ASSIGNMENT 3

FINANCIAL MANAGEMENT

Muhammad Abrar Naeem

094532-113

Salman

Ayaz Yazdani

Usman Ahmed

084232033
JS Income Fund (JS IF)
JS Investment was founded in 1995. It is the oldest AMC in Pakistan. It has a
market capitalization of around 4.33 billion (as at Dec 2008). It is best rated
AMC in Pakistan with a rating of AMC2+, it manages over USD 400 million in
assets.

JS IF is an income fund that aims to preserve investor’s capital while

providing a regular stream of current income on an annual basis which is
higher than that offered by commercial banks on deposits of a similar
liquidity profile as this fund. The fund operates a diverse portfolio of
investment-grade debt securities, government securities and money market
instruments. The fund maintains liquidity in the form of spread transactions
and bank deposits.

Key Information
Fund type Open end
Category Income Fund
Funds launch date 26 August, 2002
Fund Assets (PKR mn) 4,016.83
NAV (PKR) 103.18
Benchmark 1M KIBOR
Management fee 1.50%
Front-end Load 1.00%
Pricing mechanism forward
Trustee MCB Financial Services Ltd
Dealing Days & Cut-off time (Monday to Friday) 3:00 PM
Auditors KPMG Taseer Hadi & Co.
Risk profile Low
Listing LSE
Leverage NIL
AMC Rating AM2+
 Rating Product Ratin Definition
g

Asset Manager AM2+ Asset Manager meets very high

Rating investment management industry and
benchmarks with notes strength in
several of the rating factors

Entity Rating – JSIL A1+ Obligations supported by the highest

capacity for timely repayment
Credit Rating – Short
Term

Entity Rating – JSIL AA- Very high credit quality. ‘AA’ rating
denote a very low expectation of credit
Credit Rating – Long
risk
Term

Fund Rating Normal Long Term

JS Aggressive Asset 4 star N/A
Allocation

JS Fund of Funds 4 star N/A

JS Growth Fund 3 star N/A

JS Income Fund 5 star 5 star

JS Value Fund 5 star N/A

UTP A30+ 4 star 5 star

UTP Islamic Fund 4 star N/A

UTP Large Cap. Fund 4 star N/A

Unit Trust of Pakistan 5 star N/A

Performance (%)

1M 6M 1Y 3Y Launch

Fund 0.57 11.97 14.56 10.65 10.35

Benchmar 12.91 13.33 13.55 12.14 7.98

k

Differenc -12.34 -1.36 1.01 -1.49 2.37

e

Monthly performance (%)

FY10 FY09 FY08 FY07 FY06

Jul 9.32 13.22 9.96 9.71 7.93

Aug 10.48 11.26 9.58 9.45 8.31

Sep 13.41 13.88 8.94 10.35 15.08

Oct 37.73 14.68 10.09 9.07 13.22

Nov -0.12 -27.24 8.86 10.31 11.92

Dec 0.57 14.41 8.56 11.13 12.17

Jan 12.43 10.09 10.61 12.30

Feb 15.08 8.43 9.96 10.87

Mar 38.90 9.32 8.81 9.71

Apr 9.58 9.84 11.78 10.09

May 15.35 9.58 8.69 12.56

Jun 15.62 10.48 9.96 10.61

YTD 11.30 11.58 9.64 10.15 11.40

Benchmar 13.16 14.23 10.61 9.98 9.03

k

Differenc -1.86 -2.65 -0.97 0.17 2.37

e

Performance Charts

Statistical Analysis
Fund Benchmark

Beta 0.3 1.0

Standard Deviation 2.6% 1.2%

Largest Month Gain 3.7% 1.2%

Largest Month Loss -2.6% 0.0%

% Positive Months 94.4% 100.0%

Weighted Avg. 2.11

Maturity (Yr)

Investment Composition
Asset Allocation (%)
Dec-09 Nov-09

Term Fin. Certificates 37.49 36.69

Term Deposits 29.83 4.27

Cash 16.20 19.09

PIBs 11.92 5.60

Commercial paper 1.76 2.34

Treasury Bills 0.00 19.89

Others 2.80 12.12

TOTAL 100.00 100.00

Some Key ratios of JS Investment of their last four years are given below

200
Key Ratios 2008 2007 2006
5

Valuation

Earnings per shares PKR 5.49 5.21 5.32 1.44

Breakup value per share PKR 19.24 15.95 23.6 11.3

8 3

Price earnings ratio times 17.31 14.20 N/A N/A

Market price to break up value times 4.94 4.63 N/A N/A

Market value per share - year end PKR 95.07 73.90 N/A N/A

Market value per share - High PKR 126.5 74.90 N/A N/A

Market value per share - Low PKR 53.5 61.40 N/A N/A

Market capitalization (PKR in 9,507 7,390 N/A N/A

Million)
 Key Ratios 2008 2007 2006 2005

Historical trends

Management fee (PKR in Million) 627 462 461 300

Operating profit (PKR in Million) 673 629 679 251

Profit before tax (PKR in Million) 574 537 602 200

Profit after tax (PKR in Million) 549 521 532 144

Assets under management (PKR 38,974 29,651 22,617 16,285

in Million)

No. of funds under management 16 12 9 9

share capital (PKR in Million) 1,000 1,000 500 500

shareholders’ equity (PKR in 1,924 1,595 1,184 567

Million)

Total assets (PKR in Million) 4,302 2,547 2,353 1,503

No. of employees 189 132 93

Contribution to the national 69 67 41 80

exchequer (PKR in Million)

Conclusion
For the month of Dec 2009, JSIF yielded an annual return of 0.57% as
compare to the benchmark of 12.91%. Also they had eliminated their
exposure to Treasury Bills in the month of Dec 2009 as compare to the
allocation of 19.89% in Nov 2009. Term Deposits were increased by 25.56%
in the month of Dec 2009 as compared to Nov 2009. They have the highest
rating of AM2+; therefore their profile is less risky. Risk Level is low because
the investment is done into 7 different areas and the assets are dispersed in
different areas. Also they have 5 star rating for both Normal and Long Term.