JS Islamic Government Securities Fund - Annual Report 2016

Transcription

1. JS Islamic Government Securities Fund Annual Report 2016
2. JS Islamic Government Securities Fund CONTENTS Vision and Mission Statement 02 Organization 03 Directors ' Report to the Unit Holders 04 Fund Manager's Report 09 Performance Table / Key Financial Data 12 Review Report to the Unit holders on Statement of Compliance with Best Practices of Code of Corporate Governance 13 Statement of Compliance with the Code of Corporate Governance 14 Report of the Shariah Advisory Council 17 Statement of Compliance with Shariah Principles 18 Independent Assurance Provider's Report on Shariah Compliance of the Unit Holders 19 Trustee Report to the Unit Holders 21 Independent Auditors' Report to the Unit Holders 22 Statement of Assets and Liabilities 24 Income Statement 25 Statement of Comprehensive Income 26 Cash Flow Statement 27 Statement of Movement in Unit Holders' Fund 27 Distribution Statement 29 Notes to the Financial Statements 30 Annual Report 2016 01
3. JS Islamic Government Securities Fund VISION To be recognized as a responsible asset manager respected for continuingly realizing goals of its investors . MISSION To build JS Investments into a top ranking Asset Management Company; founded on sound values; powered by refined knowhow; supported by a committed team operating within an accountable framework of social, ethical and corporate responsibility - a strong and reliable institution for its shareholders to own; an efficient service provider and value creator for clients; an exciting and fulfilling work place for employees; and a participant worth reckoning for competitors. BROAD POLICY OBJECTIVES Value creation for clients on a sustainable basis Maintain high standards of ethical behaviors and fiduciary responsibility Manage Investments with Prudence and with the aim of providing consistent returns better than that of peers Take Products and Services to the People, Create awareness on understanding financial goals, risks and rewards Professional Excellence - Adapt, Evolve and Continuously Improve Maintain highly effective controls through strong compliance and risk management A talented, diligent and diverse HR 02 Annual Report 2016
4. JS Islamic Government Securities Fund ORGANIZATION Management Company JS Investments Limited 7th Floor , The Forum, G-20 Khayaban-e-Jami, Block-9, Clifton Karachi-75600 Tel: (92-21) 111-222-626 Fax: (92-21)35361724 E-mail:info@jsil.com Website: www.jsil.com Board of Directors Basir Shamsie Ali Akhtar Ali Suleman Lalani Asif Reza Sana Ahsen Ahmed Kamran Jafar Muhammad Yousuf Amanullah Muhammad Raza Dyer Chairman Chief Executive Officer Audit Committee Asif Reza Sana Suleman Lalani Muhammad Raza Dyer Chairman Member Member Chief Financial Officer & Company Secretary Muhammad Khawar Iqbal Trustee MCB Financial Services Ltd. 4th Floor,Perdesi House 2/1,R-Y-16, Old Queens Road, Karachi - 75530 Auditors KPMG Taseer Hadi & Co. Chartered Accountants 1st Floor, Shaikh Sultan Trust Building # 2 Beaumont Road, Karachi - 75530, Pakistan Legal Adviser Bawaney & Partners 3rd & 4th Floor, 68-C, Lane-13 Bokhari Commercial Area Phase-VI DHA, Karachi. Transfer Agent Technology Trade (Private) Limited 241-C, Block 2, P.E.C.H.S, Karachi Tel: (92-21) 34391316-7 Fax: (92-21) 34391318 Annual Report 2016 03
5. JS Islamic Government Securities Fund DIRECTORS ' REPORT TO THE UNITHOLDERS The Board of Directors of JS Investments Limited, the Management Company of JS Islamic Government Securities Fund (the Fund) is pleased to present the Annual Report for the year ended June 30, 2016. Money Market Review During FY16, average CPI during this time clocked in at 2.86% compared to 4.53% in FY15. This ease in inflation primarily came on the back of continued low commodity prices in the global markets (and its swift pass through to domestic consumers, particularly for POL products), comfortable supplies of key food items, and stable exchange rate. The impact of these factors was so overwhelming that YoY CPI inflation touched the extraordinary low of 1.32 percent in September 2015.During the outgoing quarter SBP issued two fixed rental Ijara Sukuks through which it raised Rs. 196.60 billion. During FY16, the GoP has raised Rs. 962 billion in the PIB auctions; higher than the target amount of Rs. 775.00 billion indicate market participants interest in longer maturity GoP bonds. Coming towards T-Bill auctions, the government raised Rs. 4,728 billion against the maturity of Rs. 4,469 billion while the target was Rs. 4,296 billion. In the last T-Bill auction of FY16, the Cut off yield for 3month, 6month and 12 month T-Bill averaged at 5.90%, 5.89% and 5.91% respectively. Review of Fund Performance The Net Asset Value ("NAV") per unit has increased by 3.66% inclusive of interim dividend from beginning NAV of Rs. 100.19 per unit as on June 30, 2015 to NAV of Rs. 100.51 as on June 30, 2016. The Fund underperformed its benchmark return by 1.83%. The net assets of the Funds were Rs. 191.80 million as on June 30, 2016 compared to Rs. 177.85 million as on June 30, 2015. The Fund has paid an interim distribution of Rs. 3.35 per unit amounting to Rs. 7.51 million. As the distribution is more than 90% of the accounting income for the year as reduced by capital gains whether realized or unrealized, the income of the Fund will not be subject to tax under Clause 99 of Part 1 of the Second Schedule of Income Tax Ordinance, 2001. Fund and Asset Manager Rating The Pakistan Credit Rating Agency (PACRA) reaffirmed the stability rating of "AA- (f)" (Double A Minus - Fund Rating) to the Fund. The fund's rating denotes a strong capacity to maintain high degree of stability in returns and possesses low exposure to risks. JCR-VIS Credit Rating Company Limited has assigned Management Quality Rating "AM2" (AM-Two) to JS Investments Limited. The rating denotes high management quality of the Management Company. Corporate Governance and Financial Reporting Framework The Board of Directors of the Management Company states that: 04 a. The financial statements, prepared by the Management Company, present fairly the state of affairs of the 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 accounting estimates are based on reasonable and prudent judgment Annual Report 2016
6. JS Islamic Government Securities Fund d . International Financial Reporting Standards, as applicable in Pakistan, provisions of the Non-Banking Finance Companies (Establishment & Regulation) Rules, 2003, Non-Banking Finance Companies and Notified Entities Regulations, 2008 and directives of the Securities and Exchange Commission of Pakistan have been followed in preparation of the financial statements. 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. Outstanding statutory payments on account of taxes, duties, levies and charges, if any, have been fully disclosed in the financial statements. h. There has been no material departure from the best practices of the Code of Corporate Governance, as detailed in the listing regulations. i. During the year Mr. Ahsen Ahmed has completed certification from Pakistan Institute of Corporate Governance (PICG) under the criteria given in Clause 5.19.7 of the Rule Book of Pakistan Stock Exchange Limited under the Code of Corporate Governance. j. A performance table / key financial data is annexed to this annual report. k. The Pattern of Unit holding as at June 30, 2016 as per the requirements of Sub-clause f (x) of Clause 5.19.11 of the Rule Book of Pakistan Stock Exchange Limited is disclosed in Annexure 1 of the Annual Report. l. The number of units of the Fund held by the Chief Executive, directors and executives and their spouses and minor children as at June 30, 2016 are as follows: m. n. Name Designation Units Held Mr. Malik Zafar Javaid Head of Operations 12,542 Ms. Nazneen Younus Head of Operation's Spouse 5,603 Units acquired / redeemed during the year by the Chief Executive, directors and executives, their spouses and minor children are as follows Name Designation Issuance Redemption Mr. Malik Zafar Javaid Head of Operations 374 - Ms. Nazneen Younus Head of Operation's Spouse 40 1,793 Annexed to the Annual Report is Fund Manager's Report giving reasonable indication of future prospects of profit. Annual Report 2016 05
7. JS Islamic Government Securities Fund Meetings of the Directors During the year , 6 meetings of the Board of Directors of the Management Company were held. The details of meetings of board and its committees are disclosed in the Annexure I of the Annual Report. Auditors The external auditors of the Fund Messrs KPMG Taseer Hadi & Co, Chartered Accountants, retire and being eligible offers themselves for reappointment. The Board of Directors, upon recommendation of the Audit Committee of the Board has approved the appointment of KPMG Taseer Hadi & Co., Chartered Accountants, as the Fund's auditors for the ensuing year ending June 30, 2017. Acknowledgment The Directors express their gratitude to the Securities and Exchange Commission of Pakistan for its valuable support, assistance and guidance. The Board also thanks the employees of the Management Company and the Trustee for their dedication and hard work and the Unit holders for their confidence in the Management. Karachi: August 23, 2016 06 Annual Report 2016 Ali Akhtar Ali Chief Executive Officer
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10. JS Islamic Government Securities Fund Fund Manager Report • Description of the Collective Investment Scheme category and type Shariah Compliant Income Scheme / Open end • Statement of Collective Investment Scheme's investment objective JS Islamic Government Securities Fund (JS IGSF) is an open end 'Shariah Compliant Sovereign Income Scheme' which aims at generating a stable stream of current HALAL income while ensuring low risk (volatility) and capital preservation in the medium to long term by investing primarily in Shariah Compliant Government Securities. • Explanation as to whether the Collective Investment Scheme has achieved its stated objective The collective investment scheme achieved its stated objective. • Statement of benchmark(s) relevant to the Collective Investment Scheme The benchmark of the scheme shall be the average 6 month Placement (Deposit) rate of 3 Islamic Banks (including Islamic windows of Commercial Banks) • Comparison of the Collective Investment Scheme's performance during the period compared with the said benchmarks JS IGSF BM Diff. Jul Aug Sep Oct Nov '15 '15 '15 '15 '15 4.58% 3.98% -0.12% 2.33% 1.56% 6.02% 6.05% 6.04% 5.88% 5.55% -1.44% -2.07% -6.16% -3.55% -3.98% Dec Jan '15 '16 6.75% -1.27% 5.47% 5.71% 1.27% -6.99% Feb '16 3.46% 5.09% -1.63% Mar '16 7.50% 4.93% 2.58% Apr '16 4.03% 4.50% -0.47% May '16 6.06% 4.88% 1.18% Jun '16 4.33% 4.29% 0.04% • Description of the strategies and policies employed during the period under review in relation to the Collective Investment Scheme's performance JS Islamic Government Securities Fund started in the last month of the fiscal year 2013. The Fund underperformed its benchmark by 1.83% during the year. The fund's AUM increased by 8% year on year from Rs. 177 Million to Rs. 191 Million. The fund declared a total dividend of Rs. 3.35 per unit for the year 2016. During the year as per strategy the WAM of the fund was within two years. • Disclosure of the Collective Investment Scheme's asset allocation as at the date of the report and particulars of significant changes in asset allocation since the last report (if applicable) Cash Placement with Banks and DFIs TFCs / Sukkuks Other including receivables Total Jun-15 Jun-16 22.81% 75.17% 2.03% 20.20% 78.23% 1.57% 100.00% 100.00% Annual Report 2016 09
11. JS Islamic Government Securities Fund • Analysis of the Collective Investment Scheme's performance Statistical Analysis Fund Fund 1.0% 0.07% 0.28 1.95 Standard Deviation Expense Ration Duration (Yr) WAM (Yr) • 1.1% -0.1% 94.7% 0.7% 0.0% 100.0% Based on changes in total NAV and NAV per unit since the last review period or since commencement (in the case of newly established Collective Investment Scheme) Net Assets (PKR mn) • Largest Month Gain Largest Month Loss % Positive Months BM NAV per share (PKR) 30 Jun '16 30 Jun '15 30 Jun '16 30 Jun '15 192 178 100.51 100.19 Disclosure of the markets that the Collective Investment Scheme has invested in, including:During FY16, average CPI during this time clocked in at 2.86% compared to 4.53% in FY15. This ease in inflation primarily came on the back of continued low commodity prices in the global markets (and its swift pass through to domestic consumers, particularly for POL products), ample supplies of key food items, and stable exchange rate. The impact of these factors was so overwhelming that YoY CPI inflation touched the extraordinary low of 1.3 percent in September 2015. During FY16 the SBP cut policy rate by 50bps in September 2015 and 25bps in May 2016. With benign outlook on inflation, banks participation towards longer tenure security was evident. In the last T-bill auction of the fiscal year, the cut off yield for 3 month, 6 month and 12 month T-bill averaged at 5.8998%, 5.8910% and 5.9101% respectively. The average 3M, 6M and 12M KIBOR clocked in at 6.51%, 6.53% and 6.83% for FY16 which declined by 249bps, 248bps and 246bps YoY whereas for FY15 the 3M, 6M and 9M averaged 9.00%, 9.01% and 9.29%. During 4QFY16, the SBP decreased its discount rate from 6% to 5.75% in its monetary policy announcement in May 2016. Towards the end of FY16 following GoP's re-profiling of its debt structure into PIB's and financial institutions participation increased while during the quarter government raised a collective PKR 181 billion against the target amount of PKR 150 billion. In 4QFY16, the average 3M,6M and 12M KIBOR clocked in at 6.25%, 6.26% and 6.57% decreasing by 103bps, 102bps and 100bps YoY respectively, as against 7.28%, 7.28% and 7.57% during the same period last year. • Disclosure on distribution (if any), comprising:- Particulars of income distribution or other forms of distribution made and proposed during the period; and - Statement on effects on the NAV before and after distribution is made Distribution The Fund has paid an interim distribution of Rs. 3.35 per unit of Rs. 100/- each i.e. 3.35%. The total distribution for FY16 to Rs. 3.35 per unit. NAV per unit as on June 30, 2016 Cum NAV (PKR) Ex-NAV (PKR) 10 Annual Report 2016 100.51 100.51
12. JS Islamic Government Securities Fund • Description and explanation of any significant changes in the state of affairs of the Collective Investment Scheme during the period and up till the date of the manager's report, not otherwise disclosed in the financial statements There were no significant changes in the state of affairs during the year under review. • Breakdown of unit holdings by size Number of investors Ranges JS IGSF 0.0001 - 9,999.9999 45 10,000.0000 - 49,999.9999 5 50,000.0000 - 99,999.9999 3 100,000.0000 - 499,999.9999 0 500,000.0000 & Above 1 Total 54 • Disclosure on unit split (if any), comprising:The Fund has not carried out any unit split exercise during the year. • Disclosure of circumstances that materially affect any interests of the unit holders Investment is subject to market risk. • Disclosure if the Asset Management Company or its delegate, if any, receives any soft commission (i.e. goods and services) from its broker(s) or dealer(s) by virtue of transactions conducted by the Collective Investment Scheme, disclosure of the following:The Management Company and / or any of its delegates have not received any soft commission from its brokers / dealers by virtue of transactions conducted by the Fund. Annual Report 2016 11
13. JS Islamic Government Securities Fund PERFORMANCE TABLE / KEY FINANCIAL DATA 2016 2015 Years 2014 2013 Net assets Rs. 191,797,507 177,842,930 244,415,652 449,941,172 Net income Rs. 8,139,683 7,938,557 36,620,666 3,514,343 Total return of the Fund Annual dividend distribution Capital Growth Expense Ratio * % % % % 3.66 3.35 0.31 2.23% 6.22 6.22 10.60 7.50 3.10 6.00 0.40 5.60 Average annual return - One Year - Two Years - Three Years % % % 3.66 4.94 6.62 6.22 7.51 7.46 8.80 7.40 N/A 6.00 N/A N/A NAV per unit Rs. 100.51 100.19 99.59 100.41 NAV per unit ( Ex Dividend) Rs. 100.26 100.19 99.59 100.01 Highest offer price per unit Rs. 104.62 106.64 103.68 101.42 Lowest offer price per unit Rs. 55.52 100.52 100.59 100.00 Year-end offer price per unit Rs. 101.52 101.20 100.59 101.42 Highest repurchase price per unit Rs. 103.58 105.58 102.65 100.41 Lowest repurchase price per unit Rs. 54.97 99.52 99.59 100.00 Year-end repurchase price per unit Rs. 100.51 100.19 99.59 100.41 First interim distribution Announcement date Rs. - - 0.75 30-Aug-13 - Second interim distribution Announcement date Rs. - - 0.75 26-Sep-13 - Third interim distribution Announcement date Rs. - - 0.50 25-Oct-13 - Fourth interim distribution Announcement date Rs. - - 1.00 26-Nov-13 - Fifth interim distribution Announcement date Rs. - - 0.50 31-Dec-13 - Sixth interim distribution Announcement date Rs. - - 0.75 30-Jan-14 - Seventh interim distribution Announcement date Rs. - - 0.50 26-Feb-14 - Eighth interim distribution Announcement date Rs. - - 0.40 26-Mar-14 - Ninth interim distribution Announcement date Rs. - - 0.30 29-Apr-14 - Tenth interim distribution Announcement date Rs. - - 0.50 29-May-14 - Eleventh interim distribution Announcement date Rs. - 3.00 26-Jun-14 - Twelfth interim distribution Announcement date Rs. Final distribution Announcement date Rs. Total distribution as % of par value Rs. 3.35 21-Jun-16 3.35 5.58 19-Jun-15 - - - - - 0.40 8-Jul-13 5.58 8.95 Notes - JS Islamic Government Securities Fund was launched on June 05, 2013. - The fund has paid interim distribution among the Pre-IPO investors of Rs. 1.66 million during the inception year (2012-13) of the fund. Disclaimer Past performance is not necessarily indicative of future performance and that unit prices and investment returns may go down, as well as up. * This includes 0.32% representing governmnet levy, Workers Welfare Fund and SECP Fee etc. 12 Annual Report 2016 0.40
14. JS Islamic Government Securities Fund Review report to the Unit holders of JS Islamic Government Securities Fund on Statement of Compliance with the Best Practices of Code of Corporate Governance We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate Governance ("the Code") prepared by the Board of Directors of the Management Company of JS Islamic Government Securities Fund ("the Fund") for the year ended 30 June 2016 to comply with the requirements of rule book Regulation No. 5.19 of Pakistan Stock Exchange Limited (formerly Lahore Stock Exchange Limited), where the Fund is listed. The responsibility for compliance with the Code is that of the Board of Directors of the Management Company of the Fund. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Fund's compliance with the provisions of the Code and report if it does not and to highlight any noncompliance with the requirements of the Code. A review is limited primarily to inquiries of the Fund's personnel and review of various documents prepared by the Fund to comply with the Code. As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Fund's corporate governance procedures and risks. The Code requires the Management Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval of related party transactions distinguishing between transactions carried out on terms equivalent to those that prevailed in arm's length transactions and transactions which are not executed at arm's length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not. Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Fund's compliance, in all material respects, with the best practices contained in the Code as applicable to the Fund for the year ended 30 June 2016. Date: August 23, 2016 Karachi. KPMG Taseer Hadi & Co. Chartered Accountants Annual Report 2016 13
15. JS Islamic Government Securities Fund Statement of Compliance with the Code of Corporate Governance For the year ended 30 June 2016 This statement is being presented to comply with the Code of Corporate Governance (the Code) contained in Regulation No. 5.19.23 of Pakistan Stock Exchange Regulations for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. JS Investments Limited (the Management Company) which manages the affairs of the Fund has applied the principles contained in the Code in the following manner: 1. The Management Company encourages representation of independent non-executive directors and directors representing minority interests on its Board of directors. At present the Board includes Category Name Independent Directors Mr. Ahsen Ahmed Mr. Asif Reza Sana Mr. Ali Akhtar Ali - Chief Executive Officer Mr. Suleman Lalani Mr. Kamran Jafar Mr. Muhammad Raza Dyer Mr. Basir Shamsie Mr. Muhammad Yousuf Amanullah Executive Directors Non-Executive Directors The independent directors meet the criteria of independence under clause 5.19.1.(b) of the Code. 14 2. The directors of the Management Company have confirmed that none of them is serving as a director on more than seven listed companies, including this Company (excluding the listed subsidiaries of listed holding companies where applicable). 3. All the resident directors of the Management Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a broker of a stock exchange, has been declared as a defaulter by that stock exchange. 4. Two casual vacancies occurring on the Board on 19 March 2016 and 14 April 2016 were filled up by the directors on 14 April 2016. The SECP has also confirmed their appointment on June 23, 2016. 5. The Management Company has prepared a "Code of Conduct", and has ensured that appropriate steps have taken place to disseminate it throughout the Management Company along with its supporting policies and procedures. 6. The Board of the Management Company has developed a vision / mission statement, overall corporate strategy and significant policies of the Management Company. A complete record of particulars of 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 including the appointment and determination of the remuneration and terms and conditions of the employment of the Chief Executive Officer and other executives and non-executive directors 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 by the Board for this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. Annual Report 2016
16. JS Islamic Government Securities Fund 9 . During the year Mr. Ahsen Ahmed completed certification from Pakistan Institute of Corporate Governance (PICG) under the criteria given in Clause 5.19.7 of the Code. In all, six (6) directors of the Management Company have been certified by PICG. 10. There was no change of Chief Financial Officer / Company Secretary and Head of Internal Audit during the year. The remuneration and terms and conditions of Chief Financial Officer / Company Secretary and Head of Internal Audit were approved by the Board. 11. The Directors Report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. 12. The financial statements of the Fund were duly endorsed by Chief Executive Officer and Chief Financial Officer before approval of the Board. 13. The Directors, Chief Executive Officer and Executives do not hold any interest in the units of the Fund other than that disclosed in the Directors Report. 14. The Management Company has complied with all the corporate and financial reporting requirements of the Code. 15. The Board has formed an Audit Committee which comprises of three members, two of them are non-executive directors and one is an independent director. Chairman of the committee, Mr. Asif Reza Sana, is an independent director. 16. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final results of the Fund and as required by the Code. The terms of reference of the committee have been formed and advised to the committee for compliance. 17. The Board has formed a Human Resource and Remuneration Committee which comprises of three members. Two of them are non executive directors and the chairman of the committee is a non executive director. 18. The Board has set up an effective internal audit function and is conversant with the policies and procedures of the Fund. 19. The statutory auditors of the Fund have confirmed that they have been given a satisfactory rating under the quality control review program of the ICAP, that they or any of the partners of the firm, their spouses and minor children do not hold units of the Fund and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on Code of Ethics as adopted by the ICAP. 20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. Annual Report 2016 15
17. JS Islamic Government Securities Fund 21 . The closed period, prior to the announcement of interim / final results, and business decisions, which may materially affect the share price of Company was determined and intimated to directors, employees and stock exchange. 22. Material / price sensitive information has been disseminated among all market participants at once through stock exchange. 23. We confirm that all other applicable material principles enshrined in the Code have been complied with except those that are not yet applicable. Karachi, August 23, 2016 16 Annual Report 2016 Ali Akhtar Ali Chief Executive Officer
18. JS Islamic Government Securities Fund Shariah Review Report for the year 2015-2016 The Shariah Advisory Council (SAC) of JS Investments Limited, through its two members, on request of the management made a review of the financial statements of JS Islamic Government Securities Fund for the year ended June 30, 2016. The fund made placements in several Government Sukuks which were found compliant, however Shariah compliance mechanism needs to be further enhanced. Abdullah Siddiqi Chairman JSIGSF Hassan Usmanii Member JSIGSF Annual Report 2016 17
19. JS Islamic Government Securities Fund STATEMENT OF COMPLIANCE WITH SHARIAH PRINCIPLES JS Islamic Government Securities Fund (the Fund) has fully complied with the Shariah Principles specified in the Trust Deed and in the guidelines issued by the Shariah Advisory Council for its operations, investments, bank accounts and placements made during the year ended 30 June 2016. The Shariah Advisory Council has also confirmed that the transactions were observed to be compliant with guidelines laid down by Shariah Advisory Council. Karachi, September 27, 2016 18 Annual Report 2016 Ali Akhtar Ali Chief Executive Officer
20. JS Islamic Government Securities Fund Independent Assurance Report to the Unit Holders on the Statement of Compliance with the Shariah Principles We were engaged by the Board of Directors of JS Investments Limited , Management Company of JS Islamic Government Securities Fund (the Fund), to report on Fund’s Compliance with the Shariah principles as set out in the annexed statement prepared by the Management Company for the year ended 30 June 2016 in the form of an independent reasonable assurance conclusion about whether the annexed statement presents fairly, in all material respects, the status of the Fund’s compliance with Shariah principles specified in the guidelines issued by the Shariah Advisory Council as required under clause 4.11(3) of the Offering Document of the Fund. Management Company’s Responsibilities The Management Company of the Fund is responsible for preparing the annexed statement that is free from material misstatement in accordance with the Shariah principles specified in the Offering Document and in the guidelines issued by the Shariah Advisory Council. This responsibility includes designing, implementing and maintaining internal control relevant to the operations of the Fund in accordance with the Shariah principles and to ensure that the Fund’s investments are made in compliance with Shariah principles. Our Responsibilities Our responsibility is to examine the annexed statement prepared by the Management Company and to report thereon in the form of an independent reasonable assurance conclusion based on the evidence obtained. We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE 3000) ‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’ issued by the International Auditing and Assurance Standards Board. That standard requires that we comply with ethical requirements, including independence requirements, and plan and perform our procedures to obtain reasonable assurance about whether the annexed statement fairly presents the status of the Fund’s compliance with the Shariah principles specified in the Offering Document and in the guidelines issued by the Shariah Advisory Council The procedures selected depend on our judgment, including the assessment of the risks of material non-compliance with Shariah principles whether due to fraud or error. In making those risk assessments, we have considered internal control relevant to the operations of the Fund in accordance with the Shariah principles in order to design assurance procedures that are appropriate in the circumstances, but not for the purposes of expressing a conclusion as to the effectiveness of the Fund’s internal control.. The procedures performed included: 1. Checking compliance of specific guidelines issued by the Shariah Advisory Council relating to charity, maintaining bank accounts and for making investments of the Fund. 2. Checking that the Shariah Advisory Council has certified that investments and operational activities of the Fund including all transactions were compliant with guidelines laid down by Shariah Advisor y Council. Annual Report 2016 19