Quarter and Nine months ended March 31, 2007 Quarter and Nine months ended March 31, 2007 CONTENTS FUND INFORMATION Management Company Faysal Asset Management Limited Fund Information 2 Board of Directors of the Management Company Mr. Farook Bengali, Chairman Mr. Salman Haider Sheikh, Chief Executive Officer Mission Statement 3 Mr. Hassan Mohamed Mahmood, Director Mr. Mohammad Iqbal, Director Mr. Shahid Waqar Mahmood, Director Mr. Feroz Rizvi, Director Report of the Directors of the Management Company 4 Mr. Iqbal Alimohamed, Director Mr. Aqeel Karim Dhedhi, Director CFO of the Management Company Statement of Assets and Liabilities 6 Mr. Muhammad Shakeel Musani Company Secretary of the Management Company Mr. M. Siddique Memon Income Statement 7 Audit Committee Mr. Iqbal Alimohamed, Chairman Mr. Mohammad Iqbal, Member Distribution Statement 8 Mr. Shahid Waqar Mahmood, Member Mr. Feroz Rizvi, Member Trustee Statement of Movement in Unit Holders’ Funds 9 Central Depository Company of Pakistan Limited 8th Floor, Karachi Stock Exchange Building, Stock Exchange Road, Karachi-74000 Cash Flow Statement 10 Bankers to the Fund Faysal Bank Limited MCB Bank Limited Bank Alfalah Limited Notes to the Financial Statements 11 Habib Metropolitan Bank Limited Atlas Bank Limited Bank of Punjab Limited Auditor A.F. Ferguson & Co., Chartered Accountants Legal Advisor Mohsin Tayebaly & Co. Barristers & Advocates, Corporate legal Consultants, 2nd Floor, Dime Centre, BC-4, Block-9, KDA-5, Clifton, Karachi. Registrar Gangjees Registrar Services (Pvt) Limited Room # 506, 5th Floor, Clifton Centre, Kehkashan Clifton - Karachi. Distributors Faysal Asset Management Limited Faysal Bank Limited AKD Securities (Private) Limited PICIC Commercial Bank Limited Invest Capital & Securities (Private) Limited Access Financial Services (Private) Limited Flow (Private) Limited IGI Investment Bank Limited Atlas Capital Markets (Private) Limited 2 Quarter and Nine months ended March 31, 2007 Quarter and Nine months ended March 31, 2007 REPORT OF THE DIRECTORS OF THE MANAGEMENT COMPANY The Board of Directors of the Faysal Asset Management Limited, the management company of the Faysal Balanced Growth Fund (FBGF), is pleased to present the un-audited accounts of FBGF for the quarter and nine months ended March 31, 2007. PERFORMANCE REVIEW Quarter Nine months Quarter Nine months MISSION STATEMENT ended ended ended ended March 31, March 31, March 31, March 31, 2007 2007 2006 2006 Rupees in million Total Income 127.512 156.305 330.473 793.509 FBGF endeavors to provide investors with an Operating Expenses 10.113 33.462 16.390 44.436 Profit Before Tax 117.399 122.843 314.083 749.073 Taxation - - - - opportunity to earn income and long-term Profit After Tax 117.399 122.843 314.083 749.073 Earnings per Unit – Rs. 9.94 10.40 17.02 40.60 capital appreciation by investing in a large Fund Financials: Alhamd-O-Lillah, the fund performed well as compared to its peers and its performance benchmark. The annualized yield of the Fund since inception is 18.22% as at March 31, 2007. The Profit After Tax (PAT) for the quarter and nine months ended March 31, 2007 amounted to Rs. 117.40 million and Rs. 122.84 million respectively compared to pool of funds representing equity / non equity previous year’s PAT for the same period of 314.08 million and Rs. 749.07 million respectively. The drop in PAT is mainly due to the current market conditions; KSE-100 index gained 1,767 points and 1,231 points during the nine months and quarter of the current year respectively as against 4,021 points and 1,931 points respectively during the corresponding period last year. PAT for the current quarter includes realized and unrealized capital gain of Rs. 66.41 investments in a broad range of sectors million and 59.50 million, respectively whereas there was a realized capital gain and unrealized capital loss of Rs. 284.11 million and Rs 14.90 million, respectively during same quarter last year. During the current quarter, the Fund also earned an income of Rs. 11.92 million on listed rated Term Finance Certificates and dividend of Rs. 7.47 million on its portfolio holding. and financial instruments. The operating expenses of the fund decreased by over Rs. 6.28 Million during the current quarter compared to same quarter last year. Market Review: The equity markets showed improvement with KSE-100 index posted gains of 12.26% during the quarter. The quarter began on a bullish note and the equity market rallied after Prime Minister’s announcement to extend capital gains tax holiday till June 2008. The waiver of stamp duty on electronic transfers by KSE also restored investor confidence. The equity markets went through a consolidation phase during the latter part of the quarter. Balances in the Special Convertible Rupee Account (SCRA), indicator of Foreign portfolio investments, showed an increase to a record level of US $615 million level as on March 28, 2007. Foreign research companies published positive reports about the economic stability of Pakistan and its expected corporate earnings growth. These reports were followed by an increasing interest by the foreign fund managers in the Pakistani equity markets. 3 4 Quarter and Nine months ended March 31, 2007 Quarter and Nine months ended March 31, 2007 Regional equity market comparison indicates that Pakistan’s equity market is currently trading at a discount. The comparison of PE multiple, corporate EPS CONDENSED STATEMENT OF ASSETS AND LIABILITIES growth and dividend yield also present Pakistan as an attractive investment option AS AT MARCH 31, 2007 within the region which can result in higher foreign investment in our equity market in the upcoming months. Note Un-audited Audited Fund Performance: FBGF posted a return of 10.15% for the quarter as compared March 31, June 30, to KSE-100 index return of 12.26%. The average equity exposure of FBGF during 2007 2006 the quarter was around 58%. Average open-ended equity funds posted return of ----------------- Rupees------------------ 7.30% for the quarter. FBGF has outperformed the average open-ended equity Assets funds for the quarter by 2.85%. The major sectors of FBGF investments were Oil & Gas, fertilizer and the financial sector. Cash and cash equivalents 144,514,785 27,676,508 Dividends and other receivables 4 98,515,587 28,647,063 31-December 2006 31-March 2007 Change Investments 5 1,138,902,719 1,591,506,641 KSE-100 Index 10,040.50 11,271.59 12.26% Total assets 1,381,933,090 1,647,830,212 FBGF NAV 100.64 110.73 10.02% Liabilities INVESTMENTS Remuneration payable to the Management Company 2,509,558 3,004,781 As of 31 March 2007, the total assets of the Fund were invested as below: Remuneration payable to the Trustee 196,467 215,737 Creditors, accrued and other liabilities 6 71,051,750 23,136,094 ASSET ALLOCATION (%) SECTOR ALLOCATION (%) Total liabilities 73,757,775 26,356,612 Fixed Income Technology & Cable & Communication Electrical Goods 31.43% 3.44% Others 3.82% Cement Net assets 1,308,175,315 1,621,473,600 Textile 2.01% 2.35% Composite Chemicals 3.58% 2.67% Unit holders' funds 1,308,175,315 1,621,473,600 Oil & Gas Commercial Marketing Banks Number of units in issue 11,813,768 15,259,604 8.43% 11.52% Cash Other Assets Equities Fertilizer 11.04% 1.91% 55.62% 9.80% Net asset value per unit 110.73 106.26 Oil & Gas Exploration ACKNOWLEDGEMENT 8.00% The annexed notes 1 to 12 form an integral part of these financial statements. 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 For Faysal Asset Management Limited the employees of the Management Company and the Trustee for their dedication (Management Company) and hard work. For and on behalf of the Board Salman Haider Sheikh Salman Haider Sheikh Iqbal Alimohamed Mohammad Iqbal Karachi: April 14, 2007 Chief Executive Officer Chief Executive Officer Director Director 5 6 Quarter and Nine months ended March 31, 2007 Quarter and Nine months ended March 31, 2007 CONDENSED INCOME STATEMENT (UN-AUDITED) CONDENSED DISTRIBUTION STATEMENT (UN-AUDITED) FOR THE QUARTER AND NINE MONTHS ENDED MARCH 31, 2007 FOR THE QUARTER AND NINE MONTHS ENDED MARCH 31, 2007 Note Nine months ended March 31, Quarter ended March 31, 2007 2006 2007 2006 --------------------------------------- Rupees ---------------------------------------- Nine months ended Quarter ended Income March 31, March 31, 2007 2006 2007 2006 Net gain / (loss) on sale of 'financial assets at fair value through profit ------------------------------------------ Rupees ----------------------------------- or loss' 137,510,000 537,503,827 66,412,515 284,114,898 Profit earned on Term Finance Certificates 36,969,429 46,815,749 11,922,177 12,930,361 Dividend income 38,027,168 27,440,520 7,467,500 9,510,960 Undistributed income brought forward Return on bank balances 13,104,663 17,471,134 5,345,210 12,826,212 at the beginning of period 95,513,167 6,288,573 9,399,280 441,278,926 Element of income and capital gains included in prices of units sold less those in units redeemed (27,479,684) 14,089,449 (23,135,743) 25,985,669 Net income / (loss) for the period 122,842,949 749,073,255 117,399,213 314,082,902 Other Income - 200,000 - - 198,131,576 643,520,680 68,011,659 345,368,101 Distribution @ 6% (2006: 20%) Declared for distribution on July 15, Unrealized gain / (loss) on 'financial 2006. (2006 : July 12, 2005) and assets at fair value through profit distributed on July 15, 2006 (2006 : or loss' 5.4 (41,826,711) 149,988,224 59,500,489 (14,895,600) July 12, 2005) (91,557,623) (316,672,053) - (316,672,053 156,304,865 793,508,904 127,512,148 330,472,501 Undistributed income carried forward 126,798,493 438,689,775 126,798,493 438,689,775 Expenses Remuneration of the Management Company 26,045,794 33,903,983 7,655,407 12,260,108 Remuneration of the Trustee 1,908,277 2,257,516 586,815 791,469 The annexed notes 1 to 12 form an integral part of these financial statements.