Mutual Funds: ATLAS FUND OF FUNDS - For the Period from August 02, 2004 to March 31, 2005 (Un-audited)
Atlas Fund of Funds (AFF) is a closed-end fund established by a Trust Deed, dated May 29, 2004 between Atlas Asset Management Limited (AAML) as the investment adviser and Central Depository Company of Pakistan Limited (CDC), as the trustee. AFF is listed and traded at Karachi Stock Exchange.
The SECP authorised the formation of the Fund as closed-end scheme on May 13, 2004. Of the total capital of Rs 500 million, certificates worth Rs 300 million were subscribed in Pre-IPO and certificates of Rs 200 million were offered for public subscription from December 13, 2004 to December 16, 2004.
The public offer was over-subscribed and balloting was made for successful applicants.
The objective of the AFF is to invest in closed-end mutual funds, to take advantages of availability of such securities at discount to NAV, in order to post higher return and to provide investors a one-window facility to invest in a diversified portfolio of equity securities of closed-end schemes offering consistent returns and growth. The AFF may also invest in unit trust schemes, Carry Over Transactions and Money Market Instruments. The asset allocation in each instrument will depend on prevailing market conditions.
Atlas Asset Management Limited (AAML) is a part of the Atlas Group, of which foundation was laid in 1962 with the establishment of Shirazi Investments (Pvt) Limited. Shirazi Investments owns 75% shares of AAML while the balance 25% are held by Atlas Investment Bank Limited. Today Atlas is a diversified group dealing in engineering, financial services and trading.
It consists of seven public limited companies out of which six are quoted on the stock exchanges in Pakistan, and four private limited companies. Atlas group includes companies such as Shirazi Investments (Pvt.) Limited, Atlas Honda Limited, Atlas Battery Limited, Shirazi Trading Company (Pvt.) Limited, Muslim Insurance Company Limited, Allwin Engineering Industries Limited, Atlas Investment Bank Limited, Honda Atlas Cars (Pakistan) Limited, Honda Atlas Power Product (Pvt.) Limited and Total Atlas Lubricants (Pvt.) Limited. Atlas shareholders' equity is said to stand at Rs 15 billion; assets at Rs 25 billion and annual sales have crossed Rs 30 billion. The personnel strength is over 3000. AAML, the investment advisor holds 6.620 million certificates (13.24%) of the total capital of AFF.
The Fund started market operations towards the end of January 2005, after the subscription amount was released by the Karachi Stock Exchange. Total assets at end of March 31, 2005 stand at Rs 526.505 million, of which receivables from COT are the highest at 49%, cash with bank at 40% and investments at 9%. AFF has invested a sum of Rs 50.93 million in closed-end and open-end funds as on March 31, 2005.
The Chairman of the Board of Director of the Investment Advisor, AAML in his review has stated that the Fund was launched for Public Offering from December 13-16, 2004. The market prevailing at that time had led to a reduction in the discounts between the prices of closed-end mutual funds and their Net Asset Values. Consequently, AFF's strategy was to search for values and in the interim period build up income by capitalising on the high rates prevailing in the Carry Over Trade-COT market. This conservative investment strategy has led to net income of Rs 15 million during the period with a Net Asset Value of Rs 10.31 per certificate as at March 31, 2005.
The AFF has earned total income of Rs 21.443 million during the period under review. Major chunk of the income (70%) came from COT market, followed by interest income (23%), income form future transactions (11%) and gain on sale of investment (5%). In the period AFF also provided for net unrealised loss on revaluation of investments (10%).
The remuneration paid to AAML comes to 6% of Total Income (21% of Total Expenses), whereas brokerage was 17% of Total Income (60% of Total Expenses). Theses two are major expenses of AFF and the stakeholders are urged to give more attention to control these as far as possible. Return to the equity for the period at 3% is not attractive but it pertains to the initial few months when AFF started operations. Performance statistics are enclosed.
The notes to the financial statements state that income of the Fund is exempt from income tax under clause 99 of Part I of the Second Schedule to the Income Tax Ordinance, 2001 subject to the condition that not less than 90 percent of its accounting income of the year, as reduced by capital gains, whether realised or unrealised, is distributed among its certificate-holders. Accordingly, no tax liability has been recorded for the current period.
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Performance Statistics
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Balance Sheet (Un-audited) (Rs 000)
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As on March 31, 2005
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Total Current Assets: 521,968
Total Non-current assets 4,537
Operating Fixed Assets: 0
Total Assets: 526,505
Current Liabilities: 10,997
Share Capital: 500,000
Reserves: 15,508
Total Equity: 515,508
Total Liabilities and Equity 526,505
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Ratios:
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Cash at Bank/Total Assets: 40%
COT Receivables/Total Assets: 49%
Investment, for Trade/Total Assets: 9%
Book Value Per Share Rs: 10.31
Market Value, Share (6-6-2005)- Rs: 7.10
Price/Book Value Per Share- X: 0.69
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Income Statement (un-audited) (Rs 000)
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Period, August 2, 2004 to March 31, 2005
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Interest Income: 4,947
Gain on Sale of Investments: 1,040
Income from COT: 15,069
Income from Future Transactions: 2,427
Net Unrealised Loss on Investment: -2,040
Total Income: 21,443
Total Expenses: 5,935
Net Income for The Period: 15,508
Earnings Per Share - Rs: 0.31
Total Expenses/Total Income: 28%
Net Income/Total Income: 72%
Gain, Sale of Invest./Total Income: 5%
Income from COT/Total Income: 70%
Unreal. Loss Invest/Total Income: -10%
Remuner. AAML/Total Income: 6%
Remuner. of AAML/Total Expense: 21%
Brokerage/Total Income: 17%
Brokerage/Total Expenses: 60%
Return on Equity: 3%
Cash Dividend: 0%
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COMPANY INFORMATION: Mutual Fund Type: Closed-end Par Value: Rs. 10/share Paid up Capital: Rs. 500 million Year-end: June Income distribution: Yearly
Period: perpetual Investment Advisor Information: Investment Advisor: Atlas Asset Management Limited; Chairman: Yusuf H. Shirazi; Vice Chairman & Chief Executive Officer: M. Habib-ur-Rahman; Director: Peter A. Smyth; Company Secretary: Ather H. Madina; Trustee: Central Depository Company of Pakistan Limited; Legal Advisors: Mohsin Tayebaly & Co.; Registered Office: Ground Floor, Federation House, Sharae Firdousi, Clifton, Karachi; Auditors: Hameed Chahdhri & Co., Chartered Accountants; Internal Auditors: Anjum, Asim, Shahid Rahman, Chartered Accountants; Web Address: www.atlasfunds.com.pk
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