js income fund - js investmentsof js income fund for the period ended december 31, 2010. money...

JS Income FundHalf Yearly Report for the period

ended December 31, 2010

CONTENTS

01

Vision and Mission Statement...........................................................................................02

Organization..................................................................................................................03

Directors' Report to the Unit Holders..................................................................................04

Report of the Trustee to the Unit Holders............................................................................05

Auditors’ Review report to the Unit Holders..........................................................................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 Statements.........................................................13

JS Income Fund

JS Income Fund

02

In July, 2010, the Board of Directors of JS Investments Limited adoptedthe sustainable growth initiative "JSIL 2010 Onwards ~"proposed bythe newly appointed CEO. The revised Vision, Mission, and Statementof Broad Policy Objectives of JS Investments form the bedrock of "JSIL2010 Onwards ~" and have been framed after a thorough S.W.O.T.Analysis of the Company and assessment of the Macro-economic andFinancial Market Trends.

VISIONTo be recognized as a responsible asset manager respected for continuinglyrealizing goals of its investors.

MISSIONTo build JS Investments into a top ranking Asset Management Company;founded on sound values; powered by refined knowhow; supported bya committed team operating within an accountable framework of social,ethical and corporate responsibility - a strong and reliable institution forits shareholders to own; an efficient service provider and value creatorfor clients; an exciting and fulfilling work place for employees; and aparticipant worth reckoning for competitors.

BROAD POLICY OBJECTIVES

Value creation for clients on a sustainable basisMaintain high standards of ethical behaviors and fiduciary responsibilityManage Investments with Prudence and with the aim of providingconsistent returns better than that of peersTake Products and Services to the People; Create awareness onunderstanding financial goals, risks and rewardsProfessional Excellence - Adapt, Evolve and Continuously ImproveMaintain highly effective controls through strong compliance and riskmanagementA talented, diligent and diverse HR

JS Income Fund

ORGANIZATION

03

Management Company JS Investments Limited7th Floor, The Forum, G-20Khayaban-e-Jami, Block-9, CliftonKarachi-75600Tel: (92-21) 111-222-626 Fax: (92-21) 35361724

E-mail: [email protected]: www.jsil.com

Board of Directors Munawar Alam Siddiqui ChairmanRashid Mansur Chief Executive OfficerSuleman Lalani Executive DirectorNazar Mohammad ShaikhLt.General (R) Masood ParwaizSadeq SayeedMazharul 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 Suleman Lalani

Trustee MCB Financial Services Ltd.3rd Floor, Adamjee HouseI.I.Chundrigar Road,Karachi - 74000

Auditors Ernst & Young Ford Rhodes Sidat HyderChartered Accountants

Legal Adviser Bawaney & Partners

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

04

DIRECTORS’ REPORT TO THE UNIT HOLDERS

The Board of Directors of JS Investments Limited has pleasure in presenting to you the un-audited financial statementsof JS Income Fund for the period ended December 31, 2010.

Money Market Review

After maintaining a loose monetary policy since early 2009, the State Bank of Pakistan (SBP) reversed its stance duringthe first half of 2011, in a bid to calm down the spiraling inflation level. CPI averaged 11.7% for FY10 and with pendingissues like upward revision in electricity tariffs and increase in General Sales Tax (GST), risks of further development ininflationary pressures in FY11 were mounting. The situation was worsened by the devastating floods which proveddetrimental, specifically to the agri-output of the country. Meanwhile government borrowings from the SBP continuedunabated providing additional impetus to inflationary pressures, as average CPI for 1HFY11 reached 14.6%. Consequently,the SBP increased the discount rate thrice by 50bps each, to reach 14% by the end of the 6 month period.

On the flip side, the country sought some relief as the current account registered a surplus of USD 26mn for 1HFY11on the back of high exports, robust remittances of USD 5.3bn and high magnitude of Coalition Support Fund (CSF)receipts worth USD 743mn. But political conditions remain weak while the notorious problems of electricity shortageand volatile law and order conditions persist, which have kept foreign investments afar and depressed the economicactivity in the country.

During the period under review, the average 6 months KIBOR increased by 56bps to 13.03% in 1HFY11 from 12.47%last year. In addition, the weighted average yields of 6 months and 12 months T Bills stood at 13.41% and 13.73%respectively.

Fund Performance

The Fund earned a net income of Rs. 66.000 million during the period under review compared to net income of Rs.135.002 million during the same period last year. The net assets of the Fund were Rs. 743.074 million as on December31, 2010 compared to Rs. 996.633 million as on June 30, 2010 showing a decline of 25.44%. The net asset value(NAV) per unit as on December 31, 2010 was Rs. 90.25 as compared to NAV of Rs. 87.77 per units as on June 30,2010. The Fund outperformed its benchmark return by 8.71% during the period ended December 31, 2010.

The board of Directors of the management Company has approved interim dividends of Rs. 4.00 per unit to the unitholder.

Fund and Asset Manager Rating

The Pakistan Credit Rating Agency (PACRA) assigned the stability rating of "A+ (f)" (Single A Plus - Fund Rating) to thefund. The fund's rating denotes a strong capacity to maintain relative stability in returns and possesses low exposureto risks.

JCR-VIS Credit Rating Company Limited has assigned Management Quality Rating of "AM2-"(AM-Two Minus) to JSInvestments 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 the dedicationand hard work and the unit holders for their confidence in the Management.

JS Income Fund

Karachi: February 15, 2011 Rashid Mansur

Chief Executive Officer

On behalf of the Board

05

REPORT OF THE TRUSTEE TO THE UNIT HOLDERS

Report of the Trustee Pursuant to Regulation 41(h) of the Non-Banking Finance Companies and NotifiedEntities Regulations, 2008

JS Income Fund, an open-end scheme established under a trust deed executed between JS Investments Limited as theManagement Company and MCB Financial Services Limited as the Trustee on July 18, 2002. The Fund was authorizedby the Securities and Exchange Commission of Pakistan (SECP) on August 02, 2002.

As per the Deed of change of Trustee and amendment of Trust Deed dated May 28, 2005 MCB Financial ServicesLimited retired as the Trustee and Central Depository Company of Pakistan Limited was appointed as the Trustee of JSIncome Fund. Subsequently MCB Financial Services Limited was reappointed as new Trustee of the Fund and CentralDepository Company of Pakistan Limited retired as per the second supplemental trust deed dated October 06, 2007.However, the assets of the fund were transferred to MCB Financial Services Limited by Central Depository Companyof Pakistan Limited on November 03, 2007.

1. JS Investments Limited, the Management Company of JS Income Fund has, in all material respects, managed JSIncome Fund during the six months period ended December 31, 2010 in accordance with the provisions of the following:

(i) The limitations imposed on the Asset Management Company and the Trustee under the trust deed and other applicable laws;

(ii) the valuation or pricing is carried out in accordance with the deed and any regulatory requirement;

(iii) the creation and cancellation of units are carried out in accordance with the deed;

(iv) and any regulatory requirement

For the purpose of information, the attention of unit holders is drawn towards auditor's report and note 9 of the financialstatements which explains the reasons for reversal of provision during the period on account of contribution to Worker'sWelfare Fund.

JS Income Fund

Khawaja Anwar HussainChief Executive Officer

MCB Financial Services LimitedKarachi: February 09, 2011

06

AUDITORS' REPORT TO THE UNIT HOLDERS ON REVIEWOF INTERIM FINANCIAL INFORMATION

Introduction

We have reviewed the accompanying condensed interim statement of assets and liabilities of JS Income Fund (the Fund)as at 31 December 2010 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 (here-in-after referred toas "interim financial information") for the six-months' period then ended. Management Company (JS Investments Limited)is responsible for the preparation and presentation of this interim financial information in accordance with approvedaccounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusionon 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 InterimFinancial Information Performed by the Independent Auditor of the Entity". A review of interim financial informationconsists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analyticaland other review procedures. A review is substantially less in scope than an audit conducted in accordance withInternational Standards on Auditing and consequently does not enable us to obtain assurance that we would becomeaware 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 financialinformation is not prepared, in all material respects, in accordance with approved accounting standards as applicablein Pakistan for interim financial reporting.

Emphasis of Matter

Without qualifying our conclusion, we draw attention to note 9 to the condensed interim financial statements whichexplains the reasons for reversal of provision during the period on account of contribution to the Workers' Welfare Fundamounting to Rs.16,416,839. In this regard, the Management Company of the Fund expects that the constitutionalpetition pending in the Honorable High Court of Sindh on the subject will be decided favorably.

Other Matter

The financial statements of the Fund for the half year ended 31 December 2009 and for the year ended 30 June 2010were reviewed and audited by another firm of Chartered Accountants whose review report dated 26 February 2010contains an emphasis of matter paragraph regarding the valuation of held-to-maturity investments and the audit reportdated 17 August 2010 expressed an unmodified opinion on those statements.

JS Income Fund

Ernst & Young Ford Rhodes Sidat HyderChartered AccountantsKarachi: February 15, 2011

CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIESAS AT DECEMBER 31, 2010

07

31 December2010

Note

Bank balances and Term Deposits 4 208,779,762 55,976,593Receivables and prepayment 5 11,103,761 15,775,678Investments 6 526,196,188 946,770,884Advance tax 1,210,475 1,210,475Security deposits 100,000 100,000Total assets 747,390,186 1,019,833,630

Remuneration payable to the Management Company 122,129 123,883Remuneration payable to the Trustee 63,280 86,006Annual fee payable to Securities and Exchange Commission of Pakistan 325,215 2,949,191Creditors, accrued and other liabilities 3,805,910 20,041,659Total liabilities 4,316,534 23,200,739

Net assets 743,073,652 996,632,891

Unit holders' funds 743,073,652 996,632,891

Number of units in issue 8,233,682 11,355,656

Net assets value per unit 90.25 87.77

Contingency 9 - -

The annexed notes from 1 to 14 form an integral part of these condensed interim financial statements.

30 June2010

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

JS Income Fund

(Un-Audited) (Audited)

Assets

Liabilities

For JS Investments Limited(Management Company)

ChairmanChief Executive OfficerMunawar Alam SiddiquiRashid Mansur

IncomeFinancial income 7 50,907,369 307,004,343 25,156,898 131,227,083Net loss from transaction in marketable securities 8 (3,715,584) (29,723,836) (9,066,792) (22,549,468)Amortisation of discount on availablefor sale investments 1,371,709 5,938,713 591,482 2,254,659Reversal of provision against debt security - - - (2,272,297)Element of income / (loss) and capital gain /(loss) in prices of units sold less those of units redeemed - net 32,493,549 (35,265,047) 14,398,825 (17,753,122)

81,057,043 247,954,173 31,080,413 90,906,855

ExpensesRemuneration of the Management Company 6,504,322 36,981,489 3,044,646 17,784,553Remuneration of the trustee 433,621 1,484,783 202,976 718,852Annual fee of Securities & ExchangeCommission of Pakistan 325,215 1,849,075 152,231 889,228Provision against impaired debt securities (available-for-sale investments) 6.3.1 23,575,252 71,679,215 - 71,679,215Listing fee 20,240 20,240 10,120 10,120Bank and settlement charges 99,465 393,077 22,492 240,560Securities transactions cost 325 50,126 325 36,122Auditors' remuneration 333,040 312,035 166,520 150,915Printing, stationery and postage charges 77,279 97,036 38,639 40,180Legal and professional charges - 21,648 - 21,648Advertisement 4,144 - 4,144 -Reversal of contribution toWorkers' Welfare Fund 9 (16,416,839) - - -Mutual fund rating fee 100,832 63,020 50,416 37,812

15,056,896 112,951,744 3,692,509 91,609,205

Net income / (loss) for the period 66,000,147 135,002,429 27,387,904 (702,350)


08

CONDENSED INTERIM INCOME STATEMENT (UNAUDITED)FOR THE HALF YEAR ENDED 31 DECEMBER 2010

Note

JS Income Fund

Half Year Ended Quarter Ended 31 December

2010 31 December

2009 31 December

2010 31 December

2009------------Rupees------------ ------------Rupees------------



09

CONDENSED INTERIM STATEMENT OF COMPREHENSIVEINCOME (UNAUDITED)

FOR THE HALF YEAR ENDED 31 DECEMBER 2010

JS Income Fund

Net income / (loss) for the period 66,000,147 135,002,429 27,387,904 (702,350)

Other comprehensive income for the period

-Surplus on revaluation of available-for-sale investments - net 8,825,563 51,294,192 11,457,568 75,665,166

-Deficit on revaluation of available-for-sale investments transferred to income on maturity / sale 19,024,194 49,764,085 8,458,588 41,823,924

27,849,757 101,058,277 19,916,156 117,489,090

Total comprehensive income for the period 93,849,904 236,060,706 47,304,060 116,786,740



2010 31 December

2009 31 December

2010 31 December

2009-------------Rupees------------- ------------Rupees------------



CASH FLOWS FROM OPERATING ACTIVITIES

Net income for the period 66,000,147 135,002,429Adjustments for:Amortisation of discount on available-for-sale investments (1,371,709) (5,938,713)Provision against accrued markup on investments 4,537,024 21,286,770Provision against impaired debt securities(available-for-sale investments) 23,575,252 -Element of (income) / loss and capital (gain) / loss in prices of units sold less those of units redeemed - net (32,493,549) 35,265,047

60,247,165 185,615,533Decrease/ (increase) in assets Receivable against sale of investments - 29,094,176Receivable against issue of units - 6,490,848Receivable against reverse repurchase transactions - 89,869,000Receivable against clean placements - 136,000,000Investments 426,220,910 901,086,661Mark-up / return receivables 66,445 654,695Prepayment 68,448 (157,156)

426,355,803 1,163,038,224

Decrease in liabilitiesPayable on redemption of units - (15,211,097)Remuneration payable to the Management Company (1,754) (5,727,636)Remuneration payable to the Trustee (22,726) (14,147)Annual fee payable to Securities and Exchange Commission of Pakistan (2,623,976) (5,100,333)Creditors, accrued and other liabilities (16,235,749) (27,295,702)

(18,884,205) (53,348,915)

Net cash inflow from operating activities 467,718,763 1,295,304,842

CASH FLOWS FROM FINANCING ACTIVITIESAmounts received on issue of units 43,418,395 2,876,704,655Payment against redemption of units (357,254,758) (4,025,190,297)Encashment of bonus units (1,079,231) (120,861,563)Net cash used in financing activities (314,915,594) (1,269,347,205)

Net increase in cash and cash equivalents 152,803,169 25,957,637

Cash and cash equivalents at beginning of the period 55,976,593 1,837,903,816

Cash and cash equivalents at end of the period 208,779,762 1,863,861,453

The annexed notes from 1 to 14 form an integral part of these condensed interim financial statements

10

CONDENSED INTERIM CASH FLOW STATEMENT (UNAUDITED)


JS Income Fund

31 December2010

31 December2009

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



11

CONDENSED INTERIM STATEMENT OF MOVEMENT INUNIT HOLDERS' FUND (UNAUDITED)


JS Income Fund

Net assets at the beginning of the period 996,632,891 5,014,850,320

Cash received on issue of 873,753 units(2009: 28,130,280 units) * 43,418,395 2,876,704,655

Cash paid on redemption of 3,995,727units (2009: 39,251,869 units) * (357,254,758) (4,025,190,297)

(313,836,363) (1,148,485,642)

Encashment of bonus units (1,079,231) (120,861,563)

Element of (income) / loss and capital gain / (loss) in prices of units sold less those of units redeemed - net (32,493,549) 35,265,047

Total comprehensive income for the period 93,849,904 236,060,706

Net assets as at end of the period 743,073,652 4,016,828,868

*Including 382,345 (2009: 2,233,834) units issued as bonus units during the period.


31 December2010

31 December2009

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



CONDENSED INTERIM DISTRIBUTION STATEMENT (UNAUDITED)


12

JS Income Fund

Undistributed (loss) / income at beginning of the period (120,007,912) 361,597,060

Final distribution (Nil) for the year ended 30 June 2010 (2009: at the rate of 4.50 per unit) - (215,189,099)

Net income for the period 66,000,147 135,002,429

Interim distribution at the rate of Rs. 2.00 per unit approved on September 30, 2010 (2009: Rs. 2.75 per unit approved on 23 October 2009 respectively) (19,093,512) (130,118,854)

Second Interim distribution at the rate of Rs. 2.00 per unit approved on December 30, 2010 (2009: Nil) (16,118,227) -

Undistributed (loss) / income at end of the period (89,219,504) 151,291,536


31 December2010

31 December2009

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



13

NOTES TO THE CONDENSED INTERIM FINANCIALSTATEMENTS (UNAUDITED)FOR THE HALF YEAR ENDED 31 DECEMBER 2010

1. LEGAL STATUS AND NATURE OF BUSINESS

JS Income Fund ("the Fund") has been established under the Non-Banking Finance Companies (Establishmentand Regulation) Rules, 2003. The Fund is governed under Non-Banking Finance Companies (Establishment andRegulation) Rules, 2003 and Non-Banking Finance Companies and Notified Entities Regulations, 2008. It hasbeen constituted under a Trust Deed, dated 18 July 2002, between JS Investments Limited as the ManagementCompany, a company incorporated under the Companies Ordinance, 1984 and MCB Financial Services Limited(MCBFSL) as the Trustee.

The Fund is an open end mutual fund and is listed on Lahore Stock Exchange. Units are offered for publicsubscription on a continuous basis. The units are transferable and can also be redeemed by surrendering themto the Fund.

The Fund invests primarily in fixed-rate securities and other avenues of investment, which include corporate debtsecurities and Government securities.

The registered office of the Management Company is situated at 7th Floor, The Forum, Clifton, Karachi, Pakistan.

2. BASIS OF PREPARATION

2.1 These condensed interim financial statements have been prepared in accordance with International AccountingStandard - 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 theannual financial statements and should be read in conjunction with the financial statements of the Fund for theyear ended 30 June 2010.

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 consistentwith those followed in the preparation of the Fund's annual financial statements for the year ended 30 June 2010.

The Fund has adopted the following amended IFRS and IFRIC interpretation which became effective during theperiod:

- 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 inconsistenciesand clarifying wording. These improvements are listed below:

IFRS 5 - Non-Current Assets Held for Sale and Discontinued OperationsIFRS 8 - Operating SegmentsIAS 1 - Presentation of Financial StatementsIAS 7 - Statement of Cash FlowsIAS 17 - LeasesIAS 36 - Impairment of AssetsIAS 39 Financial Instruments: Recognition and Measurement

The adoption of the above standards, amendments / improvements and interpretations did not have any effecton these condensed interim financial statements.

JS Income Fund

14

4. BANK BALANCES

- In profit / loss sharing accounts 4.1 8,779,762 55,976,593- In term deposits 4.2 200,000,000 -

208,779,762 55,976,593

4.1 This includes bank balance of Rs. 5,226,836 (2009: Rs. 155,752) with JS Bank Limited (a related party) thatcarries profit at 11.50% (2009: 9.00%) per annum. Other profit / loss sharing accounts carry profit rates rangingfrom 5% to 11.9% (2009: 5% to 11.25%) per annum.

4.2 This represents term deposit with JS Bank Limited (a related party) carrying interest rate at the rate of 14.25%(2009: Nil) per annum on the principal amount and accrued interest. This deposit will mature on January 31,2011.

5. RECEIVABLES AND PREPAYMENT

Mark-up / return receivable on:- term finance certificates and Sukuk certificates

(available-for-sale investments) 15,944,779 27,572,520- Pre-IPO investments (available-for-sale investments) 4,007,109 4,007,109- government securities - 209,989- bank balances 9,852 1,646- term deposits 78,082 -

20,039,822 31,791,264

Prepayments 19,760 88,20820,059,582 31,879,472

Less: Provision against accrued markup on non-performing assets- term finance certificates and Sukuk certificates 4,948,712 12,096,685- pre-IPO investments 4,007,109 4,007,109

5.1 8,955,821 16,103,79411,103,761 15,775,678

5.1 Balance at Beginning of the period 16,103,794 4,007,109

Charged during the period 4,537,024 12,096,685

Reversal upon sale of certificates (11,684,997) -

Balance at the end of the period 8,955,821 16,103,794

6 INVESTMENTS

Available-for-saleListed Term Finance Certificates 6.1 149,597,950 177,123,682Unlisted Term Finance Certificates 6.2 91,534,553 98,034,834Unlisted Sukuk Certificates 6.3 57,742,405 154,871,734Government Securities 6.4 227,311,280 516,730,634Advance against subscription of term finance certificates - (cement sector) 6.5 10,000 10,000

526,196,188 946,770,884

JS Income Fund

31 December2010

(Un-Audited)

30 June2010

(Audited)

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

15

Face value of Rs.5,000/- each unless stated otherwise

Financial ServicesJahangir Siddiqui & Company Limited- TFC III (a related party) 2,427 - 2,427 - - - Jahangir Siddiqui & Company Limited- TFC IV (a related party) 10,174 - - 10,174 51,021,372 6.87 BanksNIB Bank Limited 7,092 - - 7,092 34,482,425 4.64United Bank Limited - TFC IV 12,218 - - 12,218 58,063,455 7.81

Personal Goods (See note 6.1.1)Azgard Nine Limited (a related party) 18,530 - 14,000 4,530 16,255,565

Less: Provision held (10,224,867)

6,030,698 0.81

149,597,950 20.13Cost of available-for-sale investments as at 31 December 2010. 151,501,379

6.1.1 The balance of TFC before provision amounted to Rs 16.25 million as at 31 December 2010 (30 June 2010: 66.49 million)The Fund has made a provision of Rs. 5.74 million (30 June 2010: Nil) against the principal amount in accordance with therequirements of Circular 1 of 2009 dated 6 January 2009 issued by the SECP. Further, in accordance with the provisioningpolicy of the Fund approved by the Board of Directors of the Management Company, the Fund has made an additionalprovisioning of Rs. 4.5 million (30 June 2010: 41.82 million) against this investment.

6.2 Unlisted Term Finance Certificates


Financial ServicesJahangir Siddiqui & Company Limited - TFC V privately placed - (a related party) 1,800 - - 1,800 8,942,609 1.20

Orix Leasing Pakistan Limited - privately placed (face value of Rs. 100,000/-) 562 - - 562 46,527,650 6.26

Technology and communicationOptimus Limited - privately placed 7,339 - - 7,339 36,064,294 4.85

91,534,553 12.31Cost of available-for-sale investmentsas at 31 December 2010. 91,366,877

JS Income Fund

% of net

assets

---Rupees--- Carrying

value as atDecember 31

2010

As atDecember 31

2010

Matured/ disposed

during the period

Acquired during the

period

As atJuly 012010

------Number of certificates-----6.1 Listed Term Finance Certificates (TFCs)

% of net

assets



2010

As atDecember 31

2010

Matured/ disposed

during the period

Acquired during the

period

As atJuly 012010

------Number of certificates-----

16

6.3 Unlisted Sukuk Certificates


Construction and MaterialsMaple Leaf Cement Factory Limited - privatelyplaced 55,049 - 55,000 49 153,520 0.02

Maple Leaf Cement Factory Limited - privately placed - 2,064 - 2,064 7,265,885 0.98

ChemicalsAgritech Limited-privately placed-(related party) 15,484 - - 15,484 73,898,252 Less: Provision held - See note 6.3.1 (23,575,252)

50,323,000 6.77

57,742,405 7.77Cost of available-for-sale investments as at 31 December 2010. 72,584,651

6.3.1

6.4 Government Securities

Face value of Rs.100,000/- each unless stated other wise

Pakistan Investment Bonds10 - Years Pakistan Investment Bonds 1,000 - 1,000 - - -

Treasury Bills1 - Year Treasury Bills 3,550 5,400 8,950 - - -6 - Month Treasury Bills 1,050 3,000 4,050 - - -3 - Month Treasury Bills 85 17,210 14,995 2,300 227,311,280 30.59

227,311,280 30.59

Cost of available-for-sale investments as at 31 December 2010. 227,356,946

JS Income Fund

% of net

assets



2010

As atDecember 31

2010

Matured/ disposed

during the period

Acquired during the

period

As atJuly 012010


The Fund has made a provision of Rs. 11.96 million against the principal amount in accordance with the requirements ofCircular 1 of 2009 dated 6 January 2009 issued by the SECP. Further, in accordance with the provisioning policy of the Fundapproved by the Board of Directors of the Management Company, the Fund has made an additional provisioning of Rs. 11.61million against this investment.

% of net

assets



2010

As atDecember 31

2010

Matured/ disposed

during the period

Acquired during the

period

As atJuly 012010


17

JS Income Fund

6.5 Advance against subscription of term finance certificates (Cement Sector)

This represents application money for subscription of 10,000 units of term finance certificates (Pre-IPO) of DewanCement Limited (DCL). DCL was required to issue TFCs within a period of 270 days of public offering, which offeringhowever was not made and the period of 270 days to complete the public offering expired on October 05, 2008.

The Fund had made a provision of Rs. 49.99 million against the actual amount of 50 million, disbursed in accordancewith provisioning policy of the fund approved by the Board of Directors of the management Company. Further, accruedmark-up of Rs. 4.007 million have been reversed by the fund.

The above provision is without prejudice to the Fund's claim against the above entire exposure of Rs. 50 million,unrecognised mark-up and other charges etc.

7. FINANCIAL INCOME

Mark-up / Return on:- bank balances & term deposits 3,175,350 75,351,825 1,116,737 28,679,533- term finance certificates and Sukuks certificates 22,106,281 123,707,371 13,795,446 60,698,788Less: Provision against accrued markup on term finance certificates and sukuk certificates (available-for-sale investments) (4,537,024) (21,286,770) (4,537,024) (21,286,770)

17,569,257 102,420,601 9,258,422 39,412,018 - government securities 30,162,762 109,007,969 30,162,762 53,865,361

- reverse repurchase transactions - 7,008,958 - 3,640,254- clean placements - 2,276,575 - 995,548- commercial papers - 10,938,415 (15,381,023) 4,634,369

50,907,369 307,004,343 25,156,898 131,227,083

8. NET LOSS FROMTRANSACTION IN MARKETABLE SECURITIES

Gain / (loss) on sale of debt securities 15,704,277 (23,420,436) 150,848 (18,396,322)Loss on sale of government securities (19,419,861) (6,303,400) (9,217,640) (4,153,146)

(3,715,584) (29,723,836) (9,066,792) (22,549,468)


2010 31 December

2009 31 December

2010 31 December

2009------------Rupees------------ ------------Rupees------------

9. 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 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 Honorable High Courtof Sindh, challenging the applicability of WWF to the CISs, which is pending adjudication. However, without prejudiceto the above, the Management Company made a provision for WWF contribution in the annual financial statementsfor the year ended 30 June 2010.

Subsequent to the year ended June 30, 2010, a clarification was issued by the Ministry of Labour and Manpower (theMinistry) which stated that mutual funds are not liable to contribute to WWF on the basis of their income. This clarificationwas forwarded by Federal Board of Revenue (FBR) (being the collecting agency of WWF on behalf of the Ministry) videits letter dated 06 October 2010 to its members for necessary action. Based on this clarification, the FBR also withdrewnotice of demand which it had earlier issued to one of the mutual funds for collection of WWF. However, the FBR videits letter dated 04 January 2011 have cancelled its earlier letter dated 06 October 2010 ab initio and issued show causenotices to certain mutual funds for collecting WWF. In respect of such show cause notices, one of the mutual fund hasbeen granted stay by Honorable High Court of Sindh vide its order dated 10 February 2011 on the basis of the pendingconstitutional petition in the said court as referred above and the remaining mutual funds are in the process of filingpetitions for stay of proceedings in this case.

In view of the afore mentioned developments during the period, the Management Company now believes that there isno compelling reason to retain provision on account of WWF contribution in the financial statements. Further, theManagement Company also expects that the constitutional petition pending in the Honorable High Court of Sindh onthe subject as referred above will be decided in favour of the mutual funds. Accordingly, the management has reversedthe provision recognised as at June 30, 2010 amounting to Rs.16.41 million during the current period. The aggregateunrecognised amount of WWF as at December 31, 2010 amounted to Rs.17.41 million.

18

JS Income Fund

10. The Securities & Exchange Commission of Pakistan (SECP),vide its circular no. 16 dated July 7, 2010, prescribed specificrequirement for investments that are non-compliant either with the minimum investment criteria specified for the categoryassigned to such schemes or with the investment requirements of their constitutive documents. The following are theclauses of non-compliant investments.

a) Not more than 15% of the net assets shall be invested in non traded securities including reverse repos, bank deposits,certificates of investment (COI), certificate of musharakas (COM) and anything over 6 months maturity which is not amarketable security. At 31 December 2010, 27.76% of net assets were invested in non traded securities (as per theMUFAP's rate sheet as of the year end). Details of non traded securities are as follows:

b) Rating of any security in the portfolio shall not be lower than investment grade. However, as of 31 December 2010rating of the following securities were below investment grade.

Jahangir Siddiqui and Company Limited - TFC IV (a) Term finance certificates 51,021,372 - 51,021,372 6.87% 6.83%Jahangir Siddiqui and Company Limited - TFC V (a) Term finance certificates 8,942,609 - 8,942,609 1.20% 1.20%Optimus Limited - Privately placed (a) Term finance certificates 36,064,294 - 36,064,294 4.85% 4.83%Azgard Nine Limited - TFC's (a) and (b) Term finance certificates 16,255,565 (10,224,867) 6,030,698 0.81% 0.81%Azgard Nine Limited - CP (See Note 10.1) (a) and (b) Commercial Paper 67,049,410 (67,049,410) - 0.00% 0.00%Agritech Limited (a) and (b) Sukuk certificates 73,898,252 (23,575,252) 50,323,000 6.77% 6.73%Orix Leasing Pakistan Limited (a) Term finance certificates 46,527,650 - 46,527,650 6.26% 6.23%Maple Leaf Cement Factory Limited (Issue date: 03-Dec-2007) (a) and (b) Sukuk certificates 153,520 - 153,520 0.02% 0.02%Maple Leaf Cement Factory Limited (Issue date: 31-Mar-2010) (a) and (b) Sukuk certificates 7,265,885 - 7,265,885 0.98% 0.97%Dewan Cement Limited (a) and (b) Pre-IPO investment 50,000,000 (49,990,000) 10,000 0.00% 0.00%

% ofgrossassets

% ofnet

assets

Value of investment

afterprovisioning

Provisionheld if any

Value ofinvestment

beforeprovision

Type of investmentNoncomplianceof clause

Name of non compliant investment

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

10.1 The commercial paper amounting Rs.75 million of Azgard Nine Limited has been settled through issuance of 15,000PPTFCs of an equivalent amount in the name of the Fund. However, the management as a matter of prudence hasmaintained the provision against the said commercial paper.

11. 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 unrealisedcapital gain for the year is distributed amongst the Fund's unit holders. The Fund has availed such exemption in thepast and intends to continue the same in the current and future financial periods. Accordingly, no provision is madefor current and deferred taxation in these financial statements.

19

12. TRANSACTIONS WITH RELATED PARTIES / CONNECTED PERSONS

Related parties / connected persons include JS Investments Limited being the Management Company, MCBFinancial Services Limited being the Trustee, Jahangir Siddiqui and Company Limited being the holding companyof 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

JS Investments LimitedRemuneration of the Management Company 6,504,322 36,981,489Sales load - 174,996Expenses incurred 4,144 6,957

MCB Financial Services LimitedRemuneration of the trustee 433,621 1,484,783

JS Global Capital Limited Brokerage commission - see note 12.2 73,770 321,184Bonus units issued - 17,741,126

Jahangir Siddiqui & Company Limited Income on Term Finance Certificates 4,770,935 8,041,345

Azgard Nine Limited Interest Income on Term Finance Certificate - 6,877,594Income on Commercial Paper - 7,404,695Purchase of Commercial Paper - 67,049,410Maturity of Commercial Paper - 75,000,000

Agritech LimitedIncome on Term Finance Certificate & Sukuk Certificates 145,385 33,114,740Provision against Income on Sukuk Certificate 4,537,024 -Provision against principal on Sukuk Certificate 23,575,252 -Income on Commercial Paper - 3,533,720

JS Bank Limited Income on bank balance and term deposits 256,397 6,323,607

Silk Bank LimitedIncome on bank balance and term deposits - 6,200,133

Network Microfinance BankIncome on bank balance and term deposits - 300,345

JS Fund of FundsIssue of units - 41,781,071Redemption of units 30,000,000 65,143,166Bonus units issued 2,162,897 4,483,051

Jahangir Siddiqui & Sons LimitedBonus units issued 8,021 -

JS ABAMCO Commodities Limited Bonus units issued 1,550,378 2,601,931Redemption of units - 150,000

JS Income Fund

Half Year Ended 31 December

2010 31 December

2009----------------Rupees----------------

(Un-Audited)

20

EFU Life Assurance LimitedBonus units issued 2,742,084 6,289,499Redemption of units 23,038,609 -

Pakistan International Container Terminal Company LimitedBonus units issued - 30,711,255Redemption of units - 30,044,807

Key Management PersonnelIssue of units 1,102,566 1,273,502Bonus units issued 83,291 258,497Redemption of units - 1,422,286

Balance as at period / year ended

JS Investments LimitedRemuneration payable to the Management Company 122,129 123,883Sales load payable - 14,001

MCB Financial Services LimitedRemuneration payable to the trustee 63,280 86,006

JS Bank Limited Bank balance 5,226,836 155,752Term Deposit Receipts Placement 200,000,000 -Profits receivable on bank balance & TDR placement 86,422 1,646

JS Fund of Funds Outstanding units - at net asset value 50,440,287 76,698,745

Jahangir Siddiqui & Sons LimitedOutstanding units - at net asset value 187,047 174,028

JS ABAMCO Commodities Limited Outstanding units - at net asset value 36,155,917 33,639,279

EFU Life Assurance Limited Outstanding units - at net asset value 63,947,345 81,941,599

Jahangir Siddiqui & Company Limited Profits receivable on Term Finance Certificates 1,528,682 1,779,220

Azgard Nine LimitedProfits receivable on Term Finance Certificates 411,688 1,684,012Impairment of profit receivable 411,688 1,684,012

Agritech LimitedProfits receivable on Term Finance Certificates 4,537,024 4,391,639Impairment of profit receivable 4,537,024 -

Key Management PersonnelOutstanding units - at net asset value 2,345,249 1,125,281

JS Income Fund

31 December2010

(Un-Audited)

30 June2010

(Audited)

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

Half Year Ended 31 December

2010 31 December

2009-----------Rupees-----------

(Un-Audited)

21

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

12.2 The amount disclosed represents the amount of brokerage expense incurred to a related party and not the purchaseor sale value of securities transacted through them. The purchase or sale value have not been treated as transactionswith related party as ultimate counter-parties are not related.

13 GENERAL

13.1 Figures of the condensed interim income statement and condensed interim statement of comprehensive incomefor the quarters ended 31 December 2010 and 31 December 2009 have not been subject to limited scope reviewby the auditors.

13.2 Figures have been rounded off to the nearest rupee.

14 DATE OF AUTHORISATION FOR ISSUE

These condensed interim financial statements were authorised for issue by the Board of Directors of the ManagementCompany on February15, 2011.

JS Income Fund



js income fund - js investmentsof js income fund for the period ended december 31, 2010. money...

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