Unit Trust of Pakistan Half Yearly Report for the period ended December 31, 2010

Transcription

1 Half Yearly Report for the period ended December 31, Managing Mutual Funds Better!

2 CONTENTS Vision and Mission Statement...02 Organization...03 Director's Report to the Unit Holders...04 Trustee Report to the Unit Holders...05 Auditors' Report to the Unit Holders on Review of Interim Financial Information...06 Condensed Interim Statement of Assets and Liabilities...07 Condensed Interim Income Statement...08 Condensed Interim Statement of Comprehensive Income...09 Condensed Interim Cash Flow Statement...10 Condensed Interim Statement of Movement in Unit Holders' Fund...11 Condensed Interim Distribution Statement...12 Notes to the Condensed Interim Financial Statments

3 In July,, the Board of Directors of JS Investments Limited adopted the sustainable growth initiative "JSIL Onwards ~"proposed by the newly appointed CEO. The revised Vision, Mission, and Statement of Broad Policy Objectives of JS Investments form the bedrock of "JSIL Onwards ~" and have been framed after a thorough S.W.O.T. Analysis of the Company and assessment of the Macroeconomic and Financial Market Trends. VISION To be recognized as a responsible asset manager respected for continuingly realizing goals of its investors. MISSION To build JS Investments into a top ranking Asset Management Company; founded on sound values; powered by refined knowhow; supported by a committed team operating within an accountable framework of social, ethical and corporate responsibility a strong and reliable institution for its shareholders to own; an efficient service provider and value creator for clients; an exciting and fulfilling work place for employees; and a participant worth reckoning for competitors. BROAD POLICY OBJECTIVES Value creation for clients on a sustainable basis Maintain high standards of ethical behaviors and fiduciary responsibility Manage Investments with Prudence and with the aim of providing consistent returns better than that of peers Take Products and Services to the People; Create awareness on understanding financial goals, risks and rewards Professional Excellence Adapt, Evolve and Continuously Improve Maintain highly effective controls through strong compliance and risk management A talented, diligent and diverse HR 02

4 ORGANIZATION Management Company JS Investments Limited 7th Floor, The Forum, G20 KhayabaneJami, Block9, Clifton Karachi75600 Tel: (9221) Fax: (9221) Website: Board of Directors Munawar Alam Siddiqui Chairman Rashid Mansur Chief Executive Officer Suleman Lalani Executive Director Nazar Mohammad Shaikh Lt.General (R) Masood Parwaiz Sadeq Sayeed Mazharul Haq Siddiqui (Subject to approval of SECP) Audit Committee Nazar Mohammad Shaikh Chairman Munawar Alam Siddiqui Member Lt.General (R) Masood Parwaiz Member Chief Financial Officer & Company Secretary Trustee Auditors Suleman Lalani Central Depository Company of Pakistan Limited CDC House, 99B, Block 'B', S.M.C.H.S., Main SharaheFaisal, Karachi74400 Pakistan. Tel: (9221) Fax: (9221) Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants Legal Adviser Transfer Agent Bawaney & Partners Technology Trade (Private) Limited 241C, Block 2, P.E.C.H.S, Karachi Tel: (9221) Fax: (9221)

5 DIRECTORS' REPORT TO THE UNIT HOLDERS The Board of Directors of JS Investments Limited has pleasure in presenting to you the unaudited financial statements of for the half year ended December 31,. Market Review The equity market depicted robust performance during the halfyear ended December 31, represented by a significant rise of 21% in the KSE30 index. Heavy discount to regional markets coupled with relative exchange rate stability have been key reasons behind a USD 249mn foreign inflow which led to this significant improvement. Investor confidence was largely restored towards the latter half of the six month period in the postcgt (Capital Gains Tax) era, when volumes recovered sharply to average 90.6mn shares as opposed to 46.0mn shares in the earlier half, representing an increase of 98%. Earlier, the fiscal year had started on the worst note possible, with Pakistan witnessing the most damaging floods in its history. World Bank and the Asian Development Bank estimated the losses rendered through the catastrophe to equal USD 9.7bn with the agricultural sector being the worst affected. Meanwhile inability of the authorities to get the implementation of RGST underway, along with high power sector subsidies and delay in foreign aid flows culminated in continued government borrowings from the SBP to the tune of PKR 168bn. In turn higher government borrowings along with increased food prices, power tariffs and petroleum prices, led to a sharp increase in the rate of inflation to 14.6% from 12.3% at the start of the year, despite the central bank raising its policy rate cumulatively by 150bps during the interval. However the economy sought some relief as the situation of the country's current account continued to strengthen, culminating in an overall positive current account balance of USD 26mn for the period JulDec '10. This was owing to a surge in exports and a relative lower increase in imports along with consistent inflow of robust remittances and higher CSF receipts. Consequently, the PKR devalued only slightly by 1% against the USD during the 6 month period, the lowest rate of depreciation since 1HFY08. Combined with a steep discount of close to 50% to average regional market valuations on PER basis, the local markets experienced heavy FPI inflows which drove the market index upwards. Fund Performance The Fund earned a net income of Rs million during the period under review compared to net income of Rs million during the same period last year. The net assets of the Fund were Rs. 1, million as on December 31, compared to Rs. 2, million as on June 30, showing a decrease of 18.68%. The net asset value (NAV) per unit as on December 31, was Rs compared to Rs per unit as on June 30,. The Fund outperformed its benchmark return by 0.4% during the period ended December 31,. Fund and Asset Manager Rating The matter of mutual funds performance ratings by a rating agency is presently under discussion between MUFAP, SECP and the country's two rating agencies. Updated Fund rating will be announced by the Management Company once a conclusion is reached on the same. JCRVIS Credit Rating Company Limited has assigned Management Quality Rating of "AM2"(AMTwo Minus) to JS Investments Limited. The rating denotes high management quality of the Management Company. Acknowledgment We wish to express our gratitude to the employees of the Management Company and the Trustee for their dedication and hard work and the unit holders for their confidence in the Management. On behalf of the Board Karachi: February 15, 2011 Rashid Mansur Chief Executive Officer 04

6 JS Fund of Funds TRUSTEE REPORT TO THE UNIT HOLDERS Report of the Trustee pursuant to Regulation 41(h) of the NonBanking Finance Companies and Notified Entities Regulations, The (the Fund), an openend scheme was established under a trust deed dated April 26, 1997, executed between JS Investments Limited, as the Management Company and Muslim Commercial Financial Services (Private) Limited (MCFSL), as the Trustee. As per deed of change of trustee and amendment of trust deed dated June 11, 2005 MCFSL retired as the trustee and Central Depository Company of Pakistan Limited was appointed as the Trustee of the Fund. In our opinion, the Management Company has in all material respects managed the Fund during the period from July 01, to December 31, in accordance with the provisions of the following: (i) Limitations imposed on the investment powers of the Management Company under the constitutive documents of the Fund; (ii) The pricing, issuance and redemption of units are carried out in accordance with the requirements of the constitutive documents of the Fund; and (iii) The NonBanking Finance Companies (Establishment and Regulations) Rules, 2003, the NonBanking Finance Companies and Notified Entities Regulations, 2008 and the constitutive documents of the Fund. Karachi, February 17, 2011 Muhammad Hanif Jakhura Chief Executive Officer Central Depository Company of Pakistan Limited 05

7 AUDITORS' REPORT TO THE UNIT HOLDERS ON REVIEW OF INTERIM FINANCIAL INFORMATION Introduction We have reviewed the accompanying condensed interim statement of assets and liabilities of as at and the related condensed interim statements of income, comprehensive income, cash flows, movement in unit holders' fund and distribution, together with the notes forming part thereof (hereinafter referred to as "interim financial information") for the sixmonths' period then ended. Management Company (JS Investments Limited) is responsible for the preparation and presentation of this interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Emphasis of Matter Without qualifying our conclusion, we draw attention to note 9 to the condensed interim financial statements which explains the reasons for reversal of provision during the period on account of contribution to the Workers' Welfare Fund amounting to Rs.6,868,106. In this regard, the Management Company of the Fund expects that the constitutional petition pending in the Honorable High Court of Sindh on the subject will be decided favorably. Karachi: February 15, 2011 Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants 06

8 CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES AS AT 31, DECEMBER 31, December 30, June Note...Rupees... Assets (Unaudited) (Audited) Bank balances 4 89,446,832 93,940,087 Receivable against sale of securities 4,126,668 21,945,271 Investments 5 1,870,287,539 2,269,107,008 Dividend receivable 15,406,223 Accrued markup / interest 6,801,010 13,722,932 Deposits, prepayments and other receivables 3,513,689 3,420,242 Total assets 1,974,175,738 2,417,541,763 Liabilities Remuneration payable to the Management Company 426, ,752 Remuneration payable to the Trustee 268, ,800 Payable against purchase of securities 14,672, ,362 Accrued and other liabilities 2,351,471 10,480,536 Total liabilities 17,719,962 11,549,450 Net assets 1,956,455,776 2,405,992,313 Unit holders' fund 1,956,455,776 2,405,992,313 Number of units in issue 18,778,928 23,269,764 Net asset value per unit Contingency 9 The annexed notes from 1 to 13 form an integral part of these condensed interim financial statements For JS Investments Limited (Management Company) Rashid Mansur Chief Executive Officer Munawar Alam Siddiqui Chairman 07

9 CONDENSED INTERIM INCOME STATEMENT (UNAUDITED) FOR THE HALF YEAR ENDED 31 DECEMBER Income Note Half year ended Rupees... Quarter ended Rupees... Markup / interest income on bank balances and investments 6 52,350,438 94,107,646 28,659,428 50,199,523 Dividend income 48,733,294 41,840,780 26,629,466 24,812,780 Net gain / (loss) on investments at fair value through income statement 7 263,332, ,338, ,434,158 (51,314,002) Net loss on availableforsale investments 8 (37,493,634) (5,636,640) (895,610) (5,952,622) Element of (loss) / income and capital (loss) /gain included in prices of units sold less those in units redeemed net (17,490,515) 1,714,905 (15,647) (5,748,196) 309,432, ,365, ,811,795 11,997,483 Expenses Remuneration of the Management Company 23,165,829 32,859,786 11,324,252 17,226,757 Remuneration of the Trustee 1,662,440 2,147, ,291 1,113,182 Annual fee of Securities and Exchange Commission of Pakistan 992,341 1,396, , ,993 Fee to National Clearing Company of Pakistan Limited 115, ,780 66,031 92,359 Securities transactions cost 2,726,311 9,046,895 1,536,687 4,010,474 Listing fee 17,982 20,177 8,336 12,633 Bank charges 106, ,852 53, ,458 Auditors' remuneration 346, , , ,095 Printing, stationery and postage 100, ,536 47,594 53,268 Reversal of Contribution to Workers Welfare Fund 9 (6,868,106) 22,365,651 46,361,724 14,531,052 23,566,219 Net income / (loss) for the period 287,066, ,003, ,280,743 (11,568,736) The annexed notes from 1 to 13 form an integral part of these condensed interim financial statements. For JS Investments Limited (Management Company) Rashid Mansur Chief Executive Officer Munawar Alam Siddiqui Chairman 08

10 CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE HALF YEAR ENDED 31 DECEMBER Half year ended Rupees... Quarter ended Rupees... Net income / (loss) for the period 287,066, ,003, ,280,743 (11,568,736) Other comprehensive income Net unrealised gain on revaluation of availableforsale investments 1,199,207 26,431,077 1,260,929 26,211,426 Transferred to income statement upon disposal of availableforsale investments (2,500,926) 5,907, ,818 5,907,218 (1,301,719) 32,338,295 1,887,747 32,118,644 Total comprehensive income for the period 285,765, ,342, ,168,490 20,549,908 The annexed notes from 1 to 13 form an integral part of these condensed interim financial statements. For JS Investments Limited (Management Company) Rashid Mansur Chief Executive Officer Munawar Alam Siddiqui Chairman 09

11 CONDENSED INTERIM CASH FLOW STATEMENT (UNAUDITED) FOR THE HALF YEAR ENDED 31 DECEMBER Cash flows from operating activities Rupees... Net income for the period 287,066, ,003,800 Adjustments for: Markup / interest income on bank balances and investments (52,350,438) (94,107,646) Dividend income (48,733,294) (41,840,780) Net gain on sale of investments (60,412,490) (379,764,372) Net loss on investments availableforsale 37,493,634 5,636,640 Net unrealised gain on revaluation of investments (202,920,400) (229,574,461) Element of loss / (income) and capital loss / (gain) included in prices of units sold less those in units redeemed net 17,490,515 (1,714,905) (309,432,473) (741,365,524) Decrease / (increase) in assets Receivable against sale of securities 17,818,603 Deposits, prepayments and other receivables (93,447) (4,753) 17,725,156 (4,753) Increase / (decrease) in liabilities Remuneration payable to the Management Company 30,909 (4,362,037) Remuneration payable to the Trustee (13,898) 50,610 Payable against redemption of units (6,490,848) Payable against purchase of securities 14,282,566 57,429,255 Accrued and other liabilities (8,129,065) (1,845,945) 6,170,512 44,781,035 1,530,017 (1,585,442) Sale of investments 4,101,798,691 3,687,268,708 Purchase of investments (3,478,441,685) (3,501,372,989) Markup / interest income on bank balances and investments 59,272, ,043,298 Dividend received 64,139,517 41,200,903 Net cash inflow from operating activities 748,298, ,554,478 Cash flows from financing activities Proceeds from issue of units 3,547, ,698,423 Payments on redemption of units (756,340,044) (544,722,293) Net cash used in financing activities (752,792,155) (296,023,870) Net (decrease) / increase in cash and cash equivalent (4,493,255) 29,530,608 Cash and cash equivalent at the beginning of the period 93,940, ,419,371 Cash and cash equivalent at the end of the period 89,446, ,949,979 The annexed notes from 1 to 13 form an integral part of these condensed interim financial statements. For JS Investments Limited (Management Company) Rashid Mansur Chief Executive Officer Munawar Alam Siddiqui Chairman 10

12 CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUNDS) (UNAUDITED) FOR THE HALF YEAR ENDED 31 DECEMBER Rupees... Net assets as at the beginning of the period 2,405,992,313 2,929,235,395 Issue of 3,179,909 * (2009: 2,224,698) units 3,547, ,698,423 Redemption of 7,670,745 (2009: 5,202,085) units (756,340,044) (544,722,293) Element of loss / (income) and capital loss / (gain) included in prices of units sold less those in units redeemed net 17,490,515 (1,714,905) Net income for the period 287,066, ,003,800 Other comprehensive (loss) / income for the period (1,301,719) 32,338,295 Total comprehensive income for the period 285,765, ,342,095 Net assets as at the end of the period 1,956,455,776 3,358,838,715 * Including 3,141,801 (2009: Nil) units issued as bonus units during the period. The annexed notes from 1 to 13 form an integral part of these condensed interim financial statements. For JS Investments Limited (Management Company) Rashid Mansur Chief Executive Officer Munawar Alam Siddiqui Chairman 11

13 CONDENSED INTERIM DISTRIBUTION STATEMENT (UNAUDITED) FOR THE HALF YEAR ENDED 31 DECEMBER Rupees... Accumulated loss brought forward (332,525,581) (669,062,812) Rs per unit declared on July 09, (2009: Nil) (286,218,092) Net income for the period 287,066, ,003,800 (Accumulated loss) / undistributed income carried forward (331,676,851) 25,940,988 The annexed notes from 1 to 13 form an integral part of these condensed interim financial statements. For JS Investments Limited (Management Company) Rashid Mansur Chief Executive Officer Munawar Alam Siddiqui Chairman 12

14 NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE HALF YEAR ENDED 31 DECEMBER 1. LEGAL STATUS AND NATURE OF BUSINESS 1.1 (the Fund) was established under the Trust Deed executed on 26 April 1997 between JS Investments Limited as its management company and MCB Financial Services Limited as its trustee. The Fund was approved as an investment scheme by the Securities and Exchange Commission of Pakistan (SECP) on 09 June 1997 in accordance with the Asset Management Companies Rules, 1995 [subsequently repealed and replaced by the NonBanking Finance Companies (Establishment and Regulation) Rules, 2003]. Central Depository Company of Pakistan Limited was appointed as trustee of the Fund on 11 June 2005 after voluntary resignation of MCB Financial Services Limited. The registered office of the Management Company is situated at 7th floor, The Forum, Clifton, Karachi, Pakistan. 1.2 The Fund is an open ended mutual fund and offers units for public subscription on a continuous basis. The units are transferable and can also be redeemed by surrendering them to the Fund. The units are listed on the Lahore Stock Exchange. As per offering document, the Fund shall invest in equity securities as well as debt securities including government securities, commercial papers and various other money market instruments. 2. BASIS OF PREPARATION 2.1 These condensed interim financial statements have been prepared in accordance with International Accounting Standard 34 " Interim Financial Reporting" as applicable in Pakistan. 2.2 These condensed interim financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the financial statements of the Fund for the year ended 30 June. 2.3 These condensed interim financial statements are unaudited but subject to limited scope review by the auditors. 3. ACCOUNTING POLICIES The accounting policies adopted for the preparation of these condensed interim financial statements are consistent with those followed in the preparation of the Fund's annual financial statements for the year ended 30 June. The Fund has adopted the following amended IFRS and IFRIC interpretation which became effective during the period: IAS 32 Financial Instruments: Presentation Classification of Rights Issues (Amendment) IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments In April 2009, the IASB issued amendments to various standards primarily with a view to removing inconsistencies and clarifying wording. These improvements are listed below: IFRS 5 NonCurrent Assets Held for Sale and Discontinued Operations IFRS 8 Operating Segments IAS 1 Presentation of Financial Statements IAS 7 Statement of Cash Flows IAS 17 Leases IAS 36 Impairment of Assets IAS 39 Financial Instruments: Recognition and Measurement The adoption of the above standards, amendments / improvements and interpretations did not have any effect on these condensed interim financial statements. 13

15 4. BANK BALANCES Note 30 June...Rupees... UnAudited Audited Current account 5,000 PLS savings accounts ,446,832 93,935,087 89,446,832 93,940, These carry rates of return ranging from 5% to 11.90% (30 June : 5% to 11.25%) per annum. 5. INVESTMENTS At fair value through income statement Heldfortrading Listed shares 5.1 1,365,477,736 1,258,605,922 Designated at fair value through income statement Listed term finance certificates 5.2 4,992,885 10,383,642 Unlisted term finance certificates ,005 4,992,885 10,447,647 Available for sale 1,370,470,621 1,269,053,569 Listed term finance certificates ,126,659 80,744,852 Unlisted term finance certificates ,140,610 48,024,927 Government securities ,762, ,158,520 Sukuks ,787, ,125, ,816,918 1,000,053,439 Carrying value of investments as at 1,870,287,539 2,269,107,008 Cost of investments as at 1,726,989,577 2,343,140,987 14

16 5.1 Listed shares At the beginning of the period Acquired during the period (Ordinary shares of face value of Rs. 10/ each unless stated otherwise) Number of shares Bonus shares received during the period Disposed during the period At the end of the period Carrying value as at Rupees % of net assets % of investee capital Oil and gas Attock Petroleum Limited (a related party) Attock Refinery Limited Pakistan Oilfields Limited Pakistan Petroleum Limited Pakistan State oil Company Limited Shell Pakistan Limited Chemicals Engro Corporation Limited Fauji Fertilizer Bin Qasim Limited Fauji Fertilizer Company Limited ICI Pakistan Limited Construction and materials Attock Cement Pakistan Limited D.G. Khan Cement Limited Lucky Cement Limited (a related party) General Industrials Packages Limited 92, , , ,262 66, , , , , , , , , , , , ,299 1,655, ,000 92, , , ,442 66, , , , , ,058 30, , , , , , , , ,299 1,546, ,000 3,740, ,046, ,309,150 44,277, ,373,270 38,184,252 15,185,250 95,653,600 55,710, ,733,927 37,506,210 46,645,837 84,152,047 19,291, Industrial Transportation Pakistan International Container Terminal Limited (a related party) 2,002, ,000 1,350,000 98,212, Personal goods Nishat Chunian Limited Nishat Mills Limited Fixed Line Telecommunication Pakistan Telecommunication Company Limited 1,400,000 9,403,557 1,273, , , ,519 6,753,557 1,273,401 2,000,000 3,000,000 28,931, ,340, ,271,671 58,260, Electricity Hub Power Company Limited Nishat Chunian Power Limited Nishat Power limited Banks MCB Bank Limited National Bank of Pakistan United Bank Limited 5,870, , ,781 2,258,417 2,000, , , ,816 4,270, , ,543 2,500,000 2,258,417 2,000, , ,000 91,273 93,525,000 36,337,930 32,474, ,337,164 94,844,100 53,774,000 6,227, ,845, ,365,477,

17 At the beginning of the period Number of certificates Acquired during the period Disposed / redeemed during the period At the end of the period Carrying value as at Rupees % of investee capital 5.2 Listed term finance certificates (Face value of Rs. 5,000/ each) Standard Chartered Bank Limited 4,000 4,000 4,992, Trust Investment Bank Limited (II) 1,000 1,000 4,992, Unlisted term finance certificates (Face value of Rs. 5,000/ each) Pakistan Mobile Communication Limited II Listed term finance certificates (Face value Rs. 5,000/ each) Engro Corporation Limited , United Bank Limited 17,000 17,000 80,788, ,126, Unlisted term finance certificates (Face value of Rs. 5,000/ each) Optimums Limited 10,000 10,000 49,140, ,140, Government securities (Face value of Rs. 100,000/ each) Market Treasury Bills 8,150 28,824 34,224 2, ,762, ,762, Sukuks (Face value of Rs. 5,000/ each) Agritech Limited (Formerly Pak American Fertilizers Limited) (a related party) 25,700 25,700 83,525, Karachi Shipyard & Engineering Works Limited 2,000 2,000 9,765, Pak Elektron Limited , ,787, Details of noncompliant investments The Securities & Exchange Commission of Pakistan (SECP),vide its circular No. 16 dated July 07,, prescribed specific requirements for investments that are noncompliant either with the minimum investment criteria specified for the category assigned to such schemes or with the investment requirement of their constitutive documents. The following are the details of noncompliant investments having rating lower than 'A'. Name of noncompliant investments Type of Investments Carrying Value of investment before provision Provision held Carrying Value of investment after provisioning % of net assets % of gross assets Agritech Limited (formerly Pak Sukuks 117,617,546 (34,092,546) 83,525, % 4.23% American Fertilizer Limited) (a related party) See Note Azgard Nine Ltd (a related party) See Note Commercial 67,049,410 (67,049,410) Paper 16

18 5.8.1The Fund has made a provision of Rs million against the principal amount in accordance with the requirements of Circular 1 of 2009 dated 6 January 2009 issued by the SECP. Further, in accordance with the provisioning policy of the Fund approved by the Board of Directors of the Management Company, the Fund has made an additional provisioning of Rs million against this investment The commercial paper amounting Rs.75 million of Azgard Nine Limited has been settled through issuance of 15,000 PPTFCs of an equivalent amount in the name of the Fund. However, the management as a matter of prudence has maintained the provision against the said commercial paper. 6. MARKUP / INTEREST INCOME ON BANK BALANCES AND INVESTMENTS Half year ended Rupees... (UnAudited) (UnAudited) Quarter ended Rupees... (UnAudited) (UnAudited) Bank balances 9,529,210 19,799,799 5,655,951 12,279,989 Term finance certificates 9,740,952 43,104,822 4,783,701 20,496,974 Commercial papers 6,924,689 2,709,090 Government securities 39,184,000 9,338,857 17,728,717 8,277,190 Reverse repurchase of securities 4,253,162 1,215,201 Sukuks 1,426,728 10,686, ,059 5,221,079 Less: Reversal of accrued markup (7,530,452) (6,103,724) 10,686, ,059 5,221,079 52,350,438 94,107,646 28,659,428 50,199, NET GAIN / (LOSS) ON INVESTMENTS AT FAIR VALUE THRIUGH INCOME STATEMENT Heldfortrading Net gain on sale of investments 60,412, ,764,372 37,690, ,544,814 Net unrealised gain / (loss) on revaluation of investments 202,818, ,942, ,723,331 (190,944,079) 263,230, ,706, ,413,495 (50,399,265) Designated at fair value through income statement Net unrealised gain / (loss) on revaluation of investments 102,135 9,631,975 20,663 (914,737) 263,332, ,338, ,434,158 (51,314,002) 8. NET LOSS ON AVAILABLE FOR SALE INVESTMENTS Net loss on sale of investments (3,401,088) (5,636,640) (895,610) (5,952,622) Impairment loss recognised on debt securities (34,092,546) (37,493,634) (5,636,640) (895,610) (5,952, REVERSAL OF CONTRIBUTION TO WORKERS' WELFARE FUND The Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As a result of this amendment it is alleged that all Collective Investment Schemes / mutual funds (CISs) whose income exceeds Rs.0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In this regard, a constitutional petition has been filed by certain CISs through their trustees in the Honorable High Court of Sindh, challenging the applicability of WWF to the CISs, which is pending adjudication. However, without prejudice to the above, the Management Company made a provision for WWF contribution in the annual financial statements for the year ended 30 June. Subsequent to the year ended June 30,, a clarification was issued by the Ministry of Labour and Manpower (the Ministry) which stated that mutual funds are not liable to contribute to WWF on the basis of their income. This clarification was forwarded by Federal Board of Revenue (FBR) (being the collecting agency of WWF on behalf of the Ministry) vide 17

19 its letter dated 06 October to its members for necessary action. Based on this clarification, the FBR also withdrew notice of demand which it had earlier issued to one of the mutual funds for collection of WWF. However, the FBR vide its letter dated 04 January 2011 have cancelled its earlier letter dated 06 October ab initio and issued show cause notices to certain mutual funds for collecting WWF. In respect of such show cause notices, one of the mutual fund has been granted stay by Honorable High Court of Sindh vide its order dated 10 February 2011 on the basis of the pending constitutional petition in the said court as referred above and the remaining mutual funds are in the process of filing petitions for stay of proceedings in this case. In view of the afore mentioned developments during the period, the Management Company now believes that there is no compelling reason to retain provision on account of WWF contribution in the financial statements. Further, the Management Company also expects that the constitutional petition pending in the Honorable High Court of Sindh on the subject as referred above will be decided in favour of the mutual funds. Accordingly, the management has reversed the provision recognised as at June 30, amounting to Rs.6.86 million during the current period. The aggregate unrecognised amount of WWF as at December 31, amounted to Rs million. 10. TAXATION The Fund is exempt from taxation under clause 99 of the Part I of the 2nd Schedule to the Income Tax Ordinance, 2001, subject to the condition that not less than 90% of its accounting income as reduced by the realised and unrealised capital gain for the year is distributed amongst the Fund's unit holders. The Fund has availed such exemption in the past and intends to continue the same in the current and future financial periods. Accordingly, no provision is made for current and deferred taxation in these financial statements. 11. TRANSACTIONS WITH RELATED PARTIES / CONNECTED PERSONS. Related parties / connected persons include JS Investments Limited being the Management Company, Central Depository Company of Pakistan Limited being the Trustee, Jahangir Siddiqui and Company Limited being the holding company of the Management Company, associates of the Management Company and its holding company, other funds being managed by the Management Company and Key Management Personnel Transactions for the period Half year ended Rupees... (UnAudited) (UnAudited) JS Investments Limited Remuneration of the Management Company 23,165,829 32,859,786 Sale load 3,282 75,569 Expenses incurred on behalf of Management Company 3,432 Central Depository Company of Pakistan Limited Remuneration of the Trustee 1,662,440 2,147,133 CDC settlement charges 56, ,334 Jahangir Siddiqui & Company Limited Dividend income 1,888,050 JS Bank Limited Return on bank balance 155,288 4,093,528 JS Global Capital Limited See note 11.1 Brokerage commission 524,357 2,074,595 JS Fund of Funds Issue of units (bonus units) 9,620,766 15,973,100 Redemption of units 45,075,950 9,055,506 EFU Life Assurance Limited Issue of bonus units 2,989,754 Pakistan International Container Terminal Limited Issue of bonus units 69,287 Dividend income 2,565,000 18

20 Half year ended Rupees... (UnAudited) (UnAudited) Azgard Nine Limited Purchase of commercial papers 67,049,410 Commercial paper matured 50,000,000 Interest income 6,924,689 Agritech Limited (Formerly Pak American Fertilizer Limited) Interest income on investments 19,569,001 Impairment on Sukuk 34,092,546 Mark up income 300,802 Reversal against markup 7,530,452 Key management personnel Issue of units (including bonus units) 88, ,380 Redemption of units 282,567 Balances as at period / year end 30 June...Rupees... (UnAudited) (Audited) JS Investments Limited Remuneration payable to the Management Company 426, ,752 Sale load payable 3,060 Central Depository Company of Pakistan Limited Remuneration payable to the Trustee 268, ,800 CDC settlement charges payable 15,000 5,010 JS Bank Limited Bank balance 386,180 JS Fund of Funds Outstanding units at net asset value 43,003,711 80,887,012 EFU Life Assurance Limited Outstanding units at net asset value 28,741,994 25,133,382 Pakistan International Container Terminal Limited Outstanding units at net asset value 666, ,459 Key management personnel Outstanding units at net asset value 98, , This represents the amount of brokerage paid to the related party and not the purchase or sale value of securities transacted through them as the ultimate counter parties in respect of purchase and sales are not related The transactions with related parties / connected persons are in the normal course of business at contracted rates. 12. GENERAL 12.1 Figures of the condensed interim income statement and condensed interim statement of comprehensive income for the quarters ended and 2009 have not been subject to limited scope review by the auditors Figures have been rounded off to the nearest rupee. 13. DATE OF AUTHORISATION FOR ISSUE These condensed interim financial statements were authorised for issue by Board of Directors of the Management Company on February 15, Rashid Mansur Chief Executive Officer For JS Investments Limited (Management Company) 19 Munawar Alam Siddiqui Chairman

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