From the CEO’s desk

Fund Manager’s Report - August 2013

Economic Snapshot

Key Economic IndicatorsMar-13 Aprr-13 May-13 Jun-13 Jul-13 Aug-13Aug-12

Money Market Review

During the period under review, the international political and �nancial state of a�airs were and still are under tremendous pressure and the milieu changing rapidly with political developments around the globe.

Financial sector is always �rst to re�ect the signs of any positive or negative political developments. In the wake of the present situation around the globe the �nancial markets were of no exceptions and traders witnessed a free fall in stock exchanges and currencies, while commodities especially Gold considered to be a safe haven gave an upward move.

On the domestic front State bank of Pakistan delayed the announcement of its monetary policy and now it will be announced on FRIDAY the 13th!!!!! In�ation is inching up while PKR remains under pressure and keeps the depreciative trend.

We face a world full of “S-Curves” with continued volatility punctuated by occasional surprise, and potential “T-Junction”, where economies and markets are forced into more binary, left or right turn outcomes, in the coming months, quarters or perhaps years ahead. Though it is easy to get caught up in the fear and greed that can propel markets to the extremes and create unwelcome volatility, investors should not lose sight of their �nancial goals or the basic percepts of investing. The journey to a �nancial security is a long one. It is full of bumps and turns ……….. and the occasional in�ection point.

When you invest with PRIMUS, you invest with con�dence. We believe in a disciplined and methodical approach to investing. It is the foundation of everything we do and the best way to create long term value for investors. PRIMUS is one of the top mutual fund companies in Pakistan whose strength and credibility have made it one of the most respected �nancial institutions.

We will do our best to re�ect all this in positioning the savings and investments you have entrusted to us to manage. We will be emphasizing the importance of economic growth and work very hard to identify opportunities that remain attractive. We will seek to navigate this environment for you by maintaining a higher degree of operational agility and a solid dose of resilience.

Thank you for the trust you have placed in us. We value your con�dence, and will continue to work diligently to meet your expectations. If you have any query regarding any of your PRIMUS funds investments please contact your account manager at 0092-213-529-0006. We also invite you to visit our website www.primusinvestments.com to learn more about our fund, views and thought leadership.

• Headline inflation during August-13 has inched up to 8.55% against 8.3% in July-13. On month-on-month basis, inflation increased by 1.16% in Aug-13 as compared to 2.02% in the previous month and 0.9% in Aug-12. Non-perishable food items witnessed a surge of 8.7% and perishable items increased by 18.0% in August over last year. Core inflation, NFNE, rose by 8.5% in Aug 2013 against 8.2% last month. Average inflation in first two months of the current fiscal year (July-August) stood at 8.4% which has already started posing concerns over government budgetary targets of 8% for FY14. Moreover we believe in�ationary pressures will further shoot up on account of trickle down e�ects of power and gas tariff in coming months. Current positive Real Interest rate of 0.6% implies the likelihood of status quo in 13 Sept MPS. However with saying that we believe monetary tightening cannot be delayed beyond Nov-13 MPS

• Current Account posted a surplus of USD 46 million during July 2013 compared to a deficit of USD 427 million last year, CA surplus is attributed to 17%YoY surge in worker remittances primarily on account of Eid festival. Trade deficit narrowed by 16%YoY as export rises by 9% against import contraction of 1%. However going forward we believe this declining import trend is likely to take a U-Turn on account of soaring international oil prices. Services deficit saw a rise of 73%YoY in July-13. Whereas Overall balance of payment for 1MFY14 stands at a deficit of USD 820 million against a deficit of USD 613mn last year thus showing a marked increase of 34% this rise is solely based on troubled financial account and de�ating foreign in�ows.

• PKR has received severe battering against greenback as PKR has depreciated by 2.7% against USD in August 2013 alone consequentially taking the 8MFY13 depreciation to 7.5%. We believe this unabated

trend will cast serious pressures on in�ation and import competiveness of the country. Though a weaker rupee can give some respite to exporters but this bene�t will be o�set by costly imported inputs of manufacturing sector, thus eroding the �nancial advantage of a rupee. Also with rise in oil prices this rupee depreciation would hit as a double whammy to our already fragmented current account.

• Pakistan’s foreign exchange reserve rises by paltry USD10mn to reach USD10.39bn during August-13 from USD10.286bn in the preceding month. Foreign reserves held by the central bank are USD5.203bn whereas net foreign reserves held by banks stand at USD5.1869bn. IMF deal will provide the much needed breathing space to country’s FX reserve.

• SBP conducted Two T-Bill auctions (6th, and 21st August) with targets aimed at a total of PKR 500 billion.

• The first auction had a target of PKR 300 billion and the realized amount was PKR 195.712 billion. Cut off yields stood at, 8.9872%, 8.9836% for 3-month and 6-month no bids were received for 12 month.

• The second auction had a target of PKR 200 billion and the accepted amount was PKR 33.082 billion. Cut off yields stood at 8.9583%, 8.9892% for 3-month and 6-month respectively no bids were accepted for 12 month.

• SBP also conducted a PIB auction on 28th August, 2013 with a target of PKR 50 billion. Accepted

External Sector IndicatorsOverall Balance of Payments USD million 628 (640) (327) (150) (129) (820) n.aCurrent Account Balance USD million 1,077 (513) (354) (530) (163) 46 n.aExports USD million 2,043 2,190 2,186 2,263 2,009 2,206 n.aImports USD million 3,223 3,380 3,429 3,361 3,174 3,390 n.aWorker's Remittances USD million 1,259 1,119 1,216 1,186 1,165 1,404 n.aForeign Direct Investment USD million 2 118 232 465 129 61 n.aForeign Portfolio Investment USD million 46 29 21 (122) 22 58 n.aForex Reserves USD billion 14.86 12.25 11.81 11.47 11.02 10.29 10.39Exchange Rate against PKRUSD Month Avg. 94.47 98.06 98.31 98.43 98.69 100.55 103.17Inflation IndicatorsGeneral CPI YoY change 9.1% 6.6% 5.8% 5.1% 5.9% 8.3% 8.5%Food CPI YoY change 8.5% 6.3% 5.5% 6.5% 7.9% 9.2% 10.3%Core (NFNE) YoY change 10.8% 9.0% 8.7% 8.1% 7.8% 8.2% 8.5%Core (Trimmed) YoY change 10.6% 8.4% 7.6% 6.7% 6.8% 7.8% 7.9%Monetary GrowthBroad Money (M2) YoY growth 14.3% 15.0% 14.1% 15.7% 17.1% 16.5% 16%GoP's Borrowing from SBP YoY growth 26.1% 18.6% 20.3% 22.6% 29.4% 40.6% 82.3%Pvt. Sector Credit YoY growth 9.7% 4.6% 3.7% 2.0% -0.6% -0.9% -1.8%Interest RatesSBP Policy Rate Current 10.50% 9.50% 9.50% 9.50% 9.00% 9.00% 9.00%6 Month KIBOR Month Avg. 11.11% 9.54% 9.58% 9.60% 9.39% 9.08% 9.12%12 Month KIBOR Month Avg. 11.44% 9.88% 9.91% 9.91% 9.68% 9.24% 9.52%3 Month T-Bill Yield Month Avg. 10.97% 9.31% 9.40% 9.44% 9.30% 8.88% 8.95%6 Month T-Bill Yield Month Avg. 10.98% 9.42% 9.43% 9.39% 9.16% 8.93% 9.11%12 Month T-Bill Yield Month Avg. 11.03% 9.53% 9.51% 9.41% 9.16% 9.05% 9.42%10 Year PIB Yield Month Avg. 12.31% 12.01% 11.93% 11.27% 10.85% 11.55% 11.97%

Source: SBP, MoF, PBSn.a.=Not Available

Fund Manager’s Review

Portfolio Allocation

Credit Quality of Portfolio

Fund Objective

Fund Details

Investment Committee Members

Fund TypeCategoryFund Stability RatingBenchmark

Inception DateDealing DaysCut-o� TimePricing MechanismManagement FeeLoadRisk Pro�leListingTrustee

AuditorLegal AdvisorFund Manager

Open End

Cash49.46%

T-Bills44.46%

AA1.18%

AA+4.90%

AAA93.92%

Placement withDFIs

6.08%

Money Market

Portfolio Allocation Aug ‘13Placements with Banks/ Cash 49.46%Placements with DFIs 6.08%T-Bills 44.46%Total 100%

July ‘1387.29%6.93%5.78%100%

Credit Quality of PortfolioAAA 93.92%AA+ 4.90%AA 1.18%Total 100%

AA+ by PACRA50% 3 months PKRV + 3 months average

Ahmed AteeqRahaila AleemAli KazmiUmema A. Siddiqui

CEOCFO & Company SecretaryChief Investment O�cerFund Manager

Arfeen ZiaHaider HussainSonam Peswani

Head of RiskHead of Research

Fund StatisticsNet Asset (PKR mn)

WWF Disclosure

NAV per Unit (PKR)Weighted Average Maturity (days)Sharpe Ratio *

5,001.942100.099730

-0.7891Information RatioStandard Deviation ** Annualized

0.20700.294%

Head of Marketing, SMAs & Investor Services

deposit rate of AA & above rated Banks

1st January 2013Daily (days when Banks are open for business)

4.00 pmForward0.45%0% (Front-end) 0% (Back-end)Low RiskIslamabad Stock ExchangeCentral Depository Company of PakistanLtd.Deloitte PakistanMohsin Tayebaly & Co.Ms. Umema A. Siddiqui

During the month under review, the Fund returned 8.31% outperforming the benchmark return of 7.77% by 54 bps. Fund size continues to show improve-ment and has crossed a mark of PKR 5 billion compared to PKR 4.477 billion at the start of the month, increasing by 11.7% The Fund promises safe investment by allocating more funds to AAA class short term T-Bills that exhibit greater liquidity. The weighted average time to maturity of the Fund increased as the exposure in T-Bills was increased during the month. The WAM of the portfolio is now at 30 days. Your Fund is geared to obtain optimal returns given present market scenario.

The objective of the fund is to generate consistent returns with minimal risk by investing primarily in Government Securities, cash and near cash instru-ments

* Please note that WWF liability for PRIMUS Daily Reserve Fund till the close of �nancial year ended June 30, 2013 since inception will be borne by the management company *The scheme has maintained provision against Worker’s Welfare Fund’s liability to the tune of Rs. 1,244,500, if the same were not made the NAV per unit/year to date (YTD) return of the scheme would be higher by Rs. 0.2490/ 0.1465% enhancing the YTD return to 8.49% p.a”

Benchmark Avg. PDRF

Fund PerformanceSince Inception 9.58% 9.74% 7.89%

8.32% 8.65% 7.73%8.31% 8.63% 7.77%

July-13Aug-13*Simple Annualized**Morning Star

***Average of reporting period n.a = not applicable

PDRF* PDRF** Benchmark***

Fund Manager’s Report - August 2013Daily Reserve Fund

Head of Marketing, SMAs & Investor Services

Fund Manager’s Review

Portfolio Allocation

Credit Quality of Portfolio

Fund Objective

Fund Details

Investment Committee Members

Fund TypeCategoryFund Stability RatingBenchmarkInception DateDealing DaysCut-o� TimePricing MechanismManagement FeeLoadRisk Pro�leListingTrustee

AuditorLegal AdvisorFund Manager

Open End Placementswith DFIs19.75%

AA9.88%

AA+9.88%

AAA80.24%

T-Bills79.59%

Cash0.66%

Money Market

Portfolio Allocation Aug‘13Placements with Banks/ Cash 0.66%Placements with DFIs 19.75%T-Bills 79.59%Total 100%

July ‘137.26%

19.77%72.97%100%

Credit Quality of PortfolioAAA 80.24%AA+ 9.88%AA 9.88%Total 100%

Benchmark Avg. PCF

AAA(f ) by PACRA3 months PKRV

Ahmed AteeqRahaila AleemAli KazmiUmema A. Siddiqui

CEOCFO & Company SecretaryChief Investment O�cerFund Manager

Arfeen ZiaHaider HussainSonam Peswani

Head of RiskHead of Research

Fund StatisticsNet Asset (PKR mn)

WWF Disclosure

NAV per Unit (PKR)Weighted Average Maturity (days)Sharpe Ratio *

3,006.359100.095852

-13.8571Information RatioStandard Deviation ** Annualized

-0.69130.092%

9th August 2012Daily (days when Banks are open for business)

4.00 pmForward1.25%0% (Front-end) 0% (Back-end)Low RiskKarachi Stock ExchangeCentral Depository Company of PakistanLtd.Deloitte PakistanMohsin Tayebaly & Co.Ms. Umema A. Siddiqui

During the month of August 2013, the Fund posted a decent return of 7.27% against benchmark return of 8.95%. The portfolio is well diversified in placements with DFIs, T-Bills and cash in Bank, where the T-Bills constitute 80% of net assets, followed by Placements with DFIs of 19.75% The weighted average time to maturity of the portfolio is at 52 days. Going ahead we would continue to maintain fund asset mix optimally for maximum liquidity as well as higher returns.

The objective of the fund is to generate consistent returns with minimal risk by investing primarily in Government Securities, cash and near cash instru-ments

The scheme has maintained provision against Worker’s Welfare Fund’s liability to the tune of Rs. 5,336,890, if the same were not made the NAV per unit/year to date (YTD) return of the scheme would be higher by Rs. 0.1777 / 1.05% enhancing the YTD return to 8.41% p.a”

Fund PerformanceSince Inception 8.60% 8.57% 9.38%

7.40% 7.66% 8.88%July-137.27% 7.52% 8.95%Aug-13

*Simple Annualized**Morning Star

***Average of reporting period n.a = not applicable

PCF* PCF** Benchmark***

Fund Manager’s Report - August 2013Cash Fund

Head of Marketing, SMAs & Investor Services

Fund Manager’s Review

Portfolio Allocation

Credit Quality of Portfolio

Fund Objective

Fund Details

Investment Committee Members

Fund TypeCategoryFund Stability RatingBenchmarkInception DateDealing DaysCut-o� TimePricing MechanismManagement FeeLoadRisk Pro�leListingTrustee

AuditorLegal AdvisorFund Manager

Open End

Cash at Bank100%

Balanced Fund

Portfolio Allocation Aug‘13Placements with Banks 0%Placements with DFIs 0%

T-Bills 0%Total 100%

Cash 100%

Credit Quality of PortfolioAAA 100%AA+ 0%AA 0%Total 100%

Benchmark Avg. PSMAF

N/AKSE 100 index, 3 months PKRV

Ahmed AteeqRahaila AleemAli KazmiSalman Raza Kazmi

CEOCFO & Company SecretaryChief Investment O�cerFund Manager

Arfeen ZiaHaider HussainSonam Peswani

Head of RiskHead of Research

Fund StatisticsNet Asset (PKR mn)

WWF Disclosure

NAV per Unit (PKR)Sharpe Ratio ^^

104.864100.1207

-0.4767

Treynor Ratio^^Standard Deviation *^^

3M PKRV yield used as Risk‐Free rate. ^^ The look back period is 10 days (Since inception).* Annualized.**^R‐Square measures the correlation between the benchmark and the fund

-0.0021Beta^^ 0.5718R-Square**^ 77.94%Value at Risk 0.03%

0.26%

23rd August 2013Daily (days when Banks are open for business)

4.00 pmForward2% p.a.2% (Front-end) 0% (Back-end)Moderate to HighListing in processCentral Depository Company of PakistanLtd.Deloitte PakistanMohsin Tayebaly & Co.Salman Raza Kazmi

The Fund is relevantly young and has posted a return of 0.12% in the first ten days of its launch. We intend to increase the equity portfolio gradually. We are also keeping an eye on the political developments in Syria which will give us an opportunity to take position in Gold. Your fund is well placed with liquidity to cash in opportunities that may arise in commodity, equity or Govt. securities.

The objective of PIML-SMAF, an open-end balanced scheme, is o�ering retail and institutional clients a product that aims to maximize return and minimize risk. For this purpose, a balanced portfolio is created that has an optimal mix of equity, debt securities and commodity.

The scheme has maintained provision against Worker’s Welfare Fund’s liability to the tune of Rs. 7,924, if the same were not made the NAV per unit/year to date (YTD) return of the scheme would be higher by Rs. 0.0075 / 0.0076% enhancing the YTD return to 0.13% p.a”

AAA100%

Fund PerformanceSince Inception 0.12% 6.58%**

0.12% 6.58%**Aug-13

*Absolute Return**on Absolute basis, the benchmark return is 0.5%.

PSMAF* Benchmark

Fund Manager’s Report - August 2013Strategic Multi Asset Fund

Contact Details

Sonam Peswani Head of Marketing, SMAs & Investor ServicesNadeem A. Khan Manager Investor Services

Sha�q ur Rehman Bhatti

+922135435482+922135290006-9 (Ext 218)

Shoaib Shoukat Regional Manager Sales +922135435487+922135435485Regional Manager Sales

Beenish Jawaid Siddiqui +922135290005Regional Head Corporate Sales