MCB-Arif Habib Savings and Investments Limited

(formerly: Arif Habib Investments Limited)

Corporate Marketing Presentation

September 12, 2013

Sponsors Profile

MCB Bank Limited

MCB Bank is one of the largest commercial banks in Pakistan, with an asset base of over PKR 775.2 billion and a deposit base of over PKR 610 billion (as of 30th June 13). With a current market capitalization of around PKR 292.939 billion (as of 17th Sept 13), MCB is the largest listed bank on the Karachi Stock Exchange and has the largest free float in the market as well as one of the most actively traded stocks in the market. MCB Bank is also the 1st Pakistani bank to be listed on the London Stock Exchange through the issuance of Global Depository Receipts (GDRs). Nishat/MCB Group of Companies operates in Banking, Insurance, Power Generation, Cement, Textile, Leasing and now Dairy sector too. Most of the companies are listed in the capital markets having one of the largest private sector market capitalization in the country. Group has presence in Sri Lanka, Azerbaijan, Bahrain, UAE etc. Total Group Market Capitalization (Nishat group) stands at PKR 416.753 billion (as of 17th Sept 13)

Arif Habib Corporation Limited

Arif Habib Corporation Ltd (formerly: Arif Habib Securities Limited) is the holding company of Arif Habib Group, one of the countrys largest conglomerates. AHCLs Total Net Worth currently is around PKR 24.68 billion while its Total Assets stand at PKR 29.97 billion (as of 30th June13) Winner of KSE-Top 25 Companies award for corporate excellence many times Group subsidiary companies operate in Brokerage, Commodities, Energy sectors while associated companies operate in Microfinance Banking, Fertilizer, Dairy, Cement and Steel sectors. AH group has presence in UAE & Sri Lanka. Total Group Market Capitalization stands at over PKR 73.936* billion (as of 17th Sept 13)
* Excluding Thatta Cement which is being divested.

The Organization

MCB-Arif Habib Savings

Asset Management, Investment Advisory & Pension Funds Management Company (registered with & licensed by SECP) Listed on Karachi Stock Exchange with Paid Up Capital of PKR.720 million and equity base of PKR 1.27 Billion Joint Venture between MCB Bank and Arif Habib Corporation. MCB Bank holds 51.33%, while Arif Habib Corporation holds 30%. Current Assets Under Management over PKR 40 billion. Over 53,000 clients in & outside Pakistan (highest in private sector) One of the highest ever assigned Management Quality rating of AM2 (by PACRA).

 Firsts by MCB-Arif Habib Savings

What sets us Apart? -1

Private sector Equity fund in 2002 (PSM), which has delivered an absolute return of 1,410.2% since inception (2002), outperforming KSE-100 by 262.2% and the only state owned peer fund by a significant margin Fixed Income Fund in 2002 (PIF), which has consistently outperformed its benchmark and most of fixed income avenues/peer funds Launched countrys first Govt. Bond Fund (MSF-Perpetual) in 2003 Administrative investment plan in 2002 Govt. Bond Fund i.e. MetroBank Pakistan Sovereign Fund in 2003 Introduced countrys first AAA rated Money Market Fund (i.e. PCF) Introduced countrys first Index Tracker Fund based on an index provided by an international indices provider (i.e. Arif Habib Dow Jones SAFE Pakistan Titans 15 Index Fund-AHDJPF) First AMC to launch ATM withdrawal facility in 2004 First AMC to introduce web based e-statements for clients First AMC to introduce monthly Fund Managers reports and daily NAV by sms First one to initiate video FMR and webinar

What sets us Apart? -2

Core management team intact since long (key management consists of long-serving MCBAH & MCBAMC employees) High performance culture Performance of our Pension Funds and MCB Dynamic Stock Fund ranked among the worlds top 100 funds in 2012 according to an independent study Many best practices at MCBAH became part of NBFC & NE regulations enacted by SECP Largest product range (Funds/investment plans) catering to all segments

Mission & Vision

Our Mission To become a preferred Savings and Investment Manager in the domestic and regional markets, while maximizing stakeholders value Our Vision To become synonymous with Savings

Board of Directors
Mian Mohammad Mansha Chairman Mr. Nasim Beg - Executive Vice Chairman Mr. Yasir Qadri, Chief Executive Officer & Director Dr. Salman Shah Director Mr. Haroun Rashid Director Mr. Ahmed Jahangir Director Mr. Samad A. Habib Director Mirza Mahmood Ahmad - Director

Key Management
Name
Mr. Yasir Qadri Mr. Saqib Saleem, ACA Mr. Kashif Rafi Mr. Tanweer Ahmad Haral Mr. Muhammad Asim, CFA Mr. Umair Ahmed, ACA Syed Asif Mehdi, ACA Mr. Jamshed A. Khan Mr. Arif Maniar Mr. Yousuf Durvesh Mr. Mohsin Pervaiz

Designation
Chief Executive Officer SVP- COO & Company Secretary SVP-Head of Fixed Income SVP-Head of Sales & Marketing VP-Head of Equities VP CFO , Head of Fund Accounting & Special Mandates VP-Head of Internal Audit & Compliance VP- Head of Investment Advisory VP-Head of Corporate Sales (South) VP-National Business Manager (Direct Retail channel) VP-Investments

Total Experience (yrs)

15 13 15 17 8 10 14 14 26 35 20

Experience in industry (yrs)

11 9 11 8 6 5 8 7 8 8 10

Our Investment Philosophy

Macroeconomic view on the Country

Monitor Sector Fundamentals

We believe in a comprehensive top-down fundamental approach, which, harnessed by our in-house research process, can provide superior risk-adjusted returns. We believe in focusing our portfolio in the most attractive investment ideas so as to create value for our investors.
Macroeconomic Environment Asset Classes Microenvironment Instruments Major Investment Valuation Models Include Absolute Valuation and Relative Valuation Techniques using PE, PBV, Dividend Yield, Earning Yield, RI, EVA , MVA and DCF (used dominantly) using FCFE, FCFF & DDM, DDDM

Select instruments based on fundamental analysis Keep Benchmark in mind, but take aggressive overweight or underweight positions based on view

Performance In The Rough

Performance in the Rough Equity

Our Performance in Times of High Volatility Representative Asset Class Funds. While global market volatility on the rise since 2007, our stock market related funds have consistently outperformed broad indices as well as peer funds. Equity Markets Crash of 2008 and Rebound Local Equity Market peaked in April 2008 at record index level of 15,600 and made a low of near 4,800 afterwards. Since then market has recovered some of its losses and its new recovery peak has been seen recently at around 11,200 in Nov-2010. MCB Stock Fund during the crash phase, remained among the lowest burnt while also remained among the top funds in recovery as well. Performance during this path from 2008 peak to recovery until November 2010 demonstrates our fund management capability relative to our benchmark and peers in the industry and is being illustrated on the following graphs & statistics.

Long-term Performances Equity

Long-Term Performance of flagship Equity Funds Pakistan Stock Market Fund has generated a total return of 1282.2% in last ten & half years outperforming KSE-100 by significant margin of 198.8%, while Dynamic Stock Fund has been able to outperform its benchmark by staggering 174.1% since its inception
Absolute return over past 365 days (as on Aug 29, 2013) 133.7% 98.9% 200.3% 23.1% Total Return (since the funds inception) 1282.2% 1083.4%
(since PSM inception)

Equity Funds vs. Indices Pakistan Stock Market Fund (Inception: March 11, 2002) KSE-100 MCB Dynamic Stock Fund (Inception: March 01, 2007) KSE-30

196.9% 22.8%
(since DSF inception)

Performance in the Rough Equity

Relative Performance in The Stock Market Crash of 2008
Equity Funds Returns 18-Apr-08 till 26-Jan-09
-46.0% -46% -51.0% -53% -56% -61.0% -60% -63% -63% -64% -64% -65% -66% -68% -68% -69% -71%

-56.0%

Returns

-66.0%

-71.0%

MCB-DSF

PSMF

MIF

CDF

NIT

UTPA30+F

AKDITF

HBLSF

AKDOF

KSE-100

NSF

-76.0%

KASBSF

KSE-30

ASMF

USAF

APSF

-75%

Performance in Recovery Equity

Equity Funds - Performance in Recovery After Worst Period of Stock Market
125%

Equity Funds Returns 26Jan-09 till 18-Dec-09

120% 118% 113% 108%

120.0%

110.0%

100.0%

96% 91% 87% 82% 80% 80% 77% 73% 71% 68% 66% 61%

Returns

90.0%

80.0%

70.0%

60.0%

MCB-DSF

PSMF

IGISF

MIF

CDF

UTPA30+F

AKDITF

NIT

KSE-100

KASBSF

AKDOF

KSE-30

HBLSF

ASMF

USAF

AGAF

NSF

50.0%

Equity Funds - Performance in the complete cycle of market collapse and recovery (April 2008 to Feb 2011)
20.00%

Performance in Complete Cycle Equity

11.00%

10.00%

0.00%

8.45%

-2.03%

-20.00%

-10.46%

-10.00%

-4.90%

-21.37%

-24.26%

-27.87%

-29.47%

-30.00%

-24.53%

MCB-DSF

PSMF

CDF

HBLSF

NIT

KSE-100

AKDOF

ASMF

USAF

KASBSF

NSF

-50.00%

KSE-30 -38.49%

-40.00%

-36.12%

Fixed Income Markets Corporate Credit Weakening

Performance in the Rough Fixed Income

Debt Markets in Pakistan though are insulated from Credit Crises that emerged in the leading economies in the form of Collapse of CDOs and Sub-Prime Mortgage, however corporate bonds felt the heat because of challenges on both macro and micro economic levels . Majority of Fixed Income Funds being investors of Corporate Bonds (TFCs) faced severe write downs and losses. Naturally, allocation to Weaker Credit Quality Institutions was penalized by market in terms of falling Bond Prices. Where price discovery hindered, regulator enforced mandatory provisioning requirements. On Nov 04, 2008 SECP (Apex regulator) forced Fixed Income Funds to make mandatory provisions according to the credit quality buckets. The TFC crises that began in Oct-08 continued to affect the performance in the days to come. Around the same quarter, credit placements for stock market investors (suspended subsequently by the regulator) also tainted the portfolio performance. On the following pages a snapshot of our relative performance since Oct-2008 (when heat began to threaten fixed income markets) to November 2010 also highlights our ability to sail through turbulent times

Long-term Performance Fixed Income

Long-Term Performance of flagship Income Funds MCB Dynamic Cash Fund, the fixed income fund managed by MCB AMC and Pakistan Income Enhancement Fund (PIEF) managed by MCB-Arif Habib Savings were among the least burnt funds due to these provisioning requirements.

Fund MCB Dynamic Cash Fund

(Inception: March 01, 2007)

Absolute return over past 365 days (as on Aug 29, 2013) 14.1% 12.7%

CAGR (since the funds inception) 10.5% 10.2%

Pakistan Income Fund

(Inception: March 11, 2002)

Fixed Income Funds - Performance since the Corporate Debt Failures Started to affect markets in Pakistan (October 2008 to Feb 2011)
20% 15% 10% 5% 0%

Performance after financial markets crisis Fixed Income

16.9% 12.0%

11.9%

11.2%

8.3%

7.5%

MCB DCF and PIF were not far behind

10.1%

9.8%

5.3%

2.6%

2.1%

1.0% -0.6%

-1.0%

-1.3%

PIEF turned out to be-10% the star for 2008-09

-15% -20%

-4.9%

-5%

-3.6%

MCB DCF absorbed the portfolio due to better portfolio alignment

-7.1% KASBLF-16.0% IGI-AIF

MCB-DCF

IGIIF

DMMF

PIEF

UGIF

FHIF

NCF

NIF

PIF

BMA-CRSF

AGIMF

HBL IF

AKDIF

JSIF

JSAIF

AskIF

AIF

Products & Services

Funds Category wise

Money Market Funds

Debt based Open-End Mutual Funds

Pakistan Cash Management Fund is the countrys first AAA(f) rated Fund based on Treasury Bills only (AUM Rs. 3.175 billion, inception: 20th March 2008). CAGR 10.8%. MCB Cash Management Optimizer is a flexible Money Market Fund rated: AA+(f) (AUM Rs. 12.76 billion, inception: 1st October: 2009). CAGR 10.6%. Both Funds are eligible as collateral against KSE exposure and for bank guarantees Countrys first income scheme, Pakistan Income Fund is the only Income fund eligible for statutory reserve requirements for insurance companies (AUM Rs.1.029 billion, inception 11th March 2002). CAGR since inception 10.2%. MCB Dynamic Cash Fund is one of markets least volatile income fund with over 50% retail investors (AUM Rs. 10.437 billion, inception: 1st March 2007). CAGR 10.5%. Metrobank-Pakistan Sovereign Fund (Perpetual), first Govt. Bond Fund of the country outperformed peer funds this year too with a big lead (AUM Rs. 1.099 billion, inception: 1st March 2003). CAGR 6.8% since inception, 4.1% p.a. return since July 2013.

Income Funds

Aggressive Income Fund

Pakistan Income Enhancement Fund ranks among markets best performing aggressive income schemes (AUM Rs. 1.255 billion, inception 28th August 2008). CAGR 11.8%.

Funds Category
Equity Funds

Open-End Equity Mutual Funds

MCB Dynamic Stock Fund had the distinction to be the only equity fund awarded 5-Star ranking by PACRA for two consecutive times 2010-2011. MCB-DSF has generated YTD13 return of 3.9% and 196.9% since inception (AUM Rs. 0.966 billion, inception 1st March 2007). This fund has been rated among 100 best performing equity funds of the world in 2012 with 54.6% return for the year 2012. Pakistan Stock Market Fund, has an 11 year performance history with big lead over KSE100 & NI(U)T, is the only equity fund eligible for statutory reserve requirement for insurance companies. Has delivered absolute return of 1,282.2% since inception.(AUM Rs. 1.204 billion, inception 11th March 2002) Pakistan Premier Fund has an accomplished return track record (converted from closed end to Open end) outperforming KSE-100 by 99% since inception (AUM Rs. 0.560 billion, inception 1st January 2003). YTD13 return 13.6% Pakistan Strategic Allocation Fund, another successful equity fund is based on a quantitative model. PSAF was converted from closed end to Open end in 2010 (AUM Rs. 0.324 billion, inception 11th September 2004). YTD13 return of 6.5%.

Funds Category wise

Balanced Fund

Open end Hybrid Mutual Funds

Pakistan Capital Market Fund converted form closed end to Open end Fund is a leading Balanced Fund by achieving an absolute YTD13 return of 3.4% and 261.7% since inception (AUM Rs. 0.414 billion, inception: 24th January 2004) MCB Dynamic Allocation Fund has generated an absolute YTD13 return of 1.0% and 23.7% return since inception (AUM Rs. 0.590 billion, inception 17th March 2008)
Pakistan Pension Fund (conventional) was introduced in 2007 under Voluntary Pension System Rules, 2005. PPF has 3 sub Funds (Money Market, Debt & Equity). Investor can choose from 10 different allocation plans. Well structured Income Payment Plan caters to post retirement needs (AUM Rs.0.428 billion, inception 29th June 2007). Equity pool of this fund has been rated among 100 best performing equity funds of the world in 2012 with 60% return.

Asset Allocation Fund

Pension Fund (VPS) - conventional

Investment Plans

A number of investment & saving plans designed to meet unique investment needs of almost everyone

Islamic Funds (shariah compliant)

Islamic Income Fund
MCB Islamic Income Fund is being managed like a Govt. Sukuk Fund with almost Zero credit risk (AUM Rs.2.648 billion, inception: 20th June 2011). CAGR 9.5% since inception. Dr. Muhammad Zubair Usmani is the Funds Shariah advisor. Pakistan International Element Islamic Fund is one of the very few funds allowed to invest abroad. (AUM Rs. 0.244 billion, inception: 2nd May 2006). Funds Shariah counsel is chaired by Justice (Retd.) Mufti Muhammad Taqi Usmani. YTD13 return of 3.4% and 93.8% return since inception. Pakistan Islamic Pension Fund (Shariah compliant) was introduced in 2007 under Voluntary Pension System Rules, 2005. PIPF has 3 sub Funds (Money Market, Debt & Equity). Investor can choose from 10 different allocation plans. Well structured Income Payment Plan caters to post retirement needs (AUM Rs. 0.244 billion, inception 15th November 2007). Funds Shariah counsel is chaired by Justice (Retd.) Mufti Muhammad Taqi Usmani. Equity pool of this fund has been rated among 100 best performing equity funds of the world in 2012 with 55% return. We manage two Voluntary pension Funds (conventional and Islamic both) since 2007 being one of the first four licensees

Islamic Asset Allocation Fund

Islamic Pension Fund (VPS)

Voluntary Pension Schemes

VPS is a private Defined Contribution Pension scheme under Securities and Exchange Commission of Pakistans (SECP) enacted VPS Rules, 2005. This scheme was declared one of the best private pension structure in the world by World Bank team. MCBAH is one of the few Asset Management Companies licensed by the SECP to manage this scheme. Members of our board were among the major proponents and architects of this scheme. Though VPS is still in its initial stage of popularity, we are proud to be one of the top performing Pension funds with more than 550 retail accounts. Separate, Independent Trustee & Custodian to look after the investors' interest Voluntary systematic flexible saving cum investment plans Choice between 6 different Conventional & Islamic plans (MCBAH is the only AMC that offers two additional Life-cycle plans) Tax Advantages tax credit/rebate, tax free gains/profits as well as tax free commutation of 50% accumulated fund at the time of retirement from scheme, retirement income also tax free (if invested for at least 10 years in VPS). Withdrawal of PF balances transferred to VPS also made tax exempt in latest Finance bill 2013. After Retirement: Option between Income Drawdown plan & Annuities

Investment Advisory/Portfolio Management Services

Our specialized portfolio management product Portfolio Asset and Liability Management Services (PALMS) draws upon our teams research and fund management acumen to deliver best results for clients portfolios within the parameter of their defined investment policy. Ideally suited to management of employee benefit funds of large organizations. We currently manage aggregate portfolio size of over Rs. 4.165 billion in 12 Special mandates Licensed by the Securities and Exchange Commission of Pakistan (www.secp.gov.pk ) Separate, Independent Trustee & Custodian to look after the investors' interest Complete back-office service with periodic performance reporting (optional) Specific to employee benefit funds: Customized/cost effective investment solution for Provident/Gratuity/Superannuation funds Analyzing risk appetite and determining asset allocation based on factors like employees' average age, increments, historic retention, inflation, interest rates, etc. Hassle-free loans and final settlements administered by us Individual employees' statements through unitization of the pool Performance based Advisory Fee structure

Pakistans Asset Management Industry

Similar to many regional markets, Asset Management remained mainstay of Public Sector until the mid 90s when private sector AMCs began with the launch of Closed End Funds Inflection point for Growth of Private Sector AMCs coincided with the start of Golden Phase for Domestic Economic Growth in 2002-03 & Industry continued to growth faster than Domestic Economic Growth Private sector now adds over 85% to the total industry size of Rs. 330 billion The Industry comprises over 30 Asset Management Companies and 140 plus funds
30-Jun 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 AUMS In 31 40 83 154 200 252 473 466 239 222 260 330 Billion Rs. No. of Open 2 4 13 17 19 23 49 67 81 105 132 140 End Funds

Presented by: Tanweer Ahmad Haral

Head of Sales & Marketing tanweer.haral@mcbah.com