2011 remained mostly mixed with discounting reported

couple of times and also money market witnessed the lowest levels of floor rate at 11%. However,

frequent intervention by SBP through OMOs stabilized money market where average overnight rates

were ranging between 12.50% to 13.50%. Moreover, in the T-bill auction dated June 16, 2011 SBP

given the cut-off yield of 13.48%, 13.73% and 13.90% in 3, 6 and 12 months respectively and

maintained the same stance in last T-bill auction dated June 30, 2011 of the FY-11 at the same rates.

The KSE – 100 started the year at 9,722 and closed the year at 12,496 up 28.53% on YTD basis

however, the performance of the index was skewed as majority of the index gains were provided by

NESTLE which is a thinly traded stock. On a MoM basis the index started at 12,123 and closed at

12,496 up 3.08%. The market rose during the month, even as Foreign Investors Portfolio Investment

(FIPI) witnessed a net outflow on monthly basis. According to the data provided by NCCPL, foreign

investors remained net sellers for the month of June too as foreigners bought shares worth PKR 4.58 Bn

and sold shares worth PKR 8.12 Bn thus resulting in net selling of PKR 3.54 Bn (USD 41.21 Mn) during

the month. On an YTD basis FIPI registered a decline of 50.63% as net FIPI clocked in at USD 280.12

Mn for this year compared to last year’s net FIPI of USD 567.56 Mn. Majority of the FIPI selling was

absorbed by local investors and institutions that re-entered the market in anticipation of removal of CGT

due to difficulty in understanding and implementation of CGT. However, the investors were dealt with a

blow as Budget and Finance Bill failed to mention anything regarding CGT. On the economic front

Foreign Direct Investment (FDI) continued its declining trend. High interest rates and weak currency can

be cited as some of the reasons for this abysmal performance. Going forward current account can come

under pressure due to drying of aid and increase in trade deficit on the back of decline in cotton prices

and increase in international oil prices. Political uncertainty and deteriorating law and order situation also

played its part as foreigners reduced their equity exposure. Foreign flows failed to materialize which

were contingent on the government implementing measures to document the economy, increase the tax

base and reduce the subsidy given to various sectors.

Going forward successful conclusion of Pakistan’s talks with IMF, upcoming result season, relief on

CGT and monetary easing can provide much needed impetus and liquidity to the market. We continue to

focus on growth stocks that provide stable dividend yield.

Jun ‘11FUND MANAGER’S REPORT

ECONOMIC OUTLOOK

MONEY MARKET REVIEW

EQUITY MARKET REVIEW

Performance Review FBGF started June at a NAV/unit of PKR 76.18 and closed the month at a NAV/unit of PKR 72.27, down 5.13% on a Month on Month (MoM) basis. In comparison

FBGF’s benchmark gave a return of 2% for the month of June thus outperforming the fund return. Comparing FBGF to its peer group, FBGF under performed the

average return of the peer group by 393 bps (basis point) as the average peer group return for the month was negative 1.20%. The average return of balanced

funds on Year to date (YTD) basis was 17.95% while FBGF yielded a return of 9.98% on YTD basis thus under performing the peer group on YTD basis. On the

asset allocation side exposure in equities was reduced to 39.12% from previous month’s level of 40.52%. Allocation in other asset classes was more or less

maintained at last month’s level.

Investment ObjectiveFBGF endeavors to provide investors with an opportunity to earn income and

long-term capital appreciation by investing in a large pool of funds

representing equity / non equity investments in a broad range of sectors and

financial instruments

Fund Info

rmation

Fund Type Open Ended

Category Balanced Scheme

Risk Profile Moderate

Launch Date 19-Apr-04

Custodian/Trustee CDC

Auditor Ernst & Young Ford Rhodes Sidat Hyder

Management Fee 2%

Front/Back end Load 2.25% (Front end Load)

Min Subscription PKR. 5,000

Benchmark* KSE100 Index / 6M KIBOR

Pricing Mechanism Forward

Dealing Days Monday-Friday

Cut-Off Timing 9am-5pm

AMC Rating AM2- (JCR-VIS)

NAV per Unit (PKR) 72.27

Net Assets (mn) 360.19

Leverage Nil

* weighted average of 6M KIBOR & percentage invested in equities

Jun'11 May '11

Fund

Retu

rns FY11 to Date 9.98 15.93

Month-on Month -5.13 -1.59

Benchmark (YTD) 20.84 18.43

Top 1

0 E

quity h

old

ings

(% o

f T

. A

ssets

)

Pakistan State Oil 9.03%

Bank of Khyber 7.79%

Pakistan Tobacco 5.42%

Engro Corporation 4.46%

Attock Petroleum 4.14%

Pakistan Oil Fields 3.43%

Pakistan Petroleum 2.83%

Hub Power Company 2.05%

Asset

Quality

(% o

f T

ota

l

Assets

) AA 35.59

AA- 0.01

D 6.62Investm

ent

Com

mitte

e Salman Haider Sheikh Chief Executive Officer

Shahid Usman Ojha Chief Financial Officer

Asad Iqbal Chief Investment Officer

Ayaz Mustafa Zuberi Fund Manager- Fixed Income

Mansoor Bughio Fund Manager- Fixed Income

Omar Ehtisham Anwar Fund Manager- Equity

Syed Qamar Abbas Head of Research

Non Compliance

Name of InstrumentRating

required

Existing

Rating

Type of

Instrument

Value of Investment

Before provision

Provision (If

any )

Value of

Investment

after provision

% of Net

Assets

% of Total

Assets

Telecard A- D TFC 24,267,128 - 24,267,128 6.74 6.62

Single Entry exposures

Pak Electron N/A N/A

Preference

Shares 37,490,000 - 37,490,000 10.41 10.23

Asset Allocation (% of Total Assets)

Ris

k-q

uants

Alpha -0.024%

Beta 0.8998

Sharpe -0.3339

Standard Deviation 0.657%

VaR 1.080%

R² 0.4194

Treynor -0.0387

Kurtosis 1.6373

Jun’11 May’11

Jun’11 May'11

Secto

r A

llocation

(% o

f T

. A

ssets

)

Oil & Gas 19.42 16.70

Banks 7.79 9.98

Tobacco 5.42 5.19

Chemicals 4.46 2.34

Electricity 2.05 6.30

Performance Review

The performance of Faysal Income and Growth Fund (FIGF) was superb during the month of June as it yielded 8.78% during the month as compared to its peer

group that earned -16.55% on average. Thus, FIGF surpassed its peer group by 25.33%. On year to date, FIGF also outperformed its peer group return by

14.26% as it yielded a return of 9.71% vs peer group average return of -4.55%.

FIGF started June at the NAV/unit of PKR 103.73 and closed the month at the NAV/unit of PKR 104.45. On the asset allocation side, our portfolio comprises of

21.30% in bank deposits, 28.79% in GoP Ijara Sukuks, 22.06% in TBills, 16.42% in placements with financial institutions, 5.70% in TFCs and 3.46% in

preference shares. Approximately 89% of the portfolio is invested in AA or better rated instruments. The strategy remains to lookout for opportunities with high

return potential while maintaining the fund's asset quality.

Investment ObjectiveFIGF seeks to provide investors optimal yield through diversifies portfolio

consisting of both long-term fixed instruments as well as short–term money

market instruments.

TF

C/S

UK

UK

Ho

ldin

gs

(a

s %

of T

ot a

sse

ts)

Kohat Cement 5.30%

Telecard 0.40%

Fund Info

rmation


Category Aggressive Income Fund

Stability Rating A(f) (JCR-VIS)

Risk Profile Medium

Launch Date 10-Oct-05


Auditor M.Yousuf Adil Saleem & Co.

Management Fee 1.50%

Front end Load 1%

Back end Load Nil


Benchmark 90% 1 Yr KIBOR and 10% average of most recent

published 3month deposit rates of top 3 scheduled

Commercial Bank by deposit size




AMC Rating AM2-(JCRVIS)


Net Assets (PKR mn) 604

Leverage Nil

Investm

ent

Com

mitte

e

Salman Haider Sheikh Chief Executive Officer







(CAGR Annualized % p.a) Jun '11 May'11

Fund

Retu


Month-on-Month 8.78 18.30


Asset

Quality

(% o

f T

ota

l

Assets

)

Gov. Securities 50.79

AA+ 0.01

AA 37.66

AA- 0.01

D 0.40

NR 5.29

(Holding Period

Annualized % p.a) Jun '11 May'11

Fund

Retu





Ris

k-q

uants

Alpha -0.016%

Sharpe -1.5162


VaR 0.283%

Skewness -2.0594

Sortino -0.7097

Kurtosis 41.2480

Weighted Average Days 133

FIGF Vs Benchmark

Jun’11 May’11

Pak Brunei Investment Co Ltd. N/A N/A Clean Placement 500,000 - 500,000 10.97% 10.84%

Maple leaf Cement BBB BB+ TFC 18931439 - 18931439 5.38% 5.32%

Performance Review The performance of Faysal Islamic Savings Growth Fund (FISGF) was excellent. On year to date, FISGF outperformed its benchmark return by 1.48% as it

yielded a return of 10.33% vs the benchmark return of 8.85%. During the month of June FISGF yielded 8.61% during the month as compared to the benchmark

return of 8.86%.

FISGF started June at NAV/unit of PKR 102.81 and closed the month at NAV/unit of PKR 103.51. On asset allocation side, the fund is highly liquid with our

portfolio comprised 36.06% in cash at bank and 61.84% in GoP Ijara Sukuk. Approximately 98% of the portfolio is invested in AA or better rated instruments. We

intend to continue our investment strategy to look out for Shariah Compliant opportunities with competitive return at acceptable risk levels.

Investment ObjectiveFISGF seeks to provide maximum possible preservation of capital and

a reasonable rate of return via investing in Shariah Complaint money

market and debt securities having good credit quality rating and

liquidity

Fund Info

rmation


Category Islamic Income scheme

Risk Profile Low

Stability Rating A+(f) (JCRVIS)

Launch Date 14-June-10



Management Fee 1.50%

Front end Load Nil

Back end load Nil


Benchmark Average 6M deposit rate of 3 Islamic Banks






Net Assets (PKR mn) 295.40

Leverage Nil

Ris

k-q

uants

Alpha 0.014%

Sharpe -5.9242


VaR 0.062%

Skewness 1.6397

Sortino -1.9064

Kurtosis 21.0471


Investm

ent C

om

mitte

e

Salman Haider Sheikh Chief Executive Officer







(CAGR Annualized % p.a) Jun '11 May'11

Fund

Retu

rns FY11 to Date 10.33 10.48



Asset

Quality

(% o

f T

ota

l A

ssets

)

Government Securities 61.84

AAA 0.22

AA+ 0.003

AA 35.81

A 0.02

(Holding Period


Fund

Retu

rns FY11 to Date 10.33 10.44




Jun11 May’11

FISGF Vs Benchmark

Performance Review The performance of Faysal Money Market Fund (FMMF) was impressive during the month of June 2011 as the fund yielded MoM return of 11.59% as compared

to its benchmark return of 10.26% hence beating it by over 133 bps. While on YTD basis your fund yielded 11.48% against the YTD bench mark of 10.18% up

by 130 bps. However, on asset allocation side, the fund is highly liquid with our portfolio comprised almost 54.95.5% of T-bill, 17.10% of TRD 27.07% cash in AA

rated and above banks. We will continue with our investment strategy keeping the interest rate risk at lowest possible levels while ensuring highest credit quality

within our portfolio and tap any short term opportunity in terms of capital gains in the money market to pass on competitive and consistent returns to our unit

holders.

Investment ObjectiveFMMF seeks to provide stable and competitive returns in line with the money

markets exhibiting low volatility consistent with capital preservation by

constructing a liquid portfolio of low risk short term investments yielding

competitive returns.

Fund Info

rmation


Category Money Market Scheme

Risk Profile Low

Stability Rating AA+(f) (JCR-VIS)

Launch Date 13 December 2010



Management Fee 10% of Gross or minimum 1.25% of Net Assets

Front end Load Nil

Back end load Nil


Benchmark 50% 3 months T-Bills and 50% Average 3

months deposit rate AA rated and above banks

Pricing Mechanism Backward





Net Assets (PKR mn) 579.74

Leverage Nil

Ris

k-q

uants

Alpha 0.001%

Sharpe -5.7581


VaR 0.043%

Skewness 1.5784

Sortino N/A

Kurtosis 2.1186


Inve

stm

en

t C

om

mitte

e Salman Haider Sheikh Chief Executive Officer







(CAGR Annualized % p.a) Jun '11 May '11

Fund R

etu

rns

FY11 to Date 11.48 11.47



Asset Q

uality

(% o

f T

ota

l A

ssets

)

Government Securities 54.96

AA+ 0.002

AA 43.98

A 0.00

(Holding Period


Fund R

etu

rns

FY11 to Date 11.2 11.13




FMMF Vs Benchmark

Jun’11 May’11

FUND MANAGER’S REPORT Jun · NESTLE which is a thinly traded stock. On a MoM basis the index...

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