js pension savings fund - js investments limited (jsil) · for 4qfy14 were recorded at usd 233...

CONTENTSVision and Mission Statement

Organization

Directors' Report to the Participants

Trustee Report to the participants

Independent Auditors' Report to the Participants

Statement of Assets and Liabilities

Income Statement

Statement of Comprehensive Income

Statement of Cash Flows

Statement of Movement in Participants' Funds

Notes to the Financial Statements

Annual Report 2014 01

JS PENSION SAVINGS FUND

02

03

04

08

09

12

13

14

15

16

17

02 Annual Report 2014


VISIONTo be recognized as a responsible asset manager respected for continuingly realizing goalsof its investors.

MISSIONTo build JS Investments into a top ranking Asset Management Company; founded on soundvalues; powered by refined knowhow; supported by a committed team operating withinan accountable framework of social, ethical and corporate responsibility - a strong andreliable institution for its shareholders to own; an efficient service provider and valuecreator for clients; an exciting and fulfilling work place for employees; and a participantworth reckoning for competitors.

BROAD POLICY OBJECTIVESValue creation for clients on a sustainable basisMaintain high standards of ethical behaviors and fiduciary responsibilityManage Investments with Prudence and with the aim of providing consistent returnsbetter than that of peersTake Products and Services to the People, Create awareness on understanding financialgoals, risks and rewardsProfessional Excellence-Adapt, Evolve and Continuously ImproveMaintain highly effective controls through strong compliance and risk managementA talented, diligent and diverse HR

ORGANIZATION



Pension Fund Manager JS Investments Limited7th Floor, The Forum, G-20Khayaban-e-Jami, Block-9, CliftonKarachi-75600Tel: (92 -21) 111-222-626Fax: (92 -21) 35361724E-mail: [email protected]: www.jsil.com

Board of Directors Nazar Mohammad Shaikh ChairmanAli Akhtar Ali Chief Executive OfficerSuleman LalaniAsif Reza SanaAhsen AhmedKamran JafarMuhammad Khalil Ur RehmanMuhammad Raza Dyer

Audit Committee Asif Reza Sana ChairmanMuhammad Khalil Ur Rehman MemberSuleman Lalani Member

Chief Financial Officer& Company Secretary Muhammad Khawar Iqbal

Trustee Central Depository Company of Pakistan LimitedCDC House, 99-B, Block ‘B’, S.M.C.H.S.,Main Sharah-e-Faisal,Karachi-74400 Pakistan.Tel: (92 -21) 111-111-500Fax: (92 -21) 34326040

Auditors A.F Ferguson & Co.Chartered Accountants

Legal Advisers Bawaney & Partners3rd & 4th Floors,68-C, Lane-13,Bokhari Commercial Area,Phase-VI, DHA, Karachi.

Transfer Agent Technology Trade (Private) Limited241-C, Block 2, P.E.C.H.S , KarachiTel: (92 -21) 34391316-7Fax: (92 -21) 34391318

The Board of Directors of JS Investments Limited, the Pension Fund Manager of JS Pension Savings Fund (the Fund), is pleasedto present the Annual Report for the year ended June 30, 2014.

Equity Market ReviewThe KSE-30 Index posted a returned of 25.9% in FY14, another year of above average returns although it exhibited volatilitytowards the end of 4QFY14. Foreign inflows were quite robust in FY14 which helped propel the index to all time highs. Averagedaily volumes for the KSE-30 Index increased by a substantial 32% YoY to average 78.8 million shares in FY14, from 59.6 millionshares in FY13 due to higher foreign participation along with improving local retail activity. Total foreign portfolio inflows forFY14 clocked in at USD 256 million.

In 4QFY14, the KSE-30 posted a return of 6.5% on account of some very strong foreign inflows. Volatility kicked in towards themiddle of 4QFY14 due to uncertainty regarding Capital Gains Tax (CGT) increase. However, when the Federal Budget wasannounced the uncertainty dissipated resulting in increasing foreign and local interest in the equity markets. Foreign inflowsfor 4QFY14 were recorded at USD 233 million, one of the strongest quarterly flows in recent times.

In addition, secondary market offerings for both United Bank Limited (UBL) and Pakistan Petroleum Limited (PPL) were completedin June-14, with a cumulative equivalent of USD 542 million raised through both transactions. The successful completion ofthese transactions bodes well for the GoP's privatization program in the coming months. The UBL sell-off of 19.8% shareholdingof the government of Pakistan was done at an 8% discount to the market price, with 30% over-subscription. Although therewas healthy local participation, foreign funds picked up almost 80% of the shares. PPL's transaction generated more demandthan expected, with 100% over-subscription against the government's offering of 70 million shares. As a result, the strike pricecame in higher than the market close, a first in Pakistan's privatization history.

Money Market ReviewDuring FY14, the State Bank of Pakistan (SBP) increased its discount rate to 10% from 9% (Increased 50 bps in September 2013and 50 bps in November 2013). Towards the end of FY14, the Government of Pakistan (GoP) re-profiled its debt structure intolonger dated Pakistan Investment Bonds (PIB's). Financial institutions heavily participated in PIB auctions where they investedan additional amount of PKR 2,000 billion, significantly higher than the target amount as around PKR 1,000 billion matured inT-bills during FY14. The need to reprofile the debt was due to the IMF agreement whereby the GoP had to reduce its NetDomestic Assets (NDA) and bring borrowing from the central bank to zero. With benign outlook on inflation, banks participationtowards longer tenure security was evident. In the last T-bill auction, the cut off yield for 3 month, 6 month and 12 month T-bill averaged at 9.95%, 9.97% and 9.99% respectively.

The average 3M, 6M and 12M KIBOR clocked in at 9.77%, 9.82% and 10.16% for FY14 which declined by 11bps, 10bps and 9bpsYoY whereas for FY13 the 3M, 6M and 9M averaged 9.88%, 9.92% and 10.25%.

During 4QFY14, the SBP kept its discount rate unchanged at 10%. Towards the end of FY14 following GoP's reprofiling of itsdebt structure, as mentioned earlier, into PIB's financial institutions participation increased manifold. The government raised acollective PKR 867 billion, significantly higher than the target amount of PKR 300 billion.

In 4QFY14, the average 3M,6M and 12M KIBOR clocked in at 10.17%, 10.17% and 10.45% increasing by 66bps, 64bps and 61bpsYoY respectively, as against 9.51%, 9.53% and 9.84% during the same period last year.

Review of Fund PerformanceThe fund was launched on June 26, 2007 for contributions by eligible participants, under the Voluntary Pension System Rules,2005 (VPS Rules, 2005), with the objective of assisting and facilitating them to plan for their retirement. The Fund presently hasthree sub-funds that are Equity Sub-Fund, Debt Sub-Fund, and Money Market Sub-Fund. Profit for the year ended June 30, 2014of each of the sub funds and the net assets as on June 30, 2014 are provided below:-



DIRECTORS’ REPORT TO THE PARTICIPANTS



Profit for the year (Rs .in million)

Net assets (Rs. in million)

NAV per unit (Rupees)

NAV appreciation during the period

36.3

95.5

319.47

61.51%

8.0

121.6

159.25

6.91%

Equity Sub-Fund Debt Sub-Fund Money MarketSub-Fund

6.1

157.1

187.41

4.36%

The fund has 163 participants as on June 30, 2014

Benefits of investing in JS Pension Savings FundJS Pension Savings Fund provides following benefits to its participants:-• Expert advice in planning his/her retirement.• The Participant are entitled to tax credit (20% of taxable income and additional catch-up incentives are provided to

participants over 40 years, with a maximum tax credit on 50% of taxable income under Section 63 of the Income TaxOrdinance 2001 ) on his/ her contribution.

• Tax free return on investments.• Contribution frequency of participants' choice.• Minimum investment of only Rs.12,000/- p.a.• Option to withdraw funds at any time, subject to tax and zakat deductions.

Asset Manager RatingJCR-VIS Credit Rating Company Limited has reaffirmed Management Quality Rating of "AM2-"(AM-Two Minus) to JS InvestmentsLimited through a press release dated August 20th, 2014. The rating denotes high management quality of the ManagementCompany.

ComplianceThe Board of Directors of the Pension Fund Manager states that:

a. The Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As aresult of this amendment it may be construed that all Collective Investment Schemes / mutual funds (CISs) whose incomeexceeds Rs 0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thus rendering them liableto pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever is higher. In thisregard, a constitutional petition has been filed by certain CISs through their trustees in the Honourable High Court of Sindh(the Court), challenging the applicability of WWF to the CISs, which is pending for adjudication.

During the year 2011, a single bench of the Lahore High Court (LHC) in a constitutional petition relating to the amendmentsbrought in the WWF Ordinance, 1971 through the Finance Act, 2006, and the Finance Act 2008, has declared the saidamendments as unlawful and unconstitutional and struck them down. However, in the month of March 2013, a largerbench of the Sindh High Court (SHC) in various constitutional petitions declared that amendments brought in the WWFOrdinance, 1971 through the Finance Act, 2006, and the Finance Act 2008, do not suffer from any constitutional or legalinfirmity and overruled a single-member Lahore High Court (LHC) bench judgment issued in August 2011.

However, as per the advice of legal counsel of MUFAP, the stay granted to CIS (as mentioned in the first paragraph) remainsintact and the constitution petitions filed by the CIS to challenge the Workers Welfare Fund contribution have not beenaffected by the SHC judgment.

As the matter relating to levy of WWF is currently pending in the Court, the Management Company, as a matter of prudenceand abundant caution, has decided to recognize the entire liability of Rs.3.5 million in these financial statements.

b. The financial statements, prepared by the Pension Fund Manager, present fairly the state of affairs of the Fund, the resultsof its operations, cash flows and movement in net assets of the Fund.



Meetings of the Directors

During the year 10 meetings of the Board of Directors were held. The attendance of each director for these meetings is asfollows:-

NameDesignationUnits heldEquity Sub FundDebt Sub FundMoney Market sub Fund

Mr. Suleman LalaniDirector

4,54922,4098,814

j. Summary of units acquired / redeemed during the year by the Chief Executive, directors and executives and their spousesare provided below:

NameDesignationUnits Acquired

Equity Sub FundDebt Sub FundMoney Market sub Fund

Mr. Suleman LalaniDirector

1,1804,9751,944

c. Proper books of accounts of the Fund have been maintained.d. Appropriate accounting policies have been consistently applied in preparation of financial statements, and financial

estimates are based on reasonable and prudent judgment.e. International Financial Reporting Standards, as applicable in Pakistan, provisions of the Voluntary Pension Systems Rules,

2005, requirements of the Trust Deed and directives of the Securities and Exchange Commission of Pakistan have beenfollowed in preparation of the financial statements.

f. The system of internal control is sound in design and has been effectively implemented and monitored.g. There are no significant doubts upon the Fund's ability to continue as a going concern.h. A performance table / key financial data is given on page 43 of this annual report.

i. The number of units of the Fund held by the Chief Executive, directors and executives and their spouses as at June 30, 2014are as follows:



AuditorsThe external auditors of the Fund Messrs. A.F. Ferguson & Co., Chartered Accountant, retire and being eligible offers themselvesfor reappointment. The Board of Directors of JS Investments Limited, the Management Company of the Fund, upon recommendationof the Audit Committee, has approved the appointment of Messrs. A.F. Ferguson & Co., Chartered Accountant as the Fund'sauditors for the ensuing year ending June 30, 2015.

AcknowledgmentThe Directors expresses their gratitude to the Securities and Exchange Commission of Pakistan for its valuable support, assistanceand guidance. The Board also thanks the employees of the Pension Fund Manager and the Trustee for their dedication and hardwork and the participants for their confidence in the Management.

Ali Akhtar AliKarachi: August 15, 2014 Chief Executive Officer

TRUSTEE REPORT TO THE PARTICIPANTS

Report of the Trustee pursuant to Rule 31(h) of the Voluntary Pension System Rules, 2005

We, Central Depository Company of Pakistan Limited, being the Trustee of JS Pension Savings Fund (the Fund) are of the opinionthat JS Investments Limited being the Pension Fund Manager of the Fund has in all material respects managed the Fundduringthe year ended June 30, 2014 in accordance with the provisions of the constitutive documents of the Fund and the VoluntaryPension System Rules, 2005.

Muhammad Hanif JakhuraChief Executive Officer

Karachi: September 03, 2014 Central Depository Company of Pakistan Limited



AUDITORS’ REPORT TO THE PARTICIPANTS OF THE JS PENSION SAVINGS FUND



We have audited the accompanying financial statements comprising:

i. Statement of Assets and Liabilities;ii. Income Statement;iii. Statement of Comprehensive Income;iv. Statement of Cash Flows; andv. Statement of Movement in Participants' Sub-Funds

of JS Pension Savings Fund (the Fund) as at June 30, 2014 and a summary of significant accounting policies and other explanatorynotes forming part thereof for the year then ended.

Pension Fund Manager's responsibility for the financial statements

The Pension Fund Manager is responsible for the preparation and fair presentation of these financial statements in accordancewith approved accounting standards as applicable in Pakistan, and for such internal control as the Pension Fund Managerdetermines is necessary to enable the preparation of the financial statements that are free from material misstatement, whetherdue to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with the International Standards on Auditing as applicable in Pakistan. Those standards require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statementsare free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatementof the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controlrelevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity'sinternal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by the Pension Fund Manager, as well as evaluating the overall presentation of the financialstatements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion

In our opinion:a) the financial statements prepared for the year have been prepared in accordance with the relevant provisions of the Trust

Deed and the Voluntary Pension System Rules, 2005 including the guidelines there under;b) a true and fair view is given of the disposition of the Fund as at June 30, 2014 and of the transactions of the Fund for the

year ended June 30, 2014 in accordance with approved accounting standards as applicable in Pakistan;c) the allocation and reallocation of units of the sub-funds for all the participants have been made according to the Voluntary

Pension System Rules, 2005;d) the cost and expenses debited to the Fund and apportionment of expenses between sub-funds are as specified in the

constitutive documents of the Fund;e) proper books and records have been kept by the Fund and the financial statements prepared are in agreement with the

Fund's books and records;f ) we were able to obtain all the information and explanations which, to the best of our knowledge and belief, were necessary

for the purpose of the audit; andg) no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.



Other Matters

The financial statements of the Fund for the year ended June 30, 2013 were audited by another firm of Chartered Accountantswho had expressed an unqualified opinion thereon vide their report dated August 16, 2013.

A. F. FERGUSON & COChartered Accountants

Audit Engagement Partner: Rashid A. JaferKarachi: August 15, 2014



FINANCIALSTATEMENTS

1 LEGAL STATUS AND NATURE OF BUSINESS

1.1 JS Pension Savings Fund ("the Fund") has been established under the Voluntary Pension System Rules, 2005 (VPS Rules)and has been approved as a pension fund by the Securities and Exchange Commission of Pakistan (SECP) on 14 June2007. It has been constituted under a Trust Deed, dated 6 June 2007, between JS Investments Limited as the Pension FundManager, a company incorporated under the Companies Ordinance, 1984 and Central Depository Company of PakistanLimited as the Trustee, also incorporated under the Companies Ordinance 1984 . Accordingly, title to the assets of theFund is held in the name of the trustee. The registered office of JS Investments Limited is situated at 7th Floor, The Forum,G-20 Khayaban-e-Jami, Block - 9, Clifton, Karachi, Pakistan.

1.2 The Fund is an open end mutual fund and offers units for public subscription on a continuous basis. The units are non-transferable except in the circumstances mentioned in the Voluntary Pension System Rules, 2005 and can be redeemedby surrendering them to the Fund. Further, as per the offering document, the Fund shall not distribute any income fromthe Fund whether in cash or otherwise.

1.3 The objective of the Fund is to provide a secure source of savings and retirement income to individuals. It is a portablepension scheme allowing individuals the flexibility of contributions and portfolio customization through allocation ofsuch contributions among equity and fixed income investment avenues suited to their specific needs and risk profile.

Title to the assets of the Fund is held in the name of Central Depository Company of Pakistan Limited as trustee of theFund.

1.4 The Fund consists of three sub-funds namely, JS Pension Savings Fund Equity Sub-Fund ("Equity Sub-Fund"), JS PensionSavings Fund Debt Sub-Fund ("Debt Sub-Fund") and JS Pension Savings Fund Money Market Sub-Fund ("Money MarketSub-Fund") (collectively the "Sub-Funds"). The investment policy for each of the sub-funds are as follows:

- The Equity Sub-Fund shall have an average minimum investment in listed shares of ninety percent (90%) of its NetAsset Value. Investment in equity securities of a single company shall not exceed 10% of the net assets value of theequity sub fund, provided that exposure in companies belonging to a single sector as classified by the Stock Exchangeshall not exceed 30% of the net assets of the equity sub fund or the index weight, whichever is higher, subject tomaximum of 35% of the net assets of the equity sub fund. Any un-invested surplus may be invested in Governmenttreasury bills or Government securities having less than one year time to maturity.

- The Debt Sub-Fund shall invest atleast 25% of the net assets of the debt sub fund in debt securities issued by theFederal Government. The weighted average time to maturity of securities held in the portfolio of Debt Sub fund shallnot exceed 5 years. Exposure to securities issued by companies in a single sector shall not exceed 20% (30% in caseof the banking sector) of the net assets of the debt sub fund.

- The weighted average time to maturity of net assets of the Money Market Sub-fund shall not exceed 90 days, providedthat time to maturity of any asset in the portfolio of the Money Market Sub-fund shall not exceed 6 months.

1.5 The Fund offers four types of allocation schemes, as prescribed by the SECP under VPS Rules 2005 vide its Circular no. 36of 2009 dated 10 December 2009, to the participants of the Fund namely High Volatility, Medium Volatility, Low Volatilityand Lower Volatility. The participant has the option to suggest a minimum percentage of allocation to the above allocationschemes (subject to the minimum percentages prescribed in the offering document). Based on the minimum allocation,the funds are allocated to the above stated sub-funds. The allocation to the sub-funds has to be done at the date of theopening of the participant's pension account and on an anniversary date thereafter. The contribution amount may bepaid by the participant on a periodic basis such as annual, semi annual, quarterly or monthly basis within 5 days of theclose of the period.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2014





1.6 Title to the assets of the Fund is held in the name of Central Depository Company as a Trustee of the Fund.

2 BASIS OF PREPARATION

2.1 Statement of compliance

These financial statements have been prepared in accordance with the approved accounting standards as applicable inPakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued bythe International Accounting Standards Board (IASB) as are notified under the Companies Ordinance, 1984, the requirementsof the Trust Deed, the Voluntary Pension System Rules, 2005 (VPS Rules) and the directives issued by the Securities andthe Exchange Commission of Pakistan (SECP). Wherever the requirements of the Trust Deed, the VPS Rules or the directivesissued by the SECP differ with the requirements of IFRSs, the requirements of the Trust Deed, the VPS Rules, 2005 or therequirements of the said directives prevail.

2.2 Standards, interpretations and amendments to published approved accounting standards that are effective inthe current year

There are certain new and amended standards and interpretations that are mandatory for accounting periods beginning1 July 2013 but are considered not to be relevant or do not have any significant effect on the Fund's operations and aretherefore not detailed in these financial statements.

2.3 Standards, interpretations and amendments to published approved accounting standards that are not yet effective:

There are certain new and amended standards and interpretations to published approved accounting standards that aremandatory for accounting periods beginning on or after July 1, 2014 but are considered not to be relevant or do not haveany significant effect on the Company's operations and are therefore not detailed in these financial statements.

Further, the following new standards have been issued by IASB which are yet to be notified by SECP for the purpose ofapplicability in Pakistan.

Standard

IFRS 9 – Financial Instruments: Classification and Measurement

Effective date (annual periods beginning on or after)

January 01, 2015

2.4 Critical accounting estimates and judgments

The preparation of the financial statements in conformity with the approved accounting standards requires the use ofcertain critical accounting estimates. It also requires the management to exercise its judgment in the process of applyingthe Fund's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience,including expectations of future events that are believed to be reasonable under the circumstances. The areas wherevarious assumptions and estimates are significant to the Fund's financial statements or where judgment was exercisedin application of accounting policies principally relate to classification and valuation of investments (notes 3.2 and 5).

2.5 Basis of measurement

These financial statements have been prepared under the historical cost convention except that investments have beencarried at fair value.

2.6 Functional and presentation currency

These financial statements are presented in Pakistani Rupees, which is the Fund's functional and presentation currency.



3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policieshave been consistently applied unless otherwise stated.

3.1 Cash and cash equivalents

Cash and cash equivalents comprise of bank balances including term deposits with banks (that are readily convertibleto known amounts of cash, are subject to an insignificant risk of changes in value).

3.2 Financial assets

3.2.1 Classification

The Fund classifies its financial assets in the following categories: 'at fair value through profit or loss' and 'available forsale'. The classification depends on the purpose for which the financial assets were acquired. Management determinesthe classification of its financial assets at initial recognition and re-evaluates this classification on regular basis.

a) At fair value through profit or loss - Held for trading

Quoted investments which are acquired principally for the purpose of generating profit from short-term fluctuationin price or are part of a portfolio for which there is a recent actual pattern of short-term profit taking are classifiedas held for trading.

After initial recognition, the investments in listed equity instruments are remeasured at fair value determined withreference to Stock Exchange quoted market prices at the close of period end.

b) Available for sale

Investments which do not fall under the above category are classified as available-for-sale. After initial recognition,investments classified as available-for-sale are remeasured at fair value, determined with reference to the quotedrates on each day end. Gains or losses on remeasurement of these investments are recognised directly in theparticipants' funds until the investment is sold, collected or otherwise disposed-off, or until the investment isdetermined to be impaired, at which time the cumulative gain or loss previously reported in participants' funds isincluded in income statement. Amortisation of premium /discount on acquisition of the investments is carried outusing the effective yield method.

3.2.2 Initial recognition and measurement

All investments are initially recognized at cost, being the fair value of the consideration given including the transactioncost associated with the investment, except in case of held for trading investments, in which case the transaction costsare charged off to the profit and loss account.

Gains or losses on remeasurement of these investments are recognised in the income statement.

3.2.3 Subsequent measurement

Subsequent to initial recognition, financial assets designated by the management as 'at fair value through profit or loss'and 'available for sale' are valued as follows:



a) Basis of valuation of Term Finance Certificates (TFCs)

Investments in TFCs have been valued on the basis of year end rates quoted by the Mutual Fund Association ofPakistan.

b) Basis of valuation of Government Securities

The investment of the Fund in government securities are valued at their fair values (determined by reference to thequotations obtained from the PKRV rate sheet on the Reuters page), based on the remaining tenor of the security.Income accrued on treasury bills are included in the carrying value of the investment.

c) Basis of valuation of equity securities

The investment of the Fund in equity securities is valued on the basis of closing quoted market prices available atthe stock exchange. A security listed on the stock exchange for which no sale is reported on the reporting date isvalued at its last sale price on the next preceding date on which such exchange is open and if no sale is reportedfor such date the security is valued at an amount neither higher than the closing asked price nor lower than theclosing bid price.

d) Basis of valuation of debt securities

The investment of the Fund in debt securities is valued on the basis of rates determined by the Mutual FundsAssociation of Pakistan (MUFAP) and in accordance with the methodology and guidelines prescribed by the SECPfor valuation of debt securities. Further, the directives issued by the SECP has provided the discretion to themanagement to apply markup / markdown (within the available limits as provided in the directives) to the yieldsof non-traded debt securities to arrive at their fair values.

Provision against non-performing debt securities is made in accordance with the provisioning criteria prescribedby the Securities and Exchange Commission of Pakistan and the Fund's provisioning criteria.

3.2.4 Regular Way Contracts

All regular way purchases and sales of investments are recognised on the trade date i.e. the date the Fund commits topurchase / sell the investments. Regular way purchase and sale of equity investments require delivery of securities withintwo days after the transaction, as required by the Stock Exchange Regulations.

3.2.5 Transaction costs

Transaction cost associated with the acquisition of held for trading investments is charged to the income statementcurrently.

Transaction cost associated with the acquisition of investments other than held for trading investments is included inthe cost of investments.

3.2.6 Impairment

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it isimpaired. This objective evidence of impairment in respect of debt securities is determined in accordance with theprovisioning criteria for non performing debt securities specified by the Securities and Exchange Commission of Pakistan(SECP) vide its Circular no. 1 of 2009 dated 06 January 2009.



Investments in equity securities are considered to be impaired when there has been a significant or prolonged declinein the fair value below its cost. The determination of what is significant or prolonged requires judgment. In addition theimpairment in available for sale debt securities may be appropriate when there is an evidence of deterioration in thefinancial health of the invested industry and sector performance, changes in technology and operational financial cashflows.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assetsare assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised inthe income statement.

3.2.7 Financial Instruments

All the financial assets and financial liabilities are recognized at the time when the Fund becomes a party to the contractualprovisions of the instrument. Any gain or loss on derecognition of the financial assets and financial liabilities is takento income directly.

3.2.8 Derecognition

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have beentransferred and the Fund has transferred substantially all risks and rewards of ownership.

3.2.9 Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are only offset and the net amount reported in the statement of assets andliabilities when there is a legally enforceable right to set off the recognized amount and the Fund intends to either settleon a net basis, or to realize the asset and settle the liability simultaneously.

3.3 Derivatives

Derivative financial instruments are initially recognised at fair value and subsequent to initial measurement each derivativefinancial instrument is remeasured to its fair value and the resultant gain or loss is recognised in the 'income statement'.

3.4 Financial liabilities

All financial liabilities are recognised at the time when the Fund becomes a party to the contractual provisions of theinstrument. They are initially recognised at fair value and subsequently stated at amortised cost. A financial liability isderecognised when the obligation under the liability is discharged, cancelled or expired.

3.5 Provisions

A provision is recognised in the balance sheet when the Fund has a legal or constructive obligation as result of pastevent and it is probable that an outflow of resources embodying economic benefits will be required to settle theobligation and a reliable estimate can be made of the amount of the obligation.

3.6 Taxation

The income of the Fund is exempt from taxation under clause 57 (3) (viii) of the Part I of the 2nd Schedule of the IncomeTax Ordinance, 2001.



3.7 Issue, allocation, reallocation and redemption of units

Units are allocated at the offer price of each of the Sub-Fund prevalent on the day on which applications for the purchaseof units are received (however units are issued on the realisation of funds). The offer price represents the net assets valueof units at the end of the day plus the allowable front end fee. Front end fee and life insurance premium, if any, is deductedfrom the contribution amount and the net amount is used for the purchase of units. The front end fee is payable to theDistribution Companies and the Pension Fund Manager as processing fee on the issuance of units.

In case of withdrawal before retirement, units are redeemed at the net asset value of each of the Sub-Fund as of the closeof the business day on which such request is received by the distributor before the cut off time. Redemption of units isrecorded on acceptance of application for redemption.

In case of a retirement of the participant, units are redeemed at the net asset value of each of the Sub-Fund as of theclose of the business day on which retirement age is reached.

In case of change of pension fund manager, units are redeemed at the net asset value of each of the Sub-Funds as ofthe close of the business day corresponding to the date of change specified by the participant.

3.8 Net Asset Value (NAV ) per unit

The net assets value per unit disclosed in the statement of assets and liabilities is calculated by dividing the net assetsof each of the Sub-Fund by the number of units in issue of that Sub-Fund at the end of the period.

3.9 Earnings per unit

Earning per unit (EPU) is calculated based on the number of units outstanding at the year end as the management isof the opinion that determination of weighted average units for calculating EPU is not practicable.

4 EXPENSES

The pension fund manager’s remuneration and the trustee’s remuneration is charged to the Sub-Funds.

Audit fees is divided equally among all the Sub-Funds.

Brokerage and transaction costs, bank charges and borrowing / financial costs, taxes applicable to the income, turnoveror assets and other such costs are charged to the pertinent Sub-Funds on actual basis.

Legal and related costs, annual fees payable to the Commission and other costs and charges pertaining to the schemeas a whole, are divided equally amongst the Sub-Funds.

4.1 Other assets

Other assets are stated at cost less impairment losses, if any .

4.2 Revenue recognition

- Capital gains / losses arising on sale of investments are included in the 'income statement' on the date at which thetransaction takes place.

- Unrealised gains / losses arising on the revaluation of held for trading and derivatives investments to fair value aretaken to the Income Statement currently.



- Income from returns on bank deposits and investments in debt and government securities are recognised at therate of return implicit in the instrument on a time proportionate basis.

- Dividend income is recognised when the right to receive the dividend is established.

4.3 Element of income/ (loss) and capital gains/ (losses) in prices of units sold less those in units redeemed - net

An equalisation account called the 'element of income/ (loss) and capital gains/ (losses) included in prices of units issuedless those in units redeemed' is created, in order to prevent the dilution of per unit income and distribution of incomealready paid out on redemption.

The 'element of income/ (loss) and capital gains/ (losses) in price of units issued less those in units redeemed' accountis credited with the amount representing the net income/ (loss) and capital gains/ (losses) accounted for in the net assetvalue and included in the sale proceeds of units. Upon redemption of units, the 'element of income/ (loss) and capitalgains/ (losses) in prices of units issued less those in units redeemed' account is debited with the amount representingnet income/ (loss) and capital gains/ (losses) accounted for in the net asset value and included in the redemption price.

The net 'element of income/ (loss) and capital gains/ (losses) in prices of units issued less those in units redeemed' duringan accounting period is transferred to the Income Statement.

During the year the Fund has revised the method of computation and recording of element of income / (loss) and capitalgains / (losses) included in the prices of units issued less those in units redeemed. As per the revised treatment, theelement is arrived at by comparing the unit prices with opening Ex–NAV at the beginning of the year. Previously, theFund used to calculate the element by comparing unit prices with the face value of the units.

We understand that the impact of change has been incorporated in the financial statements of the Fund with effectfrom July 01, 2013. However, the interim financial statements of the Fund for the half year ended December 31, 2013 andnine months period ended March 31, 2014 did not include the effect of this change as the methodology to computeelement was changed during the last quarter of the financial year effective from the beginning of the current year.

The revised methodology, in the opinion of the management, would ensure that the continuing unit holders' share ofundistributed income remains unchanged on issue and redemption of units. Since the element is an equalisation accountbetween income for the period and undistributed income, the change did not have any impact on the Net Asset Value(NAV) of the Fund.



The above ordinary shares of Agritech Limited are subject to sale lock-in-period of 5 years in terms of the Share PurchaseAgreement (SPA) between ANL and various lenders including the Fund. However, as per the SPA, the sale restriction isnot applicable to transactions between the lenders of ANL.

6.5.1 In accordance with reference to investment policies in the Debt Sub-fund and the Money Market Sub-fund as issued bySECP, the Debt Sub-fund and Money Market Sub-fund cannot have direct or indirect exposure to equities. However,pursuant to the restructuring terms as explained above, the sub-funds now have equity exposure in the form of sharesof Agritech Limited. The Pension Fund Manager has sought exemption from the SECP in this regard and their responseis awaited.

Equity Debt Money Market Total Sub-Fund Sub-Fund Sub-Fund

7 DEPOSITS AND OTHER RECEIVABLES

Security deposit with Central Depository Company of Pakistan Limited 100,000 100,000 100,000 300,000Profit receivable on deposit accounts with banks 13,736 40,000 15,445 69,181Profit receivable on investments - 5,863,561 - 5,863,561

113,736 6,003,561 115,445 6,232,742


Security deposit with Central Depository Company of Pakistan Limited 100,000 100,000 100,000 300,000Profit receivable on deposit accounts with banks 34,046 35,496 60,355 129,897Profit receivable on investments - 2,738,624 - 2,738,624

134,046 2,874,120 160,355 3,168,521

Year ended June 30, 2014

--------------------------------- Rupees -----------------------------------


--------------------------------- Rupees -----------------------------------

8 PROVISION FOR FEDERAL EXCISE DUTY PAYABLE ON REMUNERATION OF PENSION FUND MANAGER

The Finance Act, 2013 has enlarged the scope of Federal Excise Duty (FED) on financial services to include AssetManagement Companies (AMCs) with effect from June 13, 2013. As the asset management services rendered by thePension Fund Manager of the Fund are already subject to provincial sales tax on services levied by the Sindh RevenueBoard, which is being charged to the Fund, the Pension Fund Manager is of the view that further levy of FED is notjustified.

On 4 September 2013, a Constitutional Petition has been filed in the Honorable Sindh High Court (SHC) jointly by variousasset management companies, together with their representative Collective Investment Schemes through their trustees,challenging the levy of FED. In this respect, the Honorable SHC has issued a stay order against recovery proceedings.The hearing of the petition is pending.

Consequently, pending the decision of the SHC, the Fund has stopped making payments for FED since September, 2013although full provision is being made in the books of account.


9 PAYABLE TO PENSION FUND MANAGER

Remuneration payable (including sales tax and FED on remuneration of the Pension Fund Manager) 228,488 356,057 276,920 861,465


Remuneration payable (including sales tax and FED on remuneration of the Pension Fund Manager) 100,532 170,888 157,606 429,026


--------------------------------- Rupees -----------------------------------


--------------------------------- Rupees -----------------------------------



As per the provision of the Voluntary Pension System Rules, 2005, JS Investments Limited, the Pension Fund Managerof the Fund is allowed to charge an annual management fee of 1.5% of the average of the values of the net assets ofeach of the Sub-Funds.Management fee is correctly been charged at the rate of 1.5% per annum of the average dailynet assets of the Sub-Funds. The remuneration is paid to the Pension Fund Manager monthly in arrears.

During the year 2011 the Sindh Revenue Board levied General Sales Tax at the rate of 16% on the remuneration of thePension Fund Manager through Sindh Sales Tax on Services Act 2011 effective from July 1, 2011.

10 REMUNERATION TO THE TRUSTEE

The Trustee (Central Depository Company of Pakistan Limited) is entitled to remuneration of Rs. 300,000 or 0.15% perannum of the net assets value of the Fund, whichever is higher up to Net Assets of Rs. 1 billion. The rates applicable forTrustee's Remuneration on Net Assets exceeding Rs. 1 billion are as follows:

Net assets Tariff

-Above Rs. 1 billion to Rs. 3 billion Rs. 1.5 million plus 0.10% per annum of net assets, on amount exceeding Rs. 1 billion.-Above Rs. 3 billion to Rs. 6 billion Rs. 3.5 million plus 0.08% per annum of net assets, on amount exceeding Rs. 3 billion.

Rs. 5.9 million plus 0.06% per annum of net assets, on amount exceeding Rs. 6 billion.-Above Rs. 6 billion

11 PAYABLE TO THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN

This represents annual fee payable to the Securities and Exchange Commission of Pakistan (SECP) in accordance withrule 36 of the Voluntary Pension System Rules, 2005 whereby the Fund is required to pay SECP an amount equal to onethirtieth of 1% of the average annual net assets of each of the Sub-Funds.

Equity Debt Money MarketNote Sub-Fund Sub-Fund Sub-Fund Total

Settlement fee payable to Central Depository Company of Pakistan Limited 676 500 500 1,676Printing & stationery expenses payable 9,695 9,695 9,695 29,085Zakat payable - 2,685 3,234 5,919Money market brokerage payable - 14,143 8,095 22,238Provision against contribution to Workers' Welfare Fund 12.1 887,586 947,926 631,331 2,466,843

897,957 974,949 652,855 2,525,761

---------------------------------- Rupees --------------------------------------


Equity Debt Money Market TotalNote Sub-Fund Sub-Fund Sub-Fund

12 ACCRUED EXPENSES AND OTHER LIABILITIES

Settlement fee payable to Central Depository Company of Pakistan Limited 1,252 484 484 2,220Printing & stationery expenses payable 14,225 14,225 14,224 42,674Payable against redemption of units 973,629 1,571,421 360,925 2,905,975Provision against contribution to Workers' Welfare Fund 12.1 1,630,115 1,073,351 794,684 3,498,150Others 806 1,237 932 2,975

2,620,027 2,660,718 1,171,249 6,451,994

--------------------------------- Rupees -----------------------------------


12.1 The Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). As aresult of this amendment it may be construed that all Collective Investment Schemes / mutual funds (CISs) whose incomeexceeds Rs. 0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thus rendering themliable 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 Honourable High Courtof Sindh (the Court), challenging the applicability of WWF to the CISs, which is pending adjudication.



During the year ended June 30, 2011, 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. However, on December14, 2010, the Ministry filed its response against the constitutional petition requesting the Court to dismiss the petition.According to the legal counsel who is handling the case there is a contradiction between the aforementioned clarificationissued by the Ministry and the response filed by the Ministry in the Court.

During the year ended June 30, 2012, the Honourable Lahore High Court (LHC) in a Constitutional Petition relating tothe amendments brought in the WWF Ordinance, 1971 through the Finance Act, 2006 and the Finance Act, 2008, haddeclared the said amendments as unlawful and unconstitutional. In March 2013, a larger bench of the Honourable SindhHigh Court (SHC) passed an order declaring that the amendments introduced in the WWF Ordinance, 1971 through theFinance Act, 2006 and the Finance Act, 2008 do not suffer from any constitutional or legal infirmity. However, theHonourable High Court of Sindh has not addressed the other amendments made in the WWF Ordinance 1971 aboutapplicability of WWF to the CISs which is still pending before the Court. The Pension Fund Manager in consultation withthe legal counsel has considered the implications of the above judgment of SHC and is of the view that the matter willeventually be settled in its favour and WWF will not be levied on the Fund.

As the matter relating to levy of WWF is currently pending in the court, the Management Company, as a matter ofprudence and abundant caution, has decided to recognise the entire liability of Rs. 3.50 million (June 30, 2013: Rs. 2.47million) in these financial statements as follows:

Equity Debt Money Market Sub-Fund Sub-Fund Sub-Fund Total

Aggregate recognised amount of WWF 1,630,115 1,073,351 794,684 3,498,150

Equity Debt Money Market Sub-Fund Sub-Fund Sub-Fund Total

Aggregate recognised amount of WWF 887,586 947,926 631,331 2,466,843

------------------------------ Rupees -------------------------------



------------------------------ Rupees -------------------------------

Had the provision not been made the net asset value per unit of the Fund would have been higher by Rs. 5.45 for EquitySub-Fund, Rs. 1.28 for Debt Sub-Fund and Rs. 1.04 for Money Market Sub-Fund.

13 TAXATION

No provision for taxation has been made for the year ended June 30, 2014 , in view of the exemption available underclause 57(3)(viii) of Part-1 of the second schedule to the Income Tax Ordinance, 2001.



TotalUnits Rupees Units Rupees Units Rupees Rupees

From:Individuals 57,651 33,457,109 307,382 187,122,232 224,590 128,812,089 349,391,430

TotalUnits Rupees Units Rupees Units Rupees Rupees

From:Individuals 7,160 1,202,910 173,250 30,316,000 207,841 29,524,629 61,043,539

15 NUMBER OF UNITS IN ISSUEMoney Money

Equity Debt Market Equity Debt Market Sub-Fund Sub-Fund Sub-Fund Sub-Fund Sub-Fund Sub-Fund

Total units outstanding at the beginning of the year 323,202 606,971 671,813 322,862 552,432 608,537Units issued during the year 57,651 307,382 224,590 7,160 173,250 207,841Units redeemed during the year (64,095) (111,998) (129,627) (3,408) (121,120) (145,537)Effect of reallocation (17,722) 35,994 (2,856) (3,412) 2,409 972Total units in issue at the end of the year 299,036 838,349 763,920 323,202 606,971 671,813

Money TotalEquity Debt Market

Sub-Fund Sub-Fund Sub-Fund

16 FINANCIAL INCOME

Profit on investments- Profit on TFCs - 18,741 - 18,741- Profit on Pakistan Investment Bonds - 3,896,816 - 3,896,816- Profit on Market Treasury Bills - 8,715,335 9,628,724 18,344,059Profit on bank balances 592,336 733,148 515,620 1,841,104

592,336 13,364,040 10,144,344 24,100,719

---------------------------- Rupees -----------------------------



Money MarketYear ended June 30, 2013

Sub-FundEquity

----------------------------------------------------------- Units -----------------------------------------------------------

Year ended June 30, 2014 Year ended June 30, 2013

Money MarketDebt

Sub-Fund

EquitySub-Fund Sub-Fund

DebtSub-Fund

Sub-Fund

14 CONTRIBUTION TABLE

Contributions (net of front end fee) received during the year

Money TotalEquity Debt Market


Profit on investments- Profit on TFCs - 169,296 1,548 170,844- Profit on Pakistan Investment Bonds - 3,537,384 - 3,537,384- Profit on Market Treasury Bills - 6,152,259 8,612,020 14,764,279Profit on bank balances 227,016 234,253 293,206 754,475

227,016 10,093,192 8,906,774 19,226,982


---------------------------- Rupees -----------------------------



17 AUDITORS' REMUNERATION Equity Debt Money Market Total


Annual audit fee 58,333 58,333 58,334 175,000Fee for review of condensed interim financial information 30,000 30,000 30,000 90,000Out of pocket expenses 14,157 14,159 14,159 42,475

102,490 102,492 102,493 307,475


Annual audit fee 33,333 33,334 33,333 100,000Fee for review of condensed interim financial information 16,667 16,666 16,667 50,000Out of pocket expenses 6,667 6,667 6,667 20,001

56,667 56,667 56,667 170,001

---------------------------- Rupees -----------------------------


---------------------------- Rupees -----------------------------


18 TRANSACTIONS WITH RELATED PARTIES / CONNECTED PERSONS

Related parties / connected persons include JS Investments Limited being the Pension Fund Manager, Central DepositoryCompany of Pakistan Limited being the Trustee, JS Bank Limited and Jahangir Siddiqui and Company Limited being theholding company of the Pension Fund Manager and ultimate parent respectively, associates of the Pension Fund Managerand its holding company, other funds being managed by the Pension Fund Manager and Key Management Personnel.

18.1 Details of balances of the Fund held with related parties / connected persons are as follows:

Note Equity Debt Money Market Equity Debt Money Market Sub-Fund Sub-Fund Sub-Fund Total Sub-Fund Sub-Fund Sub-Fund Total

JS Investments Limited (Pension Fund Manager)Remuneration payable 228,488 356,057 276,920 861,465 100,532 170,888 157,606 429,026Expenses payable 4,817 4,817 4,816 14,450 3,000 3,000 3,000 9,000Amount held: 76,672,800 33,314,226 28,261,049 138,248,074 59,340,000 31,922,355 26,434,950 117,697,305Units held: Number 240,000 177,761 177,463 595,225 300,000 177,761 177,463 655,224

Central Depository Company of Pakistan Limited (trustee)Remuneration payable 11,869 19,162 14,799 45,830 - - 12,388 12,388Settlement charges payable 1,252 484 484 2,220 676 500 500 1,676Prepaid Settlement charges - - - - - - - -Security deposit 100,000 100,000 100,000 300,000 100,000 100,000 100,000 300,000

JS Global Capital LimitedBrokerage payable 11.2.1 - - - - - 4,937 - 4,937

Key management personnelAmount held: 1,453,347 4,199,580 1,403,624 7,056,551 1,043,133 7,376,225 7,971,648 16,391,006Units held: Number 4,549 22,409 8,814 35,772 5,274 41,075 53,515 99,864

18.2 Details of transactions with related parties / connected persons during the year:

Equity Debt Money Market Equity Debt Money Market Sub-Fund Sub-Fund Sub-Fund Total Sub-Fund Sub-Fund Sub-Fund Total

JS Investments Limited (Pension Fund Manager)Remuneration for the year 1,323,737 2,071,982 1,634,348 5,030,067 702,799 1,515,135 1,379,029 3,596,963Sales tax on Pension Fund Manager's remuneration 245,687 384,560 303,334 933,581 113,669 244,497 222,558 580,724Federal Excise Duty on Pension Fund Manager's remuneration 211,799 331,516 261,499 804,814 7,646 13,019 11,977 32,642Expenses incurred 18,675 18,675 18,675 56,025 9,332 9,333 9,333 27,998Amount paid on redemption on units 16,772,400 - - 16,772,400 - 2,000,000 1,800,000 3,800,000


----------------------------------Rupees--------------------------------------------------------------------------Rupees------------------------------------

-----------------------------------Rupees--------------------------------------------------------------------------Rupees-------------------------------------

Year ended June 30, 2013Year ended June 30, 2014


Central Depository Company of Pakistan Limited (trustee)Remuneration for the year 132,379 207,208 163,441 503,028 70,282 151,513 137,905 359,700Settlement charges 22,087 5,984 5,984 34,055 10,736 6,100 6,500 23,336

Note Equity Debt Money Market Equity Debt Money Market Sub-Fund Sub-Fund Sub-Fund Total Sub-Fund Sub-Fund Sub-Fund Total

JS Bank LimitedPurchase of Government securities - 95,717,945 - 95,717,945 - - -

Key management personnelAmount received on issue of units 300,000 900,000 300,000 1,500,000 300,000 4,540,800 5,761,200 10,602,000Units issued Number 1,180 4,975 1,944 8,099 2,255 26,089 40,875 69,219

Azgard Nine LimitedInterest income on PPTFCs - - - - - 2,310 1,548 3,858Net reversal of impairment upon partial settlement - - - - - 300,409 1,502,034 1,802,443

The transactions with related parties / connected persons are in the normal course of business at contracted rates and terms.

19 FINANCIAL INSTRUMENTS BY CATEGORY


The amount disclosed represents the amount of brokerage paid to related party and not the purchase or sale value of securities transacted through them. The purchase or sale value havetransactions with related party as the ultimate counter- parties are not known.

-----------------------------------Rupees------------------------------------------------------------------------Rupees-------------------------------------


JS Global Capital LimitedBrokerage expense 26,668 22,238 2,600 51,506 20,656 30,935 - 51,591

Ghani Glass LimitedDividend Income - - - - 145,000 - - 145,000

not been treated as

Financial assetsBank balances 3,079,812 - - 3,079,812 5,427,978 - - 5,427,978 2,991,964 - - 2,991,964Investments - 95,293,727 - 95,293,727 - 148,568,375 264,885 148,833,260 - 118,782,915 1,324,416 120,107,331Deposits and other 113,736 - - 113,736 6,003,561 - - 6,003,561 115,445 - - 115,445 receivables

Loans andreceivables

At fair valuethrough

profit or loss

Available forsale

TotalTotalLoans and

receivables


profit or loss

Available forsale

Total

----------------------------------------------------------------------------------------------------------------- Rupees ----------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------2014-----------------------------------------------------------------------------------------------------------Equity Sub-Fund Debt Sub-Fund Money Market Sub-Fund



profit or loss

Available forsale

Financial liabilitiesPayable to Pension Fund Manager - 228,488 228,488 - 356,057 356,057 - 276,920 276,920Payable to Trustee - 11,869 11,869 - 19,162 19,162 - 14,799 14,799Payable against redemption of units - 973,629 973,629 - 1,571,421 1,571,421 - 360,925 360,925Accrued expenses and other liabilities - 16,283 16,283 - 15,946 15,946 - 15,640 15,640


profit or loss

Otherfinancialliabilities

TotalAt fair value

throughprofit or loss


Money Market Sub-Fund

TotalAt fair value


Other financialliabilities

Total

-------------------------------------------------------------------------------------- Rupees------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------2014---------------------------------------------------------------------------------------Equity Sub-Fund Debt Sub-Fund

Financial assetsBank balances 2,851,246 - - 2,851,246 5,572,247 - - 5,572,247 3,889,923 - - 3,889,923Investments - 50,656,561 - 50,656,561 - - 101,786,212 101,786,212 - - 96,910,918 96,910,918Deposits and other 11,480,824 - - 11,480,824 2,874,120 - - 2,874,120 160,355 - - 160,355 receivables

Financial liabilitiesPayable to Pension Fund Manager - 100,532 100,532 - 170,888 170,888 - 157,606 157,606Payable to Trustee - 7,901 7,901 - 13,424 13,424 - 12,388 12,388Payable against redemption of units - - - - - - - - -Accrued expenses and other liabilities - 10,371 10,371 - 27,023 27,023 - 21,524 21,524

-------------------------------------------------------------------------------------- Rupees-------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------- Rupees-----------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------2013---------------------------------------------------------------------------------------Equity Sub-Fund Debt Sub-Fund Money Market Sub-Fund


profit or loss


TotalAt fair value



TotalAt fair value


Other financialliabilities

Total



profit or loss

Available forsale

TotalLoans andreceivables


profit or loss

Available forsale

TotalLoans and

receivables


profit or loss

Available forsale

Total

-------------------------------------------------------------------------------------------------------------------2013-------------------------------------------------------------------------------------------------------------------Equity Sub-Fund Debt Sub-Fund Money Market Sub-Fund





20 FINANCIAL RISK MANAGEMENT

The Fund’s objective in managing risks is the creation and protection of unitholders value. Risk is inherent in the Fund’sactivities, but it is managed through monitoring and controlling activities which are primarily setup to be performedbased on limits established by the Pension Fund Manager, the Fund's constitutive documents and the regulations anddirectives of the SECP. These limits reflect the business strategy and market environment of the Fund as well as the levelof risk that the Fund is willing to accept, The Board of directors of the Pension Fund Manager supervises the overall riskmanagement approach within the Fund. The Fund is exposed to market risk, credit risk and liquidity risk arising fromthe financial instruments it holds.

20.1 Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes inmarket variables such as interest rates and equity prices.

20.1.1 Currency risk

Currency risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of changesin foreign exchange rates. The Fund has no investments as at the balance sheet date which exposes it to currency risk.

20.1.2 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because ofchanges in market interest rates. As of 30th June 2014, the Fund is exposed to such risks in respect of bank balances,investment in debt and government securities. The Bank balances are subject to interest rates as declared by the respectivebank on periodic basis.

Debt securities are subject to floating interest rates other than government securities which are subject to fixed interestrates.

a) Sensitivity analysis of fixed rate instruments

Presently the Debt Sub-Fund and Money Market Sub-Fund hold Pakistan Investment Bonds and Treasury Billsexposing the Fund to fair value interest rate risk. The impact of 100 basis points increase / decrease in average brokerrates on June 30, 2014, with all variables held constant, on the net assets and total comprehensive income for theyear is as follows:

Change in basis points

100 (1,681,889) (124,449) (1,806,338)-100 1,681,889 124,449 1,806,338

Total

Effect on total comprehensiveincome and net assets

DebtSub-Fund

Money MarketSub-Fund

The composition of the Fund's investment portfolio and rates announced by the Financial Market Association of Pakistanis expected to change over time. Therefore, the sensitivity analysis prepared as of June 30, 2014 is not necessarily indicativeof the effect on the Fund's net assets due to future movements in interest rates.

Yield / interest rate sensitivity position for on balance sheet financial instruments is based on the earlier of contractualrepricing or maturity date and for off balance sheet instruments is based on settlement date.



Upto threemonths

More thanthree monthsand upto one

year

More thanone year

---------------------------- Rupees -----------------------------Equity Sub-Fund

On-balance sheet financial instruments

Financial assetsBank balances 3,079,812 - - - 3,079,812Investments - - - 95,293,727 95,293,727Deposits and other receivables - - - 113,736 113,736Total assets 3,079,812 - - 95,407,463 98,487,275

Financial liabilitiesPayable to Pension Fund Manager - - - 228,488 228,488Payable to Trustee - - - 11,869 11,869Payable against redemption of units - - - 973,629 973,629Accrued expenses and other liabilities - - - 16,283 16,283Total liabilities - - - 1,230,269 1,230,269

On-balance sheet gap 3,079,812 - - 96,637,732 99,717,544

Off-balance sheet financial instruments - - - - -

Off-balance sheet gap - - - - -

Total interest rate sensitivity gap 3,079,812 - - 96,637,732 99,717,544

Cumulative interest rate sensitivity gap 3,079,812 3,079,812 3,079,812

------------------------------------------------ 2014 -----------------------------------------------Exposed to yield / interest rate risk

Particulars Total

Not exposedto yield /

interest raterisk

Upto threemonths


year

More thanone year

---------------------------- Rupees -----------------------------Debt Sub-Fund


Financial assetsBank balances 5,427,978 - - - 5,427,978Investments 10,808,480 23,322,300 114,437,595 264,885 148,833,260Deposits and other receivables - - - 6,003,561 6,003,561Total assets 16,236,458 23,322,300 114,437,595 6,268,446 160,264,799

Financial liabilitiesPayable to Pension Fund Manager - - - 356,057 356,057Payable to Trustee - - - 19,162 19,162Payable against redemption of units - - - 1,571,421 1,571,421Accrued expenses and other liabilities - - - 15,946 15,946Total liabilities - - - 1,962,586 1,962,586

On-balance sheet gap 16,236,458 23,322,300 114,437,595 8,231,032 162,227,385



Total interest rate sensitivity gap 16,236,458 23,322,300 114,437,595 8,231,032 162,227,385


Particulars



interest raterisk

Total



Upto threemonths


year

More thanone year

---------------------------- Rupees -----------------------------Money Market Sub-Fund


Financial assetsBank balances 2,991,964 - - - 2,991,964Investments 118,782,915 - - 1,324,416 120,107,331Deposits and other receivables - - - 115,445 115,445Total assets 121,774,879 - - 1,439,861 123,214,740

Financial liabilitiesPayable to Pension Fund Manager - - - 276,920 276,920Payable to Trustee - - - 14,799 14,799Payable against redemption of units - - - 360,925 360,925Accrued expenses and other liabilities - - - 15,640 15,640Total liabilities - - - 668,284 668,284






Particulars



interest raterisk

Total

Upto threemonths


year

More thanone year

---------------------------- Rupees -----------------------------Equity Sub-Fund


Financial assetsBank balances 2,851,246 - - - 2,851,246Investments - - - 50,656,561 50,656,561Deposits and other receivables - - - 11,480,824 11,480,824Total assets 2,851,246 - - 62,137,385 64,988,631

Financial liabilitiesPayable to Pension Fund Manager - - - 100,532 100,532Payable to Trustee - - - 7,901 7,901Payable against redemption of units - - - - -Accrued expenses and other liabilities - - - 10,371 10,371Total liabilities - - - 118,804 118,804






Exposed to yield / interest rate riskNot exposed

to yield /interest rate

risk

TotalParticulars

------------------------------------------------ 2013 ------------------------------------------------



Upto threemonths


year

More thanone year

---------------------------- Rupees -----------------------------Debt Sub-Fund


Financial assetsBank balances 5,572,247 - - - 5,572,247Investments 5,985,144 2,982,234 92,520,742 298,092 101,786,212Deposits and other receivables - - - 2,874,120 2,874,120Total assets 11,557,391 2,982,234 92,520,742 3,172,212 110,232,579


On-balance sheet gap 11,557,391 2,982,234 92,520,742 3,383,547 110,443,914



Total interest rate sensitivity gap 11,557,391 2,982,234 92,520,742 3,383,547 110,443,914


------------------------------------------------ 2013 -----------------------------------------------

Particulars



risk

Total

Upto threemonths


year

More thanone year

---------------------------- Rupees -----------------------------Money Market Sub-Fund


Financial assetsBank balances 3,889,923 - - - 3,889,923Investments 14,962,860 - 80,457,608 1,490,450 96,910,918Deposits and other receivables - - - 160,355 160,355Total assets 18,852,783 - 80,457,608 1,650,805 100,961,196


On-balance sheet gap 18,852,783 - 80,457,608 1,842,323 101,152,714



Total interest rate sensitivity gap 18,852,783 - 80,457,608 1,842,323 101,152,714


------------------------------------------------ 2013 -----------------------------------------------

Particulars



risk

Total



20.1.3 Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inmarket prices (other than those arising from interest risk or currency risk) whether those changes are caused by factorsspecific to the individual financial instrument or its issuer, or factors affecting all similar financial instrument traded inthe market.

The Fund manages this risk by limiting its investment exposure in the following ways:

- Through diversification of investment portfolio

- Placing limits on individuals and aggregate exposures in accordance with the internal risk management policies andregulations laid down by the SECP.

The Fund’s investments in equity securities are publicly traded and are valued at the rates quoted on the relevant stockexchanges.

In case of 10% change in KSE 100 index on June 30, 2014, with all other variables held constant, net income for the yearwould increase / decrease by Rs. 9.69 million (2013: Rs. 5.24 million) as a result of gains / losses on equity securitiesclassified as at fair value through profit or loss.

The analysis is based on the assumption that the equity index had increased / decreased by 5% with all other variablesheld constant and all the Sub-Funds equity instruments moved according to historical correlation with the index. Thisrepresents the Pension Fund Manager's best estimate of a reasonable possible shift in the KSE 100 index, having regardto historical volatility of the index. The composition of the Sub-Fund investment's portfolio and the correlation thereofto the KSE 100 index, is expected to change over time. Accordingly, the sensitivity analysis prepared as of June 30, 2014is not necessarily indicative of the effect on the Sub-Fund's net assets of future movements in the level of the KSE 100index.

20.2 Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations and commitments associated withfinancial instruments. The Pension Fund Manager manages liquidity risk by continuously analysing the maturities of itsfinancial liabilities.

The Fund's policy is to manage this risk by investing majority of its assets in investments that are traded in an activemarket and can be readily disposed of.

The table below analyses the Fund's financial liabilities into relevant maturity groupings based on the remaining periodat the balance sheet date to the contractual maturity date. The amount in the table are the contractual undiscountedcash flows.

20.2.1 Equity Sub-Fund

Financial liabilitiesPayable to Pension Fund Manager 228,488 - - - - - 228,488 100,532 - - - - - 100,532Payable to Trustee 11,869 - - - - - 11,869 7,901 - - - - - 7,901Payable against redemption of units 973,629 - - - - - 973,629 - - - - - - -Accrued expenses and other liabilities 16,283 - - - - - 16,283 897,957 - - - - - 897,957

20.2.2 Debt Sub-Fund

------------------------------------------------ Rupees------------------------------------------------Financial liabilitiesPayable to Pension Fund Manager 356,057 - - - - - 356,057 170,888 - - - - - 170,888Payable to Trustee 19,162 - - - - - 19,162 13,424 - - - - - 13,424Payable against redemption of units 1,571,421 - - - - - 1,571,421 - - - - - - -Accrued expenses and other liabilities 15,946 - - - - - 15,946 974,949 - - - - - 974,949

------------------------------------------------ Rupees------------------------------------------------

2014 2013

Within 1month

1 to 3months

3 to 12months

1 to 5 years More than

5 years Total

2013

Within 1month

2014

------------------------------------------------ Rupees------------------------------------------------

More than5 years

Financialinstruments

withoutmaturity


withoutmaturity

Total Within 1

month 1 to 3

months 3 to 12months

1 to 5 years

------------------------------------------------ Rupees------------------------------------------------

Total More than

5 years


withoutmaturity


withoutmaturity

Total 1 to 3


1 to 5 years Within 1

month 1 to 3



5 years

20.2.3 Money Market Sub-Fund

Financial liabilitiesPayable to Pension Fund Manager 276,920 - - - - - 276,920 157,606 - - - - - 157,606Payable to Trustee 14,799 - - - - - 14,799 12,388 - - - - - 12,388Payable against redemption of units 360,925 - - - - - 360,925 - - - - - - -Accrued expenses and other liabilities 15,640 - - - - - 15,640 652,855 - - - - - 652,855

More than5 years


withoutmaturity

------------------------------------------------ Rupees------------------------------------------------

Total


withoutmaturity

Total Within 1

month 1 to 3


1 to 5 years

------------------------------------------------ Rupees------------------------------------------------

Within 1month

1 to 3months

3 to 12months


5 years

20132014

20.3 Credit risk

Credit risk represents the risk of a loss if the counter parties fail to perform as contracted. Credit risk arises from depositswith banks and financial institutions, credit exposure arising as a result of dividends receivable on equity securities,receivable against sale of investments and investment in debt securities. For banks and financial institutions balancesare kept with reputed parties. Credit risk on dividend receivable is minimal due to statutory protection. All transactionsin listed securities are settled / paid for upon delivery using the national clearing company system. The risk of defaultis considered minimal due to inherent systematic measures taken therein. Risk attributable to investment in TreasuryBills and Pakistan Investment Bonds is limited as these are guaranteed by the Federal Government.

Credit risk is managed and controlled by the Pension Fund Manager of the Fund in the following manner:

- The Fund limits its exposure to credit risk by only investing in liquid debt securities that have at minimum aninvestment grade as rated by a credit rating agency approved by the SECP. In the absence of issue rating, the Fundensures that the entity has an investment grade as rated by a credit rating agency approved by the SECP.

- The risk of counter party exposure due to failed trades causing a loss to the Fund is mitigated by a periodic reviewof trade reports, credit ratings and financial statements on a regular basis.

Concentration of Credit risk

Concentration of credit risk exists when changes in economic or industry factors similarly affect groups of counterpartieswhose aggregate credit exposure is significant in relation to the Fund's total credit exposure. The Fund's portfolio offinancial instruments is mostly concentrated in government securities and deposits held with a commercial bank.

20.4 Fair value of financial instruments

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willingparties in an arm's length transaction. Consequently, differences can arise between carrying values and the fair valueestimates.



Underlying the definition of fair value is the presumption that the Fund is a going concern without any intention orrequirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms.

Fair value of investments is determined as follows:

- Fair value of listed equity securities is determined on the basis of closing market prices quoted on the respectivestock exchange.

- Investments in government securities are valued on the basis of average rates of brokers as announced by theFinancial Markets Association of Pakistan.

- Listed and unlisted debt securities, other than government securities, are valued on the basis of prices announcedby the Mutual Funds Association of Pakistan (MUFAP), as per the method of valuation agreed with the Trustees ofthe Fund under the Rules. The MUFAP calculates these prices in accordance with the SECP's Circular 1 of 2009. Thesaid circular prescribes a valuation methodology which in case of currently traded securities, is based on weightedaverage prices during the 15 days preceding the valuation date and in case of thinly or non-traded securities, on thebasis of discount coupon method which takes into consideration credit risk and maturities of the instruments.

- The fair value of all other financial assets and financial liabilities of the Fund approximate their carrying amountsdue to short term maturities of these instruments.

20.5 Fair value hierarchy

The Fund’s accounting policy on fair value measurements of investments is discussed in note 3.2 to these financialstatements.

The Fund measures fair values using the following fair value hierarchy that reflects the significance of the inputs usedin making the measurements:

Level 1: Fair value measurements using quoted price (unadjusted) in an active market for identical assets or liabilities.

Level 2: Fair value measurements using inputs other than quoted prices included within level 1 that are observablefor the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Fair value measurement using inputs for the asset or liability that are not based on observable market data(i.e. unobservable inputs).

The table below analyses financial instruments measured at fair value at the end of the reporting period by the level inthe fair value hierarchy into which the fair value measurement is categorised:



Level 1 Level 2 Level 3 Total

At fair value through profit or loss - held for tradingGovernment securities - Market Treasury Bills - 118,782,915 - 118,782,915

- 118,782,915 - 118,782,915Available-for-sale investmentsListed equity securities 1,324,416 - - 1,324,416

1,324,416 - - 1,324,416


At fair value through profit or loss - held for tradingListed equity securities 50,656,561 - - 50,656,561

50,656,561 - - 50,656,561


2014Money Market Sub-Fund

------------------ Rupees ------------------

2013Equity Sub-Fund

------------------ Rupees ------------------

2013Debt Sub-Fund


Available-for-sale investmentsListed debt securities - 1,510,983 - 1,510,983Government securities - Market Treasury Bills - 46,957,820 - 46,957,820Government securities - Pakistan Investment Bonds - 53,019,317 - 53,019,317Listed equity securities 298,092 - - 298,092

298,092 101,488,120 - 101,786,212


Available-for-sale investmentsListed equity securities 1,490,450 - - 1,490,450Government securities - Market Treasury Bills - 95,420,468 - 95,420,468

1,490,450 95,420,468 - 96,910,918

------------------ Rupees ------------------

2013Money Market Sub-Fund

------------------ Rupees ------------------


At fair value through profit or loss - held for tradingListed equity securities 95,293,727 - - 95,293,727

95,293,727 - - 95,293,727


At fair value through profit or loss - held for tradingGovernment securities - Market Treasury Bills - 34,130,780 - 34,130,780Government securities - Pakistan Investment Bonds - 114,437,595 - 114,437,595

- 148,568,375 - 148,568,375Available-for-sale investmentsListed equity securities 264,885 - - 264,885

264,885 - - 264,885

------------------Rupees------------------

Debt Sub-Fund

2014Equity Sub-Fund

------------------Rupees------------------

2014



20.6 Capital risk management

The Fund's capital is represented by redeemable units of Sub-Funds. They are entitled to payment of a proportionateshare based on the Sub-Fund's net assets value per unit on the redemption date. The relevant movements are shownin the 'statement of movement in Participant's Sub-Funds'. In accordance with the risk management policies statedabove, the Fund endeavours to invest the subscriptions received in appropriate investment avenues while maintainingsufficient liquidity to meet redemptions. Since the participants of the Fund have invested with a long term objective,the possibility of a significant redemption pressure is limited, such liquidity being augmented by short term borrowingsor disposal of investments where necessary. During the year no such borrowing was availed.

All units, including the core units, and fractions represent an undivided share in the pertinent Sub-Funds of the Fundand rank pari passu as their rights in the net assets and earnings of the Sub-Fund are not tradable or transferable. Eachparticipant has a beneficial interest in the Sub-Fund proportionate to the units held by such participant in such Sub-Fund.

21 FINANCIAL PERFORMANCE

21.1 EQUITY SUB-FUND

2014 2013 % Change 2012 2011

Net income after taxation 36,383,524 28,061,419 30 5,233,166 6,772,318Capital gain on sale of investments - net 29,280,335 20,282,287 44 1,921,796 1,723,239Unrealised gain on re-measurement of investments

classified as financial assets at fair value throughprofit or loss - net 12,324,333 9,542,584 29 1,826,442 3,597,436

Dividend income 2,616,606 2,657,674 (2) 2,045,400 1,846,026

Equity Sub-FundParticulars

Dividend income 2,616,606 2,657,674 (2) 2,045,400 1,846,026Interest income 592,336 227,016 161 293,064 200,980Net asset value per unit 319.47 197.80 62 110.99 94.79Earnings per unit 121.67 86.82 40 16.21 20.92Total contributions received - Gross 33,457,109 1,202,910 2,681 481,673 319,843

21.2 DEBT SUB-FUND

2014 2013 % Change 2012 2011

Net income after taxation 6,145,189 14,905,734 (59) 9,082,369 6,702,277Capital gain on sale of investments - net (3,901,867) 3,563,292 (210) 3,954 (524,593)Unrealised gain on re-measurement of investments

classified as financial assets at fair value throughprofit or loss - net 78,662 - 100 - -

Interest income 13,364,040 10,093,192 32 10,018,725 9,344,393Net asset value per unit 187.41 179.58 4 161.18 145.01Earnings per unit 7.33 24.56 (70) 16.44 12.28Total contributions received - Gross 187,122,232 30,316,000 517 18,216,725 15,947,293

Debt Sub-FundParticulars



21.3 MONEY MARKET SUB-FUND

2014 2013 % Change 2012 2011

Net income after taxation 8,003,820 12,342,229 (35) 8,054,341 7,494,921Capital gain on sale of investments - net (837) 1,965,465 (100) 69,440 2,071Unrealised gain on re-measurement of investments

classified as financial assets at fair value throughprofit or loss - net (17,900) - 100 - -

Interest income 10,144,344 8,906,774 14 8,921,795 7,855,444Net asset value per unit 159.25 148.96 7 133.79 120.84Earnings per unit 10.48 18.37 (43) 13.24 12.48Total contributions received - Gross 128,812,089 29,524,629 336 17,421,746 15,586,575

21.4 Highest and lower issue price of units during the year

Lowest Highest Lowest Highest Lowest Highestissue price issue price issue price issue price issue price issue price

For the year ended June 30, 2014 202.30 333.08 175.66 187.70 148.97 159.25

-------------------------------------------------- (Rupees) --------------------------------------------------

Debt Sub-FundEquity Sub-Fund Money Market Sub-Fund

Money Market Sub-FundParticulars

For the year ended June 30, 2014 202.30 333.08 175.66 187.70 148.97 159.25For the year ended June 30, 2013 112.83 204.86 161.28 181.81 133.92 149.75

22 GENERAL

22.1 Corresponding figures have been reclassified, rearranged or additionally incorporated in these financial statements,wherever necessary to facilitate comparison. No significant rearrangements or reclassifications were made in thesefinancial statements.

23 DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorised for issue by the Board of Directors of the Pension Fund Manager onAugust 15, 2014.

DirectorChief Executive Officer

Ali Akhtar Ali Nazar Mohammad Shaikh

For JS Investments Limited(Pension Fund Manager)



js pension savings fund - js investments limited (jsil) · for 4qfy14 were recorded at usd 233...

Documents