GLOBAL INVESTMENT PERFORMANCE STANDARDS (GIPS) … · AAML GIPS Steering Committee has been established for decision making process to comply with the GIPS recommendations, including

GLOBAL INVESTMENT PERFORMANCE STANDARDS (GIPS)

COMPLIANT REPORT

June 30, 2019

The objective in developing and evolving GIPS is to establish them as the recognized standard for calculating andpresenting investment performance around the world and for the GIPS standard to become a firm “passport” tomarket investment management services globally.

Standardized Investment Performance: Financial markets and the investment management industry have becomeincreasingly global in nature. The growth in the types and number of financial entities, the globalization ofinvestment process and the increased competition among investment management firms demonstrate the need tostandardize the calculation and presentation of investment performance.

Global Passport: Investment practices, regulation performance measurement and reporting of performance varyconsiderably from country to country. By adhering to global standard, firms in countries with minimal or noinvestment performance standards will be able to compete for business on an equal footing with firms fromcountries with more developed standards.

Investor Confidence: Investment managers that adhere to investment performance standards help assure investorsthat the firm’s performance is complete and fairly presented. Both prospective and existing clients of investmentfirms benefit from the global investment performance standard by having a greater degree of confidence in theperformance information presented to them.

Key Benefits:-

- Enhanced ability to compare performance

- Consistency in calculation & presentation of performance results

- Full disclosure of important details on performance data

- Strengthened internal process & controls and improved risk management

- Increased transparency

Atlas Asset Management Limited (AAML) GIPS Steering Committee

AAML GIPS Steering Committee has been established for decision making process to comply with the GIPSrecommendations, including recommendations for any updates, Guidance Statements, interpretations, Questions &Answers (Q&As), and clarifications published by CFA Institute and the GIPS Executive Committee, which will be madeavailable on the GIPS website (www.gipsstandards.org) as well as in the GIPS Handbook.

AAML GIPS Steering Committee include the following:

1) Muhammad Umar Khan2) Muhammad Noman3) Faran-ul-Haq

I n t r o d u c t i o n

C o n t e n ts

1) Atlas Money Market Composite 05

2) Atlas Fixed Income Composite 08

3) Atlas Equity Composite 11

4) Atlas Islamic Income Composite 15

5) Atlas Islamic Equity Composite 18

6) Atlas Islamic Asset Allocation Composite 21

7) Atlas Islamic Capital Preservation Composite 23

8) APF Equity Sub Fund Composite 25

9) APF Debt Sub Fund Composite 28

10) APF Money Market Sub Fund Composite 31

11) APIF Equity Sub Fund Composite 34

12) APIF Debt Sub Fund Composite 37

13) APIF Money Market Fund Composite 40

Atlas Money Market Composite

Atlas Fixed Income Composite

Atlas Equity Composite

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionThe investment objective of Atlas Money Market Composite is toprovide its unit-holders competitive returns from a portfolio of lowrisk, short duration assets while maintaining high liquidity. It providesstable income stream with preservation of capital by investing in AAand above rated banks and short term Government Securities.Currently the composite comprises of one portfolio i.e. Atlas MoneyMarket Fund (AMF). AMF was launched on January 21, 2010. AMF isan open-end Money Market Scheme and has been maintainedstability rating of AA (f) by PACRA (As on April 17, 2019). AMF’s returnand Compound Annual Growth Rate (CAGR) since inception stands at115.20% and 8.45%, respectively. Particulars of AMF performancesince launch of fund are as below:

Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, feesand expenses related to accounting and registrar services, SECP Fee,Federal Excise Duty, Sindh Sales Tax and other levies). Performancedata does not include the cost incurred directly by an investor in theform of sales load.Fee ScheduleManagement Fee is 0.45% of Average Annual Net Assets for AMFBenchmarkThe Benchmark for AMF is 30/70 composition as follows: 30% three (3)months average deposit rate of three (3) AA rated Scheduled Banks asselected by MUFAP; and 70% three months PKRV rates. BeforeSeptember 01, 2016 the Benchmark for AMF was 50% an average of “3-Month deposit rates of three scheduled banks (AA and above rated)”for the period of return; and 50% an average of “3 Month PKRV rate”for the period of return as available through Reuters and FinancialMarkets Association of Pakistan (FMA).List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Significant Eventsa) The Finance Act, 2008 had introduced an amendment to theWorkers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a resultof which it was construed that all Collective Investment Schemes (CISs)/ mutual funds whose income exceeded Rs 0.5 million in a tax yearwere brought within the scope of the WWF Ordinance, thus renderingthem liable to pay contribution to WWF at the rate of two percent oftheir accounting or taxable income, whichever was higher. In light ofthis, the Mutual Funds Association of Pakistan (MUFAP) filed aconstitutional petition in the Honorable Sindh High Court (SHC)challenging the applicability of WWF on CISs which is pendingadjudication. In view of the pending decision, the ManagementCompany, as a matter of abundant caution, had maintained theprovision for WWF amounting to Rs.35.8 million for AMF, up to June30, 2015. The Finance Act, 2015 has excluded Mutual Funds andCollective Investment Schemes from the definition of 'industrialestablishment' subject to WWF under WWF Ordinance, 1971.Therefore, AAML has not provided for WWF w.e.f. July 01, 2015.

Global Investment Performance Standards (GIPS)

Compliant Report – June 30, 2019

05

BenchmarkCreation

DateReporting Currency

70/30 composition of: 3-Month deposit rates of three scheduled banks (AA and above rated) as selected by

MUFAP and average of 3 Month PKRV rates.July 01, 2012 Pak Rupees

ATLAS MONEY MARKET COMPOSITE

PeriodTotal Net

Return

Total

Benchmark

Return

Total Composite Assets

at end of Period (mn)

Percentage of Firm’s

Assets

Total Assets of the

Firm at the end of

Period (mn)

FY19** 8.85% 8.73% 10,353 38.0% 27,279

FY18 5.48% 5.36% 13,594 43.5% 31,260

FY17 6.36% 5.21% 4,977 16.5% 30,252

FY16 6.01% 5.35% 4,098 20.3% 20,137

FY15* 8.61% 7.53% 5,207 28.7% 18,169

FY14 8.29% 8.18% 6,104 44.2% 13,812

FY13 9.02% 7.89% 3,853 39.5% 9,749* Atlas Sovereign Fund (Formerly Atlas Sovereign Liquid Fund) included in the composite from December 01, 2014.** Atlas Sovereign Fund (Formerly Atlas Sovereign Liquid Fund) excluded in the composite from January 02, 2019

* From January 21, 2010 to June 30, 2010.

FY10* FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

AMF 10.16%11.64%11.33% 9.02% 8.29% 8.59% 6.02% 6.14% 5.49% 8.87%

Benchmark 9.49% 9.84% 9.40% 7.89% 8.18% 7.59% 5.33% 5.18% 5.36% 8.74%

CAGR 10.45%11.28%11.28%10.62%10.09% 9.82% 9.22% 8.80% 8.40% 8.45%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

b) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies (AMC’s)with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC) jointlyby various AMC`s, challenging the levy of FED. In a separate petitionthe Honorable Sindh High Court declared that the FED wasunconstitutional and cannot be charged where provinces arecollecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further, viaFinance Act 2016, the FED has been withdrawn from July 1, 2016. Inthe meantime, as a matter of abundant caution, the Scheme hasprovided for FED liability which amounted to Rs.20.43 million forAMF, up till June 30, 2016.c) As per clause 47(B) of part IV of the Second Schedule to the IncomeTax Ordinance, 2001, payments made to collective investmentschemes (CISs) are exempt from withholding tax under section 151and 150. However, withholding tax on profit on debt paid to the Fundwas deducted by various withholding agents based on theinterpretation issued by FBR vide letter C. no. 1(43) DG (WHT)/2008-VOL.II-66417-R dated 12 May 2015 which requires every withholdingagent to withhold income tax at applicable rates in case a validexemption certificate under section 159(1) issued by the concernedCommissioner of Inland Revenue (CIR) is not produced before him bythe withholdee. The tax withheld as at June 30, 2019 amounts to Rs6.1 million.For this purpose, the Mutual Funds Association of Pakistan (MUFAP)on behalf of various mutual funds (including the Funds beingmanaged by the Management Company) had filed a petition in theHonourable Sindh High Court (SHC) challenging the above mentionedinterpretation of the Federal Board of Revenue (FBR) which wasdecided by the SHC in favour of FBR. On January 28, 2016, the Boardof Directors of the Management Company passed a resolution bycirculation, authorising all CISs to file an appeal in the HonourableSupreme Court through their Trustees, to direct all persons beingwithholding agents, including share registrars and banks to observethe provisions of clause 47B of Part IV of the Second Schedule to theIncome Tax Ordinance, 2001 without imposing any conditions at thetime of making any payment to the CISs being managed by theManagement Company. Accordingly, a petition was filed in theSupreme Court of Pakistan by the Funds together with other CISs(managed by the Management Company and other AssetManagement Companies) whereby the Supreme Court granted thepetitioners leave to appeal from the initial judgement of the SHC.Pending resolution of the matter, the amount of withholding taxdeducted on profit on debt has been shown as other receivables as atJune 30, 2019 as, in the opinion of the management, the amount oftax deducted at source will be refunded.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite is Rs. 100Million per Fund that is the minimum regulatory requirement to starta fund.Internal DispersionSince number of Portfolios in the composite are two at the moment(less than five) therefore calculation of internal dispersion is notrequired.

On November 10, 2016 the Supreme Court of Pakistan (SCP) haspassed a judgment declaring the amendments made in the FinanceActs 2006 and 2008 pertaining to WWF as illegal citing that WWF wasnot in the nature of tax and could, therefore, not have beenintroduced through money bills. Accordingly, the aforesaidamendments have been struck down by the SCP. The Federal Board ofRevenue has filed a petition in the SCP against the said judgment,which is pending hearing. While the petitions filed by the CISs on thematter are still pending before the SHC, the Mutual Funds Associationof Pakistan (MUFAP) (collectively on behalf of the asset managementcompanies and their CISs) has taken legal and tax opinions on theimpact of the SCP judgement on the CISs petition before the SHC. Bothlegal and tax advisors consulted were of the view that the judgmenthas removed the very basis on which the demands were raised againstthe CISs. Therefore, there was no longer any liability against the CISsunder the WWF Ordinance and that all cases pending in the SHC orlower appellate forums will now be disposed of in light of the earlierjudgement of the SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the government ofSindh as a result of which every industrial establishment located in theProvince of Sindh, the total income of which in any accounting year isnot less than Rs 0.50 million, is required to pay Sindh Workers’Welfare Fund (SWWF) in respect of that year a sum equal to twopercent of such income. The matter was taken up by the MUFAP withthe Sindh Revenue Board (SRB) collectively on behalf of various assetmanagement companies and their CISs whereby it was contested thatmutual funds should be excluded from the ambit of the SWWF Act asthese were not industrial establishments but were pass throughinvestment vehicles and did not employ workers. The SRB held thatmutual funds were included in the definition of financial institutionsas per the Financial Institution (Recovery of Finances) Ordinance, 2001and were, hence, required to register and pay SWWF under the SWWFAct. Thereafter, MUFAP has taken up the matter with the SindhFinance Ministry to have CISs/mutual funds excluded from theapplicability of SWWF.In view of the above developments regarding the applicability of WWFand SWWF on CISs / mutual funds, MUFAP has recommended thefollowing to all its members on 12 January 2017:- based on legal opinion, reverse the entire provision against WWF on12 January 2017 held by the CISs till 30 June 2015; and- as a matter of abundant caution, create provision in respect ofSWWF on 12 January 2017 with effect from the date of enactment ofthe SWWF Act, 2014 (i.e. starting from 21 May 2015).The above decisions were communicated to the SECP and the PakistanStock Exchange Limited on 12 January 2017 in response to which theSECP vide its letter dated 1 February 2017 advised MUFAP that theadjustments relating to the above should be prospective andsupported by adequate disclosures in the financial statements of theCISs / mutual funds. Accordingly, necessary adjustments in thisrespect were recorded in the books of the Fund on 12 January 2017whereby the entire provision for WWF was reversed and the provisionfor SWWF was made for the period from 21 May 2015 to 12 January2017. Thereafter, the provision for SWWF is being made by the Fundon a daily basis going forward. Up till June 30, 2019, a sum of Rs. 38.94

million (Rs. 1.91 per unit) has been provided for SWWF.

06



07


Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite and benchmark is as follows:

*Atlas Sovereign Liquid Fund included in the composite from December 01, 2014. ** Atlas Sovereign Fund excluded in the composite from January 02, 2019

Key AssumptionsFollowing are the key assumptions used in portfolio valuation:Financial InstrumentsAll financial assets and financial liabilities are recognized at the timewhen the Fund becomes a party to the contractual provisions of theinstrument. Financial assets are derecognized when the contractualrights to receive cash flows related to the asset expire. Financialliabilities are derecognized when they are extinguished, that is, whenthe obligation specified in the contract is discharged, cancelled, orexpires. Any gain or loss on derecognition of the financial assets andfinancial liabilities is taken to income currently.


Period Composite Benchmark

FY19** 0.61% 1.91%

FY18 0.42% 0.22%

FY17 0.54% 1.23%

FY16 0.38% 1.38%

FY15* 0.35% 0.72%

FY14 0.51% 0.77%

FY13 0.48% 0.91%

Revenue RecognitionInterest income on government securities is recognized usingeffective interest method at the rate of return implicit in theinstrument. Interest income on bank balances, placements anddeposits is recognized on an accrual basis. Gain or loss on sale ofgovernment securities is accounted for in the period in which it arises.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML, itsManagement Company.Taxationa) Under the provisions of Clause 99 of Part 1 of the Second Scheduleto the Income Tax Ordinance, 2001, any income derived by the mutualfund shall be exempt from tax, if not less than ninety percent of itsaccounting income of that year, as reduced by capital gains whetherrealized or unrealized, is distributed as cash dividend amongst theunit or certificate holders or shareholders as the case may be.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Fund’s incomenamely, dividend, profit on government securities, return ondeposits/certificates of investment with banks/ financial institutions,profits from money market transactions, profit from Profit or Losssharing accounts with banks of the Fund will not be subject to anywithholding tax.c) Under the provisions of Clause 100(B) sub-section (2) of Income TaxOrdinance, 2001, mutual funds are exempt from capital gains tax.

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionAtlas Fixed Income Composite aims at achieving a good rate of currentincome consistent with reasonable concern for principal and toprovide the investors with liquidity. The composite invests mainly inhigh quality fixed income securities. In selecting debt instruments andgovernment securities, the composite considers individual credit risks,with the understanding that market value of even high quality fixedrate securities can fluctuate with change in interest rate levels. Thecomposite may also invest in Margin Trading System (MTS) and SpreadTransactions (Ready Futures). Currently the composite comprises oftwo portfolios i.e. Atlas Income Fund (AIF) & Atlas Sovereign Fund(ASF). AIF was launched on March 22, 2004. AIF is an open-end IncomeScheme and has been maintained a stability rating of AA- (f) by PACRA(As on April 17, 2019).


08

BenchmarkCreation


Weighted average returns of the benchmarks of all portfolios in the composite July 01, 2012 Pak Rupees

ATLAS FIXED INCOME COMPOSITE

PeriodTotal Net

Return

Total

Benchmark

Return




Assets

Total Assets of the

Firm at the end of

Period (mn)

FY19* 7.31% 10.22% 5,449 20.0% 27,279

FY18 4.82% 6.35% 6,862 21.9% 31,260

FY17 5.48% 6.10% 12,710 42.0% 30,252

FY16 8.04% 6.55% 7,965 39.6% 20,137

FY15 12.19% 8.97% 5,777 31.8% 18,169

FY14 8.45% 9.83% 3,926 28.4% 13,812

FY13 9.58% 9.91% 1,956 20.1% 9,749

AIF’s return and Compound Annual Growth Rate (CAGR) sinceinception stands at 243.28% and 8.41%, respectively. ASF waslaunched on December 01, 2014. ASF is an open-end Income Schemeand has been maintained a stability rating of AA (f) by PACRA (As onApril 17, 2019). ASF’s return and Compound Annual Growth Rate(CAGR) since inception stands at 37.17% and 7.14%, respectively.Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, feesand expenses related to accounting and registrar services, SECP Fee,Federal Excise Duty, Sindh Sales Tax and other levies). Performancedata does not include the cost incurred directly by an investor in theform of sales load.Fee Schedule-Management fee is 0.80% of Average Annual Net Assets for AIF.-Management fee is 10% of the Gross Earnings subject to a minimumfee of 0.45% of average daily Net Assets and maximum fee of 0.80% ofaverage Annual Net Asset for ASF.BenchmarkThe Benchmark for “Atlas Fixed Income Composite” is weightedaverage returns of the benchmarks of all portfolios in the composite.Returns of the Benchmark are gross i.e. not net of withholding taxes.The Benchmark of the Composite is rebalanced monthly.The performance Benchmark for AIF is average six (6) month KIBOR(Ask).The performance Benchmark for ASF is Average 6 Months PKRV rates.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.


* Atlas Sovereign Fund (Formerly Atlas Sovereign Liquid Fund) included in the composite from January 02, 2019

* From March 22, 2004 to June 30, 2004

FY04* FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

AIF 6.17% 9.79% 11.46% 10.23% 9.46% 6.91% 9.98% 7.24% 6.04% 9.58% 8.45% 12.19% 8.02% 5.48% 4.82% 7.33%

Benchmark 2.65% 5.69% 9.25% 10.39% 10.57% 14.13% 12.40% 13.42% 12.42% 9.91% 9.83% 8.97% 6.53% 6.10% 6.35% 10.22%

CAGR 6.30% 9.03% 10.09% 10.14% 9.97% 9.38% 9.48% 9.17% 8.78% 8.87% 8.83% 9.12% 9.03% 8.76% 8.48% 8.41%

0.00%

5.00%

10.00%

15.00%

The above decisions were communicated to the SECP and thePakistan Stock Exchange Limited on 12 January 2017 in response towhich the SECP vide its letter dated 1 February 2017 advised MUFAPthat the adjustments relating to the above should be prospective andsupported by adequate disclosures in the financial statements of theCISs/mutual funds.Accordingly, necessary adjustments in this respect were recorded inthe books of the Fund on 12 January 2017 whereby the entireprovision for WWF was reversed and the provision for SWWF wasmade for the period from 21 May 2015 to 12 January 2017.Thereafter, the provision for SWWF is being made by the Fund on adaily basis going forward. Up till June 30, 2019, a sum of Rs.28.63million (Rs.4.92 per unit) and Rs. 1.98 million (Rs. 0.09 per unit )hasbeen provided for SWWF from AIF and ASF respectively.b) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies (AMC’s)with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC) jointlyby various AMC`s, challenging the levy of FED. In a separate petitionthe Honorable Sindh High Court declared that the FED wasunconstitutional and cannot be charged where provinces arecollecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further, viaFinance Act 2016, the FED has been withdrawn from July 1, 2016. Inthe meantime, as a matter of abundant caution, the Scheme hasprovided for FED liability which amounted to Rs.23.6 million and Rs0.9 million for AIF and ASF respectively, up till June 30, 2016.c) As per clause 47(B) of part IV of the Second Schedule to the IncomeTax Ordinance, 2001, payments made to collective investmentschemes (CISs) are exempt from withholding tax under section 151.However, during the year ended 30 June 2016, withholding tax onprofit on bank deposits and debt securities paid to the Fund wasdeducted by various withholding agents based on the interpretationissued by FBR vide letter C. no. 1(43) DG (WHT)/2008-VOL.II-66417-Rdated 12 May 2015 which requires every withholding agent towithhold income tax at applicable rates in case a valid exemptioncertificate under section 159(1) issued by the concernedCommissioner of Inland Revenue (CIR) is not produced before him bythe withholdee. The amount of tax withheld on profit on bankdeposits and debt securities as at 30 June 2019 amounts to Rs. 2.82million and Rs. 5.58 million for AIF and Rs. 0.4 million for ASFrespectively.For this purpose, the Mutual Funds Association of Pakistan (MUFAP)on behalf of various mutual funds (including the Funds beingmanaged by the Management Company) had filed a petition in theHonourable Sindh High Court (SHC) challenging the above mentionedinterpretation of the Federal Board of Revenue (FBR) which wasdecided by the SHC in favour of FBR. On 28 January 2016, the Board ofDirectors of the Management Company passed a resolution bycirculation, authorising all Funds managed by the Company to file anappeal in the Honourable Supreme Court through their Trustees, todirect all persons being withholding agents, including share registrarsand banks to observe the provisions of clause 47B of Part IV of theSecond Schedule to the Income Tax Ordinance, 2001 withoutimposing any conditions at the time of making any payment to theCISs being managed by the Management Company. Accordingly, apetition was filed in the Supreme Court of Pakistan by the Fundstogether with other CISs (managed by the Management Company andother Asset Management Companies) whereby the Supreme Courtgranted the petitioners leave to appeal from the initial judgement ofthe SHC. Pending resolution of the matter, the amount of withholdingtax deducted on profit received by the Fund on bank deposits and

Significant Events

a) The Finance Act, 2008 had introduced an amendment to theWorkers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a resultof which it was construed that all Collective Investment Schemes(CISs)/mutual funds whose income exceeded Rs.0.5 million in a taxyear were brought within the scope of the WWF Ordinance, thusrendering them liable to pay contribution to WWF at the rate of twopercent of their accounting or taxable income, whichever was higher.In light of this, the Mutual Funds Association of Pakistan (MUFAP)filed a constitutional petition in the Honorable Sindh High Court (SHC)challenging the applicability of WWF on CISs which is pendingadjudication. In view of the pending decision, the ManagementCompany, as a matter of abundant caution, has maintained theprovision for WWF amounting to Rs.18.9 million and Rs.324 thousandfor AIF and ASF, respectively, up to June 30, 2015. The Finance Act,2015 has excluded Mutual Funds and Collective Investment Schemesfrom the definition of 'industrial establishment' subject to WWFunder WWF Ordinance, 1971. Therefore, AAML has not provided forWWF w.e.f. July 01, 2015.On November 10, 2016 the Supreme Court of Pakistan (SCP) haspassed a judgment declaring the amendments made in the FinanceActs 2006 and 2008 pertaining to WWF as illegal citing that WWF wasnot in the nature of tax and could, therefore, not have beenintroduced through money bills. Accordingly, the aforesaidamendments have been struck down by the SCP. The Federal Boardof Revenue has filed a petition in the SCP against the said judgment,which is pending hearing. While the petitions filed by the CISs on thematter are still pending before the SHC, the Mutual Funds Associationof Pakistan (MUFAP) (collectively on behalf of the asset managementcompanies and their CISs) has taken legal and tax opinions on theimpact of the SCP judgement on the CISs petition before the SHC.Both legal and tax advisors consulted were of the view that thejudgment has removed the very basis on which the demands wereraised against the CISs. Therefore, there was no longer any liabilityagainst the CISs under the WWF Ordinance and that all cases pendingin the SHC or lower appellate forums will now be disposed of in lightof the earlier judgement of the SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the government ofSindh as a result of which every industrial establishment located inthe Province of Sindh, the total income of which in any accountingyear is not less than Rs.0.50 million, is required to pay Sindh Workers’Welfare Fund (SWWF) in respect of that year a sum equal to twopercent of such income. The matter was taken up by the MUFAP withthe Sindh Revenue Board (SRB) collectively on behalf of various assetmanagement companies and their CISs whereby it was contested thatmutual funds should be excluded from the ambit of the SWWF Act asthese were not industrial establishments but were pass throughinvestment vehicles and did not employ workers.The SRB held that mutual funds were included in the definition offinancial institutions as per the Financial Institution (Recovery ofFinances) Ordinance, 2001 and were, hence, required to register andpay SWWF under the SWWF Act. Thereafter, MUFAP has taken up thematter with the Sindh Finance Ministry to have CISs/mutual fundsexcluded from the applicability of SWWF. In view of the abovedevelopments regarding the applicability of WWF and SWWF onCISs/mutual funds, MUFAP has recommended the following to all itsmembers on 12 January 2017:- based on legal opinion, reverse the entire provision against WWF on12 January 2017 held by the CISs till 30 June 2015; and- as a matter of abundant caution, create provision in respect ofSWWF on 12 January 2017 with effect from the date of enactment ofthe SWWF Act, 2014 (i.e. starting from 21 May 2015).

09



10


debt securities has been shown as other receivables as at 30 June2019 as, in the opinion of the management, the amount of taxdeducted at source will be refunded.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite is Rs.100Million per Fund that is the minimum regulatory requirement to starta fund.Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internal dispersion isnot required.Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite and benchmark is as follows:

*Atlas Sovereign Fund included in the composite from January 02, 2019

Key AssumptionsFollowing are the key assumptions used in portfolio valuation:Financial InstrumentsAll financial assets and financial liabilities are recognized at the time whenthe Fund becomes a party to the contractual provisions of the instrument.Financial assets are derecognized when the contractual rights to receivecash flows related to the asset expire. Financial liabilities are derecognizedwhen they are extinguished, that is, when the obligation specified in thecontract is discharged, cancelled, or expires. Any gain or loss onderecognition of the financial assets and financial liabilities is taken toincome currently.

Revenue RecognitionInterest income on government securities and other debtsecurities is recognized using effective interest method at the rateof return implicit in the instrument. Interest income on bankbalances, placements and deposits is recognized on an accrualbasis. However, recognition of income on non-performingplacements/deposits and securities is suspended in accordance withthe SECP‘s Circular 1 of 2009 and the Fund's provisioning policy. Gainor loss on sale of government securities and other debt securities andderivatives is accounted for in the period in which it arises.Subjective Unobservable InputsAtlas Asset Management Limited uses subjective unobservable inputsfor valuing some of its debt instruments like Term FinanceCertificates/Sukuks. The criteria used for valuation is in accordancewith the guidelines issued by Regulator through Circular 1 of 2009 (asamended from time to time) and unobservable inputs are disclosedthrough "Provisioning Policy" on the website of the Company.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML, itsManagement Company.Taxationa) Under the provisions of Clause 99 of Part 1 of the Second Scheduleto the Income Tax Ordinance, 2001, any income derived by the mutualfund shall be exempt from tax, if not less than ninety percent of itsaccounting income of that year, as reduced by capital gains whetherrealized or unrealized, is distributed as cash dividend amongst theunit or certificate holders or shareholders as the case may be.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Fund’s incomenamely, dividend, profit on government securities, return ondeposits/certificates of investment with banks/financial institutions,profits from money market transactions, profit from Profit or Losssharing accounts with banks of the Fund will not be subject to anywithholding tax.c) Under the provisions of Clause 100(B) sub-section (2) of Income TaxOrdinance, 2001, mutual funds are exempt from capital gains tax.



FY19* 0.65% 2.13%

FY18 0.51% 0.37%

FY17 0.57% 0.97%

FY16 0.42% 1.18%

FY15 0.35% 0.72%

FY14 0.51% 0.77%

FY13 0.55% 0.96%

FY12 0.53% 0.98%

FY11 0.48% 0.91%

FY10 0.46% 0.34%

Disclaimer: The AIF scheme holds certain non-compliant investments. Before making any investment decision, investors should review thelatest Fund Manager Report and financial statements of the scheme particularly the details of non-compliant investment and Risk Factors.

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionAtlas Equity Composite aims at achieving a good rate of currentincome consistent with the prospects of appreciation in the value ofamount invested. The composite invests mainly in good quality listedequity securities. In selecting equity securities, the compositeconsiders the reputation of the management, liquidity, profitability,dividend record and prospects of earning growth.The remaining net assets are invested in cash and/or near cashinstruments which include cash in bank accounts (excluding TDRs),and treasury bills not exceeding 90 days maturity. Currently thecomposite comprises of one portfolio i.e. Atlas Stock Market Fund(ASMF). ASMF was launched on November 23, 2004 as an open-endEquity Scheme. ASMF’s return and Compound Annual Growth Rate(CAGR) since inception stands at 570.62% and 13.91%, respectively.Particulars of ASMF performance since launch of fund are as below(see graph):

Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, feesand expenses related to accounting and registrar services, SECP Fee,Federal Excise Duty, Sindh Sales Tax and other levies). Performancedata does not include the cost incurred directly by an investor in theform of sales load.Fee ScheduleManagement Fee is 2.0% of Average Annual Net Assets.BenchmarkThe Performance Benchmark for Atlas Equity Composite is KSE-100Index and returns of the Benchmark are gross i.e. not net ofwithholding taxes.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Significant Events

a) The Finance Act, 2008 had introduced an amendment to theWorkers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a resultof which it was construed that all Collective Investment Schemes(CISs)/mutual funds whose income exceeded Rs.0.5 million in a taxyear were brought within the scope of the WWF Ordinance, thusrendering them liable to pay contribution to WWF at the rate of twopercent of their accounting or taxable income, whichever was higher.In light of this, the Mutual Funds Association of Pakistan (MUFAP)filed a constitutional petition in the Honorable Sindh High Court (SHC)challenging the applicability of WWF on CISs which is pendingadjudication. In view of the pending decision, the ManagementCompany, as a matter of abundant caution, has maintained the


11

BenchmarkCreation


KSE-100 index July 01, 2012 Pak Rupees

ATLAS EQUITY COMPOSITE

PeriodTotal Net

Return

Total

Benchmark

Return




Assets

Total Assets of the

Firm at the end of

Period (mn)

FY19 -18.83% -19.11% 5,322 19.5% 27,279

FY18 -4.75% -10.00% 5,478 17.5% 31,260

FY17 33.74% 23.24% 5,864 19.4% 30,252

FY16 5.05% 9.84% 4,106 20.4% 20,137

FY15 19.73% 16.01% 3,543 19.5% 18,169

FY14 30.09% 41.16% 1,110 8.0% 13,812

FY13 51.11% 52.20% 1,089 11.2% 9,749

* From November 23, 2004 to June 30, 2005


FY05* FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

ASMF 11.62% 32.52% 29.39% -6.84% -31.58% 24.86% 40.07% 22.95% 51.11% 30.09% 19.73% 5.05% 33.74% -4.75% -18.83%

Benchmark 35.10% 34.08% 37.87% -10.77% -41.72% 35.74% 28.53% 10.45% 52.20% 41.16% 16.01% 9.84% 23.24% -10.00% -19.11%

CAGR 20.11% 27.72% 28.36% 17.41% 4.41% 7.80% 12.16% 13.52% 17.36% 18.62% 18.72% 17.47% 18.69% 16.79% 13.91%

-42.00%-32.00%-22.00%-12.00%

-2.00%8.00%

18.00%28.00%38.00%48.00%

provision for WWF amounting to Rs.34.0 million up to June 30, 2015.The Finance Act, 2015 has excluded Mutual Funds and CollectiveInvestment Schemes from the definition of 'industrial establishment'subject to WWF under WWF Ordinance, 1971. Therefore, AAML hasnot provided for WWF w.e.f. July 01, 2015. On November 10, 2016the Supreme Court of Pakistan (SCP) has passed a judgment declaringthe amendments made in the Finance Acts 2006 and 2008 pertainingto WWF as illegal citing that WWF was not in the nature of tax andcould, therefore, not have been introduced through money bills.Accordingly, the aforesaid amendments have been struck down bythe SCP. The Federal Board of Revenue has filed a petition in the SCPagainst the said judgment, which is pending hearing. While thepetitions filed by the CISs on the matter are still pending before theSHC, the Mutual Funds Association of Pakistan (MUFAP) (collectivelyon behalf of the asset management companies and their CISs) hastaken legal and tax opinions on the impact of the SCP judgement onthe CISs petition before the SHC. Both legal and tax advisorsconsulted were of the view that the judgment has removed the verybasis on which the demands were raised against the CISs. Therefore,there was no longer any liability against the CISs under the WWFOrdinance and that all cases pending in the SHC or lower appellateforums will now be disposed of in light of the earlier judgement ofthe SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the government ofSindh as a result of which every industrial establishment located inthe Province of Sindh, the total income of which in any accountingyear is not less than Rs.0.50 million, is required to pay Sindh Workers’Welfare Fund (SWWF) in respect of that year a sum equal to twopercent of such income. The matter was taken up by the MUFAP withthe Sindh Revenue Board (SRB) collectively on behalf of various assetmanagement companies and their CISs whereby it was contested thatmutual funds should be excluded from the ambit of the SWWF Act asthese were not industrial establishments but were pass throughinvestment vehicles and did not employ workers. The SRB held thatmutual funds were included in the definition of financial institutionsas per the Financial Institution (Recovery of Finances) Ordinance,2001 and were, hence, required to register and pay SWWF under theSWWF Act. Thereafter, MUFAP has taken up the matter with theSindh Finance Ministry to have CISs/mutual funds excluded from theapplicability of SWWF.In view of the above developments regarding the applicability ofWWF and SWWF on CISs/mutual funds, MUFAP has recommendedthe following to all its members on 12 January 2017:- based on legal opinion, reverse the entire provision against WWF on12 January 2017 held by the CISs till 30 June 2015; and - as a matterof abundant caution, create provision in respect of SWWF on 12January 2017 with effect from the date of enactment of the SWWFAct, 2014 (i.e. starting from 21 May 2015).The above decisions were communicated to the SECP and thePakistan Stock Exchange Limited on 12 January 2017 in response towhich the SECP vide its letter dated 1 February 2017 advised MUFAPthat the adjustments relating to the above should be prospective andsupported by adequate disclosures in the financial statements of theCISs/mutual funds. Accordingly, necessary adjustments in this respectwere recorded in the books of the Fund on 12 January 2017 wherebythe entire provision for WWF was reversed and the provision forSWWF was made for the period from 21 May 2015 to 12 January

2017. Thereafter, the provision for SWWF is being made by the Fundon a daily basis going forward. Up till June 30, 2019, a sum of Rs. 38.8million (Rs. 3.88 per unit) has been provided for SWWF.b) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies (AMC’s)with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC) jointlyby various AMC`s, challenging the levy of FED. In a separate petitionthe Honorable Sindh High Court declared that the FED wasunconstitutional and cannot be charged where provinces arecollecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further, viaFinance Act 2016, the FED has been withdrawn from July 1, 2016. Inthe meantime, as a matter of abundant caution, the Scheme hasprovided for FED liability which amounted to Rs.20.3 million up tillJune 30, 2016.c) As per clause 47(B) of part IV of the Second Schedule to the IncomeTax Ordinance, 2001, payments made to collective investmentschemes (CISs) are exempt from withholding tax under sections 150and 151. However, during the year ended 30 June 2016, severalcompanies (including banks) deducted withholding tax on dividendand profit on bank deposits paid to the Fund based on theinterpretation issued by FBR vide letter C. no. 1(43) DG (WHT)/2008-VOL.II-66417-R dated 12 May 2015 which requires every withholdingagent to withhold income tax at applicable rates in case a validexemption certificate under section 159(1) issued by the concernedCommissioner of Inland Revenue (CIR) is not produced before him bythe withholdee. The amount of tax withheld during the year ondividend and profit on bank deposits aggregates to Rs.10.2 millionand Rs. 0.6 million respectively.For this purpose, the Mutual Funds Association of Pakistan (MUFAP)on behalf of various mutual funds (including the Funds beingmanaged by the Management Company) had filed a petition in theHonourable Sindh High Court (SHC) challenging the above mentionedinterpretation of the Federal Board of Revenue (FBR) which wasdecided by the SHC in favour of FBR. On 28 January 2016, the Board ofDirectors of the Management Company passed a resolution bycirculation, authorising all Funds managed by the Company to file anappeal in the Honourable Supreme Court through their Trustees, todirect all persons being withholding agents, including share registrarsand banks to observe the provisions of clause 47B of Part IV of theSecond Schedule to the Income Tax Ordinance, 2001 withoutimposing any conditions at the time of making any payment to theCISs being managed by the Management Company. Accordingly, apetition was filed in the Supreme Court of Pakistan by the Fundstogether with other CISs (managed by the Management Company andother Asset Management Companies) whereby the Supreme Courtgranted the petitioners leave to appeal from the initial judgement ofthe SHC. Pending resolution of the matter, the amount of withholdingtax deducted from dividend and profit received on bank deposits bythe Fund has been shown as other receivables as at 30 June 2019 as,in the opinion of the management, the amount of tax deducted atsource will be refunded.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite isRs.100 Million per Fund that is the minimum regulatory requirementto start a fund.

12



13


Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internal dispersion isnot required.Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite and benchmark is as follows:

Key AssumptionsFollowing are the key assumptions used in portfolio valuation:Financial InstrumentsAll financial assets and financial liabilities are recognized at the timewhen the Fund becomes a party to the contractual provisions of theinstrument. Financial assets are derecognized when the contractualrights to receive cash flows related to the asset expire. Financialliabilities are derecognized when they are extinguished, that is, whenthe obligation specified in the contract is discharged, cancelled, orexpires. Any gain or loss on derecognition of the financial assets andfinancial liabilities is taken to income currently.



FY19 18.55% 17.48%

FY18 17.26% 17.19%

FY17 18.77% 17.28%

FY16 17.54% 17.36%

FY15 17.14% 17.20%

FY14 16.40% 16.57%

FY13 17.47% 17.02%

FY12 19.09% 18.08%

FY11 34.63% 32.05%

FY10 35.56% 33.84%

FY09 34.65% 34.08%

FY08 19.45% 24.22%

Revenue RecognitionDividend income is recognized when the right to receive the dividendis established. Interest income on bank balances, placements anddeposits is recognized on an accrual basis. Gain or loss on sale ofsecurities is accounted for in the period in which it arises.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML, itsManagement Company.Taxationa) Under the provisions of Clause 99 of Part 1 of the Second Scheduleto the Income Tax Ordinance, 2001, any income derived by the mutualfund shall be exempt from tax, if not less than ninety percent of itsaccounting income of that year, as reduced by capital gains whetherrealized or unrealized, is distributed ascash dividend amongst the unit or certificate holders or shareholdersas the case may be.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Fund’s incomenamely, dividend, profit on government securities, return ondeposits/ certificates of investment with banks/ financial institutions,profits from money market transactions, profit from Profit or Losssharing accounts with banks of the Fund will not be subject to anywithholding tax.c) Under the provisions of Clause 100(B) sub-section (2) of Income TaxOrdinance, 2001, mutual funds are exempt from capital gains tax.

Atlas Islamic Income Composite

Atlas Islamic Equity Composite

Atlas Islamic Asset Allocation Composite

Atlas Islamic Capital Preservation Composite

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionThe Composite’s primary objective is to provide investors with a goodand stable rate of current income in a Shariah Compliant manner. Asecondary objective is to take advantage of opportunities to realizecapital appreciation. The Composite seeks to provide the investorswith a rate of return consistent with a broadly diversified portfolio oflong, medium and short term high quality Islamic income instruments.Currently the composite comprises of one portfolio i.e. Atlas IslamicIncome Fund (AIIF). AIIF was launched on October 14, 2008. AIIF is anopen-end Shariah Compliant Income Scheme and has beenmaintained a stability rating of AA- (f) by PACRA (As on April 17, 2019).

AIIF’s return and Compound Annual Growth Rate (CAGR) sinceinception stands at 128.20% and 8.00%, respectively. Particulars ofAIIF performance since launch of fund are as below (see graph):Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, feesand expenses related to accounting and registrar services, SECP Fee,Federal Excise Duty, Sindh Sales Tax and other levies). Performancedata does not include the cost incurred directly by an investor in theform of sales load.Fee ScheduleManagement Fee is 0.30% of Average Annual Net Assets.BenchmarkThe Performance Benchmark for Atlas Islamic Income Composite Six(6) Months average deposit rates of three (3)- A rated scheduledIslamic banks or Islamic windows of Conventional Banks as selectedby MUFAP and returns of Benchmark are gross i.e. not net ofwithholding taxes.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Significant Eventsa) The Finance Act, 2008 had introduced an amendment to theWorkers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a resultof which it was construed that all Collective Investment Schemes(CISs) / mutual funds whose income exceeded Rs 0.5 million in a taxyear were brought within the scope of the WWF Ordinance, thusrendering them liable to pay contribution to WWF at the rate of twopercent of their accounting or taxable income, whichever was higher.In light of this, the Mutual Funds Association of Pakistan (MUFAP)filed a constitutional petition in the Honorable Sindh High Court (SHC)challenging the applicability of WWF on CISs which is pendingadjudication. In view of the pending decision, the ManagementCompany, as a matter of abundant caution, has maintained theprovision for WWF amounting to Rs.4.4 million up to June 30, 2015.The Finance Act, 2015 has excluded Mutual Funds and CollectiveInvestment Schemes from the definition of 'industrial establishment'subject to WWF under WWF Ordinance, 1971. Therefore, AAML hasnot provided for WWF w.e.f. July 01, 2015. On November 10, 2016 the


15

BenchmarkCreation


Six (6) Months average deposit rates of three (3)- A rated scheduled Islamic banks or Islamic windows of

Conventional Banks as selected by MUFAPJuly 01, 2012 Pak Rupees

ATLAS ISLAMIC INCOME COMPOSITE

PeriodTotal Net

Return

Total

Benchmark

Return




Assets

Total Assets of the

Firm at the end of

Period (mn)

FY19 8.48% 3.69% 1,424 5.2% 27,279

FY18 4.92% 2.44% 890 2.8% 31,260

FY17 5.97% 3.26% 1,640 5.4% 30,252

FY16 4.97% 5.16% 570 2.8% 20,137

FY15 7.21% 6.76% 455 2.5% 18,169

FY14 8.22% 6.93% 527 3.8% 13,812

FY13 8.65% 6.91% 531 5.4% 9,749

* From October 14, 2008 to June 30, 2009


FY09* FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

AIIF 11.50% 9.22% 9.90% 10.11% 8.65% 8.22% 7.21% 4.97% 5.97% 4.92% 8.48%

Benchmark 8.27% 7.96% 7.91% 7.70% 6.91% 6.93% 6.76% 5.14% 2.92% 2.44% 3.69%

CAGR 11.69%10.24%10.11%10.10% 9.79% 9.52% 9.17% 8.62% 8.31% 7.95% 8.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

b) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies (AMC’s)with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC) jointlyby various AMC`s, challenging the levy of FED.In a separate petition the Honorable Sindh High Court declared thatthe FED was unconstitutional and cannot be charged where provincesare collecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further, viaFinance Act 2016, the FED has been withdrawn from July 1, 2016. Inthe meantime, as a matter of abundant caution, the Scheme hasprovided for FED liability which amounted to Rs.1.7 million up till June30, 2016.c) As per Clause 47(B) of part IV of the Second Schedule to the IncomeTax Ordinance, 2001, payments made to collective investmentschemes (CISs) are exempt from withholding tax under sections 150and 151. However, several Companies (including banks) deductedwithholding tax on dividend and profit on bank deposits paid to theFund based on the interpretation issued by FBR vide letter C. no. 1(43)DG (WHT) /2008-VOL.II-66417-R dated 12 May 2015 which requiresevery withholding agent to withhold income tax at applicable rates incase a valid exemption certificate under section 159(1) issued by theconcerned Commissioner of Inland Revenue (CIR) is not produced bythe withholdee.For this purpose, the Mutual Funds Association of Pakistan (MUFAP)on behalf of various mutual funds (including the Funds beingmanaged by the Management Company) had filed a petition in theHonourable Sindh High Court (SHC) challenging the above mentionedinterpretation of the Federal Board of Revenue (FBR) which wasdecided by the SHC in favor of FBR. On 28 January 2016, the Board ofDirectors of the Management Company passed a resolution bycirculation, authorising all CISs to file an appeal in the HonourableSupreme Court through their Trustees, to direct all persons beingwithholding agents, including share registrars and banks to observethe provisions of clause 47B of Part IV of the Second Schedule to theIncome Tax Ordinance, 2001 without imposing any conditions at thetime of making any payment to the CISs being managed by theManagement Company. Accordingly, a petition was filed in theSupreme Court of Pakistan by the funds together with other CISs(managed by the Management Company and other AssetManagement Companies) whereby the Supreme Court granted thepetitioners leave to appeal from the initial judgement of the SHC.Pending resolution of the matter, the cumulative amount ofwithholding tax deducted from profit on bank deposits by the Fundshas been shown as other receivable as at 30 June 2019 as, in theopinion of the management, the amount of tax deducted at sourcewill be refunded.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite isRs.100 Million per Fund that is the minimum regulatory requirementto start a fund.Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internal dispersion isnot required.

Supreme Court of Pakistan (SCP) has passed a judgment declaring theamendments made in the Finance Acts 2006 and 2008 pertaining toWWF as illegal citing that WWF was not in the nature of tax and could,therefore, not have been introduced through money bills. Accordingly,the aforesaid amendments have been struck down by the SCP. TheFederal Board of Revenue has filed a petition in the SCP against thesaid judgment, which is pending hearing. While the petitions filed bythe CISs on the matter are still pending before the SHC, the MutualFunds Association of Pakistan (MUFAP) (collectively on behalf of theasset management companies and their CISs) has taken legal and taxopinions on the impact of the SCP judgement on the CISs petitionbefore the SHC. Both legal and tax advisors consulted were of the viewthat the judgment has removed the very basis on which the demandswere raised against the CISs. Therefore, there was no longer anyliability against the CISs under the WWF Ordinance and that all casespending in the SHC or lower appellate forums will now be disposed ofin light of the earlier judgement of the SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the government ofSindh as a result of which every industrial establishment located in theProvince of Sindh, the total income of which in any accounting year isnot less than Rs 0.50 million, is required to pay Sindh Workers’Welfare Fund (SWWF) in respect of that year a sum equal to twopercent of such income. The matter was taken up by the MUFAP withthe Sindh Revenue Board (SRB) collectively on behalf of various assetmanagement companies and their CISs whereby it was contested thatmutual funds should be excluded from the ambit of the SWWF Act asthese were not industrial establishments but were pass throughinvestment vehicles and did not employ workers. The SRB held thatmutual funds were included in the definition of financial institutionsas per the Financial Institution (Recovery of Finances) Ordinance, 2001and were, hence, required to register and pay SWWF under the SWWFAct. Thereafter, MUFAP has taken up the matter with the SindhFinance Ministry to have CISs/mutual funds excluded from theapplicability of SWWF.In view of the above developments regarding the applicability of WWFand SWWF on CISs/mutual funds, MUFAP has recommended thefollowing to all its members on 12 January 2017:- based on legal opinion, the entire provision against WWF as on 12January 2017 held by the CISs till 30 June 2015 should be reversed;and- as a matter of abundant caution, the provision in respect of SWWFon 12 January with effect from the date of enactment of the SWWFAct, 2014 (i.e. starting from 21 May 2015) on 12 January 2017.The above decisions were communicated to the SECP and the PakistanStock Exchange Limited on 12 January 2017 and the SECP vide its letterdated 1 February 2017 has advised MUFAP that the adjustmentsrelating to the above should be prospective and supported byadequate disclosures in the financial statements of the CISs / mutualfunds. Accordingly, on 12 January 2017 the provision for WWF wasreversed and the provision for SWWF was made for the period from21 May 2015 to 12 January 2017. Thereafter, the provision is beingmade by the Fund on a daily basis going forward. Up till June 30,2019, a sum of Rs. 4.0 million (Rs. 1.46 per unit) has been provided forSWWF.

16



Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite and benchmark is as follows:

Key AssumptionsFollowing are the key assumptions used in portfolio valuation:Financial InstrumentsAll financial assets and financial liabilities are recognized at the timewhen the Fund becomes a party to the contractual provisions of theinstrument. Financial assets are derecognized when the contractualrights to receive cash flows related to the asset expire. Financialliabilities are derecognized when they are extinguished, that is, whenthe obligation specified in the contract is discharged, cancelled, orexpires. Any gain or loss on derecognition of the financial assets andfinancial liabilities is taken to income currently.Revenue RecognitionMarkup income on Government Securities is recognized usingeffective markup method at the rate of return implicit in theinstrument. Income on bank balances and deposits is recognized on anaccrual basis. Gain or loss on sale of Shariah compliant debt securitiesand derivatives is accounted for in the year in which it arises.

17



FY19 0.58% 0.99%

FY18 0.38% 1.27%

FY17 0.49% 1.52%

FY16 0.55% 0.89%

FY15 0.62% 0.35%

FY14 0.76% 0.43%

FY13 0.73% 0.47%

FY12 0.54% 0.13%


Subjective Unobservable InputsAtlas Asset Management Limited uses subjective unobservable inputsfor valuing some of its debt instruments like Term FinanceCertificates/Sukuks. The criteria used for valuation is in accordancewith the guidelines issued by Regulator through Circular 1 of 2009 (asamended from time to time) and unobservable inputs are disclosedthrough "Provisioning Policy” on the website of the Company.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML, itsManagement Company.Taxationa) Under the provisions of Clause 99 of Part 1 of the Second Scheduleto the Income Tax Ordinance, 2001, any income derived by the mutualfund shall be exempt from tax, if not less than ninety percent of itsaccounting income of that year, as reduced by capital gains whetherrealized or unrealized, is distributed as cash dividend amongst theunit or certificate holders or shareholders as the case may be.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Fund’s incomenamely, dividend, profit on government securities, return ondeposits/certificates of investment with banks/ financial institutions,profits from money market transactions, profit from Profit or Losssharing accounts with banks of the Fund will not be subject to anywithholding tax.c) Under the provisions of Clause 100(B) sub-section (2) of Income TaxOrdinance, 2001, mutual funds are exempt from capital gains tax.


18

BenchmarkCreation


Weighted average returns of the benchmarks of all portfolios in the composite July 01, 2012 Pak Rupees

ATLAS ISLAMIC EQUITY COMPOSITE

PeriodTotal Net

Return

Total

Benchmark

Return




Assets

Total Assets of the

Firm at the end of

Period (mn)

FY19* -19.03% -23.84% 1,688 6.2% 27,279

FY18 -7.88% -9.59% 2,308 7.4% 31,260

FY17 29.25% 18.80% 2,769 9.2% 30,252

FY16 5.73% 15.53% 1,451 7.2% 20,137

FY15 21.37% 20.10% 1,508 8.3% 18,169

FY14 21.73% 29.89% 871 6.3% 13,812

FY13 48.67% 54.41% 1,012 10.4% 9,749*Atlas Islamic Dedicated Stock Fund included in the composite from January 10, 2019

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionAtlas Islamic Equity Composite enables Unit holders to participate in adiversified portfolio of Shariah Compliant securities such as equities,profit bearing securities and other Shariah Compliant securitiesavailable outside Pakistan. The Management Company manages thecomposite with the objective of maximizing Unit Holders’ returns ontheir Investments while at all times observing prudent investmentpractices, the highest professional standards, all applicable laws, andthe Islamic Shariah as advised by the Shariah Board. Currently thecomposite comprises of two portfolio i.e. Atlas Islamic Stock Fund(AISF) and Atlas Islamic Dedicated Stock Fund (AIDSF). AISF waslaunched on January 15, 2007 as an open-end Equity Scheme. AISF’sreturn and Compound Annual Growth Rate (CAGR) since inceptionstands at 317.41% and 12.15%, respectively.

AIDSF was launched on January 10, 2019 as an open-end EquityScheme. AIDSF’s return since inception stands at -17.27%.Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, feesand expenses related to accounting and registrar services, SECP Fee,Federal Excise Duty, Sindh Sales Tax and other levies). Performancedata does not include the cost incurred directly by an investor in theform of sales load.Fee ScheduleManagement Fee is 2.0% of Average Annual Net Assets for AISF &AIDSF.BenchmarkThe Benchmark for “Atlas Islamic Equity Composite” is weightedaverage returns of the benchmarks of all portfolios in the composite.Returns of the Benchmark are gross i.e. not net of withholding taxes.The Benchmark of the Composite is rebalanced monthly.The Performance Benchmark for AISF and AIDSF Composite iscurrently ‘KMI- 30 Index’.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Significant Eventsa) The Finance Act, 2008 had introduced an amendment to theWorkers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a resultof which it was construed that all Collective Investment Schemes(CISs)/mutual funds whose income exceeded Rs0.5 million in a taxyear were brought within the scope of the WWF Ordinance, thus

* From January 15, 2007 to June 30, 2007


FY07* FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

AISF 3.56% 1.40% -22.68% 25.14% 43.77% 27.51% 48.67% 21.73% 21.37% 5.73% 29.25% -7.88% -18.95%

Benchmark 18.38% 0.92% -35.77% 36.87% 43.66% 13.57% 54.41% 29.89% 20.10% 15.53% 18.80% -9.59% -23.84%

CAGR 7.99% 3.41% -8.13% 0.46% 8.87% 12.06% 17.08% 17.69% 18.12% 16.74% 17.88% 15.37% 12.15%

-36.00%

-16.00%

4.00%

24.00%

44.00%

dated 1 February 2017 has advised MUFAP that the adjustmentsrelating to the above should be prospective and supported byadequate disclosures in the financial statements of the CISs/mutualfunds. Accordingly, on 12 January 2017 the provision for WWF wasreversed and the provision for SWWF was made for the period from21 May 2015 to 12 January 2017. Thereafter, the provision is beingmade on a daily basis going forward. Up till June 30,2019, a sum of Rs. 15.5 million (Rs. 5.53 per unit) has been providedfor SWWF from AISF.b) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies (AMC’s)with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC) jointlyby various AMC`s, challenging the levy of FED. In a separate petitionthe Honorable Sindh High Court declared that the FED wasunconstitutional and cannot be charged where provinces arecollecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further, viaFinance Act 2016, the FED has been withdrawn from July 1, 2016. Inthe meantime, as a matter of abundant caution, the Scheme hasprovided for FED liability which amounted to Rs.10.5 million up tillJune 30, 2016 for AISF.c) As per Clause 47(B) of part IV of the Second Schedule to the IncomeTax Ordinance, 2001, payments made to collective investmentschemes (CISs) are exempt from withholding tax under sections 150and 151. However, several Companies (including banks) deductedwithholding tax on dividend and profit on bank deposits paid to theFund based on the interpretation issued by FBR vide letter C. no. 1(43)DG (WHT)/2008-VOL.II-66417-R dated 12 May 2015 which requiresevery withholding agent to withhold income tax at applicable rates incase a valid exemption certificate under section 159(1) issued by theconcerned Commissioner of Inland Revenue (CIR) is not produced bythe withholdee. Such deductions aggregate to Rs. 2.5 million for AISFand Rs 0.76 million for AIDSF, respectively.For this purpose, the Mutual Funds Association of Pakistan (MUFAP)on behalf of various mutual funds (including the Funds beingmanaged by the Management Company) had filed a petition in theHonourable Sindh High Court (SHC) challenging the above mentionedinterpretation of the Federal Board of Revenue (FBR) which wasdecided by the SHC in favour of FBR. On 28 January 2016, the Board ofDirectors of the Management Company passed a resolution bycirculation, authorising all Funds managed by the Company to file anappeal in the Honourable Supreme Court through their Trustees, todirect all persons being withholding agents, including share registrarsand banks to observe the provisions of clause 47B of Part IV of theSecond Schedule to the Income Tax Ordinance, 2001 withoutimposing any conditions at the time of making any payment to theCISs being managed by the Management Company. Accordingly, apetition was filed in the Supreme Court of Pakistan by the Fundstogether with other CISs (managed by the Management Company andother Asset Management Companies) whereby the Supreme Courtgranted the petitioners leave to appeal from the initial judgement ofthe SHC. Pending resolution of the matter, the amount of withholdingtax deducted from dividend and profit received on bank deposits bythe Funds has been shown as other receivable as at 30 June 2019 as,in the opinion of the management, the amount of tax deducted atsource will be refunded.

rendering them liable to pay contribution to WWF at the rate of twopercent of their accounting or taxable income, whichever was higher.In light of this, the Mutual Funds Association of Pakistan (MUFAP) fileda constitutional petition in the Honorable Sindh High Court (SHC)challenging the applicability of WWF on CISs which is pendingadjudication. In view of the pending decision, the ManagementCompany, as a matter of abundant caution, has maintained theprovision for WWF amounting to Rs.21.0 million for AISF, up to June30, 2015. The Finance Act, 2015 has excluded Mutual Funds andCollective Investment Schemes from the definition of 'industrialestablishment' subject to WWF under WWF Ordinance, 1971.Therefore, AAML has not provided for WWF w.e.f. July 01, 2015.On November 10, 2016 the Supreme Court of Pakistan (SCP) haspassed a judgment declaring the amendments made in the FinanceActs 2006 and 2008 pertaining to WWF as illegal citing that WWF wasnot in the nature of tax and could, therefore, not have beenintroduced through money bills. Accordingly, the aforesaidamendments have been struck down by the SCP. The Federal Board ofRevenue has filed a petition in the SCP against the said judgment,which is pending hearing. While the petitions filed by the CISs on thematter are still pending before the SHC, the Mutual Funds Associationof Pakistan (MUFAP) (collectively on behalf of the asset managementcompanies and their CISs) has taken legal and tax opinions on theimpact of the SCP judgement on the CISs petition before the SHC. Bothlegal and tax advisors consulted were of the view that the judgmenthas removed the very basis on which the demands were raised againstthe CISs. Therefore, there was no longer any liability against the CISsunder the WWF Ordinance and that all cases pending in the SHC orlower appellate forums will now be disposed of in light of the earlierjudgement of the SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the government ofSindh as a result of which every industrial establishment located in theProvince of Sindh, the total income of which in any accounting year isnot less than Rs 0.50 million, is required to pay Sindh Workers’Welfare Fund (SWWF) in respect of that year a sum equal to twopercent of such income. The matter was taken up by the MUFAP withthe Sindh Revenue Board (SRB) collectively on behalf of various assetmanagement companies and their CISs whereby it was contested thatmutual funds should be excluded from the ambit of the SWWF Act asthese were not industrial establishments but were pass throughinvestment vehicles and did not employ workers. The SRB held thatmutual funds were included in the definition of financial institutionsas per the Financial Institution (Recovery of Finances) Ordinance, 2001and were, hence, required to register and pay SWWF under the SWWFAct. Thereafter, MUFAP has taken up the matter with the SindhFinance Ministry to have CISs / mutual funds excluded from theapplicability of SWWF. In view of the above developments regardingthe applicability of WWF and SWWF on CISs/mutual funds, MUFAP hasrecommended the following to all its members on 12 January 2017:- based on legal opinion, the entire provision against WWF held by theCISs till 30 June 2015 should be reversed on 12 January 2017; and- as a matter of abundant caution, the provision in respect of SWWFshould be made with effect from the date of enactment of the SWWFAct, 2014 (i.e. starting from 21 May 2015) on 12 January 2017.The above decisions were communicated to the SECP and the PakistanStock Exchange Limited on 12 January 2017 and the SECP vide its letter

19



Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite isRs.100 Million per Fund that is the minimum regulatory requirementto start a fund.Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internal dispersion isnot required.Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite and benchmark is as follows:

* Atlas Islamic Dedicated Stock Fund included in the composite from January 10, 2019

Note : Benchmark changed from Dow Jones - JS Pakistan Islamic Indexto KMI - 30 in March 2010.Key AssumptionsFollowing are the key assumptions used in portfolio valuation:

20




FY19 * 17.11% 20.15%

FY18 16.19% 18.86%

FY17 18.15% 18.18%

FY16 16.76% 16.55%

FY15 16.72% 16.18%

FY14 14.83% 15.65%

FY13 15.59% 15.99%

FY12 16.89% 17.54%

FY11 32.29% 32.87%

FY10 32.93% 33.76%

Financial InstrumentsAll financial assets and financial liabilities are recognized at the timewhen the Fund becomes a party to the contractual provisions of theinstrument. Financial assets are derecognized when the contractualrights to receive cash flows related to the asset expire. Financialliabilities are derecognized when they are extinguished, that is, whenthe obligation specified in the contract is discharged, cancelled, orexpires. Any gain or loss on derecognition of the financial assets andfinancial liabilities is taken to income currently.Revenue RecognitionIncome on PLS accounts is recognized on an accrual basis. Dividendincome is recognized when the right to receive the dividend isestablished. Gain or loss on sale of equity securities is accounted forin the period in which it arises.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML, itsManagement Company.Taxationa) Under the provisions of Clause 99 of Part 1 of the Second Scheduleto the Income Tax Ordinance, 2001, any income derived by the mutualfund shall be exempt from tax, if not less than ninety percent of itsaccounting income of that year, as reducedby capital gains whether realized or unrealized, is distributed as cashdividend amongst the unit or certificate holders or shareholders asthe case may be.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Fund’s incomenamely, dividend, profit on government securities, return ondeposits/certificates of investment with banks/financial institutions,profits from money market transactions, profit from Profit or Losssharing accounts with banks of the Fund will not be subject to anywithholding tax.c) Under the provisions of Clause 100(B) sub-section (2) of Income TaxOrdinance, 2001, mutual funds are exempt from capital gains tax.


21

BenchmarkCreation


Weighted average returns of the benchmarks of all portfolios in the composite

January 07, 2019

Pak Rupees

ATLAS ISLAMIC ASSET ALLOCATION COMPOSITE

PeriodTotal Net

Return

Total

Benchmark

Return




Assets

Total Assets of the

Firm at the end of

Period (mn)

FY19 -6.03% -6.32% 318 1.2% 27,279

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionTo provide unit holders an opportunity to earn potentially highreturns through investment as per respective Allocation Plans byinvesting in Shariah Compliant Fixed Income Schemes (Atlas IslamicIncome Fund) and Shariah Compliant Equity based CollectiveInvestment Schemes (Atlas Islamic Dedicated Stock Fund). Currentlythe composite comprises of three portfolio i.e. Atlas AggressiveAllocation Islamic Plan (AAAIP) , Atlas Moderate Allocation IslamicPlan (AMAIP) and Atlas Conservative Allocation Islamic Plan (ACAIP).AAAIP is a Shariah Compliant Allocation Plan under the Atlas IslamicFund of Funds and primarily aims to provide capital appreciation. Itshall invest at least 65% of its net assets in Shariah Compliant EquityFunds (Atlas Islamic Dedicated Stock Fund), while the remainingportion is allocated to Shariah Compliant Fixed Income Funds (AtlasIslamic Income Fund).AMAIP is a Shariah Compliant Allocation Plan under the Atlas IslamicFund of Funds and primarily aims to provide a mix of capitalappreciation and stable returns. It shall invest at least 45% of its netassets in Shariah Compliant Equity Funds (Atlas Islamic DedicatedStock Fund), while the remaining portion is allocated to ShariahCompliant Fixed Income Funds (Atlas Islamic Income Fund).ACAIP is a Shariah Compliant Allocation Plan under the Atlas IslamicFund of Funds and primarily aims to provide stable returns. It shallinvest at least 20% of its net assets in Shariah Compliant Equity Funds(Atlas Islamic Dedicated Stock Fund), while the remaining portion isallocated to Shariah Compliant Fixed Income Funds (Atlas IslamicIncome Fund).AIFoF was launched on January 07, 2019. AAAIP’s return sinceinception stands at -11.22%. AMAIP’s return since inception stands at-6.91%. ACAIP’s return since inception stands at -0.94%.

Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, feesand expenses related to accounting and registrar services, SECP Fee,Federal Excise Duty, Sindh Sales Tax and other levies). Performancedata does not include the cost incurred directly by an investor in theform of sales load.Fee ScheduleManagement Fee is Up to 1%*Front End Load is Up to 2% *** No Management fee in case of investment is made in CIS of AAML.However, management fee of 1% of average annual net assets in caseinvestment is made in Cash/ Near Cash instruments, savings and termdeposits made with Islamic banks or Islamic banking windows ofcommercial banks.** On amount less than or equal to Rs.25 Million. However, in casewhere transaction are done online or through a website, themaximum front-end load will be up to 1.5%.BenchmarkThe Benchmark for “Atlas Islamic Asset Allocation Composite” isweighted average returns of the benchmarks of all portfolios in thecomposite. Returns of the Benchmark are gross i.e. not net ofwithholding taxes. The Benchmark of the Composite is rebalancedmonthly.The performance benchmark of each allocation Plan will be theweighted average return of KMI-30 Index, and Six months averagedeposit rates of three (3) A rated Islamic Banks or Islamic windows ofconventional banks as selected by MUFAP based on the actualproportion of investment in Equity, Income schemes and bank depositmade by the respective allocation Plan.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite isRs.100 Million per Fund that is the minimum regulatory requirementto start a fund.Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internal dispersion isnot required.Ex-Post Standard DeviationThe three year annualized ex-post standard deviation of thecomposite and Benchmark is not presented because 36 monthlyreturns are not yet available


Key AssumptionsFollowing are the key assumptions used in portfolio valuationFinancial InstrumentsAll financial assets and financial liabilities are recognized at the timewhen the Fund becomes a party to the contractual provisions of theinstrument. Financial assets are derecognized when the contractualrights to receive cash flows related to the asset expire. Financialliabilities are derecognized when they are extinguished, that is, whenthe obligation specified in the contract is discharged, cancelled, orexpires. Any gain or loss on derecognition of the financial assets andfinancial liabilities is taken to income currentlyRevenue RecognitionIncome on PLS accounts is recognized on an accrual basis. Dividendincome is recognized when the right to receive the dividend isestablished. Gain or loss on sale of equity securities is accounted for inthe period in which it arises.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML, itsManagement Company.Taxationa) Under the provisions of Clause 99 of Part 1 of the Second Scheduleto the Income Tax Ordinance, 2001, any income derived by the mutualfund shall be exempt from tax, if not less than ninety percent of itsaccounting income of that year, as reducedby capital gains whether realized or unrealized, is distributed as cashdividend amongst the unit or certificate holders or shareholders asthe case may be.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Fund’s incomenamely, dividend, profit on government securities, return ondeposits/certificates of investment with banks/financial institutions,profits from money market transactions, profit from Profit or Losssharing accounts with banks of the Fund will not be subject to anywithholding tax.c) Under the provisions of Clause 100(B) sub-section (2) of Income TaxOrdinance, 2001, mutual funds are exempt from capital gains tax.

22

Atlas Islamic Asset Allocation Composite



23

BenchmarkCreation


Plan will be the weighted average return of KMI-30Index, and Six months average deposit rates of three(3) A rated Islamic Banks or Islamic windows ofconventional banks

January 07, 2019

Pak Rupees

ATLAS ISLAMIC CAPITAL PRESERVATION COMPOSITE

PeriodTotal Net

Return

Total

Benchmark

Return




Assets

Total Assets of the

Firm at the end of

Period (mn)

FY19 -2.40% -3.38% 431 1.6% 27,279

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionTo provide unit holders an opportunity to earn potentially highreturns through investment as per respective Allocation Plans byinvesting in Shariah Compliant Fixed Income Schemes (Atlas IslamicIncome Fund) and Shariah Compliant Equity based CollectiveInvestment Schemes (Atlas Islamic Dedicated Stock Fund). Currentlythe composite comprises of one portfolio i.e. Atlas Islamic CapitalPreservation Composite (AICPP).AICPP is a Shariah Compliant Allocation Plan under the Atlas IslamicFund of Funds and primarily aims to earn a potentially high returnthrough dynamic asset allocation between Shariah Compliant Equities(Atlas Islamic Dedicated Stock Fund), Shariah Compliant Income (AtlasIslamic Income Fund) based Collective Investment Schemes andShariah Compliant saving Accounts & Term Deposits, while aiming toprovide capital preservation upon maturity of the allocation plan.AIFoF was launched on January 07, 2019. AICPP’s return sinceinception stands at -2.40%.Fee ScheduleManagement Fee is Up to 1%* ,Front End Load is Up to 2% **Back End Load is 2.5% on CPPI **** No Management fee in case of investment is made in CIS of AAML.However, management fee of 1% of average annual net assets in caseinvestment is made in Cash/ Near Cash instruments, savings and termdeposits made with Islamic banks or Islamic banking windows ofcommercial banks.** On amount less than or equal to Rs.25 million. However, in casewhere transaction are done online or through a website, themaximum front-end load will be up to 1.5%.*** Back-end Load shall be charged to the CPPI base plan.BenchmarkThe performance benchmark of Plan will be the weighted averagereturn of KMI-30 Index, and Six months average deposit rates of three(3) A rated Islamic Banks or Islamic windows of conventional banks as

selected by MUFAP based on the actual proportion of investment inEquity, Income schemes and bank deposit made by the respectiveallocation Plan.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite is Rs.100Million per Fund that is the minimum regulatory requirement to start afund.Internal DispersionSince number of Portfolios in the composite is only one at the moment(less than five) therefore calculation of internal dispersion is not required.Ex-Post Standard DeviationThe three year annualized ex-post standard deviation of the compositeand Benchmark is not presented because 36 monthly returns are not yetavailableKey AssumptionsFollowing are the key assumptions used in portfolio valuation:Financial InstrumentsAll financial assets and financial liabilities are recognized at the time whenthe Fund becomes a party to the contractual provisions of theinstrument. Financial assets are derecognized when the contractual rightsto receive cash flows related to the asset expire. Financial liabilities arederecognized when they are extinguished, that is, when the obligationspecified in the contract is discharged, cancelled, or expires. Any gain orloss on derecognition of the financial assets and financial liabilities istaken to income currentlyRevenue RecognitionIncome on PLS accounts is recognized on an accrual basis. Dividendincome is recognized when the right to receive the dividend isestablished. Gain or loss on sale of equity securities is accounted for inthe period in which it arises.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML, itsManagement Company.Taxationa) Under the provisions of Clause 99 of Part 1 of the Second Schedule tothe Income Tax Ordinance, 2001, any income derived by the mutual fundshall be exempt from tax, if not less than ninety percent of its accountingincome of that year, as reduced by capital gains whether realized orunrealized, is distributed as cash dividend amongst the unit or certificateholders or shareholders as the case may be.b) Under the provisions of Clause 47 (B) of Part 4 of the Second Scheduleto the Income Tax Ordinance, 2001, the Fund’s income namely, dividend,profit on government securities, return on deposits/certificates ofinvestment with banks/financial institutions, profits from money markettransactions, profit from Profit or Loss sharing accounts with banks of theFund will not be subject to any withholding tax.c) Under the provisions of Clause 100(B) sub-section (2) of Income TaxOrdinance, 2001, mutual funds are exempt from capital gains tax.


APF Equity Sub Fund Composite

APF Debt Sub Fund Composite

APF Money Market Sub Fund Composite

APIF Equity Sub Fund Composite

APIF Debt Sub Fund Composite

APIF Money Market Sub Fund Composite

APF Equity Sub Fund is a constituent of Atlas Pension Fund (APF). APFserves as a primary savings vehicle for retirement savings (i.e. pensionsavings) for individuals and is created as a Pension Fund under theVoluntary Pension System Rules 2005 having an umbrella structurecomposed of numerous Sub-Funds in the form of unit trust schemesunder its wing, where contributions received from the participantsshall be allocated in accordance with the allocation scheme selectedby the participants.Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, SECPFee, Federal Excise Duty, Sindh Sales Tax, WWF and other levies).Performance data does not include the cost incurred directly by aninvestor in the form of sales load.Fee ScheduleManagement Fee is 1.5% of Average Annual Net Assets. There is adiscretionary 3.0% Front-end load and no Back-end load.BenchmarkThe Commission, under the Voluntary Pension System Rules 2005,shall measure performance of Pension Fund Manager by usingspecified benchmark to take corrective measures for VoluntaryPension Schemes as may be considered necessary by the Commissionwhere the investment return are found to be consistently below thespecified benchmark, as measured on a three years rolling averagebasis.For this purpose, the index of the weighted average investmentreturn of all sub-funds for all Pension Fund Managers shall becalculated by the Commission within ninety days of the end of eachfinancial year.The benchmark for the investment performance of APF Equity SubFund shall be the return of the index (as stated above) less 500 basispoints.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Significant Eventsa) The Finance Act, 2008 had introduced an amendment to theWorkers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a resultof which it was construed that all Collective Investment Schemes(CISs)/mutual funds whose income exceeded Rs 0.5 million in a tax


25

Creation Date Reporting Currency

July 01, 2012 Pak Rupees

APF EQUITY SUB FUND COMPOSITE

PeriodTotal Net

Return

Total Composite Assets at

end of Period (mn)


Assets

Total Assets of the Firm at

the end of Period (mn)

FY19 -17.21% 392 1.4% 27,279

FY18 -2.97% 405 1.3% 31,260

FY17 28.72% 435 1.4% 30,252

FY16 4.50% 321 1.6% 20,137

FY15 21.13% 280 1.5% 18,169

FY14 35.30% 199 1.4% 13,812

FY13 52.48% 111 1.1% 9,749

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionThe Investment Objective of APF Equity Sub-Fund is to earn returnsfrom investments in Pakistani Equity Markets. It shall invest primarilyin equity securities, with at least ninety percent (90%) of net assetsshall remain invested in listed equity securities during the year basedon quarterly average investment calculated on a daily basis. Currentlythe composite comprises of one portfolio i.e. APF Equity Sub Fund.APF Equity Sub Fund was launched on July 01, 2007. APF Equity SubFund return and Compound Annual Growth Rate (CAGR) sinceinception stands at 311.97% and 12.51%, respectively. Particulars ofAPF Equity Sub Fund performance since launch of fund are as below:


FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

APF Equity 0.96% -17.31% 20.71% 29.73% 16.72% 52.48% 35.30% 21.13% 4.50% 28.72% -2.97% -17.21%

CAGR 0.95% -8.60% 0.26% 6.91% 8.80% 15.08% 17.77% 18.18% 16.58% 17.73% 15.68% 12.51%

-18.00%

-8.00%

2.00%

12.00%

22.00%

32.00%

42.00%

52.00%

The above decisions were communicated to the SECP and thePakistan Stock Exchange Limited on 12 January 2017 and the SECPvide its letter dated 1 February 2017 has advised MUFAP that theadjustments relating to the above should be prospective andsupported by adequate disclosures in the financial statements of theCISs/mutual funds. Accordingly, on 12 January 2017 the provision forWWF was reversed and the provision for SWWF was made for theperiod from 21 May 2015 to 12 January 2017. Thereafter, theprovision is being made on a daily basis going forward. Up till June 30,2019, a sum of Rs. 2.5 million (Rs.2.68 per unit) has been provided forSWWF from APF Equity Sub Fund.b) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies (AMC’s)with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC) jointlyby various AMC`s, challenging the levy of FED. In a separate petitionthe Honorable Sindh High Court declared that the FED wasunconstitutional and cannot be charged where provinces arecollecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further, viaFinance Act 2016, the FED has been withdrawn from July 1, 2016. Inthe meantime, as a matter of abundant caution, the Scheme hasprovided for FED liability which amounted to Rs.1.5 million up till June30, 2016.c) As per Clause 47(B) of part IV of the Second Schedule to the IncomeTax Ordinance, 2001, payments made to collective investmentschemes (CISs) are exempt from withholding tax under section 151.However, during the year ended June 30, 2016, several Companies(including banks) deducted withholding tax on profit on bank depositspaid to the Funds based on the interpretation issued by FBR videletter C. no. 1(43)DG (WHT)/2008-VOL.II-66417-R dated May 12, 2015which requires every withholding agent to withhold income tax atapplicable rates in case a valid exemption certificate under section159(1) issued by the concerned Commissioner of Inland Revenue (CIR)is not produced by the withholdee. The amount of tax withheldduring the year on dividend and profit on bank deposits aggregates toRs.0.8 million.For this purpose, the Mutual Funds Association of Pakistan (MUFAP)on behalf of various mutual funds (including the Funds beingmanaged by the Management Company) had filed a petition in theHonorable Sindh High Court (SHC) challenging the above mentionedinterpretation of the Federal Board of Revenue (FBR) which wasdecided by the SHC in favor of FBR. On January 28, 2016, the Board ofDirectors of the Management Company passed a resolution bycirculation, authorizing all CISs to file an appeal in the HonorableSupreme Court through their Trustees, to direct all persons beingwithholding agents, including share registrars and banks to observethe provisions of clause 47B of Part IV of the Second Schedule to theIncome Tax Ordinance, 2001 without imposing any conditions at thetime of making any payment to the CISs being managed by theManagement Company. Accordingly, a petition was filed in theSupreme Court of Pakistan by the Funds together with other CISs(managed by the Management Company and other AssetManagement Companies) whereby the Supreme Court granted thepetitioners leave to appeal from the initial judgement of the SHC.Pending decision of the case tax withheld is considered “Receivable”as it is refundable by FBR.

year were brought within the scope of the WWF Ordinance, thusrendering them liable to pay contribution to WWF at the rate of twopercent of their accounting or taxable income, whichever was higher.In light of this, the Mutual Funds Association of Pakistan (MUFAP) fileda constitutional petition in the Honorable Sindh High Court (SHC)challenging the applicability of WWF on CISs which is pendingadjudication. In view of the pending decision, the ManagementCompany, as a matter of abundant caution, has maintained theprovision for WWF amounting to Rs.3.2 million as at June 30, 2016.The Finance Act, 2015 has excluded Mutual Funds and CollectiveInvestment Schemes from the definition of 'industrial establishment'subject to WWF under WWF Ordinance, 1971. Therefore, AAML hasnot provided for WWF w.e.f. July 01, 2015.On November 10, 2016 the Supreme Court of Pakistan (SCP) haspassed a judgment declaring the amendments made in the FinanceActs 2006 and 2008 pertaining to WWF as illegal citing that WWF wasnot in the nature of tax and could, therefore, not have beenintroduced through money bills. Accordingly, the aforesaidamendments have been struck down by the SCP. The Federal Board ofRevenue has filed a petition in the SCP against the said judgment,which is pending hearing. While the petitions filed by the CISs on thematter are still pending before the SHC, the Mutual Funds Associationof Pakistan (MUFAP) (collectively on behalf of the asset managementcompanies and their CISs) has taken legal and tax opinions on theimpact of the SCP judgement on the CISs petition before the SHC. Bothlegal and tax advisors consulted were of the view that the judgmenthas removed the very basis on which the demands were raised againstthe CISs. Therefore, there was no longer any liability against the CISsunder the WWF Ordinance and that all cases pending in the SHC orlower appellate forums will now be disposed of in light of the earlierjudgement of the SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the government ofSindh as a result of which every industrial establishment located in theProvince of Sindh, the total income of which in any accounting year isnot less than Rs.0.50 million, is required to pay Sindh Workers’Welfare Fund (SWWF) in respect of that year a sum equal to twopercent of such income. The matter was taken up by the MUFAP withthe Sindh Revenue Board (SRB) collectively on behalf of various assetmanagement companies and their CISs whereby it was contested thatmutual funds should be excluded from the ambit of the SWWF Act asthese were not industrial establishments but were pass throughinvestment vehicles and did not employ workers. The SRB held thatmutual funds were included in the definition of financial institutionsas per the Financial Institution (Recovery of Finances) Ordinance, 2001and were, hence, required to register and pay SWWF under the SWWFAct. Thereafter, MUFAP has taken up the matter with the SindhFinance Ministry to have CISs/mutual funds excluded from theapplicability of SWWF.In view of the above developments regarding the applicability of WWFand SWWF on CISs/mutual funds, MUFAP has recommended thefollowing to all its members on 12 January 2017:- based on legal opinion, the entire provision against WWF held by theCISs till 30 June 2015 should be reversed on 12 January 2017; and- as a matter of abundant caution, the provision in respect of SWWFshould be made with effect from the date of enactment of the SWWFAct, 2014 (i.e. starting from 21 May 2015) on 12 January 2017.

26



27


Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite is Rs.50Million per Sub Fund for a minimum period of three years or as maybe determined by the Commission, that is the minimum regulatoryrequirement to start a sub fund. The Commission maymodify this requirement provided that the company registered asPension Fund Manager has adequate solvency margin and trackrecord for the last three years of the annual return on the funds beingmanaged by the said company.Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internal dispersion isnot required.Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite is as follows:


Period Composite

FY19 18.37%

FY18 17.31%

FY17 18.71%

FY16 17.72%

FY15 17.02%

FY14 16.32%

FY13 17.38%

FY12 18.34%

FY11 30.56%

FY10 31.00%

Revenue RecognitionIncome on PLS accounts is recognized on an accrual basis. Dividendincome is recognized when the right to receive the dividend isestablished. Gain or loss on sale of equity securities is accounted for inthe period in which it arises.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML, itsManagement Company.Taxationa) As provided in Clause 57 (3) (viii) of the Part 1 of the 2nd Schedule ofthe Income Tax Ordinance, 2001, the income of APF Equity Sub FundComposite is exempt from tax.b) Under the provisions of Clause 47 (B) of Part 4 of the Second Scheduleto the Income Tax Ordinance, 2001, the Pension Fund’s income namely,dividend, profit on government securities, return ondeposits/certificates of investment with banks/financial institutions,profits from money market transactions, profit from Profit or Losssharing accounts with banks of the Pension Fund will not be subject toany withholding tax.

APF Debt Sub Fund is a constituent of Atlas Pension Fund (APF). APFserves as a primary savings vehicle for retirement savings (i.e. pensionsavings) for individuals and is created as a Pension Fund under theVoluntary Pension System Rules 2005 having an umbrella structurecomposed of numerous Sub-Funds in the form of unit trust schemesunder its wing, where contributions received from the participantsshall be allocated in accordance with the allocation scheme selectedby the participants.Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, SECPFee, Federal Excise Duty, Sindh Sales Tax, WWF and other levies).Performance data does not include the cost incurred directly by aninvestor in the form of sales load.Fee ScheduleManagement Fee is 0.75% of Average Annual Net Assets. There is adiscretionary 3.0% Front-end load and no Back-end load.BenchmarkThe Commission, under the Voluntary Pension System Rules 2005,shall measure performance of Pension Fund Manager by usingspecified benchmark to take corrective measures for VoluntaryPension Schemes as may be considered necessary by the Commissionwhere the investment return are found to be consistently below thespecified benchmark, as measured on a three years rolling averagebasis.For this purpose, the index of the weighted average investmentreturn of all sub-funds for all Pension Fund Managers shall becalculated by the Commission within ninety days of the end of eachfinancial year.The benchmark for the investment performance of APF Debt SubFund shall be the return of the index (as stated above) less 200 basispoints.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Significant Eventsa) The Debt securities held by Collective Investment Schemesmanaged by AAML were re-priced during the year 2008-09 on


28



APF DEBT SUB FUND COMPOSITE

PeriodTotal Net

Return


end of Period (mn)


Assets



FY19 7.17% 382 1.4% 27,279

FY18 4.96% 379 1.2% 31,260

FY17 5.24% 365 1.2% 30,252

FY16 7.88% 310 1.5% 20,137

FY15 13.03% 263 1.4% 18,169

FY14 7.83% 193 1.4% 13,812

FY13 8.47% 128 1.3% 9,749

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionThe investment objective of APF Debt Sub-Fund is to earn returnsfrom investments in debt markets of Pakistan, thus incurring arelatively lower risk than equity investments. APF Debt Sub FundComposite shall invest primarily in tradable debt securities with theweighted average duration of the investment portfolio not exceedingfive years. Currently the composite comprises of one portfolio i.e.APF Debt Sub Fund. APF Debt Sub Fund was launched on July 01,2007. APF Debt Sub Fund return and Compound Annual Growth Rate(CAGR) since inception stands at 160.75% and 8.30%, respectively.Particulars of APF Debt Sub Fund performance since launch of fundare as below:



APF Debt 7.50% 9.07% 8.98% 9.64% 10.16% 8.47% 7.83% 13.03% 7.88% 5.24% 4.96% 7.17%

CAGR 7.50% 8.28% 8.51% 8.79% 9.06% 8.96% 8.80% 9.32% 9.16% 8.76% 8.41% 8.30%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

SECP directive issued on November 05, 2008, applicable on mutualfunds. The Directive enforced re-pricing of debt securities, due toabsence of liquidity and price discovery in the debt market, byapplying discount rates varying from 5% in case of AAA ratedinstruments to 30% for BBB rated and below. On 6 January 2009 theSECP issued Circular No. 1 of 2009 titled “Valuation of debt securitiesand provisioning criteria for non-performing debt securities.” ThisCircular stipulated that from 10 January 2009, the pricing would bedetermined through a market price methodology as compiled byMutual Fund Association of Pakistan (MUFAP). The valuation criteriatakes into consideration a number of factors, such as “trading”, “thinlytrading” and “non-trading” status of the debt securities, rating andcash flows, besides liquidity factors.b) The Finance Act, 2008 had introduced an amendment to theWorkers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a resultof which it was construed that all Collective Investment Schemes(CISs) / mutual funds whose income exceeded Rs 0.5 million in a taxyear were brought within the scope of the WWF Ordinance, thusrendering them liable to pay contribution to WWF at the rate of twopercent of their accounting or taxable income, whichever was higher.In light of this, the Mutual Funds Association of Pakistan (MUFAP) fileda constitutional petition in the Honorable Sindh High Court (SHC)challenging the applicability of WWF on CISs which is pendingadjudication. In view of the pending decision, the ManagementCompany, as a matter of abundant caution, has maintained theprovision for WWF amounting to Rs.1.6 million as at June 30, 2016.The Finance Act, 2015 has excluded Mutual Funds and CollectiveInvestment Schemes from the definition of 'industrial establishment'subject to WWF under WWF Ordinance, 1971. Therefore, AAML hasnot provided for WWF w.e.f. July 01, 2015.On November 10, 2016 the Supreme Court of Pakistan (SCP) haspassed a judgment declaring the amendments made in the FinanceActs 2006 and 2008 pertaining to WWF as illegal citing that WWF wasnot in the nature of tax and could, therefore, not have beenintroduced through money bills. Accordingly, the aforesaidamendments have been struck down by the SCP. The Federal Board ofRevenue has filed a petition in the SCP against the said judgment,which is pending hearing. While the petitions filed by the CISs on thematter are still pending before the SHC, the Mutual Funds Associationof Pakistan (MUFAP) (collectively on behalf of the asset managementcompanies and their CISs) has taken legal and tax opinions on theimpact of the SCP judgement on the CISs petition before the SHC. Bothlegal and tax advisors consulted were of the view that the judgmenthas removed the very basis on which the demands were raised againstthe CISs. Therefore, there was no longer any liability against the CISsunder the WWF Ordinance and that all cases pending in the SHC orlower appellate forums will now be disposed of in light of the earlierjudgement of the SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the government ofSindh as a result of which every industrial establishment located in theProvince of Sindh, the total income of which in any accounting year isnot less than Rs 0.50 million, is required to pay Sindh Workers’Welfare Fund (SWWF) in respect of that year a sum equal to twopercent of such income. The matter was taken up by the MUFAP withthe Sindh Revenue Board (SRB) collectively on behalf of various assetmanagement companies and their CISs whereby it was contested thatmutual funds should be excluded from the ambit of the SWWF Act as thesewere not industrial establishments but were pass through investmentvehicles and did not employ workers. The SRB held that mutual funds wereincluded in the definition of financial institutions as per the Financial

Institution (Recovery of Finances) Ordinance, 2001 and were, hence,required to register and pay SWWF under the SWWF Act.

Thereafter, MUFAP has taken up the matter with the Sindh FinanceMinistry to have CISs / mutual funds excluded from the applicabilityof SWWF.In view of the above developments regarding the applicability ofWWF and SWWF on CISs / mutual funds, MUFAP has recommendedthe following to all its members on 12 January 2017:- based on legal opinion, the entire provision against WWF held by theCISs till 30 June 2015 should be reversed on 12 January 2017; and- as a matter of abundant caution, the provision in respect of SWWFshould be made with effect from the date of enactment of the SWWFAct, 2014 (i.e. starting from 21 May 2015) on 12 January 2017.The above decisions were communicated to the SECP and thePakistan Stock Exchange Limited on 12 January 2017 and the SECPvide its letter dated 1 February 2017 has advised MUFAP that theadjustments relating to the above should be prospective andsupported by adequate disclosures in the financial statements of theCISs/ mutual funds. Accordingly, on 12 January 2017 the provision forWWF was reversed and the provision for SWWF was made for theperiod from 21 May 2015 to 12 January 2017. Thereafter, theprovision is being made on a daily basis going forward. Up till June 30,2019, a sum of Rs. 1.9 million (Rs. 1.28 per unit) has been provided forSWWF from APF Debt Sub Fund.c) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies (AMC’s)with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC) jointlyby various AMC`s, challenging the levy of FED. In a separate petitionthe Honorable Sindh High Court declared that the FED wasunconstitutional and cannot be charged where provinces arecollecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further, viaFinance Act 2016, the FED has been withdrawn from July 1, 2016. Inthe meantime, as a matter of abundant caution, the Scheme hasprovided for FED liability which amounted to Rs.1.1 million up till June30, 2016.d) As per Clause 47(B) of part IV of the Second Schedule to the IncomeTax Ordinance, 2001, payments made to collective investmentschemes (CISs) are exempt from withholding tax under section 151.However, during the year ended June 30, 2016, several Companies(including banks) deducted withholding tax on profit on bank depositspaid to the Funds based on the interpretation issued by FBR videletter C. no. 1(43)DG (WHT)/2008-VOL.II-66417-R dated May 12, 2015which requires every withholding agent to withhold income tax atapplicable rates in case a valid exemption certificate under section159(1) issued by the concerned Commissioner of Inland Revenue (CIR)is not produced by the withholder. The amount of tax withheld duringthe year on profit on bank deposits and debt securities aggregates toRs.0.6 million.For this purpose, the Mutual Funds Association of Pakistan (MUFAP)on behalf of various mutual funds (including the Funds beingmanaged by the Management Company) had filed a petition in theHonorable Sindh High Court (SHC) challenging the above mentionedinterpretation of the Federal Board of Revenue (FBR) which wasdecided by the SHC in favor of FBR. On January 28, 2016, the Board ofDirectors of the Management Company passed a resolution bycirculation, authorizing all CISs to file an appeal in the HonorableSupreme Court through their Trustees, to direct all persons beingwithholding agents, including share registrars and banks to observethe provisions of clause 47B of Part IV of the Second Schedule to theIncome Tax Ordinance, 2001 without imposing any conditions at thetime of making any payment to the CISs being managed by theManagement Company. Accordingly, a petition was filed in theSupreme Court of Pakistan by the Funds together with other CISs(managed by the Management Company and other Asset

29



Management Companies) whereby the Supreme Court granted thepetitioners leave to appeal from the initial judgement of the SHC.Pending decision of the case tax withheld is considered “Receivable”as it is refundable by FBR.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite is Rs.50Million per Sub Fund for a minimum period of three years or as maybe determined by the Commission, that is the minimum regulatoryrequirement to start a sub fund. The Commission may modify thisrequirement provided that the company registered as Pension FundManager has adequate solvency margin and track record for the lastthree years of the annual return on the funds being managed by thesaid company.Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internal dispersion isnot required.Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite is as follows:

Subjective Unobservable InputsAtlas Asset Management Limited uses subjective unobservable inputsfor valuing some of its debt instruments like Term FinanceCertificates/Sukuks. The criteria used for valuation is in accordancewith the guidelines issued by Regulator through Circular 1 of 2009 (asamended from time to time) and unobservable inputs are disclosedthrough "Provisioning Policy" on the website of the Company.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML, itsManagement Company.Taxationa) As provided in Clause 57 (3) (viii) of the Part 1 of the 2nd Scheduleof the Income Tax Ordinance, 2001, the income of APF Debt Sub FundComposite is exempt from tax.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Pension Fund’sincome namely, dividend, profit on government securities, return ondeposits/certificates of investment with banks/ financial institutions,profits from money market transactions, profit from Profit or Losssharing accounts with banks of the Pension Fund will not be subject toany withholding tax.

30


Compliant Report –June 30, 2019

Period Composite

FY19 0.75%

FY18 0.79%

FY17 1.63%

FY16 1.74%

FY15 1.65%

FY14 1.07%

FY13 1.46%

FY12 1.72%

FY11 1.80%

FY10 1.19%

Key AssumptionsFollowing are the key assumptions used in portfolio valuation:Financial InstrumentsAll financial assets and financial liabilities are recognized at the timewhen the Fund becomes a party to the contractual provisions of theinstrument. Financial assets are derecognized when the contractualrights to receive cash flows related to the asset expire. Financialliabilities are derecognized when they are extinguished, that is, whenthe obligation specified in the contract is discharged, cancelled, orexpires. Any gain or loss on derecognition of the financial assets andfinancial liabilities is taken to income currently.Revenue RecognitionInterest income on government securities and other debt securities isrecognized using effective interest method at the rate of returnimplicit in the instrument. Interest income on bank balances,placements and deposits is recognized on an accrual basis. However,recognition of income on non-performing placements / deposits andsecurities is suspended in accordance with the SECP‘s Circular 1 of2009 and the Fund's provisioning policy. Gain or loss on sale ofgovernment securities and other debt securities and derivatives isaccounted for in the period in which it arises.

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionThe Investment Objective of APF Money Market Sub-Fund is to earnreturns from investments in Money Markets of Pakistan, thusincurring a relatively lower risk than debt investments. APF MoneyMarket Sub Fund Composite shall invest primarily in short term debtsecurities with the weighted average time to maturity of net assetsnot exceeding ninety days. Currently the composite comprises of oneportfolio i.e. APF Money Market Sub Fund. APF Money Market SubFund was launched on July 01, 2007. APF Money Market Sub Fundreturn and Compound Annual Growth Rate (CAGR) since inceptionstands at 153.33% and 8.04%, respectively. Particulars of APF MoneyMarket Sub Fund performance since launch of fund are as below:

APF Money Market Sub Fund is a constituent of Atlas Pension Fund(APF). APF serves as a primary savings vehicle for retirement savings(i.e. pension savings) for individuals and is created as a Pension Fundunder the Voluntary Pension System Rules 2005 having an umbrellastructure composed of numerous Sub-Funds in the form of unit trustschemes under its wing, where contributions received from theparticipants shall be allocated in accordance with the allocationscheme selected by the participants.Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, SECPFee, Federal Excise Duty, Sindh Sales Tax, WWF and other levies).Performance data does not include the cost incurred directly by aninvestor in the form of sales load.Fee ScheduleManagement Fee is 0.50% of Average Annual Net Assets. There is adiscretionary 3.0% Front-end load and no Back-end load.BenchmarkThe Commission, under the Voluntary Pension System Rules 2005,shall measure performance of Pension Fund Manager by usingspecified benchmark to take corrective measures for VoluntaryPension Schemes as may be considered necessary by the Commissionwhere the investment return are found to be consistently below thespecified benchmark, as measured on a three years rolling averagebasis.For this purpose, the index of the weighted average investmentreturn of all sub-funds for all Pension Fund Managers shall becalculated by the Commission within ninety days of the end of eachfinancial year.The benchmark for the investment performance of APF MoneyMarket Sub Fund shall be the return of the index (as stated above)less 150 basis points.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Significant Eventsa) The Finance Act, 2008 had introduced an amendment to theWorkers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a


31



APF MONEY MARKET SUB FUND COMPOSITE

PeriodTotal Net

Return


end of Period (mn)


Assets



FY19 8.64% 360 1.3% 27,279

FY18 5.36% 269 0.9% 31,260

FY17 5.53% 242 0.8% 30,252

FY16 5.74% 240 1.2% 20,137

FY15 7.93% 198 1.1% 18,169

FY14 7.59% 155 1.1% 13,812

FY13 8.15% 107 1.0% 9,749



APF Money Market 7.24% 9.91% 9.51% 10.80% 10.35% 8.15% 7.59% 7.93% 5.74% 5.53% 5.36% 8.64%

CAGR 7.24% 8.56% 8.88% 9.35% 9.55% 9.31% 9.07% 8.92% 8.56% 8.26% 7.99% 8.04%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

relating to the above should be prospective and supported byadequate disclosures in the financial statements of the CISs/ mutualfunds. Accordingly, on 12 January 2017 the provision for WWF wasreversed and the provision for SWWF was made for the period from21 May 2015 to 12 January 2017. Thereafter, the provision is beingmade on a daily basis going forward. Up till June 30, 2019, a sum of Rs1.3 million (Rs. 0.93 per unit) has been provided for SWWF from APFMoney Market Sub Fund.b) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies (AMC’s)with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC) jointlyby various AMC`s, challenging the levy of FED. In a separate petitionthe Honorable Sindh High Court declared that the FED wasunconstitutional and cannot be charged where provinces arecollecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further, viaFinance Act 2016, the FED has been withdrawn from July 1, 2016. Inthe meantime, as a matter of abundant caution, the Scheme hasprovided for FED liability which amounted to Rs.0.7 million up till June30, 2016.c) As per Clause 47(B) of part IV of the Second Schedule to the IncomeTax Ordinance, 2001, payments made to collective investmentschemes (CISs) are exempt from withholding tax under section 151.However, during the year ended June 30, 2016, several Companies(including banks) deducted withholding tax on profit on bank depositspaid to the Funds based on the interpretation issued by FBR videletter C. no. 1(43)DG (WHT)/2008-VOL.II-66417-R dated May 12, 2015which requires every withholding agent to withhold income tax atapplicable rates in case a valid exemption certificate under section159(1) issued by the concerned Commissioner of Inland Revenue (CIR)is not produced by the withholdee. The amount of tax withheldduring the year on profit on bank deposits and debt securitiesaggregates to Rs.0.12 million.For this purpose, the Mutual Funds Association of Pakistan (MUFAP)on behalf of various mutual funds (including the Funds beingmanaged by the Management Company) had filed a petition in theHonorable Sindh High Court (SHC) challenging the above mentionedinterpretation of the Federal Board of Revenue (FBR) which wasdecided by the SHC in favor of FBR. On January 28, 2016, the Board ofDirectors of the Management Company passed a resolution bycirculation, authorizing all CISs to file an appeal in the HonorableSupreme Court through their Trustees, to direct all persons beingwithholding agents, including share registrars and banks to observethe provisions of clause 47B of Part IV of the Second Schedule to theIncome Tax Ordinance, 2001 without imposing any conditions at thetime of making any payment to the CISs being managed by theManagement Company. Accordingly, a petition was filed in theSupreme Court of Pakistan by the Funds together with other CISs(managed by the Management Company and other AssetManagement Companies) whereby the Supreme Court granted thepetitioners leave to appeal from the initial judgement of the SHC.Pending decision of the case tax withheld is considered “Receivable”as it is refundable by FBR.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite is Rs.50Million per Sub Fund for a minimum period of three years or as maybe determined by the Commission, that is the minimum regulatoryrequirement to start a sub fund. The Commission may modify thisrequirement provided that the company registered as Pension FundManager has adequate solvency margin and track record for the last

result of which it was construed that all Collective InvestmentSchemes (CISs) / mutual funds whose income exceeded Rs 0.5 millionin a tax year were brought within the scope of the WWF Ordinance,thus rendering them liable to pay contribution to WWF at the rate oftwo percent of their accounting or taxable income, whichever washigher. In light of this, the Mutual Funds Association of Pakistan(MUFAP) filed a constitutional petition in the Honorable Sindh HighCourt (SHC) challenging the applicability of WWF on CISs which ispending adjudication. In view of the pending decision, theManagement Company, as a matter of abundant caution, hasmaintained the provision for WWF amounting to Rs.1.1 million as atJune 30, 2016. The Finance Act, 2015 has excluded Mutual Funds andCollective Investment Schemes from the definition of 'industrialestablishment' subject to WWF under WWF Ordinance, 1971.Therefore, AAML has not provided for WWF w.e.f. July 01, 2015.On November 10, 2016 the Supreme Court of Pakistan (SCP) haspassed a judgment declaring the amendments made in the FinanceActs 2006 and 2008 pertaining to WWF as illegal citing that WWF wasnot in the nature of tax and could, therefore, not have beenintroduced through money bills. Accordingly, the aforesaidamendments have been struck down by the SCP. The Federal Board ofRevenue has filed a petition in the SCP against the said judgment,which is pending hearing. While the petitions filed by the CISs on thematter are still pending before the SHC, the Mutual Funds Associationof Pakistan (MUFAP) (collectively on behalf of the asset managementcompanies and their CISs) has taken legal and tax opinions on theimpact of the SCP judgement on the CISs petition before the SHC. Bothlegal and tax advisors consulted were of the view that the judgmenthas removed the very basis on which the demands were raised againstthe CISs. Therefore, there was no longer any liability against the CISsunder the WWF Ordinance and that all cases pending in the SHC orlower appellate forums will now be disposed of in light of the earlierjudgement of the SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the government ofSindh as a result of which every industrial establishment located in theProvince of Sindh, the total income of which in any accounting year isnot less than Rs 0.50 million, is required to pay Sindh Workers’Welfare Fund (SWWF) in respect of that year a sum equal to twopercent of such income. The matter was taken up by the MUFAP withthe Sindh Revenue Board (SRB) collectively on behalf of various assetmanagement companies and their CISs whereby it was contested thatmutual funds should be excluded from the ambit of the SWWF Act asthese were not industrial establishments but were pass throughinvestment vehicles and did not employ workers. The SRB held thatmutual funds were included in the definition of financial institutionsas per the Financial Institution (Recovery of Finances) Ordinance, 2001and were, hence, required to register and pay SWWF under the SWWFAct. Thereafter, MUFAP has taken up the matter with the SindhFinance Ministry to have CISs / mutual funds excluded from theapplicability of SWWF.In view of the above developments regarding the applicability of WWFand SWWF on CISs / mutual funds, MUFAP has recommended thefollowing to all its members on 12 January 2017:

- based on legal opinion, the entire provision against WWF held by theCISs till 30 June 2015 should be reversed on 12 January 2017; and- as a matter of abundant caution, the provision in respect of SWWFshould be made with effect from the date of enactment of the SWWFAct, 2014 (i.e. starting from 21 May 2015) on 12 January 2017.The above decisions were communicated to the SECP and the PakistanStock Exchange Limited on 12 January 2017 and the SECP vide its letterdated 1 February 2017 has advised MUFAP that the adjustments

32



three years of the annual return on the funds being managed by thesaid company.Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internal dispersion isnot required.Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite is as follows:

33



Period Composite

FY19 0.51%

FY18 0.22%

FY17 0.43%

FY16 0.38%

FY15 0.36%

FY14 0.45%

FY13 0.45%

FY12 0.34%

FY11 0.36%

FY10 0.45%

Key AssumptionsFollowing are the key assumptions used in portfolio valuation:Financial InstrumentsAll financial assets and financial liabilities are recognized at the timewhen the Fund becomes a party to the contractual provisions of theinstrument. Financial assets are derecognized when the contractualrights to receive cash flows related to the asset expire. Financialliabilities are derecognized when they are extinguished, that is, whenthe obligation specified in the contract is discharged, cancelled, orexpires. Any gain or loss on derecognition of the financial assets andfinancial liabilities is taken to income currently.Revenue RecognitionInterest income on government securities is recognized usingeffective interest method at the rate of return implicit in theinstrument. Interest income on bank balances, placements anddeposits is recognized on an accrual basis. Gain or loss on sale ofgovernment securities is accounted for in the period in which itarises.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML,its Management Company.Taxationa) As provided in Clause 57 (3) (viii) of the Part 1 of the 2nd Scheduleof the Income Tax Ordinance, 2001, the income of APF MoneyMarket Sub Fund Composite is exempt from tax.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Pension Fund’sincome namely, dividend, profit on government securities, return ondeposits/ certificates of investment with banks/ financialinstitutions, profits from money market transactions, profit fromProfit or Loss sharing accounts with banks of the Pension Fund willnot be subject to any withholding tax.


34



APIF EQUITY SUB FUND COMPOSITE

PeriodTotal Net

Return


end of Period (mn)


Assets



FY19 -19.14% 387 1.4% 27,279

FY18 -9.54% 411 1.3% 31,260

FY17 28.29% 403 1.3% 30,252

FY16 4.99% 312 1.5% 20,137

FY15 24.32% 289 1.6% 18,169

FY14 24.88% 208 1.5% 13,812

FY13 49.02% 135 1.3% 9,749

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on December 28, 2018).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionThe Investment Objective of APIF Equity Sub-Fund is to earn returnsfrom investments in Pakistani Equity Markets. APIF Equity Sub FundComposite invests primarily in equity securities (as approved by theShariah Advisor) with at least ninety percent (90%) of net assets shallremain invested in listed equity securities during the year based onquarterly average investment calculated on a daily basis. Currently thecomposite comprises of one portfolio i.e. APIF Equity Sub Fund. APIFEquity Sub Fund was launched on November 06, 2007. APIF Equity SubFund return and Compound Annual Growth Rate (CAGR) sinceinception stands at 389.33% and 14.60%, respectively. Particulars ofAPIF Equity Sub Fund performance since launch of fund are as below:

APIF Equity Sub Fund is a constituent of Atlas Pension Islamic Fund(APIF). APIF serves as a Shariah Compliant primary savings vehicle forretirement savings (i.e. pension savings) for individuals and is createdas a Pension Fund under the Voluntary Pension System Rules 2005having an umbrella structure composed of numerous Sub-Funds inthe form of unit trust schemes under its wing, where contributionsreceived from the participants shall be allocated in accordance withthe allocation scheme selected by the participants.Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, SECPFee, Federal Excise Duty, Sindh Sales Tax, WWF and other levies).Performance data does not include the cost incurred directly by aninvestor in the form of sales load.Fee ScheduleManagement Fee is 1.5% of Average Annual Net Assets. There is adiscretionary 3.0% Front-end load and no Back-end load.BenchmarkThe Commission, under the Voluntary Pension System Rules 2005,shall measure performance of Pension Fund Manager by usingspecified benchmark to take corrective measures for VoluntaryPension Schemes as may be considered necessary by the Commissionwhere the investment return are found to be consistently below thespecified benchmark, as measured on a three years rolling averagebasis.For this purpose, the index of the weighted average investmentreturn of all sub-funds for all Pension Fund Managers shall becalculated by the Commission within ninety days of the end of eachfinancial year.The benchmark for the investment performance of APIF Equity SubFund shall be the return of the index (as stated above) less 500 basispoints.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Significant Eventsa) The Finance Act, 2008 had introduced an amendment to theWorkers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a resultof which it was construed that all Collective Investment Schemes(CISs) / mutual funds whose income exceeded Rs 0.5 million in a tax* From November 06, 2007 to June 30, 2008


FY08* FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

APIF Equity -1.82% -1.88% 22.88% 39.45% 30.05% 49.02% 24.88% 24.32% 4.99% 28.29% -9.54% -19.14%

CAGR -2.79% -2.24% 6.57% 14.72% 17.85% 22.84% 23.15% 23.30% 21.02% 21.76% 18.41% 14.60%

-3.00%

7.00%

17.00%

27.00%

37.00%

47.00%

- as a matter of abundant caution, the provision in respect of SWWFshould be made with effect from the date of enactment of the SWWFAct, 2014 (i.e. starting from 21 May 2015) on 12 January 2017.The above decisions were communicated to the SECP and thePakistan Stock Exchange Limited on 12 January 2017 and the SECPvide its letter dated 1 February 2017 has advised MUFAP that theadjustments relating to the above should be prospective andsupported by adequate disclosures in the financial statements of theCISs/ mutual funds. Accordingly, on 12 January 2017 the provision forWWF was reversed and the provision for SWWF was made for theperiod from 21 May 2015 to 12 January 2017. Thereafter, theprovision is being made on a daily basis going forward. Up till June 30,2019, a sum of Rs. 2.4 million (Rs. 3.15 per unit) has been provided forSWWF from APIF Equity Sub Fund.c) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies (AMC’s)with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC) jointlyby various AMC`s, challenging the levy of FED. In a separate petitionthe Honorable Sindh High Court declared that the FED wasunconstitutional and cannot be charged where provinces arecollecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further, viaFinance Act 2016, the FED has been withdrawn from July 1, 2016. Inthe meantime, as a matter of abundant caution, the Scheme hasprovided for FED liability which amounted to Rs.1.6 million up till June30, 2016.d) As per Clause 47(B) of part IV of the Second Schedule to the IncomeTax Ordinance, 2001, payments made to collective investmentschemes (CISs) are exempt from withholding tax under section 151.However, during the year ended June 30, 2016, several Companies(including banks) deducted withholding tax on profit on bank depositspaid to the Funds based on the interpretation issued by FBR videletter C. no. 1(43)DG (WHT)/2008-VOL.II-66417-R dated May 12, 2015which requires every withholding agent to withhold income tax atapplicable rates in case a valid exemption certificate under section159(1) issued by the concerned Commissioner of Inland Revenue (CIR)is not produced by the withholdee. The amount of tax withheldduring the year on dividend and profit on bank deposits aggregates toRs.0.6 million.For this purpose, the Mutual Funds Association of Pakistan (MUFAP)on behalf of various mutual funds (including the Funds beingmanaged by the Management Company) had filed a petition in theHonorable Sindh High Court (SHC) challenging the above mentionedinterpretation of the Federal Board of Revenue (FBR) which wasdecided by the SHC in favor of FBR. On January 28, 2016, the Board ofDirectors of the Management Company passed a resolution bycirculation, authorizing all CISs to file an appeal in the HonorableSupreme Court through their Trustees, to direct all persons beingwithholding agents, including share registrars and banks to observethe provisions of clause 47B of Part IV of the Second Schedule to theIncome Tax Ordinance, 2001 without imposing any conditions at thetime of making any payment to the CISs being managed by theManagement Company.

year were brought within the scope of the WWF Ordinance, thusrendering them liable to pay contribution to WWF at the rate of twopercent of their accounting or taxable income, whichever was higher.In light of this, the Mutual Funds Association of Pakistan (MUFAP) fileda constitutional petition in the Honorable Sindh High Court (SHC)challenging the applicability of WWF on CISs which is pendingadjudication. In view of the pending decision, the ManagementCompany, as a matter of abundant caution, has maintained theprovision for WWF amounting to Rs.3.7 million as at June 30, 2016.The Finance Act, 2015 has excluded Mutual Funds and CollectiveInvestment Schemes from the definition of 'industrial establishment'subject to WWF under WWF Ordinance, 1971. Therefore, AAML hasnot provided for WWF w.e.f. July 01, 2015.On November 10, 2016 the Supreme Court of Pakistan (SCP) haspassed a judgment declaring the amendments made in the FinanceActs 2006 and 2008 pertaining to WWF as illegal citing that WWF wasnot in the nature of tax and could, therefore, not have beenintroduced through money bills. Accordingly, the aforesaidamendments have been struck down by the SCP. The Federal Board ofRevenue has filed a petition in the SCP against the said judgment,which is pending hearing. While the petitions filed by the CISs on thematter are still pending before the SHC, the Mutual Funds Associationof Pakistan (MUFAP) (collectively on behalf of the asset managementcompanies and their CISs) has taken legal and tax opinions on theimpact of the SCP judgement on the CISs petition before the SHC. Bothlegal and tax advisors consulted were of the view that the judgmenthas removed the very basis on which the demands were raised againstthe CISs. Therefore, there was no longer any liability against the CISsunder the WWF Ordinance and that all cases pending in the SHC orlower appellate forums will now be disposed of in light of the earlierjudgement of the SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the government ofSindh as a result of which every industrial establishment located in theProvince of Sindh, the total income of which in any accounting year isnot less than Rs 0.50 million, is required to pay Sindh Workers’Welfare Fund (SWWF) in respect of that year a sum equal to twopercent of such income. The matter was taken up by the MUFAP withthe Sindh Revenue Board (SRB) collectively on behalf of various assetmanagement companies and their CISs whereby it was contested thatmutual funds should be excluded from the ambit of the SWWF Act asthese were not industrial establishments but were pass throughinvestment vehicles and did not employ workers. The SRB held thatmutual funds were included in the definition of financial institutionsas per the Financial Institution (Recovery of Finances) Ordinance, 2001and were, hence, required to register and pay SWWF under the SWWFAct. Thereafter, MUFAP has taken up the matter with the SindhFinance Ministry to have CISs / mutual funds excluded from theapplicability of SWWF.In view of the above developments regarding the applicability of WWFand SWWF on CISs / mutual funds, MUFAP has recommended thefollowing to all its members on 12 January 2017:- based on legal opinion, the entire provision against WWF held by theCISs till 30 June 2015 should be reversed on 12 January 2017; and

35



36


Accordingly, a petition was filed in the Supreme Court of Pakistan bythe Funds together with other CISs (managed by the ManagementCompany and other Asset Management Companies) whereby theSupreme Court granted the petitioners leave to appeal from the initialjudgement of the SHC. Pending decision of the case tax withheld isconsidered “Receivable” as it is refundable by FBR.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite is Rs.50Million per Sub Fund for a minimum period of three years or as maybe determined by the Commission, that is the minimumregulatory requirement to start a sub fund. The Commission maymodify this requirement provided that the company registered asPension Fund Manager has adequate solvency margin and trackrecord for the last three years of the annual return on the funds beingmanaged by the said company.Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internal dispersion isnot required.Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite is as follows:


Period Composite

FY19 17.54%

FY18 16.80%

FY17 18.11%

FY16 16.64%

FY15 16.58%

FY14 14.87%

FY13 15.83%

FY12 16.80%

FY11 28.79%

Taxationa) As provided in Clause 57 (3) (viii) of the Part 1 of the 2nd Scheduleof the Income Tax Ordinance, 2001, the income of APIF Equity SubFund Composite is exempt from tax.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Pension Fund’sincome namely, dividend, profit on government securities, return ondeposits/certificates of investment with banks/financial institutions,profits from money market transactions, profit from Profit or Losssharing accounts with banks of the Pension Fund will not be subject toany withholding tax.

Key AssumptionsFollowing are the key assumptions used in portfolio valuation:Financial InstrumentsAll financial assets and financial liabilities are recognized at the timewhen the Fund becomes a party to the contractual provisionsof the instrument. Financial assets are derecognized when thecontractual rights to receive cash flows related to the asset expire.Financial liabilities are derecognized when they are extinguished,that is, when the obligation specified in the contract is discharged,cancelled, or expires. Any gain or loss on derecognition of thefinancial assets and financial liabilities is taken to income currently.Revenue RecognitionIncome on PLS accounts is recognized on an accrual basis. Dividendincome is recognized when the right to receive the dividend isestablished. Gain or loss on sale of equity securities is accounted forin the period in which it arises.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments of AAML,its Management Company.

APIF Debt Sub Fund is a constituent of Atlas Pension Islamic Fund(APIF). APIF serves as a Shariah Compliant primary savings vehicle forretirement savings (i.e. pension savings) for individuals and is createdas a Pension Fund under the Voluntary Pension System Rules 2005having an umbrella structure composed of numerous Sub-Funds inthe form of unit trust schemes under its wing, where contributionsreceived from the participants shall be allocated in accordance withthe allocation scheme selected by the participants.Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, SECPFee, Federal Excise Duty, Sindh Sales Tax, WWF and other levies).Performance data does not include the cost incurred directly by aninvestor in the form of sales load.Fee ScheduleManagement Fee is 0.75% of Average Annual Net Assets. There is adiscretionary 3.0% Front-end load and no Back-end load.BenchmarkThe Commission, under the Voluntary Pension System Rules 2005,shall measure performance of Pension Fund Manager by usingspecified benchmark to take corrective measures for VoluntaryPension Schemes as may be considered necessary by the Commissionwhere the investment return are found to be consistently below thespecified benchmark, as measured on a three years rolling averagebasis.For this purpose, the index of the weighted average investmentreturn of all sub-funds for all Pension Fund Managers shall becalculated by the Commission within ninety days of the end of eachfinancial year.The benchmark for the investment performance of APIF Debt SubFund shall be the return of the index (as stated above) less 200 basispoints.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Significant Eventsa) The Debt securities held by Collective Investment Schemesmanaged by AAML were re-priced during the year 2008-09 on

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionThe investment objective of APIF Debt Sub-Fund is to earn returnsfrom investments in debt markets of Pakistan, thus incurring arelatively lower risk than equity investments. APIF Debt Sub FundComposite invests primarily in tradable debt securities (as approvedby the Shariah Advisor) with the weighted average duration of theinvestment portfolio not exceeding ten years. Currently thecomposite comprises of one portfolio i.e. APIF Debt Sub Fund. APIFDebt Sub Fund was launched on November 06, 2007. APIF Debt SubFund return and Compound Annual Growth Rate (CAGR) sinceinception stands at 115.06% and 6.79%, respectively.Particulars of APIF Debt Sub Fund performance since launch of fundare as below:


37



APIF DEBT SUB FUND COMPOSITE

PeriodTotal Net

Return


end of Period (mn)


Assets



FY19 7.30% 378 1.4% 27,279

FY18 3.58% 354 1.1% 31,260

FY17 5.39% 344 1.1% 30,252

FY16 4.23% 280 1.4% 20,137

FY15 5.53% 235 1.3% 18,169

FY14 8.04% 177 1.3% 13,812

FY13 7.79% 131 1.3% 9,749




APIF Debt 6.93% 10.37% 9.79% 5.79% 6.98% 7.79% 8.04% 5.53% 4.23% 5.39% 3.58% 7.30%

CAGR 7.01% 9.04% 9.32% 8.34% 8.04% 8.00% 8.00% 7.68% 7.27% 7.08% 6.74% 6.79%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

SECP directive issued on November 05, 2008, applicable on mutualfunds. The Directive enforced re-pricing of debt securities, due toabsence of liquidity and price discovery in the debt market, byapplying discount rates varying from 5% in case of AAA ratedinstruments to 30% for BBB rated and below. On 6 January 2009the SECP issued Circular No. 1 of 2009 titled “Valuation of debtsecurities and provisioning criteria for non-performing debtsecurities.” This Circular stipulated that from 10 January 2009, thepricing would be determined through a market price methodologyas compiled by Mutual Fund Association of Pakistan (MUFAP). Thevaluation criteria takes into consideration a number of factors,such as “trading”, “thinly trading” and “non-trading” status of thedebt securities, rating and cash flows, besides liquidity factors.b) The Finance Act, 2008 had introduced an amendment to theWorkers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as aresult of which it was construed that all Collective InvestmentSchemes (CISs) / mutual funds whose income exceeded Rs 0.5million in a tax year were brought within the scope of the WWFOrdinance, thus rendering them liable to pay contribution to WWFat the rate of two percent of their accounting or taxable income,whichever was higher. In light of this, the Mutual FundsAssociation of Pakistan (MUFAP) filed a constitutional petition inthe Honorable Sindh High Court (SHC) challenging the applicabilityof WWF on CISs which is pending adjudication. In view of thepending decision, the Management Company, as a matter ofabundant caution, has maintained the provision for WWFamounting to Rs.1.1 million as at June 30, 2016. The Finance Act,2015 has excluded Mutual Funds and Collective InvestmentSchemes from the definition of 'industrial establishment' subjectto WWF under WWF Ordinance, 1971. Therefore, AAML has notprovided for WWF w.e.f. July 01, 2015.On November 10, 2016 the Supreme Court of Pakistan (SCP) haspassed a judgment declaring the amendments made in theFinance Acts 2006 and 2008 pertaining to WWF as illegal citing thatWWF was not in the nature of tax and could, therefore, not havebeen introduced through money bills. Accordingly, the aforesaidamendments have been struck down by the SCP. The FederalBoard of Revenue has filed a petition in the SCP against the saidjudgment, which is pending hearing. While the petitions filed bythe CISs on the matter are still pending before the SHC, the MutualFunds Association of Pakistan (MUFAP) (collectively on behalf ofthe asset management companies and their CISs) has taken legaland tax opinions on the impact of the SCP judgement on the CISspetition before the SHC. Both legal and tax advisors consultedwere of the view that the judgment has removed the very basis onwhich the demands were raised against the CISs. Therefore, therewas no longer any liability against the CISs under the WWFOrdinance and that all cases pending in the SHC or lower appellateforums will now be disposed of in light of the earlier judgement ofthe SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the governmentof Sindh as a result of which every industrial establishment locatedin the Province of Sindh, the total income of which in anyaccounting year is not less than Rs 0.50 million, is required to paySindh Workers’ Welfare Fund (SWWF) in respect of that year asum equal to two percent of such income. The matter was takenup by the MUFAP with the Sindh Revenue Board (SRB) collectivelyon behalf of various asset management companies and their CISs

whereby it was contested that mutual funds should be excludedfrom the ambit of the SWWF Act as these were not industrialestablishments but were pass through investment vehicles anddid not employ workers. The SRB held that mutual funds wereincluded in the definition of financial institutions as per theFinancial Institution (Recovery of Finances) Ordinance, 2001 andwere, hence, required to register and pay SWWF under the SWWFAct. Thereafter, MUFAP has taken up the matter with the SindhFinance Ministry to have CISs/mutual funds excluded from theapplicability of SWWF.In view of the above developments regarding the applicability ofWWF and SWWF on CISs/mutual funds, MUFAP hasrecommended the following to all its members on 12 January2017:- based on legal opinion, the entire provision against WWF held bythe CISs till 30 June 2015 should be reversed on 12 January 2017;and- as a matter of abundant caution, the provision in respect ofSWWF should be made with effect from the date of enactment ofthe SWWF Act, 2014 (i.e. starting from 21 May 2015) on 12January 2017.The above decisions were communicated to the SECP and thePakistan Stock Exchange Limited on 12 January 2017 and the SECPvide its letter dated 1 February 2017 has advised MUFAP that theadjustments relating to the above should be prospective andsupported by adequate disclosures in the financial statements ofthe CISs/ mutual funds. Accordingly, on 12 January 2017 theprovision for WWF was reversed and the provision for SWWF wasmade for the period from 21 May 2015 to 12 January 2017.Thereafter, the provision is being made on a daily basis goingforward. Up till June 30, 2019, a sum of Rs. 1.4 million (Rs. 0.78 perunit) has been provided for SWWF from APIF Debt Sub Fund.c) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies(AMC’s) with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC)jointly by various AMC`s, challenging the levy of FED. In a separatepetition the Honorable Sindh High Court declared that the FEDwas unconstitutional and cannot be charged where provinces arecollecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further,via Finance Act 2016, the FED has been withdrawn from July 1,2016. In the meantime, as a matter of abundant caution, theScheme has provided for FED liability which amounted to Rs.1.0million up till June 30, 2016.d) As per Clause 47(B) of part IV of the Second Schedule to theIncome Tax Ordinance, 2001, payments made to collectiveinvestment schemes (CISs) are exempt from withholding tax undersection 151. However, during the year ended June 30, 2016,several Companies (including banks) deducted withholding tax onprofit on bank deposits paid to the Funds based on theinterpretation issued by FBR vide letter C. no. 1(43)DG(WHT)/2008-VOL.II-66417-R dated May 12, 2015 which requiresevery withholding agent to withhold income tax at applicablerates in case a valid exemption certificate under section 159(1)issued by the concerned Commissioner of Inland Revenue (CIR) isnot produced by the withholdee. The amount of tax withheld

38



during the year on profit on bank deposits and debt securitiesaggregates to Rs.0.2 million.For this purpose, the Mutual Funds Association of Pakistan(MUFAP) on behalf of various mutual funds (including the Fundsbeing managed by the Management Company) had filed a petitionin the Honorable Sindh High Court (SHC) challenging the abovementioned interpretation of the Federal Board of Revenue (FBR)which was decided by the SHC in favor of FBR. On January 28,2016, the Board of Directors of the Management Company passeda resolution by circulation, authorizing all CISs to file an appeal inthe Honorable Supreme Court through their Trustees, to direct allpersons being withholding agents, including share registrars andbanks to observe the provisions of clause 47B of Part IV of theSecond Schedule to the Income Tax Ordinance, 2001 withoutimposing any conditions at the time of making any payment to theCISs being managed by the Management Company. Accordingly, apetition was filed in the Supreme Court of Pakistan by the Fundstogether with other CISs (managed by the Management Companyand other Asset Management Companies) whereby the SupremeCourt granted the petitioners leave to appeal from the initialjudgement of the SHC. Pending decision of the case tax withheld isconsidered “Receivable” as it is refundable by FBR.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite isRs.50 Million per Sub Fund for a minimum period of three years oras may be determined by the Commission, that is the minimumregulatory requirement to start a sub fund. The Commission maymodify this requirement provided that the company registered asPension Fund Manager has adequate solvency margin and trackrecord for the last three years of the annual return on the fundsbeing managed by the said company.Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internaldispersion is not required.Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite is as follows:

Key AssumptionsFollowing are the key assumptions used in portfolio valuation:Financial InstrumentsAll financial assets and financial liabilities are recognized at thetime when the Fund becomes a party to the contractual provisionsof the instrument. Financial assets are derecognized when thecontractual rights to receive cash flows related to the asset expire.Financial liabilities are derecognized when they are extinguished,that is, when the obligation specified in the contract is discharged,cancelled, or expires. Any gain or loss on derecognition of thefinancial assets and financial liabilities is taken to income currently.

39



Revenue RecognitionInterest income on government securities and other debtsecurities is recognized using effective interest method at the rateof return implicit in the instrument. Interest income on bankbalances, placements and deposits is recognized on an accrualbasis. However, recognition of income on non-performingplacements / deposits and securities is suspended in accordancewith the SECP‘s Circular 1 of 2009 and the Fund's provisioningpolicy. Gain or loss on sale of government securities and otherdebt securities and derivatives is accounted for in the period inwhich it arises.Subjective Unobservable InputsAtlas Asset Management Limited uses subjective unobservableinputs for valuing some of its debt instruments like Term FinanceCertificates/Sukuks. The criteria used for valuation is inaccordance with the guidelines issued by Regulator throughCircular 1 of 2009 (as amended from time to time) andunobservable inputs are disclosed through "Provisioning Policy"on the website of the Company.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments ofAAML, its Management Company.Taxationa) As provided in Clause 57 (3) (viii) of the Part 1 of the 2ndSchedule of the Income Tax Ordinance, 2001, the income of APIFDebt Sub Fund Composite is exempt from tax.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Pension Fund’sincome namely, dividend, profit on government securities, returnon deposits/certificates of investment with banks/financialinstitutions, profits from money market transactions, profit fromProfit or Loss sharing accounts with banks of the Pension Fund willnot be subject to any withholding tax.

Period Composite

FY19 0.82%

FY18 0.78%

FY17 0.98%

FY16 0.99%

FY15 0.97%

FY14 1.04%

FY13 1.31%

FY12 1.36%

FY11 1.23%


40



APIF MONEY MARKET SUB FUND COMPOSITE

PeriodTotal Net

Return


end of Period (mn)


Assets



FY19 7.57% 393 1.4% 27,279

FY18 4.02% 308 1.0% 31,260

FY17 4.88% 254 0.8% 30,252

FY16 4.22% 208 1.0% 20,137

FY15 5.97% 172 0.9% 18,169

FY14 7.67% 139 1.0% 13,812

FY13 7.12% 102 1.0% 9,749

Compliance StatementAtlas Asset Management Limited (“AAML” or the “firm”) claimscompliance with the Global Investment Performance Standards (GIPS)and has prepared and presented this report in compliance with theGIPS standards. The Firm AAML has not been independently verified.Firm DefinitionAAML, sponsored by the Atlas Group of Companies is licensed to carryout Asset Management Services as Non-Banking Finance Company bySecurities and Exchange Commission of Pakistan (Commission). Thefirm is also licensed by the Commission as Pension Fund Manager. Thefirm AAML includes all Collective Investment Schemes (includinginvestment plans) and Voluntary Pension Schemes under itsmanagement. AAML has been assigned Asset Manager Rating of AM2+by PACRA (As on June 28, 2019).PoliciesAAML policies for valuing portfolios, calculating performance andpreparing compliant presentations are available on request.Composite DescriptionThe Investment Objective of APIF Money Market Sub-Fund is to earnreturns from investments in Money Markets of Pakistan, thusincurring a relatively lower risk than debt investments. APIF MoneyMarket Sub Fund Composite invests primarily in short term debtsecurities (as approved by the Shariah Advisor) with the weightedaverage time to maturity of the assets upto one year, and the time tomaturity of Shariah Compliant Government securities such asGovernment of Pakistan Ijarah Sukuks upto three years. Currently thecomposite comprises of one portfolio i.e. APIF Money Market SubFund. APIF Money Market Sub Fund was launched on November 06,2007. APIF Money Market Sub Fund return and Compound AnnualGrowth Rate (CAGR) since inception stands at 127.70% and 7.32%,respectively. Particulars of APIF Money Market Sub Fund performancesince launch of fund are as below:

APIF Money Market Sub Fund is a constituent of Atlas Pension IslamicFund (APIF). APIF serves as a Shariah Compliant primary savingsvehicle for retirement savings (i.e. pension savings) for individuals andis created as a Pension Fund under the Voluntary Pension SystemRules 2005 having an umbrella structure composed of numerous Sub-Funds in the form of unit trust schemes under its wing, wherecontributions received from the participants shall be allocated inaccordance with the allocation scheme selected by the participants.Fees and ReturnsReturns are calculated net of management fees (actual) and otherexpenses (which mainly includes custodial fee, trustee expense, SECPFee, Federal Excise Duty, Sindh Sales Tax, WWF and other levies).Performance data does not include the cost incurred directly by aninvestor in the form of sales load.Fee ScheduleManagement Fee is 0.50% of Average Annual Net Assets. There is adiscretionary 3.0% Front-end load and no Back-end load.BenchmarkThe Commission, under the Voluntary Pension System Rules 2005,shall measure performance of Pension Fund Manager by usingspecified benchmark to take corrective measures for VoluntaryPension Schemes as may be considered necessary by the Commissionwhere the investment return are found to be consistently below thespecified benchmark, as measured on a three years rolling averagebasis.For this purpose, the index of the weighted average investmentreturn of all sub-funds for all Pension Fund Managers shall becalculated by the Commission within ninety days of the end of eachfinancial year.The benchmark for the investment performance of APIF MoneyMarket Sub Fund shall be the return of the index (as stated above)less 150 basis points.List of CompositesA list of all composite descriptions is available on request.Composites PoliciesPolicies for valuing portfolios, calculating performance, and preparingcompliant presentations is available on request.Significant Eventsa) The Finance Act, 2008 had introduced an amendment to the




APIF Money Market 6.79% 11.00% 9.21% 9.79% 9.61% 7.12% 7.67% 5.97% 4.21% 4.88% 4.02% 7.57%

CAGR 6.87% 9.35% 9.30% 9.43% 9.47% 9.05% 8.84% 8.46% 7.96% 7.64% 7.29% 7.32%

-0.50%

1.50%

3.50%

5.50%

7.50%

9.50%

11.50%

2017:- based on legal opinion, the entire provision against WWF held bythe CISs till 30 June 2015 should be reversed on 12 January 2017;and- as a matter of abundant caution, the provision in respect ofSWWF should be made with effect from the date of enactment ofthe SWWF Act, 2014 (i.e. starting from 21 May 2015) on 12January 2017.The above decisions were communicated to the SECP and thePakistan Stock Exchange Limited on 12 January 2017 and the SECPvide its letter dated 1 February 2017 has advised MUFAP that theadjustments relating to the above should be prospective andsupported by adequate disclosures in the financial statements ofthe CISs/mutual funds. Accordingly, on 12 January 2017 theprovision for WWF was reversed and the provision for SWWF wasmade for the period from 21 May 2015 to 12 January 2017.Thereafter, the provision is being made on a daily basis goingforward. Up till June 30, 2019, a sum of Rs. 1.1 million (Rs. 0.66 perunit) has been provided for SWWF from APIF Money Market SubFund.b) The Finance Act, 2013 imposed Federal Excise Duty (FED) onfinancial services to include Asset Management Companies(AMC’s) with effect from June 13, 2013. On September 04, 2013 aconstitutional petition has been filed in Sindh High Court (SHC)jointly by various AMC`s, challenging the levy of FED. In a separatepetition the Honorable Sindh High Court declared that the FEDwas unconstitutional and cannot be charged where provinces arecollecting sales tax. In response to this, the Deputy CommissionerInland Revenue has filed a Civil Petition for leave to appeal in theSupreme Court of Pakistan which is pending adjudication. Further,via Finance Act 2016, the FED has been withdrawn from July 1,2016. In the meantime, as a matter of abundant caution, the

Scheme has provided for FED liability which amounted to Rs.0.6million up till June 30, 2016.c) As per Clause 47(B) of part IV of the Second Schedule to theIncome Tax Ordinance, 2001, payments made to collectiveinvestment schemes (CISs) are exempt from withholding tax undersection 151. However, during the year ended June 30, 2016,several Companies (including banks) deducted withholding tax onprofit on bank deposits paid to the Funds based on theinterpretation issued by FBR vide letter C. no. 1(43)DG(WHT)/2008-VOL.II-66417-R dated May 12, 2015 which requiresevery withholding agent to withhold income tax at applicablerates in case a valid exemption certificate under section 159(1)issued by the concerned Commissioner of Inland Revenue (CIR) isnot produced by the withholdee. The amount of tax withheldduring the year on profit on bank deposits and debt securitiesaggregates to Rs.0.3 million.For this purpose, the Mutual Funds Association of Pakistan(MUFAP) on behalf of various mutual funds (including the Fundsbeing managed by the Management Company) had filed a petitionin the Honorable Sindh High Court (SHC) challenging the abovementioned interpretation of the Federal Board of Revenue (FBR)which was decided by the SHC in favor of FBR. On January 28,2016, the Board of Directors of the Management Company passeda resolution by circulation, authorizing all CISs to file an appeal inthe Honorable Supreme Court through their Trustees, to direct allpersons being withholding agents, including share registrars andbanks to observe the provisions of clause 47B of Part IV of the

Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as aresult of which it was construed that all Collective InvestmentSchemes (CISs)/mutual funds whose income exceeded Rs 0.5million in a tax year were brought within the scope of the WWFOrdinance, thus rendering them liable to pay contribution to WWFat the rate of two percent of their accounting or taxable income,whichever was higher. In light of this, the Mutual FundsAssociation of Pakistan (MUFAP) filed a constitutional petition inthe Honorable Sindh High Court (SHC) challenging the applicabilityof WWF on CISs which is pending adjudication. In view of thepending decision, the Management Company, as a matter ofabundant caution, has maintained the provision for WWFamounting to Rs.0.9 million as at June 30, 2016. The Finance Act,2015 has excluded Mutual Funds and Collective InvestmentSchemes from the definition of 'industrial establishment' subjectto WWF under WWF Ordinance, 1971. Therefore, AAML has notprovided for WWF w.e.f. July 01, 2015.On November 10, 2016 the Supreme Court of Pakistan (SCP) haspassed a judgment declaring the amendments made in theFinance Acts 2006 and 2008 pertaining to WWF as illegal citing thatWWF was not in the nature of tax and could, therefore, not havebeen introduced through money bills. Accordingly, the aforesaidamendments have been struck down by the SCP. The FederalBoard of Revenue has filed a petition in the SCP against the saidjudgment, which is pending hearing. While the petitions filed bythe CISs on the matter are still pending before the SHC, the MutualFunds Association of Pakistan (MUFAP) (collectively on behalf ofthe asset management companies and their CISs) has taken legaland tax opinions on the impact of the SCP judgement on the CISspetition before the SHC. Both legal and tax advisors consultedwere of the view that the judgment has removed the very basis onwhich the demands were raised against the CISs. Therefore, therewas no longer any liability against the CISs under the WWFOrdinance and that all cases pending in the SHC or lower appellateforums will now be disposed of in light of the earlier judgement ofthe SCP.Furthermore, as a consequence of the 18th amendment to theConstitution of Pakistan, in May 2015 the Sindh Workers’ WelfareFund Act, 2014 (SWWF Act) had been passed by the governmentof Sindh as a result of which every industrial establishment locatedin the Province of Sindh, the total income of which in anyaccounting year is not less than Rs 0.50 million, is required to paySindh Workers’ Welfare Fund (SWWF) in respect of that year asum equal to two percent of such income. The matter was takenup by the MUFAP with the Sindh Revenue Board (SRB) collectivelyon behalf of various asset management companies and their CISswhereby it was contested that mutual funds should be excludedfrom the ambit of the SWWF Act as these were not industrialestablishments but were pass through investment vehicles and didnot employ workers. The SRB held that mutual funds wereincluded in the definition of financial institutions as per theFinancial Institution (Recovery of Finances) Ordinance, 2001 andwere, hence, required to register and pay SWWF under the SWWFAct. Thereafter, MUFAP has taken up the matter with the SindhFinance Ministry to have CISs / mutual funds excluded from theapplicability of SWWF.In view of the above developments regarding the applicability ofWWF and SWWF on CISs / mutual funds, MUFAP hasrecommended the following to all its members on 12 January

41



42


Second Schedule to the Income Tax Ordinance, 2001 withoutimposing any conditions at the time of making any payment to theCISs being managed by the Management Company. Accordingly, apetition was filed in the Supreme Court of Pakistan by the Fundstogether with other CISs (managed by the Management Companyand other Asset Management Companies) whereby the SupremeCourt granted the petitioners leave to appeal from the initialjudgement of the SHC. Pending decision of the case tax withheld isconsidered “Receivable” as it is refundable by FBR.Minimum Portfolio SizeThe minimum portfolio size for inclusion in the composite isRs.50 Million per Sub Fund for a minimum period of three years oras may be determined by the Commission, that is the minimumregulatory requirement to start a sub fund. The Commission maymodify this requirement provided that the company registered asPension Fund Manager has adequate solvency margin and trackrecord for the last three years of the annual return on the fundsbeing managed by the said company.Internal DispersionSince number of Portfolios in the composite is only one at themoment (less than five) therefore calculation of internaldispersion is not required.Ex-Post Standard DeviationThe three-year annualized ex-post standard deviation of thecomposite is as follows:


Period Composite

FY19 0.63%

FY18 0.51%

FY17 0.73%

FY16 0.81%

FY15 0.73%

FY14 0.77%

FY13 0.83%

FY12 0.75%

FY11 0.67%

Revenue RecognitionInterest income on government securities is recognized usingeffective interest method at the rate of return implicit in theinstrument. Interest income on bank balances, placements anddeposits is recognized on an accrual basis. Gain or loss on sale ofgovernment securities is accounted for in the period in which itarises.Proprietary Assets in the CompositeProprietary Assets in the composite contains investments ofAAML, its Management Company.Taxationa) As provided in Clause 57 (3) (viii) of the Part 1 of the 2ndSchedule of the Income Tax Ordinance, 2001, the income of APIFMoney Market Sub Fund Composite is exempt from tax.b) Under the provisions of Clause 47 (B) of Part 4 of the SecondSchedule to the Income Tax Ordinance, 2001, the Pension Fund’sincome namely, dividend, profit on government securities, returnon deposits/certificates of investment with banks/financialinstitutions, profits from money market transactions, profit fromProfit or Loss sharing accounts with banks of the Pension Fund willnot be subject to any withholding tax.

Key AssumptionsFollowing are the key assumptions used in portfolio valuation:Financial InstrumentsAll financial assets and financial liabilities are recognized at thetime when the Fund becomes a party to the contractual provisionsof the instrument. Financial assets are derecognized when thecontractual rights to receive cash flows related to the asset expire.Financial liabilities are derecognized when they are extinguished,that is, when the obligation specified in the contract is discharged,cancelled, or expires. Any gain or loss on derecognition of thefinancial assets and financial liabilities is taken to incomecurrently.

Disclaimer:

All investments in mutual and pension funds are subject to market risks. Past performance is not necessarily indicative of the futureresults. Please read the Offering Document to understand the investment policies and the risks involved. Withdrawals from apension fund before retirement are subject to tax under provisions of the Income Tax Ordinance, 2001.

Documents

GLOBAL INVESTMENT PERFORMANCE STANDARDS (GIPS) … · AAML GIPS Steering Committee has been established for decision making process to comply with the GIPS recommendations, including