| Unit Trust Of Pakistan |
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| Annual
Report 1999 |
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| Contents |
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| ORGANIZATION |
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| REPORT
OF THE DIRECTORS OF THE MANAGEMENT COMPANY |
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| REPORT
OF THE TRUSTEE |
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| AUDITORS'
REPORT TO THE UNIT HOLDERS |
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| FINANCIAL
STATEMENTS |
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| Statement
of Assets and Liabilities |
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| Income
Statement |
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| Distribution
Statement |
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| Statement
of Movement in Unit Holders' Funds |
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| Notes
to the Financial Statements |
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| Performance
Table |
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| ORGANIZATION |
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| Management
Company |
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| ABAMCO
Limited |
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| 1306-1307,
Chapal Plaza, Hasrat Mohani Road |
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| Karachi-74000 |
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| Tel:
92-21-2441311-13 Fax: 92-21-2425652 |
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|
| Board
of Directors of the Management Company |
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| Chairman |
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Mr. Jahangir Siddiqui |
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| Directors |
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The Hon. Michael D'Arcy
Benson |
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|
Mr. William H. Kleh |
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|
Mr. lyad Malas |
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|
Shaikh Mukhtar Ahmed |
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|
Mr. Munaf Ibrahim |
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| Chief
Executive |
Mr. M. Habib-ur-Rahman |
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| Company
Secretary |
Saiyid Azher Alam |
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| Trustee |
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| Muslim
Commercial Financial Services (Pvt.) Limited |
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| 9th
Floor, Shaikh Sultan Trust Building |
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| Beaumont
Road, Karachi-75530 |
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| Tel:
92-21-5676172-73, 5675936 Fax: 92-21-5684458 |
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| Transfer
Agent |
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| Muslim
Commercial Bank Limited |
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| 9th
Floor, Shaikh Sultan Trust Building |
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| Beaumont
Road, Karachi-75530 |
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| Tel:
92-21-5671578, 5671587 Fax: 92-21-5684326 |
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| Distribution
Companies |
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| Altowfeek Investment Bank
Limited |
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| .Jahangir
Siddiqui & Co. Limited |
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| Muslim
Commercial Bank Limited |
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| National
Bank of Pakistan |
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| Prudential
Commercial Bank Limited |
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| Auditors |
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| Ford,
Rhodes, Robson, Morrow, Chartered Accountants |
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| Finlay
House, I.I. Chundrigar Road, Karachi-74000 |
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| Legal
Advisors |
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| Bawaney
& Partners |
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| 205-208,
Imperial Hotel Building, Q.R.5, Queens Road |
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| Karachi-74200 |
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| REPORT
OF THE DIRECTORS OF |
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| THE
MANAGEMENT COMPANY |
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| The
Board of Directors of ABAMCO Limited, the management company |
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| of
Unit Trust of Pakistan (UTP), presents the second annual report on |
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| the
working of UTP together with audited accounts for the year ended |
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| June
30, 1999. |
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| I.
INCOME OF UTP |
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| The
income for the year ended June 30, 1999 was Rs. 48.611 million |
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| (1998:
Rs. 37.964 million), after providing for Rs. 1.069 million (1998: |
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| Rs.
Nil) as provision for diminution in market value of investment on |
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| individual
investment basis. This works out to an income of Rs. 685 per |
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| unit
(1998: Rs. 556 per unit). During the year, the return available in |
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| money
market and deposits with banks declined. As a result, the |
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| combined
income from these two sources declined by 22.38% as |
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| compared
with previous year, firstly due to decline in the rate of return |
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| and
secondly, because a shift was made of UTP's fund to other avenues |
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| of
income, yielding higher return. The decline in income from money |
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| market/bank
deposits was more than offset by increase in UTP's |
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| income
from marketable securities, that included dividend, capital gains |
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| on
sale of listed securities and mark-up on term finance certificates. |
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| II.
SALE AND REDEMPTION OF UNITS |
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| During
the year under review, 6,130 units with a value of Rs. 33.214 |
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| million
were sold (October 27, 1997 - i.e. the period beginning with the |
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| public
offering - to June 30, 1998:3,446 units with a value of Rs. 18.023 |
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| million)
and 3,486 units with a value of Rs. 17.58 million were redeemed |
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| (1998:147
units with a value of Rs. 0.764 million). Net sales were |
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| 2,644
units with a value of Rs. 15.634 million (October 27, 1997 to June |
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| 30,
1998:3,299 units with a value of Rs. 17.259 million). As on June 30, |
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| 1999
units outstanding were 70,943 with a value of Rs. 358.281 million |
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| (1998:68,299
units with a value of Rs. 341.896 million), |
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| III.
UNIT PRICES |
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| After
the announcement of dividend for the year ended June 30, 1998, |
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| the
ex-dividend offer and redemption prices of units were fixed at |
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| Rs.
5,112 and Rs. 5,011 respectively for the period from July 6, 1998 to |
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| July
9, 1998, based on the net asset value (NAV) of units on July 3, |
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| 1998.
Subsequently the unit prices were announced weekly on every |
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| Saturday
for the following week, based upon the NAY of units on |
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| previous
Friday. At the end of the year on June 30, 1999, the offer and |
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| redemption
prices stood at Rs. 5,742 and Rs. 5,641 respectively (June |
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| 30,
1998:Rs..5,614 and Rs. 5,513). |
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| The
register of unit holders was closed from July 1, 1999 to July 15, |
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| 1999
to determine the entitlement to dividend. The sale and redemption |
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| of
units will now recommence from Monday July 19, 1999. The |
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| ex-dividend-d
offer and redemption prices have been fixed at Rs. 8,186 |
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| and
Rs. 5,085 respectively for the period July 19, 1999 to July 22, 1999 |
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| based
on NAV of July 16, 1999. |
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| IV,
DISTRIBUTION ON UNITS AND TOTAL RETURN |
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| The
Management Company has declared a dividend of Rs, 675 per unit |
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| (1998:
Rs. 550 per unit) for the year ended June 30, 1999. This is |
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| equivalent
to 13.5% (1998: 11%) of the par value of units of Rs. 5,000 |
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| each.
As 98.5% (1998: 98.9%) of the income for the year is being |
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| distributed
to unit holders, there will be no liability for income tax. After |
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| setting
aside the dividend amount, the NAV of units comes to Rs. 5,050 |
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| on
June 30, 1999 (June 30, 1998: Rs. 5,006), To a unit holder investing |
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| in
units, when transactions in units commenced in July 1998 after the |
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| declaration
of dividend and holding the units for one year till the |
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| transactions
again recommenced after the declaration of dividend for the |
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| year
ended June 30, 1999, the total return comes to 15%. |
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| The
dividend warrants and unit certificates/account statements for units |
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| acquired
through reinvestment of dividend are under preparation and |
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| will
be dispatched to unit holders by August 7, 1999. |
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| V.
UTP'S PERFORMANCE RELATIVE TO KSE INDEX |
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| The
KSE 100 Index appreciated by 19.9% during the year ended June |
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| 30,
1999 whereas the total return on UTP units is 15%. The appreciation |
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| in
the portfolio was mainly due to the fact that UTP was 90% invested in |
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| the
secondary fixed income market. All along our strategy has been to |
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| achieve
longer-term investment perspective of reducing volatility and |
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| focusing
on regular flow of income. For these reasons during the period |
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| of
steep decline in KSE Index in the previous year, UTP units had firmly |
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| held ground. |
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| The
Management Company will continue with its policy of remaining |
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| liquid
and invest in fixed income securities and in shares of companies |
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| with
consistent dividend paying record and growth prospects, so as to |
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| ensure
a constant flow of income without erosion in the value of |
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| investment.
UTP is well positioned to enter the market when equities of |
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| companies
with a good track record are offering attractive valuations. |
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| This
strategy will allow UTP to provide security, liquidity and profitability |
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| to
its unit holders without foregoing growth. |
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| VI.
APPROVED SECURITY STATUS AND LEVEL PLAYING FIELD |
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| Through
amendment in the Trusts Act, 1882 and by listing on the Lahore |
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| Stock
Exchange, UTP units have become approved security for |
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| investment
by provident fund schemes without any limitations. In this |
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| respect
there is now a level playing field between private sector and |
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| public
sector unit trust schemes. They can now compete on the basis of |
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| their
performance. |
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| Our
request for "approved investment" status under the Insurance Act, |
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| 1938
to be eligible for investment by life insurance companies was not |
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| approved
by the Commerce Division. Further, our request for approved |
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| security/status
for investment of the Statutory Liquidity Reserves (SLR) |
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| of
the banking companies and non-banking financial institutions (NBFI) |
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| was
not approved by the Finance Division and the State Bank of |
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| Pakistan.
We have requested the Securities and Exchange Commission |
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| of
Pakistan to kindly take up these matters again with the Government. |
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| because,
the decision not to allow approved investment/security status |
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| to
UTP appears not in line with the declared policy of the Government |
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| which
states that the Government is "committed to ensuring that there is |
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| a
level playing field between public and private sector mutual funds". It |
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| may
also be mentioned that UTP, being listed on a stock exchange, |
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| having
a stable NAV above par value since its inception and paying |
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| dividend
at higher rate than the minimum prescribed for investment by |
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| life
insurance companies already meets the basic conditions of eligibility |
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| for
investment by life insurance companies and SLR of NBFI. |
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|
| While
there may be justification for the Government to prescribe rules |
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| for
investment by the institutions, where large public fund is involved. |
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| these
rules should lay down conditions for eligibility and exposure limits |
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| rather
than defining the approved security within a narrow legal |
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| framework
or even naming the approved security. If UTP or such |
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| investment
schemes that meet the conditions of eligibility are approved |
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| it
will only provide more investment avenues to institutional investors |
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| and
the investment schemes will be able to compete in the market ;place |
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| on
the basis of their performance. It is expected that the Government |
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| will
look at these issues with a positive approach. |
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| VII.
ANOMALIES IN TAX LAWS |
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| The
mutual funds make a pool of financial assets and act as a conduit |
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| to
pass on the return to the individual investors. The basic principle of |
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| taxation
of mutual funds is that the taxation impact on the investor |
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| should
be neutral, whether he invests directly or through the mutual |
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| fund.
The Government has recognized this principle and the mutual |
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| funds
have been exempted from the payment of income tax, provided |
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| 90%
of the income is distributed as dividend to the share/unit holders. |
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| There
is an anomaly in the tax law which arises because mutual funds |
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| are
required to withhold tax at the rate of 10% from the dividend amount |
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| paid
to individual tax payers and the tax so withheld becomes the final |
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| liability
of the tax payers. As the distribution by mutual funds is also from |
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| such
sources of income that are otherwise exempt from tax in the hands |
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| of
individuals, Such as capital gains from sale of listed securities and |
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| income
from listed term finance certificates. the individual investors who |
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| invest
through the mutual funds are at a disadvantage compared to the |
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| individual
investors who invest directly in the listed securities. The |
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| withholding
tax should not be applicable on that portion of dividend that |
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| is
paid out of income that are exempted from income tax in the hands of |
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| investors.
This matter has been taken with the Government through the |
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| Mutual
Fund Association of Pakistan and it is hoped that the |
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| Government
will remove this anomaly. |
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|
| VIII.
Y2K COMPLIANCE |
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| The
Management Company has conducted a review of the existing |
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| computer
resources and related equipment to determine the current |
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| state
of readiness and to identify and prioritize the areas that need to be |
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| addressed
for millennium compliance. UTP's systems are Y2K |
|
| compliant. |
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|
| IX.
AUDITORS |
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| The
Management Company has re-appointed Messrs. Ford, Rhodes, |
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| Robson,
Morrow, Chartered Accountants, as auditors of UTP for the |
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| financial
year 1999 - 2000. |
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|
| X. THANKS |
|
|
| The
Board of Directors of the Management Company thanks the |
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| Securities
and Exchange Commission of Pakistan for their valuable |
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| support,
understanding and guidance. |
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|
|
For and on behalf of the
Board |
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|
| Karachi |
|
M. Habib-ur-Rahman |
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| July 16, 1999 |
|
Chief Executive |
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|
|
| REPORT
OF THE TRUSTEE |
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|
|
| (Pursuant
to Rule 18(f) of the Asset Management |
|
| Companies
Rules, 1995) |
|
|
| ABAMCO
Limited, the management company of Unit Trust of |
|
| Pakistan,
has in all material respects managed Unit Trust of |
|
| Pakistan
in accordance with the provisions of the Trust Deed |
|
| dated
April 26, 1997 of the Unit Trust of Pakistan, and the Asset |
|
| Management
Companies Rules, 1995 during the period July 1, |
|
| 1998
to June 30, 1999. |
|
|
| Karachi |
|
A. Razak H. Adam |
|
| July 8, 1999 |
|
Managing Director |
|
|
Muslim Commercial
Financial Services (Pvt.) Limited |
|
|
|
| AUDITORS'
REPORT TO |
|
| THE
UNIT HOLDERS |
|
|
| We
have audited the annexed statement of assets and liabilities |
|
| of
UNIT TRUST OF PAKISTAN as at June 30, 1999 and the |
|
| related
income statement, distribution statement and statement |
|
| of
movement in unit holders' funds, together with the notes |
|
| forming
part thereof, for the year then ended. |
|
|
| In
our opinion and to the best of our information and according |
|
| to
the explanations given to us, the statement of assets and |
|
| liabilities,
income statement, distribution statement and |
|
| statement
of movement in unit holders' funds, together with the |
|
| notes
forming part thereof have been prepared in accordance |
|
| with
the relevant provisions of the Trust Deed and the Asset |
|
| Management
Companies Rules, 1995 and present a true and |
|
| fair
view of the state of affairs as at June 30, 1999 and of the |
|
| transactions
of the Scheme for the year then ended. |
|
|
| Karachi |
|
Ford, Rhodes, Robson, Morrow |
|
| July
16, 1999 |
|
Chartered Accountants |
|
|
|
|
|
|
| FINANCIAL STATEMENTS |
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|
|
| UNIT
TRUST OF PAKISTAN |
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| STATEMENT
OF ASSETS AND LIABILITIES |
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| AS
AT JUNE 30, 1999 |
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|
Note |
1999 |
1998 |
|
| Assets |
|
|
Rupees |
Rupees |
|
| Investments |
|
| Marketable securities |
|
3 |
38,507,542 |
-- |
|
| Investment
in term finance |
|
|
|
|
| certificates |
|
4 |
35,000,000 |
-- |
|
| Other investments |
|
5 |
60,000,000 |
325,000,000 |
|
|
|
133,507,542 |
325,000,000 |
|
| Bank balances |
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6 |
266,732,380 |
56,909,603 |
|
| Receivable
against sale of |
|
|
|
|
| marketable securities |
|
7 |
8,625,000 |
-- |
|
| Other
receivables |
|
8 |
7,183,574 |
5,501,970 |
|
|
|
------------ |
------------ |
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| Total assets |
|
416,048,496 |
387,411,573 |
|
|
|
|
| Liabilities |
|
| Remuneration
payable to |
|
| Management Company |
|
9,103,061 |
7,059,287 |
|
| Remuneration payable to
Trustee |
|
135,552 |
239,883 |
|
| Creditors and accruals |
|
9 |
641,118 |
651,905 |
|
| Distribution payable |
|
47,887,635 |
37,564,450 |
|
|
------------ |
------------ |
|
| Total liabilities |
|
57,767,366 |
45,515,525 |
|
|
========== |
========== |
|
| Net
asset |
|
358,281,130 |
341,896,048 |
|
|
========== |
========== |
|
| Unit Holders' funds |
|
358,281,130 |
341,896,048 |
|
| (as
per statement attached) |
|
| Contingencies and
commitments |
|
Nil |
Nil |
|
|
========== |
========== |
|
| Number of units in issue |
|
70,943 |
68,299 |
|
|
========== |
========== |
|
| Net asset value per unit |
|
5,050 |
5,006 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
For ABAMCO Limited |
|
|
(Management Company) |
|
|
M. Habib-ur-Rahman |
|
Munaf Ibrahim |
|
Shaikh Mukhtar Ahmed |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
|
|
|
|
|
| For
Muslim Commercial Financial Services (Pvt.) Limited |
|
|
(Trustee) |
|
|
A. Razak H. Adam |
|
|
Managing Director |
|
|
|
|
|
| UNIT
TRUST OF PAKISTAN |
|
| INCOME
STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
| Income |
|
|
| Profit
on money market |
|
| transactions |
|
24,438,608 |
38,937,482 |
|
| Mark-up
on term finance certificates |
|
639,424 |
-- |
|
| Mark-up/interest
on bank deposits |
|
14,372,490 |
11,064,323 |
|
| Gain
on sale of marketable securities |
|
13,579,748 |
496,845 |
|
| Dividend
income |
|
5,551,252 |
-- |
|
| Other
income |
|
590,500 |
-- |
|
| Element
of income and capital |
|
|
|
| gains
in prices of units sold |
|
|
|
| less
those in units redeemed |
|
2,067,644 |
861,381 |
|
|
---------- |
---------- |
|
|
61,239,666 |
51,360,031 |
|
| Provision
for diminution in market |
|
|
|
| value
of marketable securities on |
|
|
|
| individual
investment basis |
|
1,068,625 |
-- |
|
|
---------- |
---------- |
|
|
60,171,041 |
51,360,031 |
|
| Expenses |
|
|
| Remuneration
of Management Company |
|
9,103,061 |
7,059,287 |
|
| Remuneration
of Trustee |
|
1,463,832 |
1,251,253 |
|
| Preliminary
and floatation costs |
|
-- |
4,611,510 |
|
| Brokerage
expenses |
|
58,162 |
234,807 |
|
| Bank
and settlement charges |
|
812,019 |
33,068 |
|
| Exchange
loss |
|
-- |
86,500 |
|
| Auditors'
remuneration |
|
10 |
122,500 |
120,000 |
|
|
|
----------- |
----------- |
|
|
11,559,574 |
13,396,425 |
|
|
----------- |
----------- |
|
| Net income |
|
48,611,467 |
37,963,606 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
For ABAMCO Limited |
|
|
(Management Company) |
|
|
M. Habib-ur-Rahman |
|
Munaf Ibrahim |
|
Shaikh Mukhtar Ahmed |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
|
|
|
|
|
| For
Muslim Commercial Financial Services (Pvt.) Limited |
|
|
(Trustee) |
|
|
A. Razak H. Adam |
|
|
Managing Director |
|
|
|
| UNIT
TRUST OF PAKISTAN |
|
| DISTRIBUTION
STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
|
| Undistributed
income |
|
| brought
forward |
|
399,156 |
-- |
|
|
|
|
| Net
income for the year |
|
48,611,467 |
37,963,606 |
|
|
---------- |
---------- |
|
|
49,010,623 |
37,963,606 |
|
|
|
|
| Final
distribution @ Rs. 675/- per |
|
|
|
| unit
- distribution on August 7, 1999 |
|
|
|
| (1998:
Rs. 550 per unit |
|
|
|
| distributed
on July 15, 1998) |
|
47,886,525 |
37,564,450 |
|
|
---------- |
---------- |
|
| Undistributed
income |
|
| carried
forward |
|
1,124,098 |
399,156 |
|
|
========== |
========== |
|
|
For ABAMCO Limited |
|
|
(Management Company) |
|
|
M. Habib-ur-Rahman |
|
Munaf Ibrahim |
|
Shaikh Mukhtar Ahmed |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
|
|
|
|
|
| For
Muslim Commercial Financial Services (Pvt.) Limited |
|
|
(Trustee) |
|
|
A. Razak H. Adam |
|
|
Managing Director |
|
|
|
| UNIT
TRUST OF PAKISTAN |
|
| STATEMENT
OF MOVEMENT IN UNIT HOLDERS' FUNDS |
|
| FOR
THE YEAR ENDED JUNE 30,1999 |
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
| Net
assets as at the |
|
| beg
inning of the year |
|
341,896,048 |
100,000 |
|
|
| Amount
received on issue |
|
| of
6,130 units (1998:68,446 units) |
|
33,214,262 |
343,022,634 |
|
| Amount
paid on redemption |
|
|
|
| of
3,486 units (1998:147 units) |
|
(17,580,435) |
(764,361) |
|
|
---------- |
---------- |
|
|
15,633,827 |
342,258,273 |
|
|
| Element
of income and capital |
|
| gains
in prices of units sold less |
|
| those
in units redeemed |
|
(2,067,644) |
(861,381) |
|
|
| Net
unrealised appreciation in |
|
| market
value of shares |
|
2,093,957 |
-- |
|
|
| Net
income for the year |
|
---------- |
---------- |
|
| less
distribution |
|
724,942 |
399,156 |
|
|
========== |
========== |
|
| Net
assets as at the |
|
| end
of the year |
|
358,281,130 |
341,896,048 |
|
|
|
For ABAMCO Limited |
|
|
(Management Company) |
|
|
M. Habib-ur-Rahman |
|
Munaf Ibrahim |
|
Shaikh Mukhtar Ahmed |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
|
|
|
|
|
| For
Muslim Commercial Financial Services (Pvt.) Limited |
|
|
(Trustee) |
|
