Newsletter - JS Investments Limited (JSIL) - Mar-07.pdfPage 1 of 9 Report prepared by JS ABAMCO Research, [email protected] Muddasir A. Shaikh (Research Analyst), Ata Rahman (Head

Important Information: The value of mutual fund investments may go up or down and are subject to market conditions. Past performance is not necessarily indicative of future results and annualized returns for period of less than one year can be misleading. JS ABAMCO Limited (formerly ABAMCO Limited) has exercised due diligence and care in preparing the information contained herein and believes it to be reliable as of the date indicated. However no guarantee is given that it is accurate or complete. JS ABAMCO Limited (formerly ABAMCO Limited) shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages or losses, including lost profits arising in any way from the information contained herein. Please consult your legal and/ or financial advisor before making any investment decisions. Information provided here is for the use of intended recipients only and the contents may not be reproduced, redistributed, or copied in whole or in part for any purpose without prior express consent of JS ABAMCO Limited (formerly ABAMCO Limited).

Managing UTP Mutual Funds

Newsletter Mar ‘07

Contents Financial market review 1 Economic review 2 FMR - UTP 3 FMR - UTP-AAA 4 FMR - UTP-ISF 5 FMR - UTP-IF 6 FMR - UTP-FoF 7 FMR - UTP-A30+ 8 FMR - UTP-CPF 9

Report prepared by JS ABAMCO Research, [email protected]

Muddasir A. Shaikh (Research Analyst), Ata Rahman (Head of Research) JS ABAMCO Research, Karachi, Pakistan

Page 1 of 9

Financial Markets Review – March ’07 During the month of March the market was characterized by errant behavior, with index appreciating by a meager 92 points (0.82% MoM) closing at 11,272 points. The sentiment that the sell-off in the regional markets will have an impact on the Pakistani market led to a bearish start of the month when the index lost 280 points (2.51%) in the first three trading sessions. The index breached the 11,000 level and made a low of 10,899 points. However, cement dispatch figures and Foreign Portfolio Investment figures helped the index recuperate losses, re-cording positive returns for the month. The abrupt removal of the Chief Justice of Supreme Court followed by statements from opposition and lawyers’ community over government’s action and subsequent protests compelled the market participants to stay sidelined. On one hand, the evolving political situation kept local investors worried, whereas on the other hand, foreign investors stayed in a bullish mood. SCRA figures remained strong at USD 113mn with an outflow of USD 44.12mn from Netherlands and resulted in an impressive net inflow of USD 69mn. The month was marked with low volumes as the average daily volume remained 135mn against an average of 270mn in the previous month. In terms of individual scrips, the index heavy-weight, OGDC remained the leader with an average daily volume of 11.8mn. The other most active scrips include BAFL, LUCK and DGKC with average daily volumes of 10.8mn, 10.6mn and 10.3mn, respectively. Figure 1: KSE-100 Index & Volumes during March ‘07

0

150

300

450

28-Feb 9-Mar 20-Mar 29-Mar10,800

11,025

11,250

11,475Volume [mn shares, L.H.S] KSE-100 Index [R.H.S]

Source: KSE, JS ABAMCO Research The star of the month was the cement sector which showed the long awaited rally on the back of upbeat cement demand in local as well as export markets resulting in record cement dispatches and stable reten-tion prices. The market capitalization of the sector grew by 8.97% MoM. Among cement sector scrips, LUCK provided the highest return i.e. 20.98% MoM followed by 16.49% MoM by PIOC and 16.51% MoM by MLCF. The commercial banking sector also provided support to the market as banking scrips yielded positive returns. BAFL’s price surged by 15.04% MoM on the back of expectations regarding capital gains from divestment of its holding of Warid Telecom to foreign telecom giants. Apart from cement and banking sectors, no other major sector showed impressive performance. The E&P sector’s market capitalization de-clined by 1.93% MoM which, in our opinion, was caused by factors such as decline in Pindori’s oil production and unsuccessful drilling efforts by E&P companies that were overplayed by the investors. We feel that E&P stocks will perform in the latter half of the year on the back of an ex-pected increase in oil prices in the international market and increase in

production from newly commissioned fields. Among other major sectors, Oil & Gas Marketing recorded 1.51% decline, Fertilizer recorded 1.16% decline, whereas, Telecom recorded a decline of 12.22%. In March, the demand for equity financing declined by 9.76% MoM to PKR 45.6bn with average CFS rates eased down to 12.24% MoM a decline of 272 bps. Average CFS volume also recorded a decline of 2.9% MoM to 473mn from 487mn in February. These declines show lack of interest of local investors and buying mostly by foreign funds as they, generally, are medium to long term investors, meaning that they take the delivery, rather than leveraging their positions. Figure 2: KSE-100 Index & Volumes during 1Q07

-

200

400

600

3-Jan 31-Jan 28-Feb 28-Mar9,000

10,500

12,000

13,500Volume [mn shares, L.H.S] KSE-100 Index [R.H.S]

Source: KSE, JS ABAMCO Research With the end of March, the first quarter of 2007 came to an end. During 1Q07, the market remained some what bullish as it closed the period with a return of 11.6% as against 21.4% for the same period last year. Overall dull activity was witnessed in the market with average daily traded volume of 183mn shares against 396mn shares in 1Q06. During the quarter, the main focus remained on the Foreign Portfolio Investment which, on net basis, surged by USD 349mn and currently stand at USD 626mn year-to-date. This includes the amounts received for acquisition of local companies like Lakson Tobacco and Paktel Lim-ited by foreign companies. One of the main events of the quarter was the correction in the world-wide equity markets by the end of February, triggered by Chinese government’s concern and possible administrative measures to curb speculative buying. On the privatization front, PSO remained on top of the wish list. Some progress was observed in its privatization process as Expressions of Interest (EOIs) were received from eight new parties and three previous bidders reconfirmed their interest. These new entrants include the Attock Group of Companies which previously bid successfully for the acquisi-tion of National Refinery Limited (NRL) and MCB Bank Limited. PC qualified total seven bidders including Al-Jamiah Holding Company Consortium, Dabbagh Holding Company Limited Consortium, Bakri Energy Company Consortium, Kohinoor Textile Mills Consortium, MCB Bank Limited Consortium, TransAsia Gas International, and Vitol SA. We hold our positive stance on the market performance in the medium to long term and consider foreign portfolio investment, progress on privatization front and upcoming corporate earning announcements as the main index drivers.


Farrukh Karim (Economist), Ata Rahman (Head of Research)JS ABAMCO Research, Karachi, Pakistan

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M2: A Change of Guard Mark Twain once said, “history does not repeat itself but it does rhyme...” Pakistan has experienced significant “monetary overhang” over the last five years. The boom in home remittances post 9/11 started the process, leading to a ballooning of Net Foreign Assets (NFA), which resulted in rapid money supply growth. By FY05, as remittances leveled off, the credit boom took over, with private sector credit off-take breach-ing the PKR 400bn mark in both FY05 and FY06. The GoP also lent a helping hand in spurring monetary growth, with a heightened level of budgetary borrowing, especially the SBP. Seen in this historical context, we can better understand that when the pace of growth in money supply (M2) jumped to 10.25% as on Mar 10 this year, people cried foul, fearing a return of dreaded inflation. The meat, as they say, is in the details. In FY07 to date, whilst remit-tances have risen by 21.82% YoY, the growth has not been of the quan-tum witnessed at the turn of the century. Furthermore, growth in bank credit to the private sector has slowed down visibly from previous years as a result of higher interest rates. Even GoP borrowing from the SBP, a source of much chagrin to economists in recent times, has abated sig-nificantly. Yet M2 growth has kept humming along fueled by a rise in NFA due to higher than anticipated foreign investment coming into the country and the recent T-bill fetish exhibited by primary dealers, which has increased the government budgetary borrowing from commercial banks. The question begets, is the strong growth in M2 a case of “history rhyming” in which case it will have monetary policy implications or just a temporary money supply shock? Figure 1: As a % of M2 growth

-50.0

0.0

50.0

100.0

150.0

GoP borrow ingfrom SBP

GoP borrow ingfrom CB

Credit to priv atesector

NFA

FY06 FY07

Source: SBP

Undeniably, foreign inflows have been strong, and in the first nine months of FY07, they have crossed the USD 5bn mark. Importantly, this has been achieved with a mix of greenfield and portfolio investment, but without any major privatization. Much of these external inflows are being used to finance the current account gap which stands at USD 4.8bn in just the first seven months of FY07. Resultantly, exchange reserves have increased by just USD 370mn in FY07, despite the significant quantum of foreign investment in the period. However, flows of foreign direct investment in the private sector in Feb and Mar 07 have been particularly strong, leading to a rise in NFA from PKR 14bn as of 10th Feb 07 to PKR 68bn as of 17th Mar 07, against a full year target of PKR 9.8bn. In our opinion, the spurt in NFA represents a temporary money supply shock and is likely to abate as trade and current account payments are made. That is not to say that FDI and portfolio investment will dry up going forward, but only that these external flows will be mostly used up in funding the current account gap. Weekly/interim monetary statistics can be slightly misleading as major import payments such as oil are made on a monthly or quarterly basis, and end of month or end of quar-ter money supply figures would provide better representation of NFA numbers.

Net Domestic assets (NDA) have also grown by 9.8% in the first eight months of FY07 although the drivers of growth have changed from last year. 34% of the growth in NDA in the current fiscal year derives from budgetary borrowing from commercial banks, and is largely a reflection of greater buying of treasury bills. In FY07 to date, banks have pur-chased a net of PKR 118bn in T-bills compared to a net reduction in T-bill holdings of PKR 8.8bn in the same period last year. Of course M2 growth has risen as a result, but more importantly, it has allowed the GoP to reduce its budgetary borrowing from the SBP to PKR 16bn in FY07 to date, from a local peak of PKR 112bn achieved in Jan 07. From the point of view of long-term inflationary pressures, it is a welcome development that the fiscal bank borrowing is being financed by com-mercial banks rather than by the SBP. Private sector credit growth has slowed to 11.43% in the first 8 and a half months of the current fiscal year as against growth of 19.26% in the corresponding period last year, Data from the SBP’s recently released second quarterly report for FY07 allows us dissect further the credit off-take number. PKR 48bn of the private sector credit off-take in FY07 has been extended by the SBP through commercial banks to the export, agriculture and industrial sectors. These advances are mostly on con-cessional rates, and are therefore not sensitive to the interest rate move-ments as are other loans. The underlying growth in credit off-take after excluding the impact of SBP credit is a mere 9.1%, compared to 18.8% in the similar period last year. SBP data indicates that the most significant cause of the slowdown in credit off-take stems from a reduction in fixed investment loans to the textile sector, which has fallen by 10.5% in the period Jul-Jan FY07. This has resulted from a slowdown in textile machinery import due to the sector coming towards the end of its recent BMR cycle, as well as the rather pessimistic forebodings about Pakistani’s textiles international competitiveness. Textile machinery imports in the period July-Feb FY07 total USD 357mn (-33.48% YoY). Loans for fixed investment in the business sector excluding textiles has increased by a healthy 13.8% in FY07, indicating that the broader economy is alright. However, as textile products account for 28% of the weight in the LSM basket and around 58% of total export receipts, the ramifications of lower fixed investment in the textile sector on future growth and the external account can be adverse. At the moment, investment decisions in the textile sector de-pend crucially on the nature of the incentive plan doled out by the GoP. Meanwhile, consumer finance has continued to grow, although the pace of growth has moderated. PKR 31.1bn has been loaned by banks through consumer financing in Jul-Jan FY07, compared to PKR 51.6bn in the same period last year. Higher interest rates having depressed consumer loan demand and the uncertainty surrounding the textile sector having reduced the corporate sectors demand for loans has led to a contraction in the private sectors credit appetite. In this context, it seems unlikely that the PKR 390bn private sector credit target of the credit plan will be met. The question remains that will the rising trend in budgetary borrowing from commercial banks and NFA create excessive and undesirable liquidity in the econ-omy and reverse much of the good work of a tight monetary policy. We believe not, primarily for the reason that both sources of monetary growth (NFA and budgetary borrowing from commercial banks) repre-sent transient pressures. Banks have been bidding high at T-bill auctions in the last 2-3 months in anticipation of potential monetary easing, but the recent rise in T-bill cut-offs by 3-4 basis points indicates that those expectations are as yet premature. The bidding in future T-bill auctions is hence expected to be more conservative. At any rate, with new depos-its hard to come by, bank lending to the GoP will come at the expense of crowding out credit to the private sector. Its impact on M2 is therefore largely neutral. On the external front, we believe that as import and debt payments line up, NFA too shall fall. Overall, with growth in private sector credit expected to remain subdued, we believe that M2 growth in FY07 is not likely to exceed nominal GDP growth.

PACRA Rating: 5 Star

Note: We use weightage of 30% 6M KIBOR and 70% KSE-100 as benchmark (BM) of UTP for simplified performance comparison Important Information: The value of mutual fund investments may go up or down and are subject to market conditions. Past performance is not necessarily indicative of future results and annualized returns for period of less than one year can be misleading. JS ABAMCO Limited (formerly ABAMCO Limited) has exercised due diligence and care in preparing the information contained herein and believes it to be reliable as of the date indicated. However no guarantee is given that it is accurate or complete. JS ABAMCO Limited (formerly ABAMCO Limited) shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages or losses, including lost profits arising in any way from the information contained herein. Please consult your legal and/ or financial advisor before making any investment decisions. Information provided here is for the use of intended recipients only and the contents may not be reproduced, redistrib-uted, or copied in whole or in part for any purpose without prior express consent of JS ABAMCO Limited (formerly ABAMCO Limited).

Report prepared by JS ABAMCO Research, [email protected] Page 3 of 8

Investment Objective UTP is a balanced fund that aims to preserve and growinvestor’s capital in the long term while providing a regularstream of current income on an annual basis. The fundoperates a diverse portfolio of equity and fixed incomeinvestments whereby the equity component is meant toprovide the growth in capital while dividends on the equitycomponent along with the fixed income investments helpgenerate the current income. March 2007 The fund’s NAV declined by 0.67% as compared to anincrease of 0.83% and 0.82% in the Benchmark (BM) andKSE-100 index during the month, respectively. As equities remained range bound during March with quitethin volumes, we continued with our strategy of being sidelined with the exception of minor changes to our portfolio. It is interesting to note that the performance of the KSE-100 index during the month was quite skewed in favor of fewstocks, which contributed the bulk of return. For e.g. if weexclude only five stocks, (namely MCB, UBL, BAFL, KAPCOand NESTLE) out of the 100 companies in the index, itsreturn falls to -0.77% from 0.82% for the month. The fund’slimited active position in these stocks explains the fund’sunderperformance during the month. Our investment level inthe fixed income increased to 20.2% due to fresh exposureto spread transactions. We expect our overall fixed incomeexposure to gradually increase in coming months as we lookforward to participate in the upcoming corporate debt issues.

Monthly Returns

Risk / Return

Sector Allocation* Equity Allocation*Asset Allocation

Terms and Structure Sector Allocation Drawdown Analysis

Monthly Correlation

Rolling Returns Monthly Performance

Relative Performance

* As % of market value of equities investment


Note: We use KSE100 index as benchmark of UTP-AAA Important Information: The value of mutual fund investments may go up or down and are subject to market conditions. Past performance is not necessarily indicative of future results and annualized returns for period of less than one year can be misleading. JS ABAMCO Limited (formerly ABAMCO Limited) has exercised due diligence and care in preparing the information contained herein and believes it to be reliable as of the date indicated. However no guarantee is given that it is accurate or complete. JS ABAMCO Limited (formerly ABAMCO Limited) shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages or losses, including lost profits arising in any way from the information contained herein. Please consult your legal and/ or financial advisor before making any investment decisions. Information provided here is for the use of intended recipients only and the contents may not be reproduced, redistributed, or copied in whole or in part for any purpose without prior express consent of JS ABAMCO Limited (formerly ABAMCO Limited).


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Investment Objective UTP – AAA is a dynamic asset allocation fund that aims toachieve superior risk adjusted growth in investor’s capitalover the long term. The fund operates a diverse portfolio ofequity and fixed income investments and it may constantly adjust the asset mix as equity markets rise or fall and theeconomy strengthens or weakens. The fund is allowed toinvest up to 100% of net assets in any one type of assetclass. March 2007 The NAV of the fund declined by 0.02% as compared to amarket increase of 0.82% in the KSE100 Index. Over the past month, the fund increased its overall exposureto 80.00% (prev. 73.59%) in selective value stocks. How-ever, the recent political instability has resulted in reducedvolumes and lack of investor confidence. With the 3Q FY07 results to be made available, we believe that the economywill be able to maintain its growth momentum, and henceany change in political circles will have little or no impact oncompany valuations.

Monthly Returns

Risk / Return



Monthly Correlation





Note: DJIMPK / DJIM refers to Dow Jones- JS Pakistan Islamic Index / Dow Jones Islamic Market Index (We use DJIMPK as benchmark of UTP-ISF) Source: Bloomberg/Reuters Important Information: The value of mutual fund investments may go up or down and are subject to market conditions. Past performance is not necessarily indicative of future results and annualized returns for period of less than one year can be misleading. JS ABAMCO Limited (formerly ABAMCO Limited) has exercised due diligence and care in preparing the information contained herein and believes it to be reliable as of the date indicated. However no guarantee is given that it is accurate or complete. JS ABAMCO Limited (formerly ABAMCO Limited) shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages or losses, including lost profits arising in any way from the information contained herein. Please consult your legal and/ or financial advisor before making any investment decisions. Information provided here is for the use of intended recipients only and the contents may not be reproduced, redistributed, or copied in whole or in part for any purpose without prior express consent of JS ABAMCO Limited (formerly ABAMCO Limited).


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Investment Objective UTP-ISF aims to grow investor’s capital in the long term inadherence with principles of Shariah compliance as advisedby the Shariah Advisory Board (SAB) of this fund whileensuring liquidity. The fund investments are limited to asset classes approved by the Shariah Advisory Board and allcompanies under investment consideration are regularlyscreened for Shariah compliance. March 2007 The funds NAV decreased by 1.09% as compared to the fall of 2.11% in Dow Jones-JS Pakistan Islamic Index. The equity market remained range bound during the monthwith the major profit taking occurring in the banking sector inwhich the fund does not participate. During the month weincreased our exposure mainly in telecom and chemicals.Overall exposure was reduced by nearly 3.00% primarily inOMCs, E&Ps, Fertilizers, and Cement sectors where wesaw over valued stock prices at the start of the month. Wefeel that the soon to be announced textile relief package willimpact our holding in a very positive way this month. OMCstocks also showed values but with news on delay of PSO’sprivatization we booked gains at highest levels. Fertilizer gains were booked in the earlier part of the month and inline with our view we saw prices in all Fertilizer stocks take a hit around the middle of the month. However, we remainvery positive on this sector which we believe still offersunrealized values.

Monthly Returns

Risk / Return



Monthly Correlation





Note: 1M K / 6M K refers to IM KIBOR / 6M KIBOR (We use 1M KIBOR as benchmark of UTP-IF) mportant Information: The value of mutual fund investments may go up or down and are subject to market conditions. Past performance is not necessarily indicative of future results and annualized returns for period of less than one year can be misleading. JS ABAMCO Limited (formerly ABAMCO Limited) has exercised due diligence and care in preparing the information contained herein and believes it to be reliable as of the date indicated. However no guarantee is given that it is accurate or complete. JS ABAMCO Limited (formerly ABAMCO Limited) shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages or losses, including lost profits arising in any way from the information contained herein. Please consult your legal and/ or financial advisor before making any investment decisions. Information provided here is for the use of intended recipients only and the contents may not be reproduced, redistributed, or copied in whole or in part for any purpose without prior express consent of JS ABAMCO Limited (formerly ABAMCO Limited).


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Investment Objective UTP – IF is an income fund that aims to preserve investor’scapital while providing a regular stream of current incomewhich is higher than that offered by commercial banks ondeposits of a similar liquidity profile as this fund. The fund operates a diverse portfolio of investment-grade debt securi-ties, government securities and money market instruments.The fund maintains liquidity in the form of CFS investments,spread transactions and bank deposits. March 2007 UTP-IF returns fell on a MoM basis for Mar '07 on the backof lower CFS returns and narrowing spreads in the Futuresmarket. However, the secondary market demand for TFCspicked up considerably given the influx of liquidity primarilyin the debt fund category. We took this opportunity to book some gains on our TFC portfolio where we felt secondary market prices for TFCs were over-valued. The CFS ratesaveraged 12.43% (prev.14.95%) (gross). On the moneymarket front, rates continued to hover in the band of 8.5% -9.25% as banks were participating heavily in T-Bill auctions pre-empting a soft monetary policy stance from the SBP.The yields on the longer tenor GoP bonds (PIBs) came in foractive buying as most Primary Dealers (PDs) felt that theSBP was in its final stages of tightening. Yields fell from10.10% to 9.98%. We do not expect a softening in MPstance from SBP as we feel that CPI has not yet beenadequately controlled and the trade deficit numbers are stillhigh. With lack of good quality corporate bonds available inthe secondary market and decrease in CFS rates we fore-cast a challenging 4Q'07 and will try to maintain our return.

Monthly Returns

Risk / Return

PKR Yield Curve

Terms and Structure

Rolling Returns

CFS Rates and Values (Mar ’07)

Inflation Jul ’05 – Feb ‘07

UTP-IF vs 1M KIBOR

Asset Allocation Feb 2007 vs Mar 2007

PACRA Rating: n/a

Note: We use A30 index as benchmark for UTP-FoF Important Information: The value of mutual fund investments may go up or down and are subject to market conditions. Past performance is not necessarily indicative of future results and annualized returns for period of less than one year can be misleading. JS ABAMCO Limited (formerly ABAMCO Limited) has exercised due diligence and care in preparing the information contained herein and believes it to be reliable as of the date indicated. However no guarantee is given that it is accurate or complete. JS ABAMCO Limited (formerly ABAMCO Limited) shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages or losses, including lost profits arising in any way from the information contained herein. Please consult your legal and/ or financial advisor before making any investment decisions. Information provided here is for the use of intended recipients only and the contents may not be reproduced, redistributed, or copied in whole or in part for any purpose without prior express consent of JS ABAMCO Limited (formerly ABAMCO Limited).


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Investment Objective UTP – FoF is a fund of funds that aims to grow investor’scapital in the long term while diversifying the asset managerrisk bundled together with the benefits of an asset allocationfund. The fund operates a diverse portfolio of equity, bal-anced, fixed income and money market funds (both openand closed ended) with the option to adjust the asset mix asequity markets rise or fall and the economy strengthens orweakens. March 2007 The fund’s NAV declined by 0.77% vis-à-vis 0.82% increase in the KSE-100 index during the month. Whereas, A-30 and KSE-30 both declined by 0.25%. We maintained our positions in both Open and Closed fundsduring the month. Given our relatively cautious stance onEquities for the last couple of months, particularly, post Calendar Year end results, we continued to stay on the side line. During the month, the fund earned dividend incomefrom UTP-A30, BSJS Balanced Fund (BSBF) and PICICGrowth Fund (PGF) to the tune of PKR 1.11/ unit. In line with the dull performance of Equities during themonth, the mean return of core Equity funds for the monthstood at a mere 0.67%. On the other hand, Fixed IncomeFunds, in fact outperformed the Equity funds as they deliv-ered a mean monthly return of 0.83% for March, which translate into an annualized return of 10.09%. The listedmarket cap of the Closed end funds dropped by 2.77%during the month with very thin volumes.

Monthly Returns

Risk / Return

Terms and Structure Fund Allocation Drawdown Analysis

Monthly Correlation



Asset Allocation Open End Allocation*


Fund Allocation

PACRA Rating: n/a

Note: We use A30 index as benchmark for UTP-A30+ Important Information: The value of mutual fund investments may go up or down and are subject to market conditions. Past performance is not necessarily indicative of future results and annualized returns for period of less than one year can be misleading. JS ABAMCO Limited (formerly ABAMCO Limited) has exercised due diligence and care in preparing the information contained herein and believes it to be reliable as of the date indicated. However no guarantee is given that it is accurate or complete. JS ABAMCO Limited (formerly ABAMCO Limited) shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages or losses, including lost profits arising in any way from the information contained herein. Please consult your legal and/ or financial advisor before making any investment decisions. Information provided here is for the use of intended recipients only and the contents may not be reproduced, redistributed, or copied in whole or in part for any purpose without prior express consent of JS ABAMCO Limited (formerly ABAMCO Limited).


Investment Objective UTP – A30+ is an index fund that aims to track the perform-ance of the ABAMCO 30 Index by investing in constituentcompanies of the index in proportion to their weighting. Thefund targets sophisticated investors who can time their entry and exit from the fund in accordance with the expectedperformance of the equity market or for investors who seeklong term exposure to the equity market. To ensure liquidity,the fund may invest all or part of its portfolio in fixed incomeinstruments. March 2007 The fund’s NAV increased by 0.40% vis-à-vis 0.82% in-crease in the KSE-100 index and 0.25% fall in the A-30 index during the month. At the end of March your funds YTD return stood at 14.90%as against the KSE-100 index’s 12.84%. The fund did not meet the KSE-100 index return for the month as mostbanking stocks which hold a heavy weight in our composi-tion came out of SPOT trading and experienced profit taking with negative news prevailing on the political and regulatoryfront during the last part of the month. We are hopeful that your fund will have an excellent monthahead as most banking stocks have taken a major hit andare expected to move up, close to previous highs. The fundis expected to continue its strong performance in future andgive a tough time to the KSE-100 index return by a margin.

Monthly Returns

Risk / Return



Monthly Correlation




PACRA Rating: n/a

Note: We use 10% annual return (based on 3Y TDR rates at the time of fund’s inception) as benchmark (BM) of UTP-CPF Important Information: The value of mutual fund investments may go up or down and are subject to market conditions. Past performance is not necessarily indicative of future results and annualized returns for period of less than one year can be misleading. JS ABAMCO Limited (formerly ABAMCO Limited) has exercised due diligence and care in preparing the information contained herein and believes it to be reliable as of the date indicated. However no guarantee is given that it is accurate or complete. JS ABAMCO Limited (formerly ABAMCO Limited) shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages or losses, including lost profits arising in any way from the information contained herein. Please consult your legal and/ or financial advisor before making any investment decisions. Information provided here is for the use of intended recipients only and the contents may not be reproduced, redistrib-uted, or copied in whole or in part for any purpose without prior express consent of JS ABAMCO Limited (formerly ABAMCO Limited).


Investment Objective UTP-CPF is a low-risk profile, capital protected product thataims to safeguard investor capital by placing a significantpercentage of the fund as bank deposit(s), and used theremaining funds to gain exposure into equity markets. The fund operates a portfolio of high return fixed income andmoney market instruments, as well as equity market invest-ments or any other SECP permissible investment that themanagement feels would be appropriate to maximize totalreturn. March 2007 This being the first fund manager report since launch, weare happy to report that the NAV of the fund appreciated by0.88% as compared to a market increase of 0.82% in theKSE100 Index. Given the very nature of the Fund, weassumed caution while deploying the equity portion andconcentrated on value based buying in select sectors. Over the past month, the fund increased its overall exposureto 10.91% in selective value stocks. However, the recentpolitical instabililty has resulted in reduced volumes and lack of investor confidence. With the 3Q FY07 results to be made available, we believe that the economy will be able tomaintain its growth momentum in the medium term, and hence any change in political circles will is expected to have little impact on company valuations. We prefer the Fertilizersector as a long term play on current valuations.

Monthly Returns % Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun YTD Ann.FY07 - CPF n/a n/a n/a n/a n/a n/a n/a 0.14 0.88 1.02 10.64FY07 - BM n/a n/a n/a n/a n/a n/a n/a 0.14 0.83 0.96 10.05FY06 - CPF n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/aFY06 - BM n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/aFY05 - CPF n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/aFY05 - BM n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Risk / ReturnSince inception (%) CPF BM KSE100Total return 1.02 0.96 -2.90Ann. return 10.64 10.05 -30.21Ann. volatility 1.25 0.00 17.32Semi volatility 0.61 0.00 15.07Downside dev. [10%] 0.61 0.00 14.06Sharpe [10%] (x) 0.85 n/a -2.24Sortino (x) 1.73 n/a -2.75

Sector Allocation*

Chemical8.5%

Textiles10.7%

E&P18.1%

Comm. bks20.4%

Fertilizer33.0%

Others9.3%

Equity Allocation*ICI

8.5%PPL10.0%

ENGRO30.4%

NBP10.8%

NML10.7%

Others29.6%

Asset Allocation

Fixed income77.1%

Equities10.9%

Cash12.0%

Terms and Structure Sector Allocation Drawdown Analysis % of NAV 31-Mar 28-Feb Δ Since inception CPF BM KSE100

Fund type Open end Fetilizer 26.2 0.0 26.2 Max DD (%) 0.12 0.00 6.24Fund launch date 23 February, 2007 Comm. bks. 16.2 0.0 16.2 Days in max DD 1 0 8Net assets (PKR/USDmn) 1,119.39 / 18.43 E&P 14.3 0.0 14.3 Days to recover 1 0 n/aNAV (PKR/ USD) 101.02 / 1.66 Textiles 8.5 0.0 8.5Listing LSE Chemical 6.7 0.0 6.7Trustee CDC Telecom 6.1 0.0 6.1 Since inception Alpha Beta R2 (%)Auditors Ford Rhodes SHC OMCs 1.2 0.0 1.2 KSE100 0.00 0.04 37.49Risk profile Low risk BM n/a n/a n/aManagement fee 1.25%

Daily Correlation


-3.0%

-1.5%

0.0%

1.5%

3.0%

03/01/07 03/05/07 03/09/07 03/13/07 03/17/07 03/21/07 03/25/07 03/29/07

BM CPF KSE100


Rolling Returns Daily Performance (%) 1D 7D 14D 30D Since inception CPF BM KSE100Avg. return 0.03 0.20 0.42 0.88 Number 35 35 35Best return 0.22 0.44 0.61 1.00 +ve days 17 35 11Worst return -0.12 0.01 0.28 0.76 +ve days (%) 49 100 31

CPFBM

-5.0%

-1.5%

2.0%

5.5%

9.5% 10.1% 10.7% 11.3%X-axis: Ann. Return, Y-axis: Ann. St. Dev.

Call us 0800-00887 www.abamco.com

Contact directory

JS ABAMCO Limited* Head Office Regional Office Regional Office 7th Floor, The Forum, G-20 Ground Floor Chaudhary Plaza, 65-West, Khayaban-e-Jami, Clifton 307, Upper Mall Ground Floor No. 6, Fazal-e-Haq Road, Karachi. Lahore. Blue Area, Islamabad. Tel: 92-21-111-222-626 Tel: 92-42-111-222-626 Tel: 92-51-111-222-626 Branch Offices

Karachi Karachi Hyderabad Shop # 8, Ground Floor, 209, 2nd Floor, 41/97, Ground Floor, Business Avenue, PECHS, Park Towers, Opp: Bank Al-Habib Limited, Block 6, Sharah-e-Faisal. Clifton. Saddar. Tel: 92-21-4322094-6 Tel: 92-21-5820100 Tel: 92-22-2720250 Sialkot Gujranwala Peshawar 27-Paris Road, 40 Trust Plaza, 1st Floor, State Life Building, Sialkot. Gujranwala. 34-The Mall. Tel: 92-52-4298501-2 Tel: 92-55-3252953 Tel: 92-91-5253844-6

* Formerly ABAMCO Limited

Documents

Newsletter - JS Investments Limited (JSIL) - Mar-07.pdfPage 1 of 9 Report prepared by JS ABAMCO Research, [email protected] Muddasir A. Shaikh (Research Analyst), Ata Rahman (Head