unit trust of pakistan formated - js...

Annual Report 2007 01

CONTENTS

Vision and Mission Statement

Organization

Directors’ Report

Performance Table / Key Financial Data

Statement of Compliance with the Code of Corporate Governance

Review Report to the Members on Statement of Compliancewith Best Practices of the Code of Corporate Governance

Report of the Trustee

Auditor’s Report

Financial Statements

Statement of Assets and Liabilities

Income Statement

Cash Flow Statement

Statement of Movement in Equity and Reserve ‘Per Certificate’

Distribution Statement

Notes to the Financial Statements

Branch Network

02

03

04

07

10

12

13

14

15

17

18

19

20

21

22

40

Unit Trust of Pakistan

Annual Report 200702


Pursuit of Professional Excellence

VisionTo be Industry Leaders in Financial Services

Mission

• Shareholder Value • Integrity • Commitment

Core Values


ORGANIZATION

Management Company

JS ABAMCO Limited7th Floor, The Forum, G-20Khayaban-e-Jami, Block-9, CliftonKarachi-75600Tel: (92-21) 111-222-626 Fax: (92-21) 5361724E-mail: [email protected]: www.abamco.com

Board of Directors

Munawar Alam Siddiqui ChairmanMuhammad Najam Ali Chief Executive OfficerAli Raza Siddiqui Executive DirectorNazar Mohammad ShaikhSher Afgan Zuhair SiddiquiLt.General (R) Masood ParwaizSadeq Sayeed

Audit Committee

Nazar Mohammad Shaikh ChairmanMunawar Alam Siddiqui MemberSher Afgan Zuhair Siddiqui Member

Chief Financial Officer & Company Secretary

Suleman Lalani

Trustee

Central Depository Company of Pakistan LimitedCDC House, 99-B, Block ‘B’, S.M.C.H.S.,Main Shahra-e-Faisal, Karachi-74400, Pakistan.Tel : (92-21) 111-111-500Fax: (92-21) 4326061

Auditors

KPMG Taseer Hadi & Co.Chartered Accountants1st Floor, Shaikh Sultan Trust Building # 2,Beaumont Road,Karachi - 75530.

Legal Adviser

Bawaney & PartnersRoom No.404, 4th floor,Beaumont Plaza,Beaumont Road, Civil LinesKarachi-75530.

Bankers

Bank Alfalah LimitedFaysal Bank LimitedHabib Metropolitan Bank LimitedJS Bank LimitedMCB Bank Limitedmybank LimitedSoneri Bank LimitedThe Bank of Punjab

Transfer Agent

Technology Trade (Private) Limited241-C, Block 2, P.E.C.H.S, KarachiTel: (92-21) 4391316-7Fax: (92-21) 4391318




DIRECTORS REPORT TO THE UNIT HOLDERS

The Board of Directors of JS ABAMCO Limited the Management Company of Unit Trust of Pakistan (the Fund), ispleased to present the Annual Report for the year ended June 30, 2007.

1. Market Outlook

During the year under review, the KSE-100 index appreciated from 9,989.41 at June 30, 2006 to 13,772.46on June 30, 2007, up by 37.9%. Key drivers behind the rise were increased inflow of foreign investment andcontinuation of pro-business policies by the government. The market towards the end of the outgoing fiscalyear rallied on the back of positive budgetary expectations. Key index drivers were banking and insurancewhile the index heavy weight, exploration and production (E&P) sector, was among the major laggards.

The banking sector continued to remain in favor during the outgoing fiscal year due to favorable sectorpolicies by the government over the recent years (liberalization and deregulation) and increased foreigninflow of liquidity. The insurance sector outperformed the market due to strong economic growth andexpectations of positive sector fundamentals going forward. The E&P sector was a major underperformerdue to production concerns in E&P companies during the outgoing fiscal year.

On the policy front, the State Bank of Pakistan (SBP) maintained a tight monetary posture in order to containinflationary expectations from building up in the economy. The SBP had in July 2006 resorted to the twintightening measures of raising the discount rate from 9% to 9.5% and enhancing the reserve requirementsfor commercial banks, which resulted in a rise in KIBOR of almost 100 basis points. Since July 06, SBP has notovertly tightened its monetary policy stance, but it has continued to mop up excess liquidity in the bankingsystem through open market operations and T-bill auctions.

Average CFS rates during the year fell to 14% as compared to 16.16% last year. This has primarily been theresult of greater availability of funds due to increase in fixed income mutual funds in the market.

2. Fund Performance

The net income of the Fund for the year ended June 30, 2007, including unrealized gain on investment, wasRs. 1,020.179 million, which works out to Rs. 2,365 per unit (2006: Rs. 2,185 per unit) of the par value of Rs.5,000.

The net assets of the Fund as on June 30, 2007 were Rs. 4,050.019 million compared to Rs. 3,516.598 millionon June 30, 2006. The NAV per unit as on June 30, 2007 was Rs. 9,388.78 compared to ex-stock dividend NAVof Rs. 7,311.60 showing appreciation of 28.4%.

The Fund has declared stock dividend @ 27.5% of the opening NAV per unit of Rs. 7,311.60 which translatesinto Rs. 2,010.70 per unit. An investor holding 100 units as on June 30, 2007 will receive 27.2523 units on ex-stock dividend price of Rs. 7,378.08 per unit. As the above distribution is more than 90% of the realizedincome for the year, the income of the Fund will not be subject to tax under Clause 99 of the Part I of theSecond Schedule of Income Tax Ordinance, 2001.

3. Investment Objective and Strategy

UTP is a balanced fund that aims to preserve and grow investor’s capital in the long term while providing aregular stream of current income on an annual basis. The fund operates a diverse portfolio of equity andfixed income investments whereby the equity component is meant to provide the growth in capital whiledividends on the equity component along with the fixed income investments help generate the currentincome.


4. Fund and Asset Manager Rating

The Pakistan Credit Rating Agency (PACRA) has assigned a 5-Star fund rating to Unit Trust of Pakistan, whichreflects a superior performance relative to its peers. The rating is a composite measure of two factors namelya) returns, and b) risk associated with the returns measured by Sharpe Ratio.

PACRA has awarded an “AM2+” asset manager rating to JS ABAMCO Limited. The rating denotes the company’svery strong capacity to manage the risks inherent in asset management and the asset manager meets veryhigh investment management industry standards and benchmarks.

5. Compliance

The Board of Directors of the Management Company states that:

a. The financial statements, prepared by the Management Company, present fairly the state of affairs ofthe Fund, the results of its operations, cash flows and movement in net assets of the Fund.

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

and financial estimates are based on reasonable and prudent judgment.d. International Accounting Standards, as applicable in Pakistan, provisions of the Non-Banking Finance

Companies (Establishment & Regulation) Rules, 2003, requirements of the Trust Deed and directives ofthe Securities and Exchange Commission of Pakistan have been followed in preparation of the financialstatements.

e. The system of internal control is sound in design and has been effectively implemented and monitored.f. There are no significant doubts upon the Fund’s ability to continue as a going concern.g. There has been no material departure from the best practices of the Code of Corporate Governance, as

detailed in the listing regulations.h. A performance table / key financial data is given on page 07 of this annual report.i. The Directors have signed the “Statement of Ethics and Business Practices.”j. The number of units of the Fund held by the Chief Executive, directors and executives and their spouses

as at June 30, 2007 are as follows:

Name Designation Units Held

Ali Raza Siddiqui Director 16.56Suleman Lalani CFO & Company Secretary 65.77Rahim Khakiani AVP, Finance 1.79

k. Summary of units acquired / redeemed during the year by the Chief Executive, directors and executives,their spouses and minor children is provided below:

Name Designation Units Acquired Units Redeemed

Suleman Lalani CFO & Company Secretary 27.57 -Shafqat Ali Head of Operations - 5.4Rahim Khakiani AVP, Finance 8.11 64.11

l. The value of investments of the staff provident fund of JS ABAMCO Limited, as per the audited accountsfor the year ended June 30, 2007 was Rs.13.170 million.




Karachi: August 18, 2007Muhammad Najam AliChief Executive Officer

6. Meetings of the Directors

During the year 9 meetings of the Board of Directors were held. The attendance of each director for thesemeetings is as follows:

Name Eligible to attend Meetings attended

Mr. Munawar Alam Siddiqui 09 09Mr. Muhammad Najam Ali 09 09Mr. Ali Raza Siddiqui 09 06Mr. Munaf Ibrahim 05 05Mr. William H. Kleh 09 0Mr. Sher Afgan Zuhair Siddiqui 03 03Mr. Nazar Mohammad Shaikh 09 08Lt. General (Retired) Masood Parwaiz 09 08

7. Auditors

The Fund’s external auditors, Messrs. KPMG Taseer Hadi & Co., Chartered Accountants, have completed theirthree year’s term. The Audit Committee of the Management Company has recommended change of auditorsof the Fund as required under Rule 65(h) of the NBFC Rules, 2003. The Audit Committee has recommendedappointment of Ford Rhodes Sidat Hyder & Co., Chartered Accountants, as the Fund’s auditors for the yearending June 30, 2008. Ford Rhodes Sidat Hyder & Co. have consented to act as auditors of the Fund for theensuing year.

8. Acknowledgment

The Directors expresses their gratitude to the Securities and Exchange Commission of Pakistan for its valuablesupport, assistance and guidance. The Board also thanks the employees of the Management Company andthe Trustee for their dedication and hard work and the unit holders for their confidence in the Management.

Notes

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2007200620052004200320022001200019991998

Net Assets as at June 30, 2007

PERFORMANCE TABLE / KEY FINANCIAL DATA

2007

(Rupees in million)Net assets 4,050 3,516 3,444 3,300 1,669 897 749 469 358 342

Total realized income 670 998 773 517 408 170 111 132 61 51

Total unrealized gain/(loss) in portfolio 441 (78) (325) 155 300 1 (2) - - -

Total expenses 91 95 82 72 33 38 22 23 12 13

Net income 1020 825 366 600 675 133 87 109 49 38

Total expense to net assets ratio (%) 2.25 2.70 2.38 2.18 1.98 4.24 2.94 4.90 3 4

Total dividend distribution 867 755 429 576 292 125 86 100 48 38

Outstanding Units

Number of units in issue - June 30th 431,368 377,657 428,556 383,809 233,649 166,122 144,057 88,496 70,943 68,299

Data Per Unit

Net assets value - Rupees (Ex- Dividend) 7,378 7,312 7,035 7,099 7,145 5,397 5,201 5,300 5,050 5,006

Net assets value appreciation during the year - % 28% 32% 13% 20% 56% 18% 9% 27% 14% -

Net income - Rupees 2,365 2,185 855 1,562 2,889 801 604 1,235 685 556

Cash / stock dividend - Rupees 2,010.70 2,000 1,000 1,500 1,250 750 600 1,125 675 550

Dividend as % of par value 40.21 40.00 20.00 30.00 25.00 15.00 12.00 22.50 13.75 11.00

Dividend as % of NAV at the beginning of the year 27.50 28.43 14.09 20.99 23.16 14.42 11.32 22.28 13.48 11.00

Highest issue price during the year - Rupees 9,661 11,209 9,347 9,057 8,384 6,234 5,837 6,572 5,807 5,614

Lowest issue price during the year - Rupees 7,280 7,172 6,906 7,563 5,491 5,213 5,452 5,154 5,112 5,000

Higest redemption price during the year - Rupees 9,379 10,882 9,074 8,926 8,228 6,200 5,736 6,471 5,706 5,513

Lowest redemption price during the year - Rupees 7,068 6,962 6,840 7,414 5,383 5,110 5,369 5,085 5,011 5,068

Notes - Unit Trust of Pakistan was launched on October 27, 1997. - Units have par value of Rs. 5,000 each.

2006 2005 2004 2003 2002 2001 2000 1999 1998





-

200

400

600

800

1,000

1,200

2007200620052004200320022001200019991998

Profit Earned / Distributed During the Year

Net Profit for the Year Dividend Paid During the Year

-

500

1,000

1,500

2,000

2,500

3,000

2007200620052004200320022001200019991998

Earning per Unit (Rs.)

Highest Offer Price / Lowest Redemption Price

0

2,000

4,000

6,000

8,000

10,000

12,000

2007200620052004200320022001200019991998

Highest Offer Price Lowest Redemption Price


Profit Earned / Distributed during the Year

Dividend paid85%

Transferred to Retained Earnings15%

Total Assets 2007

Bank Balances 31%

Investments 68%

Other Assets 1%




STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

This statement is being presented in compliance with the Code of Corporate Governance (‘the Code’) containedin Regulation 43 of the Listing Regulations of the Lahore Stock Exchange. The purpose of the Code is to establisha framework of good governance, whereby a listed company is managed in compliance with the best practices ofcorporate governance.

JS ABAMCO Limited, the Management Company of Unit Trust of Pakistan (‘the Fund’) complies with the Code asthe Management Company and the Fund are listed on the Karachi and Lahore Stock Exchanges, respectively. TheBoard of Directors of the Management Company manages the affairs of the Fund and has appointed the ChiefExecutive Officer, Chief Financial Officer, Company Secretary and other necessary personnel to manage its affairs.

The Management Company has applied the principles contained in the Code in the following manner:

1. The Company encourages representation of independent non-executive directors and directors representingminority interests on its Board of Directors. Presently, the Board includes five non-executive directors.

2. The directors have confirmed that none of them is serving as a director in more than ten listed companies,including the Management Company.

3. All the resident directors of the Management Company are registered as taxpayers and none of them hasdefaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stockexchange, has been declared as a defaulter by that stock exchange.

4. During the year under review two casual vacancies occurred in the Board, both of which were duly filled inby the other directors within 30 days of their respective occurrence. However one casual vacancy was filledsubsequent to the year end pursuant to SECP’s prior approval dated July 10, 2007.

5. The Management Company has prepared a “Statement of Ethics and Business Practices”, which has beensigned by all the directors and employees of the Management Company.

6. The Management Company has developed a vision / mission statement, overall corporate strategy andsignificant policies of the Fund which have been approved by the Board. A complete record of particularsof significant policies along with the dates on which they were approved or amended has been maintained.

7. All the powers of the Board have been duly exercised and decisions on material transactions, includingappointment and determination of remuneration and terms and conditions of employment of the CEO andother Executive Director, have been taken by the Board.

8. The meetings of the Board were presided over by the Chairman, and in his absence, by a director elected bythe Board for this purpose and the Board met at least once in every quarter during the year. Written noticesof the meetings of the Board of Directors, along with agenda and working papers, were circulated at leastseven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

9. The Management Company arranged an orientation course for its directors during the year to apprise themof their roles and responsibilities.

10. During the year, there was no change of CFO / Company Secretary. Their remuneration and terms andconditions of employment have been approved by the Board.


11. The directors’ report has been prepared in compliance with the requirements of the Code and fully describesthe salient matters required to be disclosed.

12. The financial statements of the Fund were duly endorsed by the CEO and CFO before approval of the Board.

13. The directors, CEO and Executives do not hold any interest in the units of the Fund other than those disclosedin the directors’ report.

14. The Management Company has complied with all the corporate and financial reporting requirements of theCode with respect to the Fund.

15. The Board has formed an Audit Committee comprising of three non-executive directors including thechairman of the Committee.

16. The meetings of the Audit Committee are held every quarter prior to approval of interim and annual resultsof the Fund as required by the Code. The Board has approved terms of reference of the Audit Committee.

17. The board has outsourced the Internal Audit function to M/s Anjum Asim Shahid Rehman, CharteredAccountants, who are considered suitably qualified and experienced for the purpose and are conversantwith the policies and procedures of the Fund and their representatives are involved in the internal auditfunction on a full time basis.

18. The statutory auditors of the Fund have confirmed that they have been given a satisfactory rating under thequality control review program of the Institute of Chartered Accountants of Pakistan, that they or any of thepartners of the firm, their spouses and minor children do not hold units of the Fund and that the firm andall its partners are in compliance with International Federation of Accountants (IFAC) guidelines on Code ofEthics as adopted by the Institute of Chartered Accountants of Pakistan.

19. The statutory auditors or the persons associated with them have not been appointed to provide otherservices except in accordance with the listing regulations and the auditors have confirmed that they haveobserved IFAC guidelines in this regard.

20. We confirm that all other material principles contained in the Code have been complied with.

Karachi: August 18, 2007Muhammad Najam AliChief Executive Officer




REVIEW REPORT TO THE UNIT HOLDERS ON STATEMENT OF COMPLIANCE WITH BESTPRACTICES OF CODE OF CORPORATE GOVERNANCE

We have reviewed the Statement of Compliance with the best practices contained in the Code of CorporateGovernance prepared by the Board of Directors of the Management Company of the Unit Trust of Pakistan tocomply with the listing regulation of the Lahore Stock Exchange, where the Fund is l isted.

The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of theManagement Company of the Fund. Our responsibility is to review, to the extent where such compliance can beobjectively verified, whether the Statement of Compliance reflects the status of the Fund’s compliance with theprovisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiriesof the Management Company’s personnel and review of various documents prepared by the Management Companyto comply with the Code.

As part of our audit of financial statements we are required to obtain an understanding of the accounting andinternal control systems sufficient to plan the audit and develop an effective audit approach. We have not carriedout any special review of the internal control system to enable us to express an opinion as to whether the Board’sstatement on internal control covers all controls and the effectiveness of such internal controls.

Based on our review, nothing has come to our attention, which causes us to believe that the Statement of Compliancedoes not appropriately reflect the Fund’s compliance, in all material respects, with the best practices contained inthe Code of Corporate Governance as at 30 June 2007.

KPMG Taseer Hadi & Co.Karachi: August 18, 2007 Chartered Accountants


REPORT OF THE TRUSTEE TO THE UNIT HOLDERS

Report of the Trustee Pursuant to Rule 76(h) of the Non-Banking Finance Companies(Establishment and Regulation) Rules, 2003

Karachi: August 23, 2007

Mohammad Hanif JakhuraChief Executive Officer

Central Depository Company of Pakistan Limited

The Unit Trust of Pakistan, an Open-ended Scheme established under a trust deed executed between JS ABAMCOLimited as the Asset Management Company and Muslim Commercial Financial Services (Private) Limited as theTrustee on April 26, 1997. The Scheme was authorized by Securities and Exchange Commission of Pakistan (SECP)on June 9, 1997.

As per the Deed of change of Trustee and amendment of Trust Deed dated June 11, 2005 Muslim CommercialFinancial Services (Private) Limited retired as the Trustee and Central Depository Company of Pakistan Limited wasappointed as the Trustee of Unit Trust of Pakistan.

In our opinion, JS ABAMCO Limited, the Management Company of Unit Trust of Pakistan has in all material respectsmanaged Unit Trust of Pakistan during the year ended June 30, 2007 in accordance with the provisions of the TrustDeed (and the modifications authorized by the SECP from time to time) and Non-Banking Finance Companies(Establishment and Regulation) Rules, 2003 (Rules).

For the purpose of information, the attention of the Unit Holders is drawn towards note 6.5 of the financial statementswherein it is specified that listed Term Finance Certificates have been valued with reference to quotation obtainedfrom brokerage houses instead of the closing rate quoted on stock exchange as required under the Rules. Further,unquoted Term Finance Certificate, as disclosed in note 6.3 of the financial statements, have been stated at amortisedcost instead of investment price or break up value whichever is later as required under the Rules.




INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS

We have audited the accompanying financial statements of Unit Trust of Pakistan (“the Fund”), which comprise thestatement of assets and liabilities as at 30 June 2007, and the related income statement, distribution statement,cash flow statement, statement of movement in unit holders’ funds for the year then ended, and a summary ofsignificant accounting polices and other explanatory notes.

Management’s responsibility for the financial statements

The Management Company of the Fund (JS ABAMCO Limited) is responsible for the preparation and fair presentationof these financial statements in accordance with the requirements of the Trust Deed, the Non-Banking FinanceCompanies (Establishment and Regulation) Rules, 2003 and approved accounting standards as applicable in Pakistan.This responsibility includes: designing, implementing and maintaining internal control relevant to the preparationand fair presentation of financial statements that are free from material misstatement, whether due to fraud orerror; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonablein the circumstances.

Auditors’ responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of therisks of material misstatement of the financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates madeby management, as well as evaluating the overall presentation of the financial statements. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion the financial statements give a true and fair view of the state of the Fund’s affairs as at 30 June 2007and of its financial performance, cash flows and transactions for the year then ended in accordance with approvedaccounting standards as applicable in Pakistan.

Other matters

In our opinion the financial statements have been prepared in accordance with the relevant provisions of the TrustDeed and the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003.

KPMG Taseer Hadi & Co.Karachi: August 18, 2007 Chartered Accountants

FINANCIALSTATEMENTS




STATEMENT OF ASSETS AND LIABILITIESAS AT JUNE 30, 2007

Note 2007 2006---------------Rupees---------------

ASSETSBank balances 5 1,285,313,044 915,721,488Balance receivable against sale of marketable securities 12,752,445 11,686,736Investments 6 2,841,781,658 2,561,497,370Placements - 50,000,000Income receivable 7 41,978,354 19,962,349Deposits, prepayments and other receivables 8 1,950,242 1,935,242Total assets 4,183,775,743 3,560,803,185

LIABILITIESBalance payable against purchase of marketable securities 56,384,289 19,401,562Balance Payable on redemption of units 64,388,333 9,527,671Remuneration payable to the Management Company 9 6,445,752 7,027,196Remuneration payable to the Trustee 10 410,907 366,843Annual fee Payable to the Securities and Exchange

Commission of Pakistan 11 3,729,921 3,703,303Creditors, accrued and other liabilities 12 2,397,279 4,178,396Total liabilities 133,756,481 44,204,971

Net assets Rupees 4,050,019,262 3,516,598,214

Unit holders' funds (as per statement attached) Rupees 4,050,019,262 3,516,598,214

(Number)

Number of units in issue 13 431,368 377,657

Net assets value per unit Rupees 9,389 9,312

The annexed notes 1 to 24 form an integral part of these financial statements.

Muhammad Najam AliChief Executive Officer

Munawar Alam SiddiquiChairman

Ali Raza SiddiquiExecutive Director

For JS ABAMCO Limited(Management Company)




INCOME STATEMENTFOR THE YEAR ENDED JUNE 30, 2007

Note 2007 2006--------------Rupees---------------

Income

Net gain on sale of held for trading investments (realised) 347,730,818 985,223,134Financial income 14 141,700,268 150,725,912Dividend income 102,944,513 89,402,440Element of income / (loss) included in prices of units

issued less those in units redeemed - net 77,845,992 (227,293,828)670,221,591 998,057,658

Unrealised gain / (loss) on revaluation of held fortrading investments - net 440,864,402 (78,123,751)

Total income 1,111,085,993 919,933,907

Expenses

Remuneration to the Management Company 9 73,292,397 74,140,954Remuneration to the Trustee 10 4,738,010 4,707,012Annual fee to the Securities and Exchange Commission

of Pakistan 11 3,729,921 3,703,300Auditors' remuneration 15 495,800 491,655Mutual fund rating fee - 233,000Fee to Mutual Fund Association of Pakistan 31,099 42,634Fee to National Clearing Company of Pakistan Limited. - 299,991Listing fee 15,000 15,000Bank and settlement charges 381,815 1,108,859Brokerage 8,223,148 10,106,132Others - 85,866

90,907,190 94,934,403

Net income Rupees 1,020,178,803 824,999,504

Net income per unit 16 2,365 2,185







CASH FLOW STATEMENTFOR THE YEAR ENDED JUNE 30, 2007

2007 2006--------------Rupees---------------

Cash Flows from operating activities

Net income for the year 1,020,178,803 824,999,504

Adjustments for:

Net gain on sale of held-for-trading investments (347,730,818) (985,223,134)Element of (income) / loss in prices of units sold

less those of units redeemed (77,845,992) 227,293,828Unrealised (gain) / loss on investment in

held-for-trading securities (440,864,402) 78,123,751153,737,591 145,193,949

Decrease in Receivables 26,903,286 729,693,435

Increase / (decrease) in:Balance payable against purchase of marketable securities 36,982,727 19,401,562Remuneration payable to Management Company (581,444) 925,228Remuneration payable to Trustee 44,064 (31,692)Creditors, accrued and other liabilities 53,106,163 (3,854,905)

89,551,510 16,440,193270,192,387 891,327,577

Sale of investments 5,518,652,213 13,231,645,587

Purchase of investments (5,010,341,281) (12,972,797,450)

Others - 1,804,230Cash flows from operating activities 778,503,319 1,151,979,944

Cash flows from financing activitiesAmount received on issuance of units 656,198,272 648,410,551Payment against redemption of units (1,065,110,035) (1,754,778,803)Cash flows from financing activities (408,911,763) (1,106,368,252)Net increase in cash and cash equivalent 369,591,556 45,611,692

Cash and cash equivalent at beginning of the year 915,721,488 870,109,796

Cash and cash equivalent at end of the year Rupees 1,285,313,044 915,721,488









STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUNDSFOR THE YEAR ENDED JUNE 30, 2007

2007 2006--------------Rupees---------------

Net assets at beginning of the year 3,516,598,214 3,443,554,171

Cash received / receivable on issuance of 187,208*units (2006 : 136,672 units) 656,198,272 648,410,551

Cash paid / payable on redemption of 133,497units (2006: 187,571 units) (1,065,110,035) (1,627,659,840)

(408,911,763) (979,249,289)

3,107,686,451 2,464,304,882

Element of (income)/loss included in prices of unitsissued less those in units redeemed - net (77,845,992) 227,293,828

Net income for the year (recognised income for the year) 1,020,178,803 824,999,504

Net assets at end of the year Rupees 4,050,019,262 3,516,598,214

* includes 103,303 units (2006: 60,918) issued as bonus units.







DISTRIBUTION STATEMENTFOR THE YEAR ENDED JUNE 30, 2007

2007 2006--------------Rupees---------------

Undistributed income brought forward 1,213,178,977 816,735,473

Final Distribution (at the rate of 40% and20% for the year ended 30 June 2006 and30 June 2005 respectively):

- Bonus units (stock dividend) (670,342,516) (428,556,000)

- Cash dividend (84,971,484) -

(755,314,000) (428,556,000)

Net income for the year 1,020,178,803 824,999,504

Undistributed income carried forward Rupees 1,478,043,780 1,213,178,977









NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED JUNE 30, 2007

1. LEGAL STATUS AND NATURE OF BUSINESS

Unit Trust of Pakistan (the "Fund") was established under Trust Deed executed between JS ABAMCO Limitedas its Management Company and Muslim Commercial Financial Services (Private) Limited ("MCFSL") as itsTrustee. The Trust Deed was executed on 26 April 1997 and was approved as a investment scheme by theSecurities & Exchange Commission of Pakistan (SECP) on 9 June 1997 in accordance with the Asset Management

Companies Rules, 1995 [now repealed and replaced by the Non-Banking Finance Companies (Establishmentand Regulation) Rules, 2003 (NBFC Rules)].

Central Depository Company of Pakistan Limited (CDC) was appointed as Trustee of the Fund on 11 June

2005 after voluntary resignation of MCFSL.

The Management Company of the Fund is registered with the SECP as a Non-Banking Finance Companyunder NBFC Rules, 2003. Its registered office is located at 7th Floor, The Forum, Clifton, Karachi, Pakistan.

The Fund is an open ended mutual fund and offers units for public subscription on a continuous basis. Theunits are transferable and can also be redeemed by surrendering them to the Fund. The units are listed onthe Lahore Stock Exchange.

The principal activity of the Fund is to make investments in securities listed on the stock exchanges registeredin Pakistan as well as other debt securities including Government of Pakistan paper, commercial paper andvarious other money market instruments.

Title to the assets of the Fund are held in the name of Central Depository Company Limited as a Trustee ofthe Fund.

2. STATEMENT OF COMPLIANCE

2.1 These financial statements have been prepared in accordance with the requirements of the Trust Deed,NBFC Rules, directives issued by the Securities and Exchange Commission of Pakistan (SECP) and approved

accounting standards as applicable in Pakistan. Approved accounting standards comprise of suchInternational Financial Reporting Standards as notified under the provisions of the Companies Ordinance,1984. Wherever, the requirements of the Trust Deed, the NBFC Rules or directives issued by SECP differwith the requirements of these standards, the requirements of the Trust Deed, NBFC Rules and the said

directives take precedence.

2.2 New accounting standards and IFRIC interpretations that are not yet effective

The following standards, amendments and interpretations of approved accounting standards are onlyeffective for accounting periods beginning on or after 1 July 2007 and are either not relevant to theFund's operations or are not expected to have significant impact on the Fund's financial statementsother than certain increased disclosures in the certain cases:


- IAS 1 - Presentation of Financial Statements - Amendments Relating to Capital Disclosures;- IAS 23 - Borrowing Costs (revised);

- IAS 41 - Agriculture;- IFRS 2 - Share-based Payments;- IFRS 3 - Business Combinations;- IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations;

- IFRS 6 - Exploration for and Evaluation of Mineral Resources;- IFRIC 10 - Interim Financial Reporting and Impairment;- IFRIC 11 - Group and Treasury Share Transactions;- IFRIC 12 - Service Concession Arrangements;

- IFRIC 13 - Customer Loyalty Programmes;- IFRIC 14 - The Limit on a Defined Benefit Asset Minimum Funding Requirements and their interactions.

3. BASIS OF PREPARATION

3.1 These financial statements have been prepared under the historical cost convention, except thatinvestments held for trading are measured at fair values. These financial statements are presented inPakistan Rupees, which is the functional currency of the Fund.

3.2 The preparation of financial statements in conformity with approved accounting standards, as applicablein Pakistan, requires management to make judgments, estimates and assumptions that affect theapplication of policies and the reported amounts of assets, liabilities, income and expenses. The

estimates and associated assumptions are based on historical experience and various other factorsthat are believed to be reasonable under the circumstances, the results of which form the basis ofmaking the judgments about the carrying values of assets and liabilities that are not readily apparentfrom other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimate is revised if the revision affects only thatperiod, or in the period of the revision and future periods if the revision affects both current and future

periods.

Judgments made by management in the application of approved accounting standards, as applicablein Pakistan, that have significant effect on the financial statements and estimates with a significant risk

of material judgment in the next year are as follows;

- Held to maturity investment

The Fund has classified certain investment as held to maturity. In this regard, management's judgementis involved in evaluating the intention and ability to hold these investment till their respective maturities.

- Investment stated at fair value

Management has determined fair value of certain investments by using quotation from active market.




Fair value estimates are made at a specific point in time, based on market conditions and informationabout the financial instrument. These estimates are subjective in nature and involve uncertainties andmatter of judgment (e.g. valuation, interest rates, etc.) and therefore, can not be determined with

precision.

- Other assets

Judgement is involved in assessing the realisability of the assets balances.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4.1 Investments

4.1.1 All investments are initially recognised at cost, being the fair value of the consideration given includingtransactions cost associated with the investment, excluding those pertaining to held-for-trading which

are charged to the Income Statement.

4.1.2 The Fund classifies its investments in the following categories:

Held for trading

These represent investments which are acquired principally for the purposes of generating profit fromshort term fluctuation in price or are part of the portfolio in which there is recent actual pattern of

short term profit taking.

The transaction cost associated with the acquisition of these investments are charged off to the incomestatement.

After initial recognition, the above investments are remeasured at fair value determined with referenceto the year-end quoted rates. Gains or losses on re-measurement of these investments are recognisedin Income Statement.

Held to maturity

Investments with fixed maturity where the management has both the intent and ability to hold till

maturity are classified as held to maturity. These investments are stated at amortised cost less impairmentlosses, if any. Amortisation of premium / discount on acquisition of the investments is carried out usingthe effective yield method.

4.1.3 For investments in quoted equity marketable securities, fair value is determined by reference to StockExchange quoted market prices at the close of business on balance sheet date. The fair value of termfinance certificates is determined on the basis of the average of rates quoted by the brokers (Also seenote 6.2).

4.1.4 All regular way of purchases and sales of investments are recognised on the trade date i.e. the date


the Fund commits to purchase / sell the investments. Regular way of purchase and sale of investments

require delivery of securities within three days after the transaction, as required by the Stock ExchangeRegulations.

4.2 Securities under repurchase / resale agreements (including balance receivable against ContinuousFunding System arrangement)

Transactions of purchase under resale (reverse-repo) of marketable and government securities, includingthe securities purchased under continuous funding system, are entered into at contracted rates for

specified periods of time. Securities purchased with a corresponding commitment to resell at a specifiedfuture date (reverse-repos) are not recognised in the statement of assets and liabilities.

Amounts paid under these agreements are included in receivable in respect of reverse repurchase

transactions / against Continuous Funding System. The difference between purchase and resale priceis treated as income from reverse repurchase transactions / Continuous Funding System and accruedover the life of the reverse-repo agreement.

4.3 Issue and redemption of units

Units are issued at the offer price prevalent on the day in which the units are issued. The offer pricerepresents the net assets value of units at the end of the day plus the allowable sales load. The sales

load is payable to the Distribution Companies and the Management Company as processing fee. Issueof units is recorded on acceptance of application for sale.

Units redeemed are recorded at the redemption price prevalent on the day in which the units are

redeemed. The redemption price represents the net assets value at the end of the day. Redemptionof units is recorded on acceptance of application for redemption.

4.4 Net asset value per unit

The net assets value per unit disclosed in the statement of assets and liabilities is calculated by dividingthe net assets of the Fund by the number of units in issue at the year-end.

4.5 Revenue recognition

Gains / (losses) arising on sale of investments are included in the Income Statement on the date atwhich the transaction takes place.

Dividend income is recorded at the time of the closure of share transfer book of the company declaringthe dividend. Dividend received on marketable securities acquired after the announcement of dividendtill the book closure date are not taken to income but reflected as reduction in the cost of investment.

Returns on certificates of investment, placements, bank deposits and investments in debt securitiesare recognised at rate of return implicit in the instrument on a time proportionate basis.


4.6 Element of income in prices of units sold less those in units redeemed

An equalisation account called the "element of income / (loss) included in prices of units sold lessthose in units redeemed" is created, in order to prevent the dilution of per unit income and distributionof income already paid out on redemption.

The Fund records the net element of accrued income/(loss) relating to units issued and redeemedduring an accounting period in the Income Statement while the portion of the element of income/(loss)that relates to unrealised gains/(losses) relating to available for sale investment securities held by theFund is recorded in a separate reserve account in the balance sheet and any amount remaining in thisreserve account at the end of an accounting period (whether gain or loss) is included in the amountavailable for distribution to the unit holders.

4.7 Taxation

The Fund is exempt from taxation under clause 99 of the Part I of the 2nd Schedule to the Income TaxOrdinance, 2001, subject to the condition that not less than 90 percent of its income excluding realisedand unrealised capital gain for the year is distributed amongst the unit holders.

4.8 Financial instruments

All the financial assets and financial liabilities are recognised at the time when the Fund becomes aparty to the contractual provisions of the instrument. Any gain or loss on derecognition of the financial assets and financial liabilities is taken to income directly.

4.9 Offsetting of financial assets and liabilities

Financial assets and financial liabilities are only offset and the net amount reported in the statementof assets and liabilities when there is a legally enforceable right to set off the recognised amount and the Fund intends to either settle on a net basis, or to realise the asset and settle the liability simultaneously.

4.10 Cash and cash equivalents

Cash and cash equivalents comprise of bank balances including term deposits.

4.11 Impairment

The carrying amount of the Fund's assets are reviewed at each balance sheet date to determinewhether there is any indication of impairment. If such indication exists, the assets recoverable amountis estimated. An impairment loss is recognised whenever the carrying amount of an asset exceed itsrecoverable amount. Impairment losses are recognised in the Income Statements.

4.12 Provision

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




4.13 Other assets

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

Note 2007 2006--------------Rupees---------------

5. BANK BALANCESCash at bank - local currency:- in current accounts 5,000 5,000- in saving accounts 5.1 1,285,308,044 615,716,488- in term deposits - 300,000,000

1,285,313,044 915,721,488

5.1 This includes bank balance of Rs. 701.257 million with JS Bank Limited (a related party) that carries mark-up of 10% per annum. Other saving accounts carry profit rates ranging from 5% to 11% (2006: 5% to9.90%) per annum.

6 INVESTMENTS

Quoted investments:

Held for tradingListed equity securities 6.1 2,604,766,890 2,376,765,577Term finance certificates 6.2 71,264,101 124,746,793

Unquoted investments:

Held to maturityTerm finance certificates at amortised cost 6.3 130,750,667 59,985,000Application money for subscription of

term finance certificates 6.4 35,000,000 -Rupees 2,841,781,658 2,561,497,370




6.1 Listed equity securities - held for trading*

Mutual funds

BSJS Balanced Fund Limited (Related Party) 6,600,199 413,500 - 755,500 6,258,199 80,730,774 1.99

UTP-Large Cap. Fund (formerly ABAMCO

Composite Fund) (Related Party) - 50,000 - 50,000 - - -

PICIC Growth Fund - 1,687,500 - 1,687,500 - - -

UTP-Growth Fund (Related Party) 3,295,473 - - 3,295,473 - - -

Investment companies / securities

companies / banks

MCB Bank Limited 950,000 1,085,000 7,500 1,985,000 57,500 20,987,500 0.52

National Bank of Pakistan 850,000 2,771,100 150,000 3,671,100 100,000 26,200,000 0.65

The Bank of Punjab - 3,428,600 292,500 3,221,100 500,000 58,250,000 1.44

United Bank Limited 501,000 120,000 75,000 696,000 - - -

Allied Bank Limited 175,000 450,000 - 225,000 400,000 55,580,000 1.37

Bank AlFalah Limited - 1,355,000 226,200 981,000 600,200 39,073,020 0.96

Faysal Bank Limited - 450,000 - 450,000 - - -

Askari Bank Limited (related party) - 1,590,100 - 290,100 1,300,000 137,670,000 3.40

Insurance

EFU Life Assurance Limited 262,115 - 168,743 430,858 - - -

Adamjee Insurance Company Limited - 377,300 - 327,300 50,000 16,297,500 0.40

Textile composite

Nishat Mills Limited 853,000 3,200,200 - 2,403,000 1,650,200 215,268,590 5.32

Azgard Nine Limited (Related Party) 8,706,350 - - 250,000 8,456,350 446,495,280 11.02

Cement

D.G. Khan Cement Limited 700,000 1,650,000 50,000 2,400,000 - - -

Lucky Cement Limited 1,750,000 1,502,300 - 2,852,300 400,000 55,100,000 1.36

Pioneer Cement Limited 175,000 - 7,895 182,895 - - -

Dewan Cement Limited - 500,000 - 500,000 - - -

Oil & gas marketing companies

Pakistan State Oil Company Limited - 771,000 - 420,000 351,000 137,398,950 3.39

Pakistan Petroleum Limited 600,000 1,642,200 - 1,492,200 750,000 196,837,500 4.86

Attock Petroleum Limited 79,000 - - 79,000 - -

Oil & gas exploration companies

Oil & Gas Development Company Limited 1,500,000 3,938,300 - 3,488,300 1,950,000 233,610,000 5.77

Pakistan Oilfields Limited (Related Party) 800,000 915,000 - 1,031,600 683,400 216,637,800 5.35

Engineering

DADEX Eternit Limited (Related Party) 1,051,000 - - - 1,051,000 63,060,000 1.56

Automobile assembler

Indus Motor Company Limited - 32,900 - 32,900 - - -

Technology and communication

Pakistan Telecommunication Company Limited 2,000,000 8,974,000 - 8,965,500 2,008,500 114,484,500 2.83

World Call Telecom Limited 1,164,210 2,475,000 - 3,639,210 - - -

Fertilizer

Fauji Fertilizer Company Limited 1,140,900 59,100 - 475,000 725,000 87,906,250 2.17

Fauji Fertilizer Bin Qasim Limited 3,538,000 6,400,000 - 5,288,000 4,650,000 181,350,000 4.48

Engro Chemical Pakistan Limited 350,000 725,000 - 875,000 200,000 50,600,000 1.25

Engro Chemical Pakistan Limited - letters of right - - 82,500 - 82,500 10,560,000 0.26

Chemical

ICI Pakistan Limited 239,500 200,200 - 289,700 150,000 25,065,000 0.62

Paper and Board

Packages Limited 475,000 - 23,725 73,700 425,025 135,604,226 3.35

2,604,766,890 64.31

Cost of held for trading investments as at 30 June 2007 2,104,063,053

Ordinary shares / certificates have a face value of Rs. 10/- each unless stated otherwise.

No. of Acquired Bonus / rights Disposed No. of Market % of

holdings during the received holdings value Net Assets

at the year during the at the end (Rupees) of the Fund

beginning year

during the

of the year

of the year

year

Sectors / companies

-


6.2 Term finance certificates - held for trading (quoted debt securities) (Certificates of face value of Rs. 5,000 each)

Leasing companies

Orix Leasing Pakistan Limited (II) 2,000 - - 2,000 - - -

Trust Leasing Corporation Limited (I) 6.6 568 - - - 568 1,578,716 0.04

Trust Leasing Corporation Limited (II) 6.7 1,000 - - - 1,000 3,523,330 0.09

Commercial Banks

Askari Bank Limited (related party) 2,000 - - 2,000 - - -

MCB Bank Limited 6.8 6,038 - - - 6,038 18,379,612 0.45

Standard Chartered Bank Limited (II) 6.9 4,000 - - - 4,000 19,601,440 0.48

Bank Al-Habib Limited 6.10 - 7,000 - 2,000 5,000 26,581,250 0.66

Textile composite

Azgard Nine Limited (related party) 3,000 - - 3,000 - - -

Oil & gas marketing companies

Sui Southern Gas Company Limited (II) 3,000 - - 3,000 - - -

Technology and communication

Pakistan Mobile Communications Limited 5,000 - - 5,000 - - -

Miscellaneous -

-

Pakistan Services Limited 6.11 747 - - - 747 1,599,753 0.04

Market value of held for trading investments as at 30 June 2007 71,264,101 1.76

Cost of held for trading investments as at 30 June 2007 69,778,372Cost of held-for-trading investments as at March 31, 2007

(Face value of Rs. 5,000/- each)

6.3 Unquoted debt securities -held to maturity at amortised cost

Term finance certificates (Certificates of face value of Rs. 5,000 each)

Azgard Nine Limited - privately placed(Related Party) 6.12 - 22,000 - - 22,000 109,934,000 2.71

Escort Investment Bank Limited 6.13 - 5,000 - - 5,000 20,816,667 0.51

Optimus Limited (Face Value of Rs 1,000,000) - - 35 - 35 - - -Total130,750,667 3.23

6.4 Application money for subscription of term finance certificates -held to maturity

(Certificates of face value of Rs. 5,000 each)

Engro Chemical Pakistan Limited 6.14 35,000,000 0.86

35,000,000 0.86

No. of Acquired Bonus / rights Disposed No. of Market % of

holdings during the received holdings value Net Assets

at the year during the at the end (Rupees) of the Fund

beginning year

during the

of the year

of the year

year




6.5 As stated in note 4.1 term finance certificates are valued with reference to quotation obtained fromreputable brokerage houses.

However, the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 requirethat the term finance certificates be valued on the basis of the closing price of the Stock Exchange onwhich the same are listed. Had these been valued on this basis, the net assets and net income for theyear would have been lower by Rs. 1,119,069.

Further, the net asset value of the Fund during the year may also have been lower or higher based onthe prevailing Stock Exchange rates and as such there may be differences in the "element of incomeand capital gains in prices of units sold less those of units redeemed" accordingly. The impact of themethod used by the fund on the "element of income and capital gains in the prices of units sold lessthose of units redeemed" paid or received is not quantifiable and is considered immaterial as differencebetween the closing Stock Exchange price and broker quotations for the term finance certificates formless than 0.1% of the net asset value at the year end.

6.6 These term finance certificates carry rate of mark-up of base rate plus 2% per annum with floor of 9%per annum and a cap of 14% per annum receivable semi-annually in arrears and will mature in June2008. These term finance certificates are secured by specific leased assets and related future receivableswith 25% margin.

6.7 These term finance certificates carry rate of mark-up of ask rate (KIBOR) + 200 basis points with nofloor and no cap receivable semi-annually in arrears and will mature in November 2010. These termfinance certificates are secured by first charge by way of hypothecation over specific leased assets ofthe company with 25% margin in favour of Trustee.

6.8 These term finance certificates carry rate of mark-up equal to the cut-off yield on the last successful5 years Pakistan Investment Bonds' auction conducted by the State Bank of Pakistan plus 1.5% witha floor of 11.75% per annum and a cap of 15.75% per annum receivable semi-annually in arrears andwill mature in February 2008. These term finance certificates are unsecured and subordinated to allother indebtedness of MCB Bank Limited including all deposits.

6.9 These term finance certificates carry rate of mark-up of Base rate plus 0.75% with a floor of 5% perannum and cap of 10.75% per annum receivable semi-annually in arrears and will mature in January2011. These term finance certificates are unsecured.

6.10 These term finance certificates carry a rate of mark-up equal to the six month Karachi Inter Bank OfferRate (ask side) plus 1.95% p.a., receivable semi annually in arrears with no floor or cap and will maturein eight years after the issue. These term finance certificates are unsecured.


6.11 These term finance certificates carry rate of mark-up equal to the State Bank of Pakistan discount rateplus 2.25% per annum with a floor of 9.75% per annum and a cap of 13.75% per annum receivablesemi-annually in arrears and will mature in November 2008. These term finance certificates are securedby way of first equitable mortgage at immovable assets of Pearl Continental Hotel, Karachi with the25% margin and first pari-passu charge by way of hypothecation over all current and future movableassets of the Pearl Continental Hotel, Karachi with the 25% margin.

6.12 These term finance certificates carry a rate of mark-up on the basis of simple average six monthsKarachi Inter Bank offer rate (KIBOR) plus margin of 3% per annum , receivable quarterly in arrears andwill mature in August 2007. These term finance certificates are secured by the Subsituted MortgageCharge, Hypothecation Charge, lien or other encumbrance offered by the company.

6.13 These term finance certificates are unlisted & carry a rate of mark-up of base rate plus 2.75% per annumwith a floor of 5% per annum and a cap of 10% per annum receivable on semi annual basis in arrearsand will mature in September 2009. Base rate is defined as 6 months Karachi Inter Bank Offer Rate(KIBOR). These term finance certificates are secured by a first charge over the future and present currentassets of the issuer excluding the shares pledged to Karachi Stock Exchange.

6.14 This represents application money for subscription of 7,000 term certificates (Pre-IPO) of Engro ChemicalPakistan Limited having face value of 5,000 each and carry a rate of mark-up equal to six month KarachiInterbank Offer Rate plus the rate of 1.55% per annum receivable semi annually in arrears and willmature in eight years after the issue. These term finance certificates are secured on Second rankingcharge on all present and future fixed assets of Engro Chemical Pakistan Limited with a margin of 25%,to be upgraded within 90 days from the date of issue to first ranking pari passu charge over all futurefixed assets of Engro Chemical Pakistan Limited.

7. INCOME RECEIVABLES - considered good2007 2006

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

Profit / mark-up receivable on:- Bank balances 7.1 9,448,139 5,423,644- Term finance certificates 7.2 6,909,431 5,369,680- Placement - 918,250Dividend receivable 7.3 25,620,784 8,250,775

Rupees 41,978,354 19,962,349

7.1 This includes Rs.1,213,373 due on balances maintained with JS Bank Limited (a related party)

7.2 This includes amount of Rs 3,185,616 due from Azgard Nine Limited (a related party) in respect ofprivately placed term finance certificates.

7.3 This includes Rs.18,689,284 due from related paries.




8. DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES

2007 2006--------------Rupees---------------

Security deposit with Central DepositoryCompany of Pakistan Limited 100,000 100,000

Security deposit with National ClearingCompany Pakistan Limited 1,000,000 1,000,000

Prepaid listing fee 30,000 15,000Withholding income tax recoverable 820,242 820,242

Rupees 1,950,242 1,935,242

9. REMUNERATION PAYABLE TO THE MANAGEMENT COMPANY - related party

The Management Company is entitled to a remuneration for services rendered to the Fund under theprovisions of the Non-Banking Finance Companies (Establishment & Regulation) Rules, 2003 up to a maximumof 2% (2006: 2%) per annum of the average daily net assets of the Fund.

2007 2006--------------Rupees---------------

Balance at beginning of the year 7,027,196 6,101,968Remuneration for the year 73,292,397 74,140,954Amount paid during the year (73,873,841) (73,215,726)Balance at end of the year Rupees 6,445,752 7,027,196

10. REMUNERATION PAYABLE TO THE TRUSTEE -related party

The trustee is entitled to a monthly remuneration for services rendered to the Fund under the provisions ofthe Trust Deed.

Net assets upto rupees one billion Rs. 0.7 million or 0.20% per annum of NetAssets Value, which ever is higher.

Net assets exceeding rupees one billion Rs. 2.00 million plus 0.10% per annum of NetAssets Value exceeding Rupees one billion.

Balance at beginning of the year 366,843 398,535Remuneration for the year 4,738,010 4,707,012Amount paid during the year (4,693,946) (4,738,704)Balance at the end of the year Rupees 410,907 366,843

11. ANNUAL FEE TO SECURITIES AND EXCHANGECOMMISSION OF PAKISTAN

This represents annual fee payable to Securities and Exchange Commission of Pakistan (SECP) in accordancewith rule 79 of the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003; wherebythe Fund is required to pay SECP an amount equal to one tenth of 1% of the average annual net asset of theFund.


2007 2006--------------Rupees---------------

12. CREDITORS, ACCRUED AND OTHERLIABILITIES

Sales load payable 12.1 291,902 1,995,111Accrued expenses 1,173,825 1,197,080CDC transaction charges Payable 48,000 32,059Distribution payable 407,104 532,211Others 476,448 421,935

Rupees 2,397,279 4,178,396

12.1 This includes Rs. 93,545 (2006: Rs.532,271) payable to the Management Company.

13. NUMBER OF UNITS IN ISSUE2007 2006

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

Total units in issue at beginning of the year 377,657 428,556Units sold during the year 83,905 75,754Units redeemed during the period (133,497) (187,571)Bonus unit issued as final stock dividend 103,303 60,918Total units in issue at end of the year Number 431,368 377,657

14. FINANCIAL INCOME

On- Bank deposit accounts 96,483,008 81,894,767- Placements 10,222,138 7,143,451- Term Finance Certificates 34,995,122 17,874,490- Government securities - 1,645,842-Reverse repurchase transactions - 42,113,818Other income - 53,544

Rupees 141,700,268 150,725,912

15. AUDITORS' REMUNERATION

Annual audit fee 250,000 225,000Fee for the review of half yearly financial statements 96,800 88,000Fee for the review of statement of compliance with

the best practices of Code of Corporate Governance 45,000 45,000Other services 20,000 55,000Out of pocket expenses 84,000 78,655

Rupees 495,800 491,655




16. NET INCOME PER UNIT

Net income for the year Rupees 1,020,178,803 824,999,504

Number of units in issue Number 431,368 377,657

Net income per unit Rupees 2,365 2,185

17. UNDISTRIBUTED INCOME CARRIED FORWARD AT 30 JUNE 2007

Undistributed income includes Rs.502.189 million representing net unrealised gain on revaluation ofinvestments, which is not distributable as per clause 26.2 of the Trust Deed.

18. TAXATION

No provision for taxation has been made in these financial statements in view of the exemption under Clause99 of the Part I of the 2nd Schedule of the Income Tax Ordinance, 2001, subject to the condition that not lessthan 90% of its income excluding realised and unrealised capital gains for the year is distributed among theunit holders.

The income tax assessments of Unit Trust of Pakistan have been finalised up to and including the assessmentsyear 2002-2003 by the Income Tax Department creating a nil demand. For tax years 2004-2005 and 2006, theFund has filed tax returns which are deemed to be assessed under section 120 of the Income Tax Ordinance,2001.

19. TRANSACTIONS WITH RELATED PARTIES

19.1 Following are the related parties of the fund

Related Parties Relationship Details oftransactions andbalances (Note)

JS ABAMCO Limited Management Company 9 & 19.2.1

Jahangir Siddiqui & Company Holding Company ofLimited Management Company 19.2.2

JS Global Capital Market (Formerly Associate Company of JahangirJahangir Siddiqui Capital Markets Limited) Siddiqui & Company Limited 19.2.3

JS Bank limited Subsidiary of JahangirSiddiqui & Company Limited 5

Central Depository Company ofPakistan Limited Trustee 10

BSJS Balanced Fund Limited Fund managed by the Management Company 19.2.5


UTP-Large Cap. Fund (formerly ABAMCO Composite Fund) ------------do------------ 19.2.6 UTP-Growth Fund ------------do------------ 19.2.7 UTP-Aggressive Assets Allocation Fund ------------do------------ 19.2.8UTP-Fund of Fund ------------do------------ 19.2.9UTP-Income Fund ------------do------------ -UTP-Islamic Fund ------------do------------ -UTP-A30+ Fund, ------------do------------ -UTP-Capital Protected Fund and ------------do------------ -UTP-Capital Protected Fund II ------------do------------ -

Azgard Nine Limited Associated company of the holding company ofthe Management Company 6, 7.2 & 7.3

Pakistan Oil Fields Limited Company with common directors of theManagement Company 6

DADEX Eternit Limited Company with common directors of theManagement Company 6

Askari Bank Limited Company with common directors of theManagement Company 6

19.2 Details of the other transactions with related parties during the year are as follows:

19.2.1 JS ABAMCO Limited 2007 2006--------------Rupees---------------

Remuneration of Management Company 73,292,397 74,140,954

Sales load 3,684,513 4,351,566

19.2.2 Jahangir Siddiqui & Company Limited

Purchase of Investments - 755,963,863

Sales of Investments - 40,091,489

Profit on money market transactions - 2,420,655

19.2.3 JS Global Capital Limited(Formerly Jahangir Siddiqui Capital Markets Limited)

Brokerage fee 1,435,774 3,226,430

The amount disclosed represents brokerage paid to related party and not the purchase or sale valueof securities transacted through them. The purchase or sale value have not been treated as transactionswith related parties.

19.2.4 Related parties do not hold any unit of the Fund as at 30 June 2007(2006: 2,103.74), other keymanagement personnel hold 82.33 units (2006: 47.24 units)




2007 2006 --------------Rupees---------------

19.2.5 BSJS Balanced Fund Limited

Dividend 15,645,498 19,800,596

19.2.6 UTP Large Cap. Fund (formerly ABAMCO Composite Fund)

Dividend - 4,053,875

19.2.7 UTP Growth Fund

Dividend - 11,535,90619.2.8 UTP Aggressive Assets Allocation Fund

Purchase of units - 380,000,000

Sale of units - 395,165,733

19.2.9 UTP Fund of Funds

Issue of units 10,538,575 38,791,640

Redemption of units 28,648,424 18,116,191

Purchase of units - 20,000,000

Sale of units - 19,604,534


20. MARK-UP / PROFIT RATE RISK EXPOSURE

The Fund's exposure to mark-up / profit rate risk based on contractual repricing and maturity dates, whichever is earlier at 30 June2007, is as follows:

Non mark-up /

Rate of Within Three More than profit

mark-up / one month months to one year bearing

return one year

(%)

Financial assets

Bank balances 7.5 to 11 1,285,308,044 - - 5,000 1,285,313,044

Receivable against sale of

marketable securities - - - - 12,752,445 12,752,445

Investments 10 to 13.56 109,934,000 127,080,768 2,604,766,890 2,841,781,658

Income receivable - 16,357,570 - 25,620,784 41,978,354

Deposits and other receivables - - - 1,100,000 1,100,000

Rupees 1,285,308,044 126,291,570 127,080,768 2,644,245,119 4,182,925,501

Financial liabilities

Remuneration payable to Management Company - - - 6,445,752 6,445,752

Remuneration payable to Trustee - - - 410,907 410,907

Payable to Securities and Exchange

Commission of Pakistan - - - 3,729,921 3,729,921

Creditors, accrued expenses and other liabilities - - - 2,397,279 2,397,279

Amount payable on redemption of units - - - 64,388,333 64,388,333

Payable against purchase of marketable securities - - - 56,384,289 56,384,289

- - - 133,756,481 133,756,481

Balance sheet gap - 2007 (a) Rupees 1,285,308,044 126,291,570 127,080,768 2,510,488,638 4,049,169,020

(a) On-balance sheet gap represents the net amounts of on-balance sheet items.

Non mark-up /

Rate of Within Three More than profit

mark-up / one month months to one year bearing

return one year

(%)

Financial assets

Bank balances 5 to 10.75 915,716,488 - - 5,000 915,721,488

Receivable against sale of

marketable securities - 11,686,736 11,686,736

Placements 11.30 to 11.95 - 50,000,000 - - 50,000,000

Investments 11.95 to 14 - 50,106,925 134,624,868 2,376,765,577 2,561,497,370

Income receivable - 11,711,574 - 8,250,775 19,962,349

Deposits and other receivables - - - 1,100,000 1,100,000

Rupees 915,716,488 111,818,499 134,624,868 2,397,808,088 3,559,967,943

Financial liabilities

Remuneration payable to Management Company - - - 7,027,196 7,027,196

Remuneration payable to Trustee - - - 366,843 366,843

Payable to Securities and Exchange

Commission of Pakistan - - - 3,703,303 3,703,303

Creditors, accrued expenses and other liabilities - - - 4,178,396 4,178,396

Amount payable on redemption of units - - - 9,527,671 9,527,671

Payable against purchase of marketable securities - - - 19,401,562 19,401,562

- - - 44,204,971 44,204,971

Balance sheet gap - 2006 (a) Rupees 915,716,488 111,818,499 134,624,868 2,353,603,117 3,515,762,972

(a) On-balance sheet gap represents the net amounts of on-balance sheet items.

Total

2006

2007

Mark-up / profit bearing

Total

Mark-up / profit bearing

-




21. RISK MANAGEMENT

The Fund is primarily subject to market risk, yield / interest rate risk, liquidity risk and credit risk. The Fundhas designed and implemented a framework of controls to identify, monitor and manage these risks asfollows:

21.1 Market risk

Market risk is the risk that the value of the financial instrument may fluctuate as a result of changesin market interest rates or the market price of securities due to a change in credit rating of the issueror the instrument, change in market sentiments, speculative activities, supply and demand of securitiesand liquidity in the market.

The Fund manages market risk by monitoring exposure on securities by following the internal riskmanagement policies and investment guidelines approved by its board of directors and regulationslaid down by the Securities and Exchange Commission of Pakistan.

21.2 Credit risk and Management of credit risk

Credit risk arises from the inability of the issuers of the instruments, the relevant financial institutionsor counter party in case of reverse repurchase agreement transactions and receivable against continuousfunding system or other arrangements, to fulfil their obligations. The fund is exposed to credit risk onassets amounting to Rs. 1,579,008,853 as at 30 June 2007 (2006: 1,184,037,608).

The Fund’s policy is to enter into financial contracts in accordance with the internal risk managementpolicies and investment guidelines approved by the board of directors. In addition, the risk is managedthrough assignment of credit limits, obtaining adequate collaterals and by following strict creditevaluation criteria laid down by the management. The Fund does not expect to incur material creditlosses on its financial assets.

21.3 Concentration of credit risk

Concentration of credit risk exists when changes in economic or industry factors affect the group ofcounterparties whose aggregate credit exposure is significant in relation to the Fund’s total creditexposure. The Fund’s portfolio of financial assets is broadly diversified and transactions are enteredinto with diverse credit worthy counterparties thereby mitigating any significant concentration ofcredit risk.

21.4 Liquidity risk

Liquidity risk is the risk that the Fund may encounter difficulty in raising funds to meet its obligationsand commitments. The Fund manages the liquidity risk by maintaining maturities of financial assetsand financial liabilities and investing a major portion of the Fund’s assets in highly liquid financialassets.


21.5 Market rate of return (MROR) risk

MROR risk is the risk that the value of a financial instrument will fluctuate due to changes in the marketinterest rates. The Fund manages its investment portfolio in order to reduce the risk of loss in marketvalue of investments as a result of changes in market interest rates. In case the Fund expects economicuncertainty, the portfolio is restructured so as to comprise short term debt securities, money marketinstruments, short maturity repurchase transactions, etc.

22. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Fund is of the view that the fair market value of the financial assets and liabilities, are not significantlydifferent from their carrying values as its assets and liabilities are essentially short term in nature and / orfrequently repriced.

23. NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATE

The board of directors of the management company has approved a stock dividend of Rs. 2,010.70 per unitfor the year ended 30 June 2007, amounting to Rs. 867.35 million in total in their meeting held on 07 July2007. These financial statements do not include the effect of the above dividend that will be accounted forsubsequent to the year end.

24. DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorized for issue by Board of Directors of the Management Companyon August 18, 2007.






JS ABAMCO Head Office7th Floor, The Forum, G-20Khayaban-e-Jami, Block-9, CliftonKarachi-75600Tel: (92-21) 111-222-626Fax: (92-21) 5361724

JS ABAMCO (Shahra-e-Faisal branch)Shop No. 8, Ground Floor,Plot No 26-A, Block 6,Business Avenue, PECHS,Main Shahra - e -Faisal,Karachi - 75350Ph: 021-4322094-96Fax: 021-4322093

JS ABAMCO (Park Tower branch)Office No. 209, 2nd FloorPark Tower, Shahrah-e-FirdusiClifton Karachi.Ph: 021-5820100Fax: 021-5821655

JS ABAMCO (Hyderabad branch)Property No 41/97, Ground Floor,Saddar, Hydrabad Cantonment,HyderabadPh: 022-2720250, 2720077, 2720010Fax: 022-2720581

JS ABAMCO (Islamabad branch)65-W, Ground Floor # 6,Chaudhary Plaza, Fazal-e-Haq Road,Blue Area - IslamabadUAN: 051-111-222-626Fax: 051-2806323

JS ABAMCO (Lahore branch)Ground Floor,307-Upper Mall,Lahore - 54000UAN: 042-111-222-626Fax: 042-5789108

BRANCH NETWORK OF THE MANAGMENT COMPANY

JS ABAMCO (Gujranwala branch)40, Trust Plaza,GT, Road,Gujranwala - 52250Ph: 055-3252953Fax: 055-3253373

JS ABAMCO (Multan branch)1st & 2nd Floor,185-Quaid-e-Azam Road,Multan Cantt.Ph: 061-450142-47

JS ABAMCO (Sialkot branch)27th Paris Road,Sialkot - 53100Ph: 052-4298501-02Fax: 052-4298503

JS ABAMCO (Peshawar branch)1st FloorState Life Building,34-The Mall, PeshawarPh: 091-5253844-6Fax: 091-5253850

JS ABAMCO (Mirpur branch)Azad Kashmir, Jarral PlazaBuilding No. 63/F,Sector F-1, Kotli Road,Mirpur AJKPh: (+92-058610) 39670-2 (+92-058610) 39669Fax: (+92-058610)39668



unit trust of pakistan formated - js...

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