Islamic Stock Fund

Condensed Interim Financial Statements forFor The Period From July 24, 2020 To March 31, 2021 (Un-audited)

Islamic Stock Fund

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ITMinds LimitedCentral Depository Company of Pakistan, LimitedCDC House, 99B, Block-B, S.M.C.H.S.,Main Shahra-e-Faisal, Karachi.

Faysal Bank Limited (Islamic Banking)Meezan Bank Limited

2 Faysal Asset Management Faysal Islamic Stock Fund


MISSION AND VISIONTo provide world class investment managementand advisory services for the benefit of clientelelooking to maximize their financial returns whileminimizing risk.

To amplify our client-centricity by inspiringinnovation, championing customer service,generating competitive returns, and honoring theutmost ethical and professional standards.

MISSION STATEMENTFaysal Islamic Stock Fund (FISF) endeavors toprovide investors with an opportunity to earn capitalgrowth by investing in a large pool of fundrepresenting Shariah Compliant equity investmentin a broad range of sectors and financialinstruments.

Condensed Interim Statement of Assets and LiabilitiesAs at March 31, 2021

DirectorChief Executive OfficerChief Financial Officer

For Faysal Asset Management Limited(Management Company)


Condensed Interim Income StatementFor The Period From July 24, 2020 To March 31, 2021




Condensed Interim Statement of Comprehensive IncomeFor The Period From July 24, 2020 To March 31, 2021




Condensed Interim Statement of Movement in Unit Holders’ FundFor The Period From July 24, 2020 To March 31, 2021




Condensed Interim Cash Flows StatementFor The Period From July 24, 2020 To March 31, 2021




1 LEGAL STATUS AND NATURE OF BUSINESS

1.1 Faysal Islamic Stock Fund (The Fund) is an open-ended collective investment schemeestablished through a Trust Deed under the Trust Act, 1882, entered into on February25, 2019 between Faysal Asset Management Limited (FAML) as the ManagementCompany and the Central Depository Company of Pakistan Limited (CDC) as theTrustee. This was approved by the Securities and Exchange Commission of Pakistan(SECP) under the Non-Banking Finance Companies (Establishment and Regulation)Rules, 2003 (NBFC Rules) and the Non-Banking Finance Companies and NotifiedEntities Regulations, 2008 (NBFC Regulations). The investment activities andadministration of the Fund are managed by the Management Company.

The Management Company of the Fund has been licensed by the SECP to act as anAsset Management Company under the Non-Banking Finance Companies (Establishmentand Regulation) Rules, 2003 through a certificate of registration issued by the Securitiesand Exchange Commission of Pakistan (SECP). The registered office of the ManagementCompany is situated at 7th Floor, Faysal House, ST-02, Main Shahrah-e-Faisal, Karachi,Pakistan. The Management Company is a member of the Mutual Funds Associationof Pakistan (MUFAP).

1.2 The Fund has been categorised as a 'Shariah Compliant Open Ended Equity Scheme'by the Board of Directors of the Management Company pursuant to the provisionscontained in Circular 7 of 2009. The units of the Fund were initially offered for publicsubscription at a par value of Rs.100 per unit. Thereafter, the units were being offeredfor public subscription on a continuous basis from July 24, 2020 and are transferableand redeemable by surrendering them to the Fund.

1.3 The objective of the Fund is to provide long term capital growth by investing primarilyin Shariah compliant listed equity securities, with prudent and professional management.

1.4 The Management Company has been assigned a quality rating of 'AM2' by VIS CreditRating Company Limited dated March 31, 2021. The rating reflects the Company’sexperienced management team, structured investment process and sound quality ofsystems and processes.

1.5 The title to the assets of the Fund are held in the name of Central Depository Companyof Pakistan Limited as the Trustee of the Fund.

2 BASIS OF PREPARATION

2.1 Statement of compliance

These condensed interim financial statements have been prepared in accordance withthe accounting and reporting standards as applicable in Pakistan for interim financial

Notes to and forming part of the Condensed Interim Financial StatementsFor The Period From July 24, 2020 To March 31, 2021




reporting. The accounting and reporting standards applicable in Pakistan for interimfinancial reporting comprise of:

- International Accounting Standard (IAS) 34, 'Interim Financial Reporting' issued bythe International Accounting Standards Board (IASB) as notified under the Companies

Act, 2017;

- Provisions of and directives issued under the Companies Act, 2017 along with partVIIIA of the repealed Companies Ordinance, 1984; and

- Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003 (theNBFC Rules), Non-Banking Finance Companies and Notified Entities Regulations,2008 (the NBFC Regulations) and requirements of the trust deed.

Wherever provisions of and directives issued under the Companies Act, 2017, partVIIIA of the repealed Companies Ordinance, 1984, the NBFC Rules, the NBFCRegulations and the requirements of the Trust Deed differ from the requirements of

IAS 34, the provisions of and directives issued under the Companies Act, 2017, partVIIIA of the repealed Companies Ordinance, 1984, the NBFC Rules, the NBFCRegulations and requirements of the Trust Deed have been followed.

The disclosures made in these condensed interim financial statements have, however,been limited based on the requirements of IAS 34: 'Interim Financial Reporting'. Thesecondensed interim financial statements do not include all the information and disclosuresrequired in a full set of financial statements.

2.2 In compliance with Schedule V of the Non-Banking Finance Companies and NotifiedEntities Regulations, 2008, the directors of the Management Company hereby declarethat these condensed interim financial statements give a true and fair view of the stateof affairs of the Fund as at March 31, 2021.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, JUDGMENTS AND RISK MANAGEMENT POLICIES

3.1 The accounting policies applied and the methods of computations of balances used in the preparation of these condensed interim financial statements are the same as those applied in the preparation of the annual financial statements of the Fund for the

year ended June 30, 2020.

3.2 The preparation of these condensed interim financial statements is in conformity withthe accounting and reporting standards as applicable in Pakistan requires managementto make estimates, assumptions and use judgments that affect the application ofaccounting policies and reported amounts of assets, liabilities, income and expenses.Estimates, assumptions and judgments are continually evaluated and are based on



historical experience and other factors, including reasonable expectations of futureevents. Revisions to accounting estimates are recognised prospectively commencingfrom the period of revision. In preparing these condensed interim financial statements,the significant judgments made by the management in applying the Fund’s accountingpolicies and the key sources of estimation and uncertainty were the same as thoseapplied to the financial statements as at and for the year ended June 30, 2020. TheFund’s financial risk management objectives and policies are consistent with thosedisclosed in the financial statements of the Fund for the year ended June 30, 2020.

3.3 Amendments to the published accounting and reporting standards that are effective in the current period

There are certain amendments to the published accounting and reporting standardsthat are mandatory for the Fund's annual accounting period beginning on July 1, 2020.However, these do not have any significant impact on the Fund's operations and,

therefore, have not been detailed in these condensed interim financial statements.

3.4 Standards, interpretations and amendments to the published accounting and reportingstandards that are not yet effective

There are certain new amendments to the published accounting and reporting standardsthat are mandatory for the Fund's annual accounting period beginning on or after July1, 2021. However, these will not have any significant impact on the Fund's operations

and, therefore, have not been detailed in these condensed interim financial statements

4.1 These savings accounts carry mark-up at rates ranging from 2.50% to 6.50% perannum. Deposits in PLS savings accounts also include Rs. 0.0327 million maintainedwith Faysal Bank Limited, a related party, and carry mark-up at the rate of 6.50% perannum.



5.1.1 The above investments include shares of the following companies which have beenpledged with National Clearing Company of Pakistan for guaranteeing settlement ofthe Fund's trades in accordance with Circular no. 11 of 2007 dated October 23, 2007issued by the Securities & Exchange Commission of Pakistan. The details of shareswhich have been pledged are as follows:



6 RECEIVABLE FROM FAYSAL ASSET MANAGEMENT LIMITED - MANAGEMENTCOMPANY

6.1 As per the SECP's direction No. SCD/PRDD/Direction/18/2016 all AMCs are required to calculate the Total Expense ratio (TER) in respect of each CIS to ensure that the

TER is not in breach of the required maximum percentage. The AMCs are required toadjust the NAV of the CIS on the basis of TER at the end of each quarter during thefinancial year for the amount of expenses in excess of the TER limit prescribed inregulation 60(5) of the NBFC Regulations.



During the period ended March 31, 2021, the Fund was in breach of the TER ratio of4.5% as prescribed under NBFC Regulations for a collective investment schemerecognised as an equity scheme. As a result the Fund has recorded receivable fromthe Management Company to comply with the TER.

7.1 As per regulation 61 of the NBFC Regulations, the Management Company is entitledto a remuneration equal to an amount not exceeding the maximum rate of managementfee as disclosed in the offering document subject to the total expense ratio limit.

The Management Company has determined the maximum rate to be 2% and is chargingthe remuneration variably keeping in view the overall return and the total expense ratiolimit of the Fund as defined under the NBFC Regulations, 2008. Accordingly, remunerationat the rate of 1.5% of average annual net assets of the Fund has been charged for theperiod.

7.2 During the period, an amount of Rs. 0.822 million was charged on account of sales tax@ 13% on management fee levied through the Sindh Sales Tax on Services Act, 2011.

7.3 In accordance with Regulation 60 of the NBFC Regulations, 2008, the ManagementCompany is entitled to charge fees and expenses related to registrar services, accounting,operation and valuation services, related to a Collective Investment Scheme (CIS).

The Board of Directors of the Management Company, in its 106th meeting held on April17, 2020, had given Management Company the discretion for charging allocatedexpenses. Accordingly, the Management Company has charged allocated expenseswhile keeping in view the overall return and the total expense ratio limit of the Fundas defined under the NBFC Regulations, 2008 at the rate of 0.15% of average annualnet assets of the Fund for the period.

7.4 The SECP has allowed the Asset Management Companies to charge selling andmarketing expenses to all categories of open-end mutual funds (except fund of funds)upto a maximum limit approved by the Board of Directors of the Management Companyas part of annual plan.



The Board of Directors of the Management Company approved the annual plan forcharging of selling and marketing expenses to the funds (existing and to be launched)through a circular resolution dated December 16, 2019. Furthermore, the Board, throughthe same circular resolution, had given discretion to the Management Company forcharging selling and marketing expenses on the Fund. The Management Companyhas, therefore, charged selling and marketing expenses while keeping in view theoverall return and the total expense ratio limit of the Fund as defined under the NBFCRegulations, 2008 at the rate of 0.50% of average annual net assets of the Fund forthe period.

8.1 As a consequence of the 18th amendment to the Constitution of Pakistan, in May 2015the Sindh Workers’ Welfare Fund Act, 2014 (SWWF Act) had been passed by theGovernment of Sindh in May 2015 as a result of which every industrial establishmentlocated in the Province of Sindh, the total income of which in any accounting year isnot less than Rs 0.50 million, was required to pay Sindh Workers’ Welfare Fund (SWWF)in respect of that year a sum equal to two percent of such income. The matter wastaken up by the MUFAP with the Sindh Revenue Board (SRB) collectively on behalfof various asset management companies and their CISs whereby it was contested thatmutual funds should be excluded from the ambit of the SWWF Act as these were notindustrial establishments but were pass through investment vehicles and did not employworkers. The SRB held that mutual funds were included in the definition of financialinstitutions as per the Financial Institution (Recovery of Finances) Ordinance, 2001and were, hence, required to register and pay SWWF under the SWWF Act. Thereafter,MUFAP had taken up the matter with the Sindh Finance Ministry to have CISs / mutualfunds excluded from the applicability of SWWF. In view of the above developmentsregarding the applicability of SWWF on CISs / mutual funds, the MUFAP recommendedthat as a matter of abundant caution provision in respect of SWWF should be made



on a prudent basis with effect from the date of enactment of the SWWF Act, 2014 (i.e.starting from May 21, 2015). Since the Fund has started operations with effect fromJuly 24, 2020 therefore, the provision has been recognised from July 24, 2020 to March31, 2021.

Had the provision for SWWF not been recorded in the condensed interim financial statements of the Fund for the period March 31, 2021, the net asset value of the Fund

as at March 31, 2021 would have been higher by Re. 0.885 per unit.

9 Contingencies and commitments

There were no contingencies and commitments outstanding as at March 31, 2021.

10 TOTAL EXPENSE RATIO

The total expense ratio (TER) of the Fund for the period ended March 31, 2021 is5.31% which includes 1.26% representing government levies, Sindh Workers' WelfareFund and the SECP fee, etc. The same is within the maximum limit of 4.5% prescribedunder the NBFC Regulations for a collective investment scheme categorised as anequity scheme.

11 Taxation

The Fund's income is exempt from income tax as per clause 99 of part I of the SecondSchedule to the Income Tax Ordinance, 2001 subject to the condition that not less than

90 percent of the accounting income for the year as reduced by capital gains, whetherrealised or unrealised, is distributed amongst the unit holders as cash dividend.Furthermore, as per Regulation 63 of the NBFC Regulations, 2008, the Fund is requiredto distribute not less than 90 percent of its accounting income for the period derivedfrom sources other than capital gains as reduced by such expenses as are chargeablethereon to the unit holders. Since the management intends to distribute the requiredminimum percentage of income earned by the Fund for the year ending June 30, 2021to the unit holders in the manner as explained above, no provision for taxation hasbeen made in these condensed interim financial statements.

The Fund is also exempt from the provisions of section 113 (minimum tax) under clause11A of part IV of the Second Schedule to the Income Tax Ordinance, 2001.

12 EARNINGS PER UNIT

Earnings per unit (EPU) has not been disclosed in theses condensed interim financialstatements as, in the opinion of the management, determination of weighted averageoutstanding number of units for calculating EPU is not practicable.



13 TRANSACTIONS WITH CONNECTED PERSONS AND RELATED PARTIES

13.1Connected persons and related parties include Faysal Asset Management Limitedbeing the Management Company, Central Depository Company of Pakistan Limitedbeing the Trustee, other collective investment schemes managed by the ManagementCompany, Faysal Asset Management Limited - Staff Provident Fund, Faysal AssetManagement Limited - Staff Gratuity Fund, Faysal Bank Limited, Faysal Bank Limited- Staff Provident Fund, Faysal Bank Limited - Staff Gratuity Fund and other entitiesunder common management and / or directorship and the directors and officers of theManagement Company and the Trustee, key management personnel, other associatedundertakings and unit holders holding more than 10 percent or more units / net assetsof the Fund.

13.2Transactions with connected persons are executed on an arm's length basis essentiallycomprise sale and redemption of units, fee on account of managing the affairs of theFund, sales load, other charges and distribution payments to connected persons.Transactions with connected persons are in the normal course of business, at contractedrates and terms determined in accordance with market rates.

13.3Remuneration to the Management Company of the Fund is determined in accordancewith the provisions of the NBFC Regulations, 2008 and the Trust Deed.

13.4Remuneration to the Trustee is determined in accordance with the provisions of theNBFC Regulations, 2008 and the Trust Deed.

13.5Allocated expenses and selling and marketing expenses are charged to the Fund bythe Management Company subject to the maximum prescribed Total Expense Ratio.

13.6 The details of transactions carried out by the Fund with connected persons during theyear and balances with them as at year end are as follows:



13.7 Other balances due to / from related parties / connected persons are included in the respective notes to these condensed interim financial statements.

14 FAIR VALUE MEASUREMENT

Fair value is the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants at the measurement

date. Consequently, differences can arise between carrying values and the fair valueestimates.



Underlying the definition of fair value is the presumption that the Fund is a goingconcern without any intention or requirement to curtail materially the scale of itsoperations or to undertake a transaction on adverse terms.

Financial assets which are tradable in an open market are revalued at the marketprices prevailing at the reporting date. The estimated fair value of all other financialassets and liabilities is considered not to be significantly different from the respectivebook values.

14.1 Fair value hierarchy

International Financial Reporting Standard 13, 'Fair value measurement' requires theFund to classify assets using a fair value hierarchy that reflects the significance of theinputs used in making the measurements. The fair value hierarchy has the followinglevels:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: 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); and

Level 3: inputs for the asset or liability that are not based on observable market data(i.e. unobservable inputs).

As at the reporting date, the Fund held the following financial instruments measuredat fair values:

15 GENERAL

15.1 Figures have been rounded off to the nearest rupee.

15.2 Impact of COVID-19

The COVID-19 pandemic has taken a toll on all economies and emerged as a contagionrisk around the globe, including Pakistan. To reduce the impact on businesses and economiesin general, regulators / governments across the globe have introduced a host of measures





on both the fiscal and economic fronts. The Securities and Exchange Commission ofPakistan (SECP) had provided the following relaxation to CISs operating in Pakistan

for classification of debt security for a specified period of time commencing from April9, 2020 and expired on March 31, 2021.

- The timeline for classification of debt security as non performing has been extendedfrom 15 days to 180 days overdue.

The Management Company is closely monitoring the situation and has invoked required actions to ensure safety and security of the staff and an uninterrupted service to thecustomers. Business Continuity Plans (BCP) for respective areas are in place andtested. The Management Company has significantly enhanced monitoring for all cybersecurity risk during these times from its information security protocols. The remote workcapabilities were enabled for critical staff and related risk and control measures wereassessed to make sure they are fully protected using virtual private network (“VPN”)connections. Further, the Management Company has also ensured that its remoteaccess systems are sufficiently resilient to any unwanted cyber-attacks.

The Management Company has made an assessment of COVID-19 on the credit riskand liquidity risk and believes that there is no significant impact on the Fund.

16 DATE OF AUTHORISATION FOR ISSUE

These condensed interim financial statements were authorised for issue on19 April 2021 by the Board of Directors of the Management Company.

Islamic Stock Fund

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