Press Release

JCR-VIS Upgrades Fund Stability Rating of United Growth and Income Fund

Karachi, April 25, 2013: JCR-VIS Credit Rating Co. Ltd. (JCR-VIS) has upgraded the Fund Stability Rating of United Growth and Income Fund (UGIF) to ‘BBB+(f)’ (Triple B Plus (f)) from ‘BBB-(f)’ (Triple B Minus (f)).

Given the significant provisioning made by the fund in the past two years, coupled with restructuring of some non-performing instruments; exposure of the fund to assets with weak credit risk profile has reduced on a timeline basis. At end-Mar’13, exposures with weak credit risk profile comprised less than 10% of net assets; returns on these exposures have been erratic, either on account of slight delays in repayment or instability in prices of these instruments; translating into some volatility in NAV of the fund. Risk profile of other holdings in the fund is considered sound and largely comprises assets with ratings in AA band or higher; exposures with rating in the A band comprised 7% of total assets at end-Mar’13. As an aggressive income fund, regulations allow UGIF to invest in a wide range of avenues across the credit risk spectrum; moreover, weighted average maturity of the fund’s assets can go up to five years (condition not applicable to government securities).

The fund continues to be exposed to price risk, primarily emanating from limited trading volumes in the secondary debt market, particularly for restructured debt instruments. Exposure in TFCs represented 37% of total assets at end-Mar’13. The fund also had investment in listed shares, received in lieu of settlement; while there is price volatility associated with this exposure, the same comprised mere 2% of net assets at end-Mar’13.

United Bank Limited (UBL) is the largest investor in the fund with a holding of 88% in the outstanding units. Stability in investment by UBL in the fund has provided the liquidity cushion to meet redemption pressure in a period where returns of the fund were volatile. While there is no restriction on redemption of units, issuance of fresh units of UGIF continues to be suspended.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 or fax to 35311872.



Abdur Rahim, ACII
Advisor

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