notes to the condensed interim financial statementsthe annexed notes from 1 to 10 form an integral...

01

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

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

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

Condensed Interim Statement of Assets and Liabilities....................................................05

Condensed Interim Income Statement..........................................................................06

Condensed Interim Statement of Comprehensive Income................................................07

Condensed Interim Cash Flow Statement.....................................................................08

Condensed Interim Statement of Movement in Unit Holders' Fund....................................09

Condensed Interim Distribution Statement.....................................................................10

Notes to the Condensed Interim Financial Statements..................................................11

02

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

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

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

The Board of directors of JS Investments Limited has pleasure in presenting to you the un-audited financial statementsof JS Principal Secure Fund II for the period ended March 31, 2011.

Market Review

The equity market showed robust performance during the nine months period ended March 31, 2011 represented bya significant rise of 21% in the KSE-30 index. Heavy discount to regional markets coupled with relative exchange ratestability have been key reasons behind a USD 302mn foreign inflow which led to this significant improvement. Howevermuch of the rise was brought about by impressive returns during 2QFY11 whereas 1QFY11 and 3QFY11 remainedvirtually flat. During the latter quarter, political disturbance in the MENA region and the subsequent surge in oil pricesalong with domestic political noise muted sentiments and caused a sharp decline of 64% QoQ in foreign portfolioinvestments.

The calendar year started on a positive note with the SBP maintaining its policy rate constant at 14% in the backdropof an improved external accounts position along with discipline showed by Government with respect to borrowings fromthe central bank. However the month of February witnessed political tensions in the MENA region which pushed upcommodity prices raising concerns over the country’s macro economic health. Furthermore, Pak US relations suffereda set back over the diplomatic immunity of a US national. This boded negatively for the potential aid and sovereigninflows expected in the upcoming months.

However the country’s current account situation continues to show strength with an overall surplus of USD 99mn duringjuly ‘10-March ‘11 as against a deficit of USD 3.1bn in the corresponding period last year. The Government also tookthe difficult decisions of announcing revenue generation measures including a 15% flood tax surcharge and removalof general sales tax (GST) exemption on a number of items. Moreover with Pakistan’s relations with US resurrected toan extent, probabilities of receipt of sovereign inflows and the remaining IMF tranches appear to have enhanced whichaugurs well for the economy. Meanwhile the much awaited leverage product has yet to show any real signs of providingimpetus to proceedings as volumes have remained bland since its reintroduction in March.

Fund Performance

The Fund earned a net income of Rs. 44.963 million during the period under review. The net assets of the Fund wereRs. 601.762 million as on March 31, 2011 compared to Rs. 585.641 million as on June 30, 2010 – an increase of2.8%. The net assets value (NAV) per unit as on March 31, 2011 was Rs. 108.90 compared to ex-distribution NAV ofRs. 100.47 per unit on June 30, 2010 showing an increase of 8.4%. The Fund underperformed its benchmark returnby 2.53% during the period ended March 31, 2011.

Fund and Asset Manager Rating

The Pakistan Credit Rating Agency (PACRA) has assigned a capital protection rating of ‘AA+(cp)’ [Double A plus (capitalprotection)] to the Fund. The fund’s rating denotes very strong certainty of capital protection.

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 their dedicationand hard work and the unit holders for their confidence in the Management.

On behalf of the Board

Rashid MansurChief Executive OfficerKarachi: April 21, 2011

05

Assets

Bank balances 4 1,938,887 548,606Term deposit 5 564,258,906 540,768,205Investments 6 36,906,936 44,901,927Dividend receivable 424,470 525,000Deposit, prepayments and other receivables 188,560 100,000Deferred formation costs 282,395 938,129Total assets 604,000,154 587,781,867

Liabilities

Remuneration payable to Management Company 763,197 72,198Remuneration payable to Trustee 76,361 73,116Annual fee payable to Securities and Exchange Commission of Pakistan 332,956 240,468Preliminary and floatation costs payable to the management company - 74,580Accrued and other liabilities 1,065,416 1,680,126Total liabilities 2,237,930 2,140,488

Contingency 7

Net assets 601,762,224 585,641,379

Unit holder's fund 601,762,224 585,641,379

--- No. of Units --

Number of units in issue 5,525,719 5,676,637

Net assets value per unit (Rupees) 108.90 103.17

The annexed notes from 1 to 10 form an integral part of these condensed interim financial statements.

For JS Investments Limited(Management Company)

ChairmanMunawar Alam Siddiqui

Chief Executive OfficerRashid Mansur

06

Income

Return on bank balances and term deposits 45,752,450 20,387,338 15,336,433 15,345,096Dividend income 1,091,470 1,686,155 609,470 1,686,155

Net gain / (loss) on investments at fair valuethrough income statementNet gain / (loss) on sale of investments 5,564,924 (886,640) 1,855,806 (886,640)Net unrealized gain / (loss) on revaluation of investments 1,966,549 (1,362,920) (3,685,926) (1,362,920)

7,531,473 (2,249,560) (1,830,120) (2,249,560)Element of (loss) / income and capital (loss) / gains in prices of units sold less those of units redeemed - net (1,090,795) 294,168 (529,080) 117,375

53,284,598 20,118,101 13,586,703 14,899,066Expenses

Remuneration of the management company 6,658,539 2,584,711 2,209,746 2,198,047Remuneration of the trustee 669,160 262,341 221,290 220,514Annual fee of Securities and Exchange Commission of Pakistan 332,956 129,236 110,487 109,903Securities transactions cost 187,933 244,115 22,482 244,115Listing fee 30,028 92,119 9,863 14,202Bank charges on early redemption - net (155,089) 366,728 5,487 358,946Auditors' remuneration 198,395 198,734 41,904 72,360Printing and stationary 102,712 54,324 25,299 45,270Amortization of deferred formation cost 655,734 253,718 215,387 217,446Mutual Fund Rating Fee 39,896 - 39,896 -Reversal of contribution to Workers' Welfare Fund 7 (400,937) - - -Other expenses 2,288 12,160 - 12,160

8,321,615 4,198,186 2,901,841 3,492,963Net income for the period 44,962,983 15,919,915 10,684,862 11,406,103





07

Net income for the period 44,962,983 15,919,915 10,684,862 11,406,103

Other comprehensive income - - - -

Total Comprehensive income for the period 44,962,983 15,919,915 10,684,862 11,406,103





08




Net income for the period 44,962,983 15,919,915

Adjustments for:Return on bank balances and term deposits (45,752,450) (20,387,338)Dividend income (1,091,470) (1,686,155)Net (gain) / loss on sale of investments (5,564,924) 886,640Net unrealized (gain) / loss on revaluation of investments (1,966,549) 1,362,920Amortization of deferred formation cost 655,734 253,718Element of loss / (income) and capital loss / (gains) in prices of units sold less those of units redeemed - net 1,090,795 (294,168)

(52,628,864) (19,864,383)Increase in current assetsDeposit, prepayments and other receivables (70,077) (109,892)

Increase / (decrease) in current liabilitiesRemuneration payable to the Management Company 690,999 73,424Remuneration payable to the trustee 3,245 75,937Annual fee payable to Securities and Exchange Commission of Pakistan 92,488 129,236Creditors, accrued and other liabilities (614,710) 6,191,149

172,022 6,469,746 (7,563,936) 2,415,386

Purchase of investments (54,381,649) (88,571,938)Sale of investments 69,908,113 28,522,762Preliminary and flotation costs re-imbursed to management company (74,580) (1,335,007)Return on bank balances and term deposits received 2,135,342 5,986,873Placement in term deposits - (511,648,871)Early redemption of term deposits 20,107,924 -Dividend received 1,192,000 675,900Net cash generated from / (used in) operating activities 31,323,214 (563,954,895)

Cash flow from financing activitiesProceeds on issue of units - 587,139,304Amounts paid on redemption of units (29,932,933) (7,397,879)Net cash (used in) / generated from financing activities (29,932,933) 579,741,425Net increase in cash and cash equivalents during the period 1,390,281 15,786,530

Cash and cash equivalents at the beginning of the period 548,606 -Cash and cash equivalents at the end of the period 1,938,887 15,786,530


Net assets at the beginning of the period 585,641,379 -

Issue of 152,552 bonus units (2010: 5,897,367* units) - 587,139,304Redemption of 231,267 units (2010: 76,699 units) (29,932,933) (7,397,879)

(29,932,933) 579,741,425

Element of loss / (income) and capital loss / (gains) in prices of units sold less those of units redeemed - net 1,090,795 (294,168)

Net income for the period 44,962,983 15,919,915Other comprehensive income - -

Total comprehensive income for the period 44,962,983 15,919,915

Net assets as at the end of the period 601,762,224 595,367,172

Net assets at the end of the period consist of:

Capital account 552,571,898 581,831,741

Undistributed income carried forward 46,482,630 13,145,692

Back-end load - special reserve account 2,707,696 389,739

601,762,224 595,367,172

* These include 27,742 additional units issued during the period.


09




10

Undistributed income brought forward 16,846,566 -

Distribution at the rate of Rs. 2.70 per unit declared on 07 July 2010 (2010: Nil) (15,326,919) -

1,519,647 -

Net income for the period 44,962,983 15,919,915

Distribution of NIL (2010: 27,742 additional) units - (2,774,223)

Undistributed income carried forward 46,482,630 13,145,692





11

1. LEGAL STATUS AND NATURE OF BUSINESS

1.1 JS Principal Secure Fund II (the Fund) was established under the Non-Banking Finance Companies (Establishmentand Regulation) Rules, 2003. as an open-end unit trust scheme. It was constituted under a Trust Deed, dated30 July 2009 between JS Investments Limited as the Management Company, a company incorporated under theCompanies Ordinance, 1984 and MCB Financial Services Limited as the trustee, also incorporated under theCompanies Ordinance, 1984. The registered office of the Management Company is situated at 7th Floor, TheForum, Clifton, Karachi.

1.2 The Fund aims at protecting investors' capital by placing a significant percentage of the Fund as bank deposit(s)or in other fixed income instruments, and uses the remaining funds for investments into equity markets or anyother permissible investment instruments. The duration of the Fund is eighteen months and six weeks from thelast day of Initial Public Offering i.e. 15 December 2009. Accordingly, the Fund shall automatically stand dissolvedin July 2011. However, the management believes the said dissolution of the Fund does not require any adjustmentin these interim condensed financial statements for the reason that the carrying value of asset and liabilities arenot materially different from the respective realizable / settlement amounts.

1.3 After the initial subscription the public sale of units was discontinued. The sale of additional units if allowed duringthe tenure of the Fund will be at the discretion of the management company. The units can also be redeemedby surrendering them to the Fund subject to back end load as per the offering document. The Fund is listed onthe Lahore Stock Exchange. The Pakistan Credit Rating Agency Limited (PACRA) has assigned a capital protectionrating of 'AA+(cp)' [Double A plus(capital protection)].

2. BASIS OF PREPARATION

2.1 These condensed interim financial statements are un-audited and have been prepared in accordance withInternational Accounting Standard - 34 " Interim Financial Reporting" as applicable in Pakistan.

2.2 These condensed interim financial statements do not include all the information and disclosures required in theannual financial statements and should be read in conjunction with the financial statements of the Fund for theyear ended 30 June 2010.

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.

March 31,2011

(Un-audited)

June 30,2010

(Audited)---------Rupees---------4. BANK BALANCES

In PLS saving accounts 1,928,887 548,606In Current account 10,000 - 1,938,887 548,606

5. TERM DEPOSITS

Principal amount 491,540,947 511,648,871Accrued return 72,717,959 29,119,334

564,258,906 540,768,205

12

6. INVESTMENTS

At fair value through income statementHeld-for trading

Listed equity ecurities 6.1 36,792,336 44,901,927Right share options 6.2 114,600 -

36,906,936 44,901,927

% ofinvestee capital

% ofnet

assets

Marketvalue

(Rupees)

At the end

of the period

Disposed during

the period

Bonus received during

the period

Acquired during

the period

At the beginning

of the period

Number of shares

Sector / companies

6.1 Listed equity securities(Ordinary shares of face value of Rs. 10/-)

Oil and GasAttock Petroleum Limited (related party) 20,000 - - 20,000 - - - -Pakistan Oilfields Limited 4,000 15,000 - 8,000 11,000 3,575,990 0.59 -Pakistan Petroleum Limited 60,000 10,000 7,000 62,000 15,000 3,171,150 0.53 -

6,747,140 1.12 Construction and MaterialsAttock Cement Pakistan Limited 56,000 - - - 56,000 2,936,640 0.49 0.06D.G. Khan Cement Company Limited - 510,100 - 410,100 100,000 2,573,000 0.43 0.03

5,509,640 0.92 Automobile and PartsPak Suzuki Motor Company Limited 70,131 - - 70,131 - - - -

ElectricityNishat Chunian Power Limited - 400,000 - 50,000 350,000 5,516,000 0.92 0.01

Food ProducersRafhan Maiz Products Company Limited - 3,500 - 2,146 1,354 3,089,990 0.51 0.01

Personal GoodsNishat Mills Limited - 340,689 - 265,689 75,000 4,874,250 0.81 0.06 ChemicalsFauji Fertilizer Bin Qasim Limited - 100,000 - - 100,000 4,142,000 0.69 0.01

Fixed Line Telecommunication Pakistan Telecommunication Company Limited 475,000 175,950 - 650,950 - - - -

13

BanksMeezan Bank Limited 47,015 - - 47,015 - - - -

Life InsuranceEFU Life Assurance Limited (related party) 113,333 - - - 113,333 6,913,316 1.15 0.15

Market value 36,792,336 6.11

Cost 38,001,990

% ofnet

assets

Marketvalue

(Rupees)

At the end of the

period

Disposedduring the

period

Receivedduring the

period

6.2 Right share options

D.G. Khan Cement Company Limited 20,000 - 20,000 114,600 0.02114,600 0.02

7. CONTINGENCY

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) whoseincome exceeds Rs.0.5 million in a tax year, have been brought within the scope of the WWF Ordinance, thusrendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income,whichever is higher. In this regard, a constitutional petition has been filed by certain CISs through their trustees inthe Honorable High Court of Sindh, challenging the applicability of WWF to the CISs, which is pending adjudication.However, without prejudice to the above, the Management Company made a provision for WWF contribution inthe annual financial statements for the year ended 30 June 2010.

Subsequent to the year ended 30 June 2010, 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. Thisclarification was forwarded by Federal Board of Revenue (FBR) (being the collecting agency of WWF on behalfof the Ministry) vide its letter dated 06 October 2010 to its members for necessary action. Based on this clarification,the FBR also withdrew notice of demand which it had earlier issued to one of the mutual funds for collection ofWWF. However, the FBR vide its letter dated 04 January 2011 have cancelled its earlier letter dated 06 October2010 ab initio and issued show cause notices to certain mutual funds for collecting WWF. In respect of such showcause notices, one of the mutual fund has been granted stay by Honorable High Court of Sindh vide its orderdated 10 February 2011 on the basis of the pending constitutional petition in the said court as referred above

In view of the afore mentioned developments during the period, the Management Company now believes thatthere is no compelling reason to retain provision on account of WWF contribution in the financial statements.Further, the Management Company also expects that the constitutional petition pending in the Honorable HighCourt of Sindh on the subject as referred above will be decided in favour of the mutual funds. Accordingly, themanagement has reversed the provision recognised as at 30 June 2010 amounting to Rs. 0.40 million duringthe current period. The aggregate unrecognised amount of WWF as at 31 March 2011 amounted to Rs. 1.292million.

and the remaining mutual funds are in the process of filing petitions for stay of proceedings in this case.

Letter of Rights

14

8. TRANSACTIONS WITH RELATED PARTIES / CONNECTED PERSONS

JS Investments LimitedRemuneration of the management company 6,658,539 2,584,711Front-end load - 2,117,167Preliminary and floatation cost incurred - 1,409,587Preliminary and floatation cost re-imbursed 74,580 1,335,007Expenses incurred and re-imbursed 3,978 42,160

MCB Financial Services LimitedRemuneration of the trustee 669,160 262,341

JSIL’s - Staff Provident FundIssue of units - 3,500,000Issue of additional units - 22,072Issue of bonus units 95,096 -

JS Bank LimitedProfit on bank balances 92,896 1,971,645

JS Global Capital LimitedBrokerage fee 8.1 34,494 19,770

EFU Life Assurance Limited Issue of units - 30,000,000Issue of additional units - 180,961Issue of bonus units 814,886 -

JS Investment LimitedRemuneration payable 763,197 72,198

MCB Financial Services LimitedRemuneration payable 76,361 73,116

JSIL’s - Staff Provident FundOutstanding 36,167 units (2010: 35,221 units) 3,938,611 3,633,721

JS Bank LimitedBank balances 19,315 315,511

EFU Life Assurance LimitedOutstanding 309,920 units (2010: 301,810 units) 33,750,326 31,137,697

Balance as at period end

March 31,2011

(Un-Audited)

June 30,2010

(Audited)

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

15




8.1 The amount disclosed represents the amount of brokerage paid to the related party and not the purchase or salevalue of securities transacted through them. The purchase or sale value have not been treated as transactionswith related party as ultimate counter parties are not known.

8.2 The transactions with related parties / connected persons are in the normal course of business at contracted ratesand terms determined in accordance with market rates.

9. DATE OF AUTHORISATION FOR ISSUE

These condensed interim financial statements were authorised for issue by the Board of Directors of the ManagementCompany on April 21, 2011.

10. GENERAL

10.1 Figures have been rounded off to the nearest rupee.

10.2 Corresponding figures have been re-arranged where ever necessary.

notes to the condensed interim financial statementsthe annexed notes from 1 to 10 form an integral...

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