Interim report cover page- 30062013

PHEIM

PHEIM UNIT TRUSTS BERHAD (545919-A)7th Floor, Menara Hap Seng (Letter Box 12)Jalan P.Ramlee,50250 Kuala Lumpur, Malaysia.Tel No: (603) 2142 8888Fax No:(603) 2141 9199

Your Need

is our Focus

I N T E R I M R E P O R T30 JUNE 2013

MASTER TRUST

Pheim Emerging Companies Balanced Fund

Dana Makmur Pheim

Pheim Income Fund

PHEIM Master Trust Interim Report 30.06.2013

TRUST DIRECTORY

MANAGERPheim Unit Trusts Berhad (545919-A)

Registered Office and Head Office:7th Floor, Menara Hap Seng (Letter Box 12)

Jalan P. Ramlee, 50250 Kuala LumpurTel:(603) 2142 8888 Fax:(603) 2141 9199

BOARD OF DIRECTORSDr. Tan Chong Koay (Non-independent)Azmi Malek Merican (Non-independent)

Wong Cheng Leong (Independent)Hoi Weng Kong (Independent)

INVESTMENT COMMITTEEOng Kheng Liat (Non-independent)

Foong Mei Phong (Non-independent)Zarina Omar (Independent - DMP only)

Rostam Effendi Abdul Rahim (Independent)Pee Ban Hock (Independent)Ho Sen Feek (Independent)

EXTERNAL INVESTMENT MANAGERPheim Asset Management Sdn Bhd (269564-A)

SHARIAH ADVISERIBFIM (763075-W)

TRUSTEEMaybank Trustees Berhad (5004-P)

AUDITORSFolks DFK & Co

TAXATION CONSULTANTFolks Taxation Sdn Bhd (178104-M)

PHEIM Master Trust lnterim Report 30.06.2013

CONTENTS

Page No

1. Funds Information

2. Funds Performance

3. Manager’s Report

4. Trustee’s Report, Statement by the Manager,Shariah Adviser’s Report and Unaudited FinancialStatements:

Pheim Emerging Companies Balanced Fund

Dana Makmur Pheim

Pheim Income Fund

1 – 4

5 – 13

14 – 29

30 – 61

62 – 94

95 – 126


Fund Information

[email protected]

1 Your Needis our Focus

Dear Valued Unit Holders

We are pleased to present the Manager’s Report and the unaudited financial statements for theperiod from 1 January 2013 to 30 June 2013 for the following funds:

i. Pheim Emerging Companies Balanced Fund (PECBF)

ii. Dana Makmur Pheim (DMP)

iii. Pheim Income Fund (PIF)

1 FUND INFORMATION

1.1 Fund Category and Type

Fund Category and type

PECBF PECBF is a balanced fund that aims to provide income and some capitalgrowth.

DMP DMP is an Islamic balanced fund that aims to provide Shariah permissibleincome and some capital growth.

PIF PIF is a bond fund that aims to provide steady income.

1.2 Funds’ Investment Objective and Strategy

Fund Investment objective and strategy

PECBF PECBF aims to provide Unit Holders with steady income and someprospects for capital appreciation (income and growth) in the longer term.PECBF will invest in a balanced portfolio of equities and fixed incomeinstruments subject to a maximum of 60% in equities and a minimum of40% in fixed income instruments and liquid assets.

DMP DMP aims to provide Unit Holders with steady income and someprospects for capital appreciation (income and growth) in the longer term.DMP will invest in a balanced portfolio of Shariah-compliant equities andsukuk subject to a maximum of 60% in Shariah-compliant equities and aminimum of 40% in sukuk and Islamic liquid assets. All investment will bemade in accordance to Shariah requirements.

PIF PIF aims to provide unit holders with consistent income returns in themedium to longer term. PIF will invest primarily in medium to long-termfixed income instruments subject to a minimum of 80% in fixed incomeinstruments and liquid assets and a maximum of 20% in equities.


Fund Information

[email protected]


1.3 Duration of the Funds

Fund Duration of the Fund

PECBF PECBF was launched on 28 January 2002 and its offer period endedon 15 February 2002. It shall exist for as long as it appears to theManager and the Trustee that it is in the interest of the Unit Holders forit to continue.

DMP DMP was launched on 28 January 2002 and its offer period ended on15 February 2002. It shall exist for as long as it appears to the Managerand the Trustee that it is in the interest of the Unit Holders for it tocontinue.

PIF PIF was launched on 28 January 2002 and its offer period ended on 15February 2002. It shall exist for as long as it appears to the Managerand the Trustee that it is in the interest of the Unit Holders for it tocontinue.

1.4 Funds’ Performance Benchmark

The performance benchmarks deemed relevant to access the performance of the respectiveFunds are shown in the following table:

Fund Performance Benchmark Source

PECBFWeighted average of:1. 60% of FTSE Bursa Malaysia EMAS Index return, and2. 40% of Maybank 1-year fixed deposit rate at the

beginning of the financial year.

BursaMalaysia&Maybank

DMPWeighted average of:1. 60% of FTSE Bursa Malaysia EMAS Shariah Index*, and2. 40% of Maybank 1-year General Investment Account

(GIA) rate obtained at the beginning of the financial year.

BursaMalaysia&Maybank

PIFMaybank 1-year fixed deposit rate at the beginning of thefinancial year.

Maybank

* KL Syariah Index was discontinued from 1 November 2007 by Bursa Malaysia. The new index that issubstituting KL Syariah Index is FTSE Bursa Malaysia EMAS Shariah Index (FBMS).

1.5 Funds’ Distribution Policy

Fund Distribution Policy

PECBF,DMP& PIF

The Funds intend to distribute income, if any, on an annual basis. Theincome distribution may be declared at the end of each financial year orany specified period as maybe approved by the Trustee.


Fund Information

[email protected]


1.6 Breakdown Of Unit Holdings By Size As At 30.06.2013

1.6.1 PECBFNo. of units held Unitholders

Sizeof holding (‘000) %

No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

129.03 0.87 47 23.62 40 21.85

5,001 - 10,000 313.80 2.11 44 22.11 42 22.95

10,001 -50,000

1,357.37 9.11 66 33.17 62 33.88

50,001 -500,000

5,202.64 34.91 38 19.09 35 19.13

500,001 andabove

7,898.14 53.00 4 2.01 4 2.19

Total 14,900.98 100.00 199 100.00 183 100.00

1.6.2 DMP

No. of units held Unitholders


No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

160.95 2.85 60 30.93 55 30.39

5,001 - 10,000 301.79 5.35 43 22.16 42 23.20

10,001 -50,000

1,499.28 26.57 77 39.69 71 39.23

50,001 -500,000

1,840.25 32.62 13 6.70 12 6.63

500,001 andabove

1,839.93 32.61 1 0.52 1 0.55

Total 5,642.20 100.00 194 100.00 181 100.00


Fund Information

[email protected]


1.6.3 PIF

No. of units held Unitholders


No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

65.96 0.50 24 20.34 22 21.15

5,001 - 10,000 134.76 1.02 20 16.95 15 14.42

10,001 -50,000

851.29 6.42 40 33.90 37 35.58

50,001 -500,000

4,885.90 36.88 27 22.88 23 22.12

500,001 andabove

7,310.84 55.18 7 5.93 7 6.73

Total 13,248.75 100.00 118 100.00 104 100.00


Funds’ Performances

[email protected]

5Your Need

is our Focus

2 FUND PERFORMANCE

2.1 Pheim Emerging Companies Balanced Fund

2.1.1 Portfolio composition

As at30.06.2013

(%)

As at30.06.2012

(%)

As at30.06.2011

(%)

(Percentage of Net Asset Value)

Biochemical & Biotechnology 2.19 0.80 -

Construction 3.55 2.45 3.24

Consumer Products 2.59 2.90 6.57

Energy & Water Supply - 2.29 -

Finance 7.75 10.32 5.68

Industrial Products 7.43 7.92 16.90

Infrastructure 0.90 0.79 -

Mining 1.22 2.42 -

Plantations 1.83 2.86 7.99

Pharmacy & Cosmetic - 1.69 -

Properties 9.26 0.99 -

Technology 0.93 - -

Telecommunications 0.83 0.92 -

Trading / Services 3.22 5.29 3.96

Foreign Investments - - 16.53

Unquoted/Quoted Corporate Bonds 35.15 34.82 34.97

Cash and cash equivalents 23.15 23.54 4.16

Total 100.00 100.00 100.00



[email protected]

6Your Need

is our Focus

PECBF

2.1.2 Other financial and performance data

6 monthsended

30.06.2013

6 monthsended

30.06.2012

6 monthsended

30.06.2011

Net asset value (RM‘000) 16,783.19 17,779.56 19,023.42

Units in circulation (‘000) 14,900.98 16,023.93 16,865.56

Net asset value per unit (RM) 1.1263 1.1096 1.1279

Highest NAV/ unit for the period

NAV/ unit 1.1871 1.2123 1.2402

Lowest NAV/ unit for the period

NAV/ unit 1.1043 1.0923 1.1245

Total returns for the period(RM’000)

Capital growth (880.21) (932.60) (112.50)

Income distribution 1,647.72 1,905.86 569.33

Income Distribution (Final)On

26.04.2013On

27.04.2012On

28.04.2011

Gross distribution per unit (sen) 6.00 6.00 6.00

Net distribution per unit (sen) 6.00 6.00 6.00

Management expense ratio (MER)(%)

0.94 0.90 0.86

Portfolio turnover ratio (PTR)(time)

0.37 0.32 0.41

Note:i) MER is calculated based on total fees and expenses incurred by the fund divided by

average value of the fund calculated on a daily basis. The MER for the periodincreased mainly due to the lower averaged NAV.

ii) PTR is calculated based on the average of the acquisitions and disposals ofinvestments of the fund to the average value of the fund calculated on a daily basis.The PTR for the period increased due to higher trading activities.



[email protected]

7Your Need

is our Focus

PECBF

2.1.3 Average total return ended 30 June 2013

(%)

One Year +7.09

Three Years +7.62

Five Years +4.79

2.1.4 Annual total return for each of the last five financial years

Financial year ended 31 December : (%)

2012 +9.86

2011 -1.82

2010 +10.7

2009 +37.9

2008 -35.1

Note : All returns above are calculated based on NAV per unit adjusted for incomedistribution.

Data source : Bloomberg

Past performance is not necessarily indicative of future performance and unitprices and investment returns may go down, as well as up.



[email protected]

8Your Need

is our Focus

2.2 Dana Makmur Pheim


As at30.06.2013

(%)

As at30.06.2012

(%)

As at30.06.2011

(%)



Consumer Products 1.64 - 6.47

Industrial Products 9.38 11.72 16.58

Plantations - 4.92 9.13

Properties 7.05 - 4.08

Technology - 2.03 2.10

Trading / Services 4.81 4.60 3.95

Sukuk 5.09 16.12 15.73

Cash and Other Assets 69.76 52.35 30.75

Total 100.00 100.00 100.00


6 monthsended

30.06.2013

6 monthsended

30.06.2012

6 monthsended

30.06.2011






[email protected]

9Your Need

is our Focus

DMP

2.2.2 Other financial and performance data (continued)

6 monthsended

30.06.2013

6 monthsended

30.06.2012

6 monthsended

30.06.2011


NAV/ unit 1.7837 1.6554 1.6446


NAV/ unit 1.5398 1.5309 1.5403


Capital growth 183.40 (327.79) 145.21

Income distribution 1,332.82 747.11 121.11

Income Distribution (Final)

On26.04.2013

On27.04.2012

On28.04.2011




1.05 1.03 1.01

Portfolio turnover ratio (PTR)time)

0.29 0.28 0.32


average value of the fund calculated on a daily basis. The MER for the periodincreased mainly due to the lower averaged NAV.

ii) PTR is calculated based on the average of the acquisitions and disposals of Shariah-compliant investments of the fund to the average value of the fund calculated on adaily basis. The PTR for the period increased due to higher trading activities.



[email protected]

10Your Need

is our Focus

DMP


(%)

One Year +17.33

Three Years +11.66

Five Years +8.27



2012 +5.87

2011 +1.7

2010 +10.7

2009 +35.1

2008 -27.1






[email protected]

11Your Need

is our Focus

2.3 Pheim Income Fund


As at30.06.2013

(%)

As at30.06.2012

(%)

As at30.06.2011

(%)



Consumer Product 0.69 0.97 1.27

Finance 4.24 5.11 -

Industrial Products - - 3.19

Infrastructure - 1.61 -

Plantation 0.77 1.16 3.29

Properties 1.65 - 0.77

Trading/ Services 0.32 1.33 -

Technology - - -

Foreign Investments - - 2.15

Unquoted Corporate Bonds 45.65 48.37 45.54

Cash and Other Assets 45.81 39.52 40.11

Total 100.00 100.00 100.00


6 monthsended

30.06.2013

6 monthsended

30.06.2012

6 monthsended

30.06.2011





NAV/ unit 1.1541 1.1163 1.1196


NAV/ unit 1.0874 1.0804 1.0455


Capital growth (432.25) (123.29) (142.77)

Income distribution 594.35 738.23 115.36



[email protected]

12Your Need

is our Focus

PIF

2.3.2 Other financial and performance data (continued)

6 monthsended

30.06.2013

6 monthsended

30.06.2012

6 monthsended

30.06.2011

Income Distribution (Final)On

27.04.2013On

27.04.2012On

28.04.2011




0.69 0.65 0.64

Portfolio turnover ratio (PTR)(time)

0.21 0.18 0.30


average value of the fund calculated on a daily basis. The MER for the period increasedmainly due to the lower averaged NAV.

ii) PTR is calculated based on the average of the acquisitions and disposals of investmentsof the fund to the average value of the fund calculated on a daily basis. The PTR for theperiod increased due to higher trading activities.


(%)

One Year +3.27

Three Years +5.06

Five Years +4.59



[email protected]

13Your Need

is our Focus

PIF



2012 +6.02

2011 +4.36

2010 +3.4

2009 +10.4

2008 -0.3





Manager’s Report

[email protected]


3 MANAGER’S REPORT

3.1 Performance Review

3.1.1 PECBF

For the six months period ended 30 June 2013, the net asset value (NAV) per unit of theFund declined by 2.00% which has underperformed the benchmark by 12.14%. Duringthe period, the total NAV decreased to approximately RM16.8 million from RM17.5million.

The Fund had made an income distribution of 6.00 sen per unit (net of tax) on the 26 April2013 for the period ended 31 December 2012. After the income distribution, the NAV perunit declined to RM1.1150 from RM1.1750.

Performance table since the last review period (6 months):

Benchmark/ FundAs at

30.06.2013As at

31.12.2012Change

%

Benchmark of PECBF 104.95% 94.81% +10.14

PECBF – NAV per unit (RM) 1.1263* 1.1493 -2.00

* adjusted for income distribution on 26.04.2013

3.1.2 DMP

For the six months period ended 30 June 2013, the net asset value (NAV) per unit of thefund increased by 12.94% which has outperformed the benchmark by 3.97%. During theperiod, the total NAV increased to approximately RM9.9 million from RM8.6 million.


Manager’s Report

[email protected]


3.1.2 DMP (contd.)




30.06.2013As at

31.12.2012Change

%

Benchmark of DMP 99.52% 90.55% +8.97

DMP – NAV per unit (RM) 1.7547* 1.5537 +12.94


3.1.3 PIF

For the six months period ended 30 June 2013, the net asset value (NAV) per unit of thefund decreased by 3.26% which has underperformed the benchmark by 4.83%. Duringthe period, the total NAV increased to approximately RM14.5 million from RM14.3 million.




30.06.2013As at

31.12.2012Change

%

Maybank 1-Year FD rate return 39.85% 38.28% +1.57

PIF – NAV per unit (RM) 1.0924* 1.1292 -3.26



Manager’s Report

[email protected]


3.2 Performance Chart Since Inception

3.2.1 PECBF

3.2.2 DMP


Manager’s Report

[email protected]


3.2.3 PIF

Note: The data source for all the above performance returns is Bloomberg.

3.3 Changes in Asset Allocation since the last review (in percentage)

3.3.1 PECBF

Asset ClassAs at

30.06.2013

As at31.12.2012 Change

Equity Securities – in Malaysia 21.19 20.56 +0.63

Equity Securities – outside Malaysia 20.51 33.55 -13.04

Corporate Bonds 35.15 33.71 +1.44

Cash and cash equivalent 23.15 12.18 +10.97

Total 100.00 100.00


Manager’s Report

[email protected]


3.3.2 DMP

Asset ClassAs at

30.06.2013As at

31.12.2012 Change

Shariah-compliant equity securities– in Malaysia

25.15 57.84 -32.69

Sukuk 5.09 5.85 -0.76

Cash and cash equivalent 69.76 36.31 +33.45

Total 100.00 100.00

3.3.3 PIF

Asset ClassAs at

30.06.2013As at

31.12.2012 Change

Corporate Bonds – in Malaysia 45.65 46.27 -0.62

Money market & cash 45.81 34.77 +11.04

Equity Securities – in Malaysia 0.32 3.36 -3.04

Equity Securities – outside Malaysia 8.22 15.60 -7.38

Total 100.00 100.00


Manager’s Report

[email protected]


3.4 Funds’ Strategies and Policies Employed

3.4.1 PECBF

As at end of June 2013, equities exposure was lower at 41.70% versus 54.11% as at endof December 2012. We reduced the Fund equity exposure as we were more cautious onthe global economic outlook and we took profits on selective stocks which have ralliedbeyond fundamentals. Going forward, we would continue to increase our equity exposurein companies which are fundamentally undervalued.

As part of diversification strategy, the Fund has invested in foreign equities listed in HongKong/China, Singapore, Indonesia and Thailand. We are maintaining our stance ofinvesting in fixed income securities which have a maturity of less than 3 years in order tomitigate risks in event of an increase in the interest rates.

For the period ended 30 June 2013, PECBF recorded the following gains or losses inthe various markets invested.

Market

Net realised andunrealised gain/ (loss)

RM’000

Malaysia 503Indonesia (176)Korea (54)Philippine (71)Singapore (171)Hong Kong/China 133

3.4.2 DMP

As at end of June 2013, Shariah-compliant equities exposure was lower at 25.15%versus 57.84% as at end of December 2012. We reduced the Fund Shariah-compliantequity exposure as we took profits from the rally in the Malaysian equity market post the13th general election.

Going forward, we would continue to increase our equity exposure in Shariah-compliantcompanies which are fundamentally undervalued. We are maintaining our stance ofinvesting in sukuk which have a maturity of less than 3 years in order to mitigate risks inevent of an increase in the interest rates.

For the period ended 30 June 2013, DMP recorded a net realised and unrealised gain ofRM1,460,329 due to investments in domestic Shariah-compliant equities.


Manager’s Report

[email protected]


3.4.3 PIF

As at end of June 2013, equities exposure was lower at 8.22% versus 15.60% as at endof December 2012. We reduced the Fund equity exposure as we were more cautious onthe global economic outlook and we took profits on selective stocks which have ralliedbeyond fundamentals.

As part of diversification strategy, the Fund has invested in foreign equities listed in HongKong, Singapore and Indonesia. We are maintaining our stance of investing in fixedincome securities which have a maturity of less than 3 years in order to mitigate risks inevent of an increase in the interest rates.

For the period ended 30 June 2013, PIF recorded the following gains or losses in thevarious markets invested.

Market

Net realised andunrealised gain/ (loss)

RM’000

Malaysia 148Indonesia 91Singapore (75)Hong Kong/China 74

3.5 Market Review, Outlook and Strategy

3.5.1 Malaysian Bond/Sukuk Market

3.5.1.1 Bond/Sukuk Market Review

The Malaysian bond/sukuk market made history on 8th February 2013 with the debut ofthe first retail bond/sukuk which was issued by DanaInfra Nasional Berhad. Althoughbonds is relatively a new asset class to most retailers, we believe participation rate hasthe potential to increase as retail investors become more knowledgeable about theadvantages of diversification and having a sukuk in their portfolios.

Market conditions in the Malaysian fixed income/sukuk market throughout the early partof the 1st half of 2013 might be described as relatively positive with, the overnight policyrate (OPR) maintained at 3.00%. According to Bank Negara Malaysia’s Monetary PolicyCommittee (MPC), the stance on monetary policy was considered to be appropriate giventhe outlook for inflation and growth. Buying interests were also attributed to quantitativeeasing measures undertaken in the US, with some of the liquidity flowing to emergingmarkets for their higher yields. Malaysia has been one of the beneficiaries, for instance,foreign holdings in local currency government bonds/sukuk surged to 31.2% as end-March 2013 from 13.3% as at end-December 2009.

Post-election, which was in the early month of May, the Malaysian Government Securities(MGS)/government sukuk garnered further buying interest as the ruling coalition, BarisanNasional was returned to power. It resulted in a surged in capital flows which broughtyields of short dated MGS to below 3.00%. However, prices slumped towards the end of


Manager’s Report

[email protected]


May and June on concerns that the scaling back of the quantitative measures in the USmay cause a hike in interest rates. The market seems braced for an outflow by foreigninvestors hence the softening bond prices.

That being said, we do not expect a total withdrawal of foreign participation in the localbond/sukuk market as interest rate differential between US and Malaysia still means thatMalaysia remains a good investment destination for foreign investors. Furthermore,Malaysia’s strong macroeconomic fundamentals as well as stable sovereign credit ratingwould continue to be supportive of the local bond market.

3.5.1.2 Bond/Sukuk Market Outlook and Strategy

Looking ahead, there is growing conviction that the Federal Reserve’s massive bondpurchases may be scaled back following the late May announcement by Federal ReserveChairman Ben Bernanke that it would be appropriate to moderate the monthly pace ofpurchases later this year and perhaps end the program by mid-2014, subject to the USeconomic recovery continuing its present trajectory.

In view of this, we do not discount the possibility of a hike in the Malaysian OPR rate in theyear 2014. Although inflation rate remains manageable at 1.8% in May, it could inchhigher towards the end of the year 2013 on the back of the minimum wage policy, tightdomestic labour market and potential reduction in subsidies.

Due to the challenging economic and financial environments, we would continue to adopta prudent credit assessment approach in any purchase of fixed income securities/sukuk.Thus, issuers’ credit profile, management, financial performance, asset quality, riskmanagement and industry outlook rank high on our list of purchase criteria. We wouldcontinue to focus on investment grade bonds/sukuk. Further, in view of the interest rateoutlook, we are maintaining our stance of investing in fixed income securities/sukuk with amaturity of less than 3 years in order to mitigate interest rate risk.


Manager’s Report

[email protected]


3.5.2 Stock Markets Review

3.5.2.1 Malaysian Stock Market – (Bursa Malaysia)

For the first half of 2013, the FBM KLCI registered a gain of 5.0%, slightly bettercompared to the 4.5% gain registered in the same period last year. The Index wasgenerally traded range bound in the first three months amid generally weaker resultsreported by companies and investors anticipation towards the announcement ofparliament dissolution and the General Election. It surged right after the results of theGeneral Elections was announced. After reaching its all-time high of 1,788.43 on 14 May2013, the KLCI entered into a correction phase, mainly due to the concerns onquantitative tapering by Federal Reserve and slowdown in China’s economy growth. TheIndex closed at 1,773.54 points as at end of June 2013.

Gross domestic product expanded by 4.1% y.o.y in first quarter 2013, slower than the6.5% y.o.y growth recorded in fourth quarter 2012 and 5.5% median expectation ofeconomists. The external environment remains a major worry for Malaysia’s economy,with sluggish US growth and the downturn in the Eurozone. Bank Negara has maintaineda GDP growth of 5% to 6% for 2013, led by private investment growth mid an improvingexternal trade landscape.

Inflation in May inched up to 1.8% y.o.y in May after rising to 1.7% in April mainly due to afaster increase in the core inflation rate. This was mainly due to the increase in the pricesof food and non-alcoholic beverages as well as miscellaneous goods and services. Thebenchmark interest rate was maintained at 3.00% throughout the first half 2013 since itwas last adjusted from 2.75% in 2011. The inflation is expected to remain benign for therest of the year.

Trade surplus narrowed to RM943 mil in April compared to the surplus of RM4.9 bil inMarch. The trade surplus was at 16-year low, driven by the lower shipments to China,Japan and European Union. The narrowing trade balance should remain a theme for therest of the year, as the exports tail off with lower commodity prices and uncertainties inexternal demand.

We remain cautiously optimistic on the Malaysia economy given the resilient domesticdemand, supported by stable consumer spending, young population and favourablelabour market conditions. We are positive on the construction, property and oil & gassectors, which will benefit from the pick-up in business activities and the on-going roll-outof economic transformation programme. We continue to take profit on stocks which areovervalued. We believe the current market volatility provides opportunity to position ourportfolio holdings. Going forward, we remain selective and continue to invest inundervalued stocks. We would also like to concentrate on Malaysia small and mid-capundervalued stocks as valuation is cheaper than the big cap stocks.


Manager’s Report

[email protected]


3.5.3 Foreign Securities Investment - Market Review

3.5.3.1 Singapore Market

The FSSTI index closed the half year marginally down 0.53% at 3,150.44 points on theback of concerns that the tapering of the bond purchases in US may have significantnegative implications for the financial markets. SGD depreciated 3.50% against the USDto close at 1.2646 on weak export outlook.

According to the Ministry of Trade and Industry (MTI), Singapore’s 1Q2013 grew by 0.2%y.o.y which was slower than the 1.5% growth seen in the 4Q2012. Due to the challengingeconomic outlook, the MTI maintained its 2013 GDP growth forecast at 1.0% to 3.0%.

Singapore’s May inflation rate was at 1.6%, lower than the consensus estimate of 1.7%.Should the haze situation persist, there may be downward pressure on prices especiallyin the tourism sector.

In the 1st quarter of 2013, unemployment rate in Singapore increased to 1.9% from 1.8%the previous quarter. Understandably, unemployment rate in Singapore remains low withdemand for professional talent buoyant supported by domestic-oriented activities.

Going forward, we expect moderate economic growth for Singapore backed by theconstruction and financial services sectors. Although the FSSTI index is no longer cheap,we believe the downside for the FSSTI index remains limited for its “safe haven” statusamong investors.

3.5.3.2 Hong Kong/ China Market

The Hang Seng Index for 1H13 closed at 20,803, down by 8.1% comparing to the 2H12.This was due to China’s weaker macro figures. Those that contributed to the indexdecline for the period were CNOOC, CCB and Petro China. However stocks like Tencent,AIA Group and Hengan limit the downside.

In Hong Kong, the exports picked up in Mar, growing by 11.2% y.o.y after a drop of 16.9%in Feb as a result of seasonal distortions and compared with +0.3% in Jan-Feb. Therebound in exports was mainly fuelled by stronger demand from most major Asianmarkets, including Mainland China, and a lower base of 2012. Exports to major advancedeconomies, on the other hand, remained weak. The recent reported retail sales growthslowed in May. Based on value of sales, retail sales rose 12.8% y.o.y, weaker thanmarket consensus estimate of a 19.4% increase and compared with +20.7% in Apr. Thelower than expected retail sales was mainly due to a fall in the sales of consumer durablegoods and slower sales of jewellery, watches and valuable gifts, although the latterposted the biggest growth among all the retail categories in May.

The China industrial production and FAI growth were slightly lower than marketexpectation in May 13, the However we feel that the broad picture shows China’seconomy has stabilized. Although growth may not pick up quickly, but it is unlikely for theeconomy to further deteriorate in the near term. The government will take this chance tospeed up its economic restructuring and resolve the overcapacity problem for industrialsectors.


Manager’s Report

[email protected]


CPI in China was pulled down by easing vegetable price given improved weathercondition, but the rebound of pork price will gradually push up the headline CPI in thelonger term. Meanwhile, demand recovery remained slow, as shown by lower-than-expected PPI reading. Liquidity condition will be hard to predict going forward, given thesurge in short-term rates. However, it is likely the central bank will stay with open marketoperations in the near term to curb the increase.

Both export and import growth in China surprised the market on the downside, given thegovernment’s crackdown on unreliable trade data. As external demand remained weak, asignificant improvement in export and the growth rate will stay in the single-digit level inthe next few months. But import growth is likely to be supported by state-led investmentactivities in the medium term, along with support from a low base effect.

In line with the consensus, China’s official manufacturing PMI fell to 50.1 in June from50.8 in May, suggesting a slowdown in manufacturing expansion. However the figure isstill pointing to a growing manufacturing sector in China although the pace of expansionhas slowed partly due to a weak recovery in domestic demand and unfavourable foreignorders. In 2Q13, the official PMI remained in the expansion territory with an averagereading of 50.5, similar to the previous quarter. Based on the data we believed thatoverall manufacturing activity has remained broadly stable, although certain industrieswould continue to face downside risks from over-investment and on-going governmentpolicies to eliminate inefficient production capacity. The Chinese economy should be ableto sustain its growth in 2013, with the continued expansion in the manufacturing sector inthe coming quarters as global conditions improve, as well as a continuation ofinfrastructure spending and supportive fiscal and credit policies.

3.5.3.4 Thailand Market

The SET index wrapped with a total return of 1.5% for the 1H13 in local currency terms toend at 1451.9 points. CPI tumbled 33.6% and core inflation plunged 44.7% during the firsthalf of the year as the government administered controls and tightening measures.Headline CPI averaged at 2.71% and inflation remained benign at 2.5% at end June. TheBath depreciated by 4.0% against US Dollar to Baht31.05 compared to US Dollar toBaht29.85 in January.

Strong index gain was contributed by mixed sector performances by various domesticand external sectors in the first two months. Thailand remained strong regionally, butbegan battling turbulences leading into March, regarding market concerns on the postrapid appreciation of baht, changes in margin loans together with negative news onpolitics which involved the rice pledging scheme. Steeping into 2Q13, the index startedwith a plunged of almost 5% in the first week over potential measures to curb lending bythe central bank on concerns over surging property and equities trade and the ruling onPrime Minister Yingluck Shinawatra’s assets concealment charges. The Monetary PolicyCommittee decided to bring the policy rate down by 25bp to 2.5% from 2.75% previouslyon the 29th of May, citing weaker-than-expected global recovery which led to weaker-than-expected GDP growth and inflation conditions. Production output was weaker thanexpected for the second month in June and exports fell 3.1% m.o.m with both auto andelectronics exports falling in the month. On the 30th of June, His Majesty the Kingendorsed Prime Minister Yingluck Shinawatra’s fifth cabinet.


Manager’s Report

[email protected]


Thailand’s market performance for 1H13 took many investors by surprise as the yearstarted off riding high but took the opposite direction starting May. The month of Junerecorded Thailand as one of the worst performing market in Asia, driven by a huge foreignsell down. We believe this wave will linger for a while and therefore we are cautiously onthe watch for hidden gems going into 2H13 as the Thai market might correct when themajority investors perceive the SET index has bottom up.

3.5.3.5 Philippine Market

The PSEi was the one of the best performing market in the region for the first half of2013, rising by 11.2% in local currency terms to close at 6,465.25 points. Pesodepreciated 5.2% against the USD to PHP43.135 /USD.

Philippine 1Q13 GDP surprised the market with a 7.8% y.o.y growth, up from a revised7.1% in the fourth quarter of 2012 thanks to government expenditure and privateconsumption.

The Monetary Board of Bangko Sentral ng Pilipinas (BSP) maintained the interest rateovernight borrowing and lending rates unchanged at 3.5% and 5.5% respectively. On theother hand, BSP cut the interest rate on special deposit accounts (SDAs) three times in1H13 to 2%.

Overseas foreign worker (OFW) remittances rose by 6% y.o.y in April to USD1.8 bil. On acumulative basis, 4 months 2013 remittances reached USD6.9 bil, a 5.7% y.o.y growth,above the BSP’s 5% growth forecast for the year.

Fitch has become the first credit rating agency to raise Philippines’ credit rating toinvestment grade, cited persistent current account surplus and stable growth trajectory.Subsequently, Standard & Poor’s followed suit to become the second rating agency togive Philippines an investment grade rating.

The Philippine market is expected to be challenging due to its high valuation of 19x 2013PE and worries on external economics especially on potential QE tapering in the US andChina credit squeeze. We remain watchful on the Philippine market after the recent selldown but eyeing on high dividend-yielding stocks and undervalued growth companies.

3.5.3.6 Taiwan Stock Market

The TWSE increased by 4.7% year to date to close at 8,062.21 points as at end of June,mainly due to further policy stimulus by government to boost economy, such as the newlysigned Taiwan Strait Services Trade Pact, more cross-strait collaboration in tourism andfinancial industries and the implementation of free economic pilot zone projects. TheTaiwanese Dollar depreciated by 3.17% against US Dollar to TWD29.982/USD.

Taiwan export orders dropped for the 4th consecutive month in May, indicating that itsexport outlook remains flattish. Export orders increased slightly (+1.8% m.om) in May butdeclined 0.4% y.o.y. Total exports for the first five months stood at USD17.4 mil, adecrease of 1.4% as compared to preceding period last year. This was mainly due to


Manager’s Report

[email protected]


lower export to Europe and Japan, which dropped 6.8% y.o.y and 16.5% y.o.yrespectively.

Taiwan’s economy grew 1.54% y.o.y in first quarter 2013, weighed down by sluggishexports and private consumption. The growth was well down from the 3.72% growth inthe fourth quarter 2013. In addition, the figure was barely half of the 3.26% growthestimated by the Directorate-General of Budget, Accounting and Statistics. As a result ofweaker than expected GDP growth in first quarter 2013, the government has lowered its2013 GDP growth forecast to 2.4% from initial forecast of 3.59%.

For technology sector, the PC shipments are expected to fall given the shift fromcomputers to tablets continues to gather momentum. The smart phone supply chain isexpected to benefit from the increasing demand in emerging market, especially the low-end smart phone segments. In addition, there are many new Apple’s products in thepipeline, including iPhone 5s, low-cost iPhone, iPad 5 and iPad mini 2. The Apple’ssupply chain is expected to benefit from the upcoming new launches in second half 2013.

Looking ahead, Taiwan economy growth, which is highly dependent on the export sector,would be capped by the flattish global economic outlook, slower growth in China and fundoutflow caused by the concerns of quantitative tapering by Federal Reserve.

3.5.3.7 South Korean Stock Market

The KOSPI index declined 6.07% to close at 1,863.32 points on concerns that the SouthKorean economy may be affected by an economic slowdown in China. Heightenedgeopolitical risks (from the military posturings by North Korea) and the weak Japaneseyen caused the KRW to depreciate by 7.30% against the USD to close at 1,142.06 in1H13.

For the 1st quarter of 2013, South Korea’s GDP grew by 1.5% y.o.y. On a q.o.q basis, theeconomy grew by 0.8%. According to the Bank of Korea, the country’s growth trajectoryremains largely intact based on the latest set of economic data.

For the month of June, inflation increased by 1.0% from a year earlier. Due to thepersistently stable prices of farm goods and oil, we expect inflationary pressure to remainlow in the coming quarters.

The unemployment rate in South Korea inched marginally higher to 3.2% in May from3.1% April. Job prospects in South Korea may continue to be sluggish in the immediateterm due to a slowdown in the manufacturing sector.

We expect the KOPSI index to remain range bound on concerns that there could bedownward revision in earnings in the 2nd half of the year due to sluggish economicoutlook. In addition, the sharp depreciation on the Japanese yen may continue to hurt thecompetitiveness of Korean exporters.


Manager’s Report

[email protected]


3.5.3.8 Indonesian Stock Market

The Indonesian stock market was the top performing market in the first half of 2013 as theJCI rose by 11.6% in local currency terms to close at 4,819 points. The Rupiahdepreciated by 2.1% against the Dollar to close the 1H13 at IDR10,004/USD.

Bank Indonesia (BI) increased its benchmark rate (BI rate) by 25 bps to 6.00% in Juneafter it was maintained at 5.75% since February 2012. The surprising but well receiveddecision was made as a pre-emptive response to the inflation outlook after thegovernment had cut the subsidies for fuel, increasing the subsidized fuel prices by 33%on average.

Inflation had been inching up after the government implemented a minimum wage policyand increased the electricity tariffs earlier this year. CPI inflation in June increased to5.9% y.o.y from the 5.47% recorded in May, mainly due to the higher food prices inanticipation of the fuel price hike announcement in late June. The Central Bank said itexpects inflation to peak at 8.0% after the fuel hike, but slow down to 7.6%, and revert to4.5% in FY14.

GDP growth continued to slow down to 6.02% y.o.y in 1Q13 compared to the 6.11% pacerecorded in 4Q12. The full year of 2012 growth was recorded at 6.23%. Bank Indonesia,in its latest June Monetary Policy Report forecasted the 2Q13 GDP growth to dip belowthat of the preceding quarter on continued weakness of the global economic conditionespecially in Europe and China. A slight slowdown in the domestic consumption was alsoexpected amid rising inflation.

Moody’s Investor Service has appreciated Indonesia’s government move in raisingsubsidized fuel prices as an effort to provide healthier 2013 state budget. Fitch Ratingalso has affirmed Indonesia’s sovereign rating of “BBB-“ and “stable” outlook as higherfuel prices could ease overheating symptoms and provide improved fundamentals onIndonesia’s economy over the longer term. On the other hand, Standard & Poor’sbelieves the impact of the fuel-price hike would be minimal. It downgraded Indonesia’scredit rating outlook to “stable” from “positive” in May due to uncertainty over theincreasing fuel subsidies.

We are in the view that the government’s move to increase subsidized fuel prices wouldbe good for the economy in the long term as the government would have the fiscal roomto stimulate it should the growth undershoots. While being cautiously optimistic on theIndonesian market, we will continue to follow our philosophy in the search for stocks withvalue and growth.

3.5.3.9 Australian Stock Market

The ASX 200 index recorded a gain of 3.3% to close the 1H13 at 4,803 points, retreatingafter a strong run-up in April. The Aussie Dollar depreciated by 13.6% against the USDollar to AUD1.09/USD.

Australia’s GDP grew just 0.6% q.o.q in 1Q, yielding a growth of 2.5% y.o.y (+3.1% in4Q12), the slowest pace since mid-2011. The expansion was supported by 1% rise in


Manager’s Report

[email protected]


exports and a rise in in household spending of 0.3% but they failed to offset a sharp dropin government investment.

The Reserve Bank of Australia (RBA) cut its benchmark interest rate by 25bps to a recordlow of 2.75% in May. The benign inflation outlook, a softening labour market, and anelevated currency that had been negatively affecting manufacturing gave the central bankthe scope for easing.

The CPI rose only by 2.5% y.o.y and 0.4% q.o.q in 1Q. The low 1Q outcome was mainlydue to the declines in the prices of fruits, vegetables, and auto fuel. The previous CPIwas 2.2% and economists were expecting 2.8% for 1Q. Although it has improved, thesubdued inflation rate is expected to increase the possibility of further interest rate cut.

3.5.4 Foreign Securities Investment - Market Outlook and Strategy

The MSCI Far East ex-Japan (USD) declined by 6.84% in 1H2013, underperforming theMSCI World index which rose 7.1%. During the 1st half of the year, institutional fundswere seen reducing their exposures to emerging markets in favour of the developedmarkets. This has been due mainly to data which shows the US economy has beengaining traction with steady job growth and continued recovery in the housing market. TheDow Jones Industrial index managed to register a gain of 13.8% for the 1st half of 2013 –during which it recorded a new record high. Within the Asia ex-Japan equity markets, thetop three performing markets were Vietnam (+16.3%), Indonesia (+11.6%) andPhilippines (+11.2%). On the other hand, the worst performing markets were China H-Shares (-18.6%), Hong Kong (-8.2%) and Korea (-6.7%).

Global stock markets rallied at the beginning of the year following a short-term deal thatstaved-off US “fiscal cliff”. However, major pullbacks were seen in the equities markettowards the month of June with investors turning cautious at the potential tapering off ofthe monthly bond purchases (under QE3). The concern was that the ultra-low borrowingrates which have helped to support economic growth and drive equity stocks to its all-timehigh may come to an end more sooner than later. China, which has been a major driver ofglobal growth has also shown signs of an economic slowdown, The World Bank slashedChina’s economic growth forecast this year to 7.7% from 8.4%, warning of a potentially“sharp” slowdown due to a fall in investment.

In anticipation of a potentially higher interest rate environment and a reduction of liquidityin the financial markets, we are taking profit on selective stocks. We would not be overlyconcerned about the prospect for a tapering of the quantitative easing in the US, as webelieve it would be done on a gradual basis without seriously harming the US economicrecovery.

We are cautiously optimistic on the Asia Pacific ex-Japan equity market region backed bya combination of improving demand and unchallenging valuations. We believe thefundamentals of the economy of the region remain largely intact backed by investments ininfrastructures and favourable fiscal and monetary policies.

Among the Asia-Pacific ex-Japan region, we are overweight on Hong Kong/China due itsundemanding valuation where both the price to book and price to earnings ratios aretrading below their longer term historical averages. Although there are signs that China is


Manager’s Report

[email protected]


facing an economic slowdown, we believe China would avoid a hard landing. In fact,China’s projected GDP growth is still one of the highest in the world and it may beunjustifiable for the Hong Kong/China equity markets to trade at their historical lows.

We would continue to adopt our value approach to investment, which is buying equitieswhich are fundamentally undervalued and that offer good upside potential. In addition, wewould take profit on stocks which have rallied beyond their fundamentals. In the eventthat we believe that the equities market is near its peak, we may seek to trim our equityexposure as we do not believe in fully invested at all times. Conversely, we may seek toincrease the equity exposures of the funds when we believe that the equity market isrelatively undervalued.

3.6 Policy On Rebates And Soft Commission

It is our policy to pay all rebates from stockbrokers to the respective Funds. However, softcommissions from stockbrokers (if any) will be retained by the Manager only if the goodsand services are demonstrable benefit to the unit holders such as research materials, dataquotation services and computer software incidental to the management of the Funds.

During the period, the Manager has not received any soft commissions fromstockbrokers.


PECBF

[email protected]

30Your Need

is our Focus

22 August 2013


PECBF

[email protected]

31Your Need

is our Focus

22 August 2013


PECBF

[email protected]

32Your Need

is our Focus

STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM EMERGING COMPANIES BALANCED FUND

In the opinion of the Manager, the accompanying unaudited financial statements ofPheim Emerging Companies Balanced Fund are drawn up in accordance with MalaysianFinancial Reporting Standards, International Financial Reporting Standards and theSecurities Commission's Guidelines on Unit Trust Funds in Malaysia so as to give a trueand fair view of the financial position of Pheim Emerging Companies Balanced Fund asat 30 June 2013 and of its results, changes in net assets value and cash flows for theperiod then ended.

For and on behalf of the Manager,PHEIM UNIT TRUSTS BERHAD

AZMI MALEK MERICANDirector

HOI WENG KONGDirector

Kuala Lumpur, Malaysia22 AUG 2013

PECBF

PHEIM EMERGING COMPANIES BALANCED FUND

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE PERIOD ENDED 30 JUNE 2013

Note 30.06.2013 30.06.2012

RM RM

INVESTMENT INCOME

Gross dividend income 202,426 181,969

Interest Income

- loans and receivables 14,409 13,971

- available for sale ("AFS") 92,692 101,920

Net gain/(loss) on financial assets at fair value through

profit and loss ("FVTPL") 7 406,287 863,627

Accretion of discounts, net of amortisation of premiums 8 48,071 66,090

on AFS financial assets

Net (loss)/gain on foreign exchange (14,359) 26,735

749,526 1,254,312

EXPENSES

Manager's fee 3 126,602 134,918

Trustee's fee 4 8,827 8,902

Auditor's remuneration 6,819 4,756

Tax agent's fee 1,280 1,731

Administrative expenses 18,955 12,870

162,483 163,177

Net income before tax 587,043 1,091,135

Income tax expenses 5 (10,226) (1,170)Net income after tax 576,817 1,089,965

Other comprehensive income

Net change in fair value of AFS financial assets (20,087) 1,993

Total comprehensive income for the period 556,730 1,091,958

Net income for the period is made up as follows:

Net realised income 1,457,025 2,022,560

Net unrealised (loss) (880,208) (932,595)576,817 1,089,965

Distribution for the year:

Net distribution 12 858,410 915,456

Net distribution per unit (sen) 12 6 6

Gross distribution per unit (sen) 12 6 6

The accompanying notes form an integral part of the financial statements.

33

PECBF


STATEMENT OF FINANCIAL POSITION (UNAUDITED) AS AT 30 JUNE 2013

Note 30.06.2013 30.06.2012 30.06.2011

RM RM RM

ASSETS

Investment 6 12,896,724 13,596,192 18,230,159

Deposits with licensed financial institutions 9 2,081,211 2,313,583 -

Amount due from brokers - 201,554 2,007,664

Other receivables 152,096 95,718 77,375

Tax recoverable 11,547 44,325 48,128

Cash at bank 1,670,903 2,167,518 3,808,908

TOTAL ASSETS 16,812,481 18,418,890 24,172,233

LIABILITIES

Amount due to brokers - 612,164 228,461

Amount due to Manager 11 19,562 25,743 29,608

Amount due to Trustee 1,381 1,426 1,579

Other payables and accruals 8,348 - 4,889,165

TOTAL LIABILITIES 29,291 639,333 5,148,813

UNITHOLDERS' EQUITY

Unitholders' capital 8,272,886 9,548,902 10,484,028

Retained earnings 8,500,390 8,181,152 8,496,355

Available for sale reserve 9,914 49,502 43,037

TOTAL EQUITY 13 16,783,190 17,779,556 19,023,420

TOTAL EQUITY AND LIABILITIES 16,812,481 18,418,890 24,172,233

UNITS IN CIRCULATION 13 (a) 14,900,979 16,023,934 16,865,560

NET ASSET VALUE ("NAV") PER UNIT 14 1.1263 1.1096 1.1279


34

PECBF


STATEMENT OF CHANGES IN EQUITY (UNAUDITED)



Unitholders' Retained AFS Total

Capital earnings reserves Equity

Note 12(a) Note 12(b) Note 12(d)

and (c )

RM RM RM RM

At 1 January 2012 9,909,020 8,006,642 47,509 17,963,171

Total comprehensive income for

the period - 1,089,965 1,993 1,091,958

Creation of units 996,271 - - 996,271

Cancellation of units (1,239,688) - - (1,239,688)

Distribution equalisation (116,701) - (116,701)

Distribution for the period (915,456) (915,456)Balance at 30 June 2012 9,548,902 8,181,151 49,502 17,779,556

At 1 January 2013 8,700,042 8,781,983 30,001 17,512,026

Effects of adopting FRS 139 - - -

8,700,042 8,781,983 30,001 17,512,026


the period - 576,817 (20,087) 556,730


Cancellations of units (1,169,686) - - (1,169,686)

Distribution equalisation (190,699) - - (190,699)

Distribution for the period - (858,410) - (858,410)Balance at 30 June 2013 8,272,886 8,500,390 9,914 16,783,190

35

PECBF


STATEMENT OF CASH FLOWS (UNAUDITED)


01.01.2013 01.01.2012

to to

30.06.2013 30.06.2012

RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sale of investments 7,756,606 7,048,267

Purchase of investments (4,867,170) (4,681,173)

Dividends received 90,279 124,636

Interest received from deposits with licensed

financial institutions and other debt securities 108,966 117,158

Management fee paid (129,040) (136,857)

Trustee's fee paid (8,971) (8,860)

Payment for other fees and expenses (12,300) (29,338)

Income distribution paid (19,586) (19,586)

Net cash generated from operating and investing activities 2,918,784 2,414,247

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from creation of units 110,316 114,304

Payment for cancellation of units (1,383,299) (1,412,764)

Net cash used in financing activities (1,272,983) (1,298,460)

NET INCREASE IN CASH

AND CASH EQUIVALENTS 1,645,800 1,115,787

CASH AND CASH EQUIVALENTS AT

BEGINNING OF YEAR 2,106,314 3,365,314

CASH AND CASH EQUIVALENTS AT THE END OFTHE PERIOD 3,752,114 4,481,101

Cash and cash equivalents comprise the following:

Deposits with licensed financial institutions (Note 9) 2,081,211 2,313,583

Cash at bank (Note 10) 1,670,903 2,167,5183,752,114 4,481,101


36

PECBF


NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)


1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

The unaudited financial statements of the Fund are prepared under the historical cost convention unlessotherwise indicated in this summary of significant accounting policies. The financial statements complywithin Malaysian Financial Reporting Standards ("MFRSs"), International Financial Reporting Standards("IFRSs") and the Securites Commission's Guidelines on Unit Trust Funds in Malaysia.

All significant accounting policies set out below are consistent with those applied in the previuos year otherthan the adoption of the new and revised Malaysain Financial Reporting Synadards ("MFRS") andAmendments to MFRSs issued by the Malaysian Accounting Standards Board ("MASB") which aremandatory for the financial periods beginning on or after 1 January 2013 as disclosed in Note 2.2 below.

Pheim Emerging Companies Balanced Fund ("the Fund") was established pursuant to a Master Deed dated 11January 2002 as amended by Second Supplemental Master Deed dated 29 April 2013 between the Manager;Pheim Unit Trusts Berhad, the Trustee; Maybank Trustees Berhad and the registered unit holders of the Fund.

The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 of the MasterDeed, which includes investments in equities and fixed income securities traded on Bursa Malaysia or any othermarkets considered as Eligible Market. The Fund commenced operations on 28 January 2002 and will continue itsoperations until terminated by the Trustee as provided under Part 12 of the Master Deed.

The Manager, Pheim Unit Trusts Berhad, is a public company incorporated in Malaysia. It is a wholly ownedsubsidiary of the Pheim Asset Management Sdn Bhd, a private company incorporated in Malaysia. Its principalactivity is the management of unit trust funds. Pheim Asset Management Sdn. Bhd. has been appointed by theManager as the External Investment Manager of the Fund with responsibility for the provision of investmentmanagement services to the Fund.

The principal place of business of the Fund is located at 7th Floor, Menara Hap Seng, Jalan P.Ramlee, 50250Kuala Lumpur.

The unaudited financial statements are presented in Ringgit Malaysia (RM).

The unaudited financial statements were authorised for issue by the Board of Directors of the Manager inaccordance with the resolution of the directors on 22 August 2013.

37

PECBF

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.2 New MFRSs and Amendments to MFRSs That Are Effective

Amendments to MFRS 101 Presentation of Financial Statements

- Presentation of Items of Other Comprehensive Income

MFRS 13 Fair Value Measurement


- (Annual improvements 2009-2011 Cycle)

Amendments to MFRS 132 Financial Instruments : Presentation


Amendments to MFRS 134 Interim Financial Reporting


Amendments to MFRS 7 Financial Instruments : Disclosures

- Offsetting Financial Assets and Financial Liabilities

The adoption of the above new and revised MFRS and Amendments to MFRSs did not result in significant

changes to the Company's accounting policies and have no significant financial impact on the amounts

reported in the financial statements.

2.3 New MFRSs and Amendments to MFRSs That Are Not Yet Effective and

Have Not Been Early Adopted

The Fund has not early adopted the following new MFRSs and the amendments to MFRSs issued by the

Malaysian Accounting Standards Board ("MASB") that are relevant to its operations but are not yet

effective:-

Effective for

financial period

beginning

on or after

Amendments to MFRS 132 Financial Instruments : Presentation 1 January 2014

- Offsetting Financial Assets and

Financial Liabilities

MFRS 9 Financial Instruments (IFRS9 issued 1 January 2015

by International Accounting Standard

Board ("IASB") in November 2009)

MFRS 9 Financial Instruments (IFRS 9 issued 1 January 2015

by IASB in October 2010

The Fund will adopt the above MFRSs and amendments to MFRSs when they become effective and they arenot expected to have any significant impact on the financial statements of the Fund upon their initialapplication other than the classification and measurement of financial assets under MFRS 9. MFRS 9replaces the multiple classification and measurement models in MFRS 139 with a single model thatclassifies financial assets into only two categories: measured at fair value through profit or loss, or atamortised cost, depending on the entity's business model for managing the financial assets and thecontractual cash flow characteristics of the financial assets.

38

PECBF


2.4 Significant Accounting Policies

(a) Financial Assets

(i) Financial assets at fair value through profit of loss ("FVTPL")

(ii) Available-for-sale ("AFS") financial assets

Financial assets are classified as financial assets at FVTPL if they are held for trading or aredesignated as such upon initial recognition. Financial assets held for trading include securities andfixed income securities and collective investments scheme acquired principally for the purpose ofselling them in near term.

Subsequent to initial recognition, financial assets at the FVTPL are measured at fair value at the dateof statement of financial position. Changes in the fair value of those financial instruments are recordedin "Net gain or loss on financial assets at FVTPL". Interest earned and dividend revenue elements ofsuch instruments are recorded separately in "Interest income" and "Gross dividend income",respectively. Foreign exchange differences on financial assets at FVTPL are not recognised separatelyin profit and loss but included in net gains or net losses on changes in fair value of financial assets atFVTPL.

AFS financial assets are financial assets that are designated as available for sale or are not classifiedas financial assets at FVTPL or loans and receivables.

After initial recognition, AFS financial assets are measured at fair value. Gains or losses from changesin fair value of the AFS financial assets are recognised in other comprehensive income, except thatimpairment losses, foreign exchange gains and losses on monetary instruments, dividend income andinterest calculated using effective interest method are recognised in profit or loss.

The cumulative gains or loss previously recognised in other comprehensive income is reclassifiedfrom equity to profit or loss as a reclassification adjustment when the financial assets is derecognised.Interest income calculated using the effective interest method is recognised in profit or loss.Dividends on an AFS equity instrument are recognised in profit or loss when the Fund's right toreceive payment is established.

Fair value is the amount for which an asset could be exchanged, or liability settled, betweenknowledgeable, willing parties in an arm's length transaction. The fair value for financial instrumentstraded in active markets at the reporting date is based on their quoted prices or binding dealer pricequotations, without deduction for transaction costs.

A financial assets is derecognised where the asset is disposed and the contractual right to receive cashflow from the asset has expired. On derecognition of a financial assets in its entirety, the differencebetween the carrying amount and the sum of the consideration received and any cumulative gain orloss that had been recognised in other comprehensive income is recognised in profit or loss.

Financial assets are recognised in the statement of financial position when, and only when, the Fund becomea party to the contractual provisions of the financial instruments. Regular way of purchase and sale ofinvestments in financial instruments are recognised on trade dates.When financial assets are recognisedinitially, they are measured at fair value, plus attributable transaction cost, for investment not at fair valuethrough profit or loss.

The Fund determines the classification of its financial assets at the initial recognition, and the categoriesinclude financial assets at fair value through profit or loss, available-for-sale financial assets and loans andreceivables.

39

PECBF


2.4 Significant Accounting Policies (Contd.)

(a) Financial Assets (Contd.)

(ii) AFS financial assets (Contd.)

(iii) Loan and receivables

(b) Impairment of Financial Assets

(i) AFS financial assets

Financial assets with fixed or determinable payments that are not quoted in an active market areclassified as loans and receivables. The Fund includes short term receivables such as balances duefrom broker, Manager and other receivables in the classification. Loans and receivables are recognisedinitially at fair value including transaction costs.

Subsequent to initial recognition, receivables are measured at amortised cost using effective interestmethod. Gains and losses are recognised in profit or loss when the loans and receivables arederecognised or impaired, and through the amortisation process.

Significant or prolonged decline in fair value below cost, weaken fundamental, significant financialdifficulties of the issuer or obligor, and the disappearance of an active trading market areconsiderations to determine whether there is objective evidence that investment securities classified asAFS financial assets are impaired. At end of each financial year, the Manager would receiveimpairment proposal from the Fund's external investment manager, if any financial assets of the Fund,in their professional opinion, warrant an impairment exercise.

If an AFS financial assets is impaired, an amount comprising the differences between its cost (net ofany principal payment and amortisation) and its current fair value, less any impairment loss previouslyrecognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on AFS equity investments are not reversed in profit or loss in the subsequentperiods. Increase in fair value, if any, subsequent to impairment loss is recognised in othercomprehensive income. For AFS debt investments, impairment losses are subsequently reversed inprofit or loss, up to the amount previously recognised as impairment loss, if an increase in the fairvalue of the investment can be objectively related to an event occuring after the recognition of theimpairment loss in profit or loss.

The Fund assesses at each reporting date whether there is any objective evidence that a financial asset isimpaired.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assetswithin the period generally established by regulation or convention in the marketplace concerned. Allregular way purchases and sales of financial assets are recognised or derecognised on trade date,i.e.the date that the fund commit to purchase or sell the asset.

40

PECBF



(b) Impairment of Financial Assets (Contd.)

(ii) Trade and other receivables and other financial assets carried at amortised cost

(c) Classification of Realised and Unrealised Gain and Losses

(d) Financial Liabilities

Unrealised gain and losses comprise changes in fair value of financial instruments for the period fromreversal of prior period's unrealised gain and losses for financial instruments which were realised (i.e. sold,redeemed or matured) during the reporting period.

Realised gains and losses on disposals of financial instruments classified as part of "at fair value throughprofit or loss" are calculated using weighted average method. They represent the difference between aninstrument's initial carrying amount and disposal amount, or cash payment or receipts made of derivativecontracts (excluding payments or receipts on collateral margin accounts for such investments).

Financial liabilities are classified according to the substance of the contractual arrangements entered into andthe definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial positionwhen, and only when, the Fund become a party to the contractual provisions of the financial instrument.Financial liabilities are classified as other financial liabilities.

The Fund's financial liabilities which include amount due to broker, Manager and other payables arerecognised initially at fair value plus directly attributable transaction costs and subsequently measured at theamortised cost using effective interest method.

A financial liability is derecognised when the obligation under the liability is extinguished. Gains and lossesare recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

To determine whether there is objective evidence that an impairment loss on financial assets has beenincurred, the Fund considers factors such as the probability of insolvency or significant financial difficultiesof the debtor and default or significant delay in payments.

If any such evidence exists, the amount of impairment loss is measured as the difference between the assets'scarrying amount and the present value of estimated future cash flows discounted at the financial asset'soriginal effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assetswith the exception of trade receivables, where the amount is reduced through the use of an allowanceaccount. When a trade receivable becomes uncollectible, it is written off against allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be relatedobjectively to an event occurring after the impairment was recognised, the previously recognised impairmentloss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at thereversal date. The amount of reversal is recognised in profit or loss.

41

PECBF



(e) Foreign Currencies

(f) Unitholders' Capital

(g) Income Distribution

(h) Cash and Cash Equivalents

(i) Income Recognition

Cash and cash equivalents comprise cash at bank and deposits with financial institutions which haveinsignificant risk of changes in value.

Income is recognised to the extent that is probable that the economic benefits will flow to the Fund and theincome can be realiably measured. Income is measured at fair value of consideration received or receivable.

Dividend income is recognised when the Fund's right to receive payment is established.

Interest income, which includes the accretion of discount and amortisation of premium on fixed incomesecurities, is recognised using effective interest method.

The financial statements of the Fund are measured using the currency of the primary economic environmentin which the Fund operates ("the functional currency"). The financial statements are presented in RinggitMalaysia (RM), which is also the Fund's functional currency.

In preparing the financial statements, transactions in curriencies other than the Fund's functional currency(foreign curriencies) are recorded in the functional currency using teh exchange rates prevailing at the datesof the transactions. At the end of each reporting period, foreign currency monetary assets and liabilities aretranslated at exchange rates prevailing at the end of the reporting period. Non-monetary items that aremeasured at fair value in a foreign currency are translated using exchanges rates at the date when the fairvalue was determined.

Exchnages differences arising from the settlement of foreign currency transactions and from the translationof foreign currency monetary assets and liabilities are recognised in profit or loss.

Exchange differences arising from teh translation of non-monetary items caaried at fair value are included inprofit or loss for the period except for the differences arising on the translation of non-monetary items inrespect of which gains or losses are recognised directly in equity. Exchange differences arising from suchnon-monetary items are recognised directly to equity.

The unitholders' contributions to the Fund meet the definition of puttable instruments classified as equityinstruments under the revised MFRS 132.

Distribution equalisation represents the average distributable amount included in the creation andcancellation prices of units. This amount is either refunded to Unitholders by way of distribution and/oradjusted accordingly when units are cancelled.

Income distributions are at the discretion of the Manager. Income distribution to the Fund's unitholders isaccounted for as a deduction from realised reserves except where distribution is sourced out of distributionequalisation which is accounted for as deduction from Unitholders' capital.

42

PECBF



(j) Income Tax

(k) Segment Reporting

2.5 Significant Accounting Estimates and Judgements

3. MANAGER'S FEE

4. TRUSTEE' S FEE

The Trustee is entitled to a fee of 0.07% per annum based on NAV of the Fund (before deducting the manager'sand trustee's fee for the day) calculated and accrued on a daily basis, subject to a minimum of RM18,000 p.a.

The Manager is entitled to an annual management fee of 1.50% per annum of the NAV of the Fund (beforededucting manager's and trustee's fees for the day) calculated and accrued on a daily basis.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxauthorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantivelyenacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognisedoutside profit or loss, either in other comprehensive income or directly in equity.

No deffered tax is recognised as there are no material temporary differences.

For management purposes, the Fund is managed by 2 main portfolios, namely (1) equity securities and (2)fixed income instruments. Each segment engages in separate business activities and the operating results areregularly reviewed by the Manager, External Investment Manager and the fund's Investment Committee. TheExternal Investment Manager and the Fund Investment Commitee jointly assumes the role of chief operationdecision maker, for performance assessment purposes and to make decision about resources allocated to eachinvestment segment.

The preparation of financial statements in accordance with MFRS and IFRS requires the use of certainaccounting estimates and exercise of judgements. Estimates and judgements are continually evaluated andare based on past experience, reasonable expectations of future events and othe factors.

No major judgements have been made by the Manager in applying the Fund's accounting policies. There areno key assumptions concerning the future and other key sources of estimation uncertainty at the reportingdate, that have significant risk of causing material adjustment to the carrying amounts of assets andliabilities within next year.

43

PECBF

5. TAXATION

30.06.2013 30.06.2012

RM RM

Current year Malaysian tax 10,226 1,170

Under provision in prior years - -Malaysian tax expense based on result for the year 10,226 1,170

30.06.2013 30.06.2012

RM RM

Net (loss)/income before taxation 587,043 1,091,135

Taxation at Malaysian statutory rate of 25% 146,761 272,784

(2012: 25%)

Tax effects of:

Losses/(Income) not subject to tax (187,381) (309,073)

Expenses not deductible for tax purposes 7,266 5,876

Restriction on tax deductible expenses for unit trust

funds 43,581 31,584Tax expense for the financial period 10,226 1,170

6. INVESTMENTS

Financial assets at fair value through profit or loss 30.06.2013 30.06.2012

(Note 7) RM RM

Quoted equities

- in Malaysia 3,554,825 3,219,305

- outside Malaysia 3,442,039 4,185,907

6,996,864 7,405,212

Available-for-sale financial assets (Note 8)

- Unquoted fixed income securitiesin Malaysia 5,899,860 6,190,980

Total investments 12,896,724 13,596,192

A reconciliation of tax expense/(income) applicable to net income/(loss) before tax at the statutory income taxrate to income expense at the effective income tax rate of the Fund is as follows:

Income tax is calculated at Malaysian statutory tax rate 25% (2012 : 25%) of the estimated assessable income forthe period.

The tax charge for the period is in relation to the taxable income earned by the Fund after deducting allowableexpenses. In accordance with Schedule 6 of Income Tax Act 1967, interest income earned by the Fund isexempted from tax.

44

PECBF

7. FINANCIAL ASSETS AT FVTPL

30.06.2012 30.06.2012

RM RM

Financial assets at FVTPL :Quoted equities 6,996,865 7,405,212

Net gain/(loss) on financial assets at FVTPL comprised:

Realised gain/(loss) on disposals 1,286,495 1,796,222

Unrealised changes in fair values (880,208) (932,595)406,287 863,627

The currency exposure profile of financial assets at

FVTPL is as follows:

- Ringgit Malaysia 3,554,825 3,219,305

- Hong Kong Dollar 2,329,216 3,071,895

- Indonesian Rupiah 384,874 504,714

- Singapore Dollar 242,660 358,948

- Thai Baht - 250,350

- South Korea Won 293,720 -

- Phillipines Peso 191,570 -6,996,865 7,405,212

Financial assets at FVTPL as at 30 June 2013 are as detailed below:

Name of Counter Quantity Cost Fair value % of

RM RM NAV

QUOTED EQUITIES

- IN MALAYSIA

Main Market

Construction

Muhibbah Engineering (M) Bhd 220,000 327,226 380,600 2.27

Industrial Products

Ann Joo Resources Bhd 100,000 237,369 130,000 0.77

Favelle Favco Bhd 150,000 259,399 426,000 2.54

Jaya Tiasa Holdings Bhd 64,000 156,080 127,360 0.76

Kian Joo Can Factory Bhd 100,000 235,833 280,000 1.67

TA Ann Holdings Bhd 75,000 348,952 283,500 1.69

489,000 1,237,633 1,246,860 7.43

Properties

KSL Holdings Bhd 146,500 285,892 291,535 1.74

Matrix Concepts Holdings Bhd 303,000 666,600 766,590 4.57

Metro Kajang Holdings Bhd 80,000 177,396 202,400 1.21

529,500 1,129,888 1,260,525 7.52

45

PECBF

7. FINANCIAL ASSETS AT FVTPL (CONTD.)


RM RM NAV

QUOTED EQUITIES

- IN MALAYSIA (CONTD.)

Plantations

TH Plantation Bhd 168,000 351,022 307,440 1.83

Trading/Services

Engtex Group Bhd 58,000 59,952 54,520 0.32

Tenaga Nasional Bhd 37,000 258,644 304,880 1.82

95,000 318,596 359,400 2.14

TOTAL QUOTED

EQUITIES- IN MALAYSIA 1,501,500 3,364,365 3,554,825 21.19

QUOTED EQUITIES- OUTSIDE MALAYSIA

Hong Kong Stock Exchange

("HKSE")

Anhui Expressway Co Ltd-H 100,000 176,391 150,301 0.90

China Merchants Bank-H 90,000 530,117 474,365 2.83

Chongqing Rural Commercial-H 160,000 259,602 212,458 1.27

Fufeng Group Ltd 360,000 525,488 368,054 2.19

Ind & Comm BK of China 239,275 509,291 475,612 2.83

K Wah International Holdings 100,000 162,471 145,006 0.86

Lai Sun Development 1,800,000 163,567 148,102 0.88

West China Cement Limited 460,000 253,011 215,472 1.28

Tungda Inovative Lighting Holdings Ltd 1,840,000 - - -

Vodone Ltd 635,800 468,609 139,846 0.83

5,785,075 3,048,547 2,329,216 13.87

46

PECBF



RM RM NAV

QUOTED EQUITIES

- OUTSIDE MALAYSIA (CONTD.)

Jakarta Stock Exchange

("JSX")

Hexindo Adiperkasa TBK PT 130,000 266,382 180,523 1.08

Tambang Batubara Bukit Asam 50,000 369,340 204,351 1.22

180,000 635,722 384,874 2.30

Korea Stock Exchange

("KE")

Hana Financial Group 1,500 172,451 137,944 0.82

Samsung Electronics Co. Ltd 42 174,772 155,775 0.93

1,542 347,223 293,719 1.75

Philippines Stock Exchange

("PSE")

San Miguel Pure Foods Co. 12,000 262,256 191,570 1.14

Singapore Stock Exchange

("SGX")

Fibrechem Technologies 188,000 - - -

Indofood Agri Resources Limited 100,000 460,314 242,660 1.45

288,000 460,314 242,660 1.45

TOTAL QUOTED

EQUITIES

- OUTSIDE MALAYSIA 6,266,617 4,754,062 3,442,039 20.51

TOTAL QUOTED EQUITIES 8,118,427 6,996,865 41.70

TOTAL FINANCIAL ASSETSAT FVTPL 8,118,427 6,996,865 41.70

EXCESS OF FAIR VALUEOVER COST (1,121,562)

8. AFS FINANCIAL ASSETS

30.06.2013 30.06.2012

RM RM

Unquoted fixed income securities 5,899,860 6,190,980

Accretion of discounts, net of

amortisation of premiums on AFS financial assets 16,796 48,071

47

PECBF

8. AFS FINANCIAL ASSETS (CONTD.)

AFS financial assets as at 30 June 2013 are as detailed below:-

Nominal Cost * Fair value % of

Name of Counter Amount RM RM NAV

UNQUOTED FIXED INCOME SECURITIES

Government Investment Issues 1,700,000 1,706,288 1,713,940 10.21

- 02/14 (Not Rated)

Malaysian Government Securities 1,700,000 1,707,130 1,700,170 10.13

- 10/15

WCT Engineering 2,500,000 2,476,528 2,485,750 14.81

- 12/13 (Rating: AA-)

5,900,000 5,889,946 5,899,860 35.15

EXCESS OF FAIR VALUEOVER COST 9,914

* Cost of fixed income securities include accretion of discount and/or amortisation of premium.

9. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

30.06.2013 30.06.2012RM RM

Licensed investment bank 2,081,211 2,313,583

Average

remaining

WAEIR maturities

30.06.2013 30.06.2012 30.06.2013 30.06.2012

% % Days Days

Licensed investment bank 2.91 2.95 1 2

The weighted average effective interest rate ("WAEIR") per annum and the average remaining maturities of

48

PECBF

10. CASH AT BANK

The currency exposure profile of bank balances is as follows:-

30.06.2013 30.06.2012

RM RM

Rinngit Malaysia 1,646,762 378,877

United States Dollar 11,717 151,671

Singapore Dollar - 258,117

South Korean Won - 107,335

Thai Baht - 27,800

Indonesia Rupiah - 668,070

Philippines Peso - 17,136

Hong Kong Dollar 12,424 558,5111,670,903 2,167,518

11. AMOUNT DUE TO MANAGER

30.06.2013 30.06.2012

RM RM

Amount due from creation/(release) of units - (4,699)

Management fee 19,562 (21,045)19,562 (25,743)

12. INCOME DISTRIBUTION

Distribution declared and paid on 28 April 2013 was 6.00 sen net per unit.

Distribution to unitholders are from the following sources:

2013 2012

RM RM

Dividend income 6,563 4,296

Interest income 20,051 27,175

Net realised gain from sale of investment 66,386 304,607

Net amortization of premium on corporate bond 3,212 4,584

Other Income 123 40

96,335 340,702

Less:

Expenses 30,697 41,550

Taxation - -

Previous year's realised gain 65,638 299,152

Distribution out of realised reserves 792,772 616,304Distribution for the period 858,410 915,456

Units in circulation at book closing date 14,306,838 15,257,606

Gross distribution per units (sen) 6 6

Net distribution per unit (sen) 6 6

Date of distribution 26.04.2013 27.04.2012

49

PECBF

13. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS

Note 30.06.2013 30.06.2012

RM RM

Unitholders' capital (a) 8,272,886 9,548,902

Retained earnings

- Realised (b) 8,274,627 7,321,000

- Unrealised (c) 225,763 860,151

8,500,390 8,181,151

AFS reserve (d) 9,914 49,502Total equity / Net asset value 16,783,190 25,960,706

(a) Unitholders' Capital

Number Number

of units RM of units RM

Balance at beginning

of the year 15,237,393 8,700,042 16,305,634 9,909,020

Add: Creation of units 846,046 933,229 889,540 996,271

Less: Cancellation of units (1,182,460) (1,169,686) (1,171,240) (1,239,688)

Distribution equalisation - (190,699) - (116,701)Balance at end of the period 14,900,979 8,272,886 16,023,934 9,548,902

01.01.2013 to 30.06.2013 01.01.2012 to 30.06.2012

In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 14 August 2006,the maximum number of units that can be issued for circulation is 100,000,000 units. As at 30 June 2013, thenumber not yet issued is 85,099,021 units (30 June 2012: 83,976,066).

50

PECBF

13. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (CONTD.)

(b) Realised - Distributable

30.06.2013 30.06.2012

RM RM

Balance at the beginning of period 9,436,428 8,079,086

Net income/(loss) after tax 576,817 1,089,965

Net unrealised (gain)/loss attributable to

investments held transferred to

unrealised reserve (865,850) (905,860)

Net unrealised foreign exchange

loss/(gain) attributable to foreign currency

monetary items transferred to unrealised

reserve (14,358) (26,735)

Distribution out of realised reserve (858,410) (915,456)Balance at the end of period 8,274,627 7,321,000

(c) Unrealised - Non-distributable 30.06.2013 30.06.2012

RM RM

Balance at the beginning of period (654,445) (72,444)

Effects of adoption of FRS 139 - -

(654,445) (72,444)

Net unrealised (loss)/gain attributable to

investment held transferred from

realised reserve 865,850 905,860

Net unrealised foreign exchange

(loss)/gain attributable to foreign

currency monetary items transferred from

realised reserve 14,358 26,735Balance at the end of period 225,763 860,151

51

PECBF

14. NET ASSET VALUE PER UNIT

RM RM/Unit RM RM/Unit

Net asset value attributable

to unitholders for

issuing/redeeming of units 16,819,557 1.1288 17,798,584 1.1108

Effect from adopting bid

prices as fair value (36,367) (0.0025) (19,028) (0.0012)


to unitholders per

financial statements 16,783,190 1.1263 17,779,556 1.1096

15. UNITS HELD BY RELATED PARTIES

30.06.2013 30.06.2012

Number of Valued at Number of Valued at

units NAV units NAV

RM RM

Directors of the Manager # - - 144,275 160,082

# The Directors of the Manager are the legal and beneficial owners of the units.

30 June 201230 June 2013

Net asset value attributable to unitholders is classified as equity in the statement of financial position.

Quoted financial assets have been valued at the bid prices at the close of business in accordance with theprovision of MFRS 139. For the purpose of calculation of net asset value attributable to unitholders per unit forthe issuance and redemption of units in accordance with the Deed, quoted financial assets are stated at the lastdone market price.

A reconciliation of net asset value attributable to unitholders for issuing/redeeming units as at 30 June 2013 andthe net assets value attributable to unitholders per the financial statements is as follows:-

52

PECBF

16. TRANSACTIONS WITH BROKERS

1 January 2013 to 30 June 2013

% of Total

Value of % of Total Brokerage Brokerage

Trade Trade Fees Fees

RM % RM %

MIDF Amanah Investment Bank Bhd 11,160,000.00 46.94 - -

DBS Vickers Securities Ltd 2,820,601.07 11.86 7,072 20.98

- Hong Kong

Hong Leong Investment Bank 996,740.00 4.19 743 3.20

CCB International Securities Ltd 993,341.04 4.18 3,111 9.23

CIMB-GK Securitites Ltd - HK 895,766.24 3.77 2,236 6.63

BOCI Securities Ltd 693,936.46 2.92 3,211 9.52

AmInvestment Bank Bhd 679,662.39 2.86 1,534 4.55

Kenanga Investment Bank Bhd 648,746.70 2.73 1,461 4.33

Maybank Investment Bank Bhd 627,934.26 2.64 1,414 4.19

CIMB Investment Bank Bhd 571,239.11 2.40 1,284 3.81

Other brokers 3,687,647 15.51 11,649 34.5523,775,614 100.00 33,715 100.00

17. MANAGEMENT EXPENSE RATIO ("MER")

30.06.2013 30.06.2012

Management expense ratio 0.94% 0.90%

18. PORTFOLIO TURNOVER RATIO ("PTR")

30.06.2013 30.06.2012

Portfolio turnover (times) 0.37 0.32

This is the ratio of the sum of fees ( inclusive of the manager's, trustee's audit and other proffessional fees) andother administrative expenses of the Fund to the average NAV of the Fund calculated on a daily basis. Theaverage NAV of the Fund for the period ended 30 June 2013 was RM 17,195,396 (30 June 2012: RM18,181,155)

This is the ratio of average acquisitions and disposals of the Fund for the period to the average NAV of theFund calculated on a daily basis.

Details of transactions with stockbroking companies and other investment banks for the period ended 30 June

53

PECBF

19. SEGMENT INFORMATION

The Manager and Investment Committee of the Fund are responsible for allocating resources available to theFund in accordance with the overall investment strategies as set out in the investment Guidelines of the Fund.The Fund is managed by two segments:

● A portfolio of equity instruments● A portfolio of fixed income portfolio, including debt securities and deposits with financial institutions.

The investment objective of each segment is to achieve consistent returns from the investments in each segmentwhile safeguarding capital by investing in diversified portfolios. There have been no changes is reportablesegments in the current financial period. The segment information provided is presented to the Manager andInvestment Committee of the Fund.

01.01.2013 to 30.06.2013 01.01.2012 to 30.06.2012Fixed Fixed

Equity Income Total Equity Income Total

Portfolio Portfolio Portfolio PortfolioRM RM RM RM RM RM

Gross dividend income 202,426 - 202,426 181,969 - 181,969

Interest Income - 107,101 107,101 - 115,891 115,891

Net (loss)/gain from

investments:

- financial assets at fair value

through profit and loss

("FVTPL") 406,287 - 406,287 863,627 - 863,627

- available for sale ("AFS") 48,071 48,071 48,071 - 48,071

- net realised gain on sale of

investments - - - - - -

- net amortisation of

- discount/(premium) - - - - 18,019 18,019

- net unrealised loss on

foreign exchange (14,359) - (14,359) 26,735 - 26,735

- net unrealised gain on

changes in value of

investments - - - - - -

Total segment operating (loss)/

income for the period 642,425 107,101 749,526 1,120,402 133,910 1,254,312

Deposit with financial institutions 2,081,211 2,081,211 - 2,313,583 2,313,583

Financial assets at FVTPL 6,996,865 - 6,996,865 7,405,212 - 7,405,212

AFS financial assets - 5,899,860 5,899,860 - 6,190,980 6,190,980Other assets 113,409 38,686 152,095 59,131 36,587 95,718

Total segment assets 7,110,274 8,019,757 15,130,031 7,464,343 6,227,567 16,005,493

Other liabilities - - - 612,164 - 612,164Total segment liabilities - - - 612,164 - 612,164

During the period, there were no transactions between operating segments.

54

PECBF

19. SEGMENT INFORMATION (CONTD.)

30.06.2013 30.06.2012

RM RM

Net reportable segment operating (loss)/income 749,526 1,254,312

Expenses (162,483) (163,177)

Net (loss)/income before tax 587,043 1,091,135

Income tax expense (10,226) (1,170)Net (loss)/income after tax 576,817 1,089,965

30.06.2013 30.06.2012

RM RM

Total segment assets 15,130,031 16,005,493

Tax recoverable 11,547 44,325

Amount due from Broker - 201,554

Cash at bank 1,670,903 2,167,518

Total assets of the Fund 16,812,481 18,418,890

Total segment liabilities - 612,164

Other payables and accruals 8,348 -

Amount due to Manager 19,562 25,743

Amount due to Trustee 1,381 1,426

Total liabilities of the Fund 29,291 27,170

20. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

Expenses of the Fund are not considered part of the performance of any operating segment. The followingtable provides a reconciliation between reportable segment income/(loss) and operating profits/(loss).

The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either fair value or atamortised cost based on their respective classification. The significant accounting policies in Note 2 describe howthe classes of financial instruments are measured, and how income and expenses, including fair value gains andlosses are recognized. The following table analyses the financial assets and liabilities of the Fund in the statementof financial position by the class of financial instrument to which they are assigned, and therefore by themeasurement basis.

In addition, certain assets and liabilities are not considered to be part of the net assets or liabilities of anindividual segment. The following table provides reconciliation between the total reportable segment assetsand liabilities and total assets and liabilities of the Fund.

55

PECBF

20. FINANCIAL INSTRUMENTS (CONTD.)

(a) Classification of financial instruments (Contd.)

Financial

liabilities

Financial AFS at

assets at financial Loan and amortised

FVTPL assets receivables cost Total

30-Jun-13 RM RM RM RM RM

Assets

Investments 6,996,864 5,899,860 - - 12,896,724

Deposits with licensed

financial institutions - - 2,081,211 - 2,081,211

Amount due from brokers - - - - -

Other receivables - - 152,096 - 152,096

Cash at bank - - 1,670,903 - 1,670,903Total financial assets 6,996,864 5,899,860 3,904,210 - 16,800,934

Total non-financial assets 11,54716,812,481

Liabilities

Amount due to Brokers - - - - -

Amount due to Manager - - - 19,562 19,562Amount due to Trustee - - - 1,381 1,381

Other payables - - - 8,348 8,348Total financial liabilities - - - 29,291 29,291

Financial

liabilities

Financial AFS at

assets at financial Loan and amortised

FVTPL assets receivables cost Total

30-Jun-12 RM RM RM RM RM

Assets

Investments 7,405,212 6,190,980 - - 13,596,192


financial institutions - - 2,313,583 - 2,313,583

Amount due from brokers - - 201,554 - 201,554




Liabilities

Amount due to Brokers - - - 612,164 612,164


Other payables - - - - -Total financial liabilities - - - 639,333 639,333

56

PECBF


(b) Fair value

(i) Financial instruments that are carried at fair value

Level 1 Level 2 Total

RM RM RM

As at 30 June 2013

Financial asset at FVTPL

- Quoted equities 6,996,864 - 6,996,864

AFS financial assets-Fixed income securities - 5,899,860 5,899,860

6,996,864 5,899,860 12,896,724


RM RM RM

As at 30 June 2012

Financial asset at FVTPL

- Quoted equities 7,405,212 - 7,405,212

AFS financial assets

-Fixed income securities - 6,190,980 6,190,980

7,405,212 6,190,980 13,596,192

The Fund’s financial assets at FVTPL and AFS financial assets are carried at fair value. The fairvalues of these financial assets were determined using prices in active markets for identical assets.

Quoted equity instrumentsFair value is determined directly by reference to their published market bid price on the relevant stockexchanges at the reporting date.

Unquoted fixed income securitiesThe published market prices for RM-denominated unquoted bonds are based on information providedby Bond Pricing Agency Malaysia Sdn Bhd.

The Fund held the following financial instruments carried at fair value on the statement of financialposition as at the end of period :

The Fund uses the following level of fair value hierarchy for determining and disclosing the fair valueof financial instruments carried at fair value in the statement of financial position:

Level 1 : Quoted (unadjusted) prices in active markets for identical assets or liabilitiesLevel 2 : Inputs other than quoted prices included within Level 1 that are observable for the asset or

liability either directly or indirectly.Level 3 : Inputs for the asset or liability that are not based on observable market data.

57

PECBF


(b) Fair value (Contd.)


21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES

(i) Market Risk

(a) Equity Price Risk

Effect on profit

or loss and equity

Change in equity price (%) Increase / (Decrease)

RM

30 June 2013

+6/-6 419,812/ (419,812)

30 June 2012

+6/-6 444,313/ (444,313)

Equity price risk is the risk of unfavourable changes in the fair value of equities as the result of changes in thelevels of equity indices and the value of individual shares. The equity price risk exposure arises from theFund's investments in equity securities.

The table below summarises the effect of sensitivity from the Fund's underlying investments in quotedequities on the profit or loss and equity of the Fund due to possible changes in equity prices, with all othervariables held constant:

The Fund maintains investment portfolios in a variety of quoted and unquoted financial instruments as dictated byits Trust Deed and investment management strategy.

The Fund is exposed to a variety of risks including market risk (which include interest rate risk, equity price riskand currenct risk), credit risk, and liquidity risk. Whilst these are the most important types of financial risksinherent in each type of financial instruments, the Manager and the Trustee would like to highlight that this listdoes not purport to constitute an exhaustive list of all the risks inherent in an investment in the Fund.

The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk is inherent in theFund’s activities, but it is managed through a process of ongoing identification, measurement and monitoring ofrisks. Financial risk management is also carried out through sound internal control systems and adherence to theinvestment restrictions as stipulated in the Trust Deed, the Securities Commission’s Guidelines on Unit TrustFunds and the Capital Markets and Service Act, 2007.

The Fund's principal exposure to market risk arises primarily due to changes or developments in the marketenvironment and typically includes changes in regulations, politics and the economy of the country. Marketrisk is also influenced by global economics and geopolitical developments. The Fund seeks to diversify awaysome of this risk by investing into different sectors to mitigate risk exposure to any single asset class.

The Fund's market risk is affected primilary due to changes in market prices, interest rates and foreign

currency exchange rates.

Financial instruments not carried at fair value comprise financial instruments and financial liabilitiesclassified as loans and receivables and financial liabilities at amortised cost respectively. The carryingamount of these financial instruments at the end of the period approximated their fair values due totheir short term to maturity.

58

PECBF

21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)

(i) Market Risk (Contd.)

(b) Interest Rate Risk

Effect on profit

or loss and equity

Change In Basis Points * Increase / (Decrease)

RM

30 June 2013

+25/-25 3,364/(3,364)

30 June 2012

+25/-25 2,827/(2,827)

*

(c) Currency Risk

Effect on profit or

loss and equity

30 June 2013 30 June 2012

RM RM


Singapore Dollar 24,266 61,707

South Korean Won 29,372 10,734

Thai Baht - 27,815

Indonesia Rupiah 38,487 117,278

Philippines Peso 19,157 1,714Hong Kong Dollar 234,164 363,041

346,618 597,456

This risk refers to the effect of interest rate changes on the market value of fixed income securities anddeposits with financial institutions. In the event of rising interest rates, the return on deposits with financialinstitutions will rise while prices of bond will decrease and vice versa, thus affecting the net asset value ofthe Fund. This risk wil be minimized via the management of the duration structure of the portfolio of bondand deposits with financial institutions.

The following table demonstrates the sensitivity of the profit or loss and equity of the Fund to a reasonablypossible change in interest rates, with all other variables held constant:

The assumed movement in basis points for interest rate sensitivity analysis is based on the currentlyobservable market environtment.

The Fund is exposure to currency risk primilary its investment in overseas quoted equities and bank balancesthat are denominated in foreign currencies. The Fund's foreign currency exposure profiles of its investment inquoted equities and bank balances has been doscolsed under Note 7 and Note 10 reapectively.

A 10% strengtening or weakening of the RM against the following foreign currencies as at the end of periodwould have decreased or increased respectively the profit or loss and equity of the Fund by the amountshown below. This analysis assumes all other variables are held constant.

59

PECBF


(ii) Credit Risk

(iii) Liquidity Risk

30 June 2013 1 month-3 Above 3

months months Total

RM RM RM

Financial assets

Financial assets held at FVTPL 6,996,864 - 6,996,864

AFS financial assets - 5,899,860 5,899,860

Deposits with financial institutions 2,081,211 - 2,081,211

Other assets 1,822,999 - 1,822,999

Total undiscounted financial assets: 10,901,074 5,899,860 16,800,934

Non-Financial assets

Tax Recoverable - 11,547 11,547

Total Assets 10,901,074 5,911,407 16,812,481

Financial liabilities

Other Liabilities 29,291 29,291

Total undiscounted

financial liabilities 29,291 29,291

Unitholders capital 16,783,190 16,783,190

Liquidity gap (5,882,116) 5,882,116

The following table summarises the maturity profile of the Fund's financial liabilities and the correspondingassets available to meet commitments associated with those financial liabilities and redemption by theunitholders.

The Fund's prinicipal exposure to credit risk arises primarily due to changes in the financial conditions ofcompanies issuing debt securities and stockbroking companies, which may affect their creditworthiness. Thisin turn may lead to default in the payment. Such events can lead to loss of capital or delayed or reducedincome for the Fund resulting in a reduction in the Fund's asset value and thus unit price. This risk ismitigated by vigorous credit analysis and diversification of the bond portfolio of the Fund and to enagedifferent stockbroking companies with good reputation. Bond rating of the Fund's portfolio is disclosed inNote 8.

This risk occurs in thinly traded or illiquid equity securities. Should the Fund needs to sell a relatively largeamount of such securities, the act itself may significantly depress the selling price. As the Fund is exposed todaily redemption of units, the risk is minimised by placing a prudent level of funds in short term deposits andby investing in stocks whose liquidity is adjudged to be commensurate with the expected exposure level ofthe Funds.

60

PECBF


(iii) Liquidity Risk (Contd.)

30 June 2012 1 month-3 Above 3

months months Total

RM RM RM

Financial assets

Financial assets held at FVTPL 7,405,212 - 7,405,212



Other assets 2,464,790 613,641 3,078,431

Total undiscounted financial assets: 12,183,585 6,804,621 18,988,206

Financial liabilities

Other Liabilities 1,208,650 1,208,650

Total undiscounted

financial liabilities 1,208,650 1,208,650

Unitholders capital 17,779,556 17,779,556

Liquidity gap (5,595,971) 5,595,971

(iv) Stock Specific Risk

(v) Single Issuer Risk

(vi) Capital Management

The Fund is exposed to the individual risk of the respective companies issuing securities which includeschanges to the business performance of the company, consumer tastes and demand, lawsuits andmanagement practices. This risk is minimised through the well diversified nature of the Fund.

The Fund's exposure to securities issued by any issuer is limited to not more than a certain percentage of itsnet assets value. Under such restriction, the risk exposure to the securities of any issuer is minimised.

The capital is represented by unitholders' subscription to the Fund. The amount of capital can changesignificantly on a daily basis as the Fund is subject to daily redemption and subscription at the discretion ofunitholders. The Manager manages the Fund's capital with the objective of maximising unitholders' value,while maintaining sufficient liquidity to meet untiholder's redemption as explained in Note 21 (iii) above.

61


DMP

[email protected]

62Your Need

is our Focus

22 August 2013


DMP

[email protected]

63Your Need

is our Focus

22 August 2013


DMP

[email protected]

64Your Need

is our Focus

22 August 2013


DMP

[email protected]

65Your Need

is our Focus

STATEMENT BY MANAGER TO THE UNITHOLDERS OFDANA MAKMUR PHEIM

In the opinion of the Manager, the accompanying unaudited financial statements of

Dana Makmur Pheim are drawn up in accordance with Malaysian Financial Reporting

Standards, International Financial Reporting Standards and the Securities Commission's

Guidelines on Unit Trust Funds in Malaysia so as to give a true and fair view of the

unaudited financial position of Dana Makmur Pheim as at 30 June 2013 and of its

results, changes in the net asset value and cash flows for the period then ended.





DMPDANA MAKMUR PHEIM



Note 30.06.2013 30.06.2012

RM RM

INVESTMENT INCOME


Profit from Shariah-compliant investements

- receivables 50,510 41,814

- available for sale ("AFS") financial assets 10,387 28,110

Net gain on financial assets at fair value through

profit or loss ("FVTPL") 7 1,404,117 441,347

Amortisation of premiums, net of accretion of

discounts on AFS financial assets 8 (1,356) (7,106)

1,536,378 584,947

EXPENDITURE

Manager's fee 3 67,078 70,009





95,996 97,221

Net income before taxation 1,440,382 487,726

Tax expenses 5 (6,813) (1,367)Net income for the period 1,433,569 486,359

Other comprehensive income

Net (loss)/gain on change in fair value of AFS financial assets (1,644) 1,073

(1,644) 1,073

Total comprehensive income for the period 1,431,925 487,432

Net income after tax for the period is made up of the following:

Net realised income 1,250,166 814,148

Net unrealised (loss)/income 183,403 (327,789)1,433,569 486,359

Distribution for the year

Net distribution (RM) 11 324,295 346,694

Net distribution per unit (sen) 11 6 6

Gross distribution per unit (sen) 11 6 6


66



Note 30.06.2013 30.06.2012 30.06.2011

RM RM RM

ASSETS

Shariah-compliant investments 6 2,995,766 4,465,478 6,660,140

Islamic deposit with licensed financial institutions 9 6,136,056 3,529,043 2,979,846

Amount due from brokers 218,231 106,071 -


Tax recoverable 28,265 27,614 24,639

Cash at bank 504,552 1,321,353 378,016TOTAL ASSETS 9,912,477 9,476,424 10,072,475

LIABILITIES

Amount due to brokers - 82,853 425,156

Amount due to Manager 11,461 11,054 11,955


Other payables and accruals (685) 10,625 16,500

TOTAL LIABILITIES 12,157 105,959 455,090

EQUITY


Retained earnings 3,903,285 2,763,232 2,813,668

Available for sale reserve 2,358 8,806 4,933

TOTAL EQUITY 12 9,900,320 9,370,465 9,617,385


.UNITS IN CIRCULATION 12 (a) 5,642,204 6,032,366 6,183,783



67






Capital earnings reserves Equity

Note 12(a) Note 12(b) Note 12 (d)

and 12 (c)

RM RM RM RM

At 1 January 2012 6,539,990 2,623,567 7,733 9,171,290


the period - 486,359 1,073 487,432


Cancellation of units (322,077) - - (322,077)

Distribution equalisation (67,038) - - (67,038)

Distribution in the period - (346,694) (346,694)Balance at 30 June 2012 6,598,428 2,763,232 8,806 9,370,466

At 1 January 2013 5,863,028 2,794,011 4,002 8,661,041

Effects of adopting FRS 139 - - - -

(Note 2.2) 5,863,028 2,794,011 4,002 8,661,041


the period - 1,433,569 (1,644) 1,431,925


Cancellations of units (242,486) - - (242,486)Distribution equalisation (82,650) - - (82,650)

Distribution in the period - (324,295) - (324,295)Balance at 30 June 2013 5,994,677 3,903,285 2,358 9,900,320

68




01.01.2013 01.01.2012

to to

30.06.2013 30.06.2012

RM RM



Proceeds from sale of Shariah-compliant investments 4,514,450 3,486,378

Purchase of Shariah-compliant investments (810,963) (1,800,698)


Profits received from Islamic deposits with licensed

financial institutions and sukuk 61,343 70,457



Payment for other fees and expenses (34,976) 28,353

Income distribution paid (50) (6,494)

Net cash generated from operating

and investing activities 3,715,524 1,773,884



Payment for cancellation of units (413,549) (482,448)

Net cash used in financing activities (265,366) (338,695)

NET INCREASE IN CASH

AND CASH EQUIVALENTS 3,450,158 1,435,189

CASH AND CASH EQUIVALENTS AT

BEGINNING OF YEAR 3,190,450 3,415,207



Islamic deposits with licensed financial institutions (Note 9) 6,136,056 3,529,043

Cash at bank 504,552 1,321,3536,640,608 4,850,396


69

DMP

DANA MAKMUR PHEIM






The unaudited financial statements of the Fund have been prepared under the historical costconvention unless otherwise indicated in this summary of significant accounting policies. Thefinancial statements comply with Malaysian Financial Reporting Standards ("MFRSs"),International Financial Reporting Standards ("IFRSs") and the Securities Commision'sGuidelines on Unit Trust Funds in Malaysia.

All significant accounting policies set out below are consistent with those applied in theprevious year other than the adoption of the new and revised Malaysian Financial ReportingStandards ("MFRS") and Amendments to MFRSs issued by the Malaysian AccountingStandards Board ("MASB") which are mandatory for the financial periods beginning on orafter 1 January 2013 as disclosed in Note 2.2 below.

Dana Makmur Pheim ("the Fund") was established pursuant to a Master Deed dated 11 January2002 as amended by second Supplemental Master Deed dated 29 April 2013 between the Manager;Pheim Unit Trusts Berhad, the Trustee; Maybank Trustees Berhad and the registered unitholders ofthe Fund.

The principal activity of the Fund is to invest in "Permitted Investments" in compliance withShariah requirements as defined under Article 7 of the Master Deed, which includes quotedShariah-compliant securities on the Bursa Malaysia Securities Berhad ("Bursa Malaysia") or anyother markets, Shariah-compliant collective investment schemes, sukuk, and other Shariah-compliant investments. The activities of the Fund shall be conducted strictly in compliance withShariah requirements and as approved by the Shariah Advisory Council of the SecuritiesCommission Malaysia and/or the Shariah Adviser of Dana Makmur Pheim. The Fund commencedoperations on 28 January 2002 and will continue its operations until terminated according to theconditions in the Master Deed.

The Manager, Pheim Unit Trusts Berhad, is a public company incorporated in Malaysia. It is awholly owned subsidiary of Pheim Asset Management Sdn Bhd, a private company incorporated inMalaysia. Its principal activity is the management of unit trust funds. Pheim Asset ManagementSdn. Bhd. has been appointed by the Manager as the External Investment Manager of the Fundwith responsibility for the provision of investment management services to the Fund.

The principal place of business of the Fund is located at 7th Floor, Menara Hap Seng, Jalan P.Ramlee, 50250 Kuala Lumpur.


The unaudited financial statements were authorised for issue by the Board of Directors of theManager in accordance with the resolution of the directors on 22 August 2013.

70

DMP







- (Annual Improvements 2009-2011 Cycle)







2.3 New MFRSs and Amendments to MFRSs That Are Not Yet Effective and Have

Not Been Early Adopted

The Fund has not early adopted the following new MFRSs and amendments to MFRSs issued

by the Malaysian Accounting Standards Board ("MASB") that are relevant to its operations but

are not yet effective :-

Amendment to MFRS 132 Financial Instruments : Presentation 1 January 2014

- Offsetting Financial Assets and


MFRS 9 Financial Instruments (IFRS 9 issued by 1 January 2015

International Accounting Standards Board

("IASB") in November 2009) 1 January 2015

MFRS 9 Financial Instruments (IFRS 9 issued by

IASB in October 2010)

Effective forannualperiods

beginning onor after

The adoption of the above new and revised MFRSs and Amendments to MFRSs did not resultin significant changes to the Company's accounting policies and have no significant financialimpact on the amounts reported in the financial statements.

The Fund will adopt the above MFRSs and amendments to MFRSs when they becomeeffective and they are not expected to have any significant impact on the financial statementsof the Fund upon their initial application other than the classification and measurement offinancial assets under MFRS 9. MFRS 9 replaces the multiple classification and measurementmodels in MFRS 139 with a single model than classifies financial assets into only twocategories: measured at fair value through profit or loss, or at amortised cost, depending on theentity's business model for managing the financial assets and the contractual cash flowcharacteristics of the financial assets.

71

DMP




(i) Financial assets at fair value through profit or loss ("FVTPL")

(ii) Available for sales ("AFS") financial assets

Financial assets are recognised in the statement of financial position when, and only when, theFund becomes a party to the contractual provisions of the financial instruments. Regular wayof purchase and sale of investments in financial instruments are recognised on trade dates.When financial assets are recognised initially , they are measured at fair value, plusattributable transaction cost, or investment not at fair value through profit or loss.

The Fund determines the classification of its financial assets at the initial recognition, and thecategories include financial assets at fair value through profit or loss, available-for-salefinancial assets and receivables.

Financial assets are classified as financial assets at FVTPL if they are held for trading orare designated as such by the Manager upon initial recognition. Financial assets held fortrading include Shariah-compliant securities and sukuk acquired principally for thepurpose of selling them in near term.

Subsequent to initial recognition, financial assets at the FVTPL are measured at fairvalue at the date of the statement of financial position. Changes in the fair value of thosefinancial instruments are recorded in "Net gain or loss on financial assets at FVTPL".Profit earned and dividend revenue elements such as instruments are recorded separatelyin "Profit income" and "Dividend income", respectively. Foreign exchange differenceson financial assets at FVTPL are not recognised separately in profit or loss but includedin net gains or net lossess on changes in fair value of financial assets at FVTPL.

AFS financial assets are financial assets that are designated as available for sale or are notclassified as financial assets at FVTPL or receivables.

After initial recognition, AFS financial assets are measured at fair value. Gains or losseson changes in fair value of the AFS financial assets are recognised in othercomprehensive income, except that impairment lossess, foreign exchange gains andlosses on monetary instruments, dividend income and profit income calculated usingeffective profit method are recognised in profit or loss.

The cumulative gain or loss previously recognised in other comprehensive income isreclassified from equity to profit or loss as a reclassification adjustment when thefinancial assets is derecognised. Profit income calculated using the effective profitmethod is recognised in profit or loss. Dividends on an AFS Shariah-compliant equityinstrument are recognised in profit or loss when the Fund's right to receive payment isestablished.

72

DMP


2.4 Significant Accounting Policies (contd.)


(ii) Available for sales ("AFS") financial assets (Contd.)

(iii) Receivables

Fair value is the amount for which an assets could be exchanged., or a liability settled,between knowledgeable , willing parties in an arm's length transaction. The fair value forfinancial instruments traded in active markets at the reporting date is based on theirquoted price or binding dealing price quotations, without deduction for transaction costs.

A financial asset is derecognised when the asset is disposed and the contractual right toreceive cash flows from the asset has expired. On derecognition of financial asset in itsentirety, the difference between the carrying amount and the sum of the considerationreceived and any cumulative gain or loss that had been recognised in othercomprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that requiredelivery of assets within the period generally established by regulation or convention inthe marketplace concerned. All regular way of purchases and sales of financial assets arerecognised or derecognised on the trade date, i.e. the date that fund commit to purchaseor sell of asset.

Financial assets with fixed or determinable payments that are not quoted in an activemarket are classified as receivables. The Fund includes short term receivables such asbalances due from broker, Manager and other receivables in the classification.Receivables are recognised initially at fair value including transaction costs.

Subsequently to initial recognition, receivables are measured at amortised cost usingeffective profit method. Gains and losses are recognised in profit or loss when thereceivables are derecognised or impaired, and through the amortisation process.

73

DMP




The Fund assesses at each reporting date whether there is any objective evidence that

a financial asset is impaired.



Significant or prolonged decline in fair value below cost, significant financial difficultiesof the issuer or obligor, and the disappearance of an active trading market areconsiderations to determine whether there is objective evidence that investment securitiesclassified as AFS financial assets are impaired.

If an AFS financial asset is impaired, an amount comprising the differences between itscost (net of any principal payment and amortisation) and its current fair value, less anyimpairment loss previously recognised in profit or loss, is transferred from equity toprofit or loss.

Impairment losses on AFS equity investments are not reversed in profit or loss in thesubsequent periods. Increase in fair value, if any, subsequent to impairment loss isrecognised in other comprehensive income. For AFS sukuk investments, impairmentlosses are subsequently reversed in profit or loss, up to the amount previously recognisedas impairment loss, if an increase in the fair value of the investment can be objectivelyrelated to an event occurring after the recognition of the impairment loss in profit or loss.

To determine whether there is objective evidence that an impairment loss on financialassets has been incurred, the Fund consider factors such as the probability of insolvencyor significant financial difficulties of the debtor and default or significant delay inpayments.

If any such evidence exists, the amount of impairment loss is measured as the differencebetween the assets's carrying amount and the present value of estimated future cash flowsdiscounted at the financial asset's original effective profit rate. The impairment loss isrecognised in profit or loss

The carrying amount of the financial asset is reduced by the impairment loss directly forall financial assets with the exception of trade receivables, where the amount is reducedthrough the use of an allowance account. When a trade receivable becomes uncollectible,it's written off against allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decreasecan be related objectively to an event occuring after the impairment was recognised, thepreviously recognised impairment loss is reversed to the extent that the carrying amountof the asset does not exceed its amortised cost at the reversal date. The amount ofreversal is recognised in profit or loss.

74

DMP





(e) Functional and Presentation Currency


Unrealised gain and losses comprise changes in fair value of financial instruments for theperiod from reversal of prior period's unrealised gain and losses for financial instrumentswhich were realised (i.e. sold, redeemed or matured) during the reporting period.

Realised gains and losses on disposals of financial instruments classified as part of "at fairvalue through profit or loss" are calculated using weighted average method. They represent thedifference between an instrument's initial carrying amount and disposal amount, or cashpayment or receipts made of Shariah-compliant derivative contracts (excluding payments orreceipts on collateral margin accounts for such investments).

Financial liabilities are classified according to the substance of the contractual arrangementsentered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement offinancial position when, only when, the Fund becomes a party to the contractual provisions ofthe financial instrument. Financial liabilities are classified as other financial liabilities.

The Fund's financial liabilities which include amount due to broker, Manager and otherpayables are recognised initially at fair value plus directly attributable transaction costs andsubsequently measured at the amortised cost using effective profit method.

A financial liability is derecognised when the obligation under the liability is extinguished.Gains and losses are recognised in profit or loss when the liabilities are derecognised, andthrough the amortisation process.

The financial statements of the Fund are measured using the currency of the primary economicenvironment in which the Fund operates ("the functional currency"). The financial statementsare presented in Ringgit Malaysia (RM), which is also the Fund's functional currency.

The unitholders' contributions to the Fund meet the definition of puttable instruments classifiedas equity instruments under MFRS 132.

Distribution equalisation represents the average distributable amount included in the creationand cancellation prices of units. This amount is either refunded to unitholders by way ofdistribution and/or adjusted accordingly when units are cancelled.

75

DMP

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)




(i) Income

(j) Income Tax

Income distributions are at the discretion of the Manager. Income distribution to the Fund'sunitholders is accounted for as a deduction from realised reserves except where distribution issourced out of distribution equalisation which is accounted for as deduction from unitholders'capital.

Cash and cash equivalents comprise cash at bank and Islamic deposits with financialinstitutions which have insignificant risk of changes in value.

Income is recognsied to the extent that is probable that the economic benefits will flow to theFund and the income can be realiably measured. Income is measured at fair value ofconsideration received or receivable.


Profit income, which includes the accretion of discount and amortisation of premium on sukuk,is recognised using effective profit method.

Current tax assets and liabilities are measured at the amount expected to be recovered from orpaid to the tax authorities. The tax rates and tax laws used to compute the amount are thosethat are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to itemsrecognised outside profit or loss, either in other comprehensive income or directly in equity.

No deferred tax is recognised as there are no material temporary differences.

76

DMP

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)




3. MANAGER'S FEE

4. TRUSTEE' S FEE

The Manager is entitled to an annual management fee of 1.5% p.a. of net asset value of the Fund(before deducting the Manager's and Trustee's fee for the day) calculated and accrued on a dailybasis.

For management purposes, the Fund is managed by 2 main portfolios, namely (1) Shariah-compliant equity securities and (2) sukuk and Islamic deposits. Each segment engages inseparate business activities and the operating results are regularly reviewed by the Manager,External Investment Manager and the Fund's Investment Committee. The External InvestmentManagers and the Fund Investment Committee jointly assumes the role of chief operationdecision maker, for performance assessment purposes and to make decision about resourcesallocated to each investment segment.

The preparation of financial statements in accordance with MFRS and IFRS requires the use ofcertain accounting estimates and exercise of judgements. Estimates and judgements arecontinually evaluated and are based on past experience, reasonable expectations of futureevents and other factors.

No major judgements have been made by the Manager in applying the Fund's accountingpolicies. There are no key assumptions concerning the future and other key sources ofestimation uncertainty at the reporting date, that have significant risk of causing materialadjustment to the carrying amounts of assets and liabilities within next year.

The Trustee is entitiled to a fee of 0.07% p.a. based on net asset value of the Fund (beforededucting the Manager's and Trustees for the day) calculated and accrued on a daily basis subjectto a minimum of RM18,000 p.a.

77

DMP

5. TAXATION

30.06.2013 30.06.2012

RM RM

Current year Malaysian tax 6,813 1,367

Underprovision in prior year - -Malaysian tax expense based on results for the year 6,813 1,367

30.06.2013 30.06.2012

RM RM

Net income before tax 1,440,382 487,726

Tax at Malaysian statutory rate of 25% (2012: 25%) 360,096 121,931

Tax effects of:

Income not subject to tax (384,095) (146,237)


Restriction on tax deductible expenses for unit trust funds 25,290 20,058Tax expense/(recoverable) for the financial year 6,813 1,367

6. SHARIAH-COMPLIANT INVESTMENTS

30.06.2013 30.06.2012RM RM

Financial assets at fair value through

profit or loss (Note 7)

Quoted Shariah-compliant equities

in Malaysia 2,491,666 2,954,778

Available-for-sale financial assets

(Note 8)

Unquoted sukuk 504,100 1,510,700Total Shariah-compliant investment 2,995,766 4,465,478

Income tax is calculated at Malaysian statutory tax rate 25% of the estimated assessable net incomefor the financial period.

The tax charge for the period is in relation to the taxable income earned by the Fund after deductingallowable expenses. In accordance with Schedule 6 of Income Tax Act 1967, profit income earnedby the Fund is exempted from tax.

A reconciliation of income tax expense applicable to net income before tax at the statutory incometax rate to income tax expense at the effective income tax rate of the Fund is as follows:

78

DMP


30.06.2013 30.06.2012

RM RM

Financial assets at FVTPL:Quoted Shariah-compliant equities 2,491,666 2,954,778

Net gain/(loss) on financial assets at FVTPL comprised:

Realised gain on disposals 1,220,714 769,136

Unrealised changes in fair values 183,403 (327,789)1,404,117 441,347

Financial assets held-for-trading as at 30 June 2013 are as detailed below:


RM RM NAV

QUOTED SHARIAH-COMPLIANT EQUITIES

- IN MALAYSIA

Main Market

Construction

Muhibbah Engineering (M) Bhd 130,000 193,436 224,900 2.27

Consumer

Latitude Tree Holdings Bhd 172,500 123,776 162,150 1.64

79

DMP



RM RM NAV

QUOTED SHARIAH-COMPLIANT EQUITIES

- IN MALAYSIA (CONTD.)

Industrial Products

Ann Joo Resources Bhd 110,000 238,035 143,000 1.44

Box-Pak (Malaysia) Bhd 70,000 150,645 161,000 1.63

CB Industrial Product

Holdings Bhd 129,000 357,208 337,980 3.41

Favelle Favco Bhd 73,000 121,266 207,320 2.09

Jaya Tiasa Holdings Berhad 40,050 96,650 79,700 0.81

422,050 963,804 929,000 9.38

Properties

KSL Holdings Berhad 160,400 229,522 319,196 3.22

Matrix Concepts Holdings Bhd 150,000 330,000 379,500 3.83

310,400 559,522 698,696 7.05

Trading/ Services

Engtex Group Bhd 34,000 35,145 31,960 0.32

Tenaga Nasional Bhd 54,000 376,368 444,960 4.49

88,000 411,513 476,920 4.81

TOTAL QUOTED

SHARIAH-COMPLIANT

EQUITIES 1,122,950 2,252,051 2,491,666 25.15



80

DMP


30.06.2013 30.06.2012

RM RMUnquoted Sukuk 504,100 1,510,700

Amortisation of premiums, net of accretionof discounts on AFS financial assets (1,356) (7,106)

Unrealised (loss)/gain on changes in fair values 2,358 6,006

AFS financial assets as at 30 June 2013 are as detailed below:


RM RM NAV

UNQUOTED SUKUK

Government Investment

Issues -02/14 (Not rated) 500,000 501,742 504,100 5.09


* Cost of sukuk includes amortisation of premium

9. ISLAMIC DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

30.06.2013 30.06.2012

RM RM

Licensed investment banks 6,136,056 3,529,043

Average

remaining

WAEPR maturities

30.06.2013 30.06.2012 30.06.2013 30.06.2012

% % Days Days

Licensed investment bank 4.20 2.84 9 12

The weighted average rate of return per annum and the average remaining maturities of Islamicdeposits and placement are as follows:

81

DMP

10. SHARIAH INFORMATION OF THE FUND

(a)

(b)

(c)

11. DISTRIBUTION FOR THE PERIOD

Distribution declared and paid on 28 April 2013 was 6.00 sen net per unit.


2013 2012

RM RM

Dividend (local) Quoted Shariah-compliant securities 4,161 1,168

Profit from Corporate Sukuk 804 2,921

Profit from Islamic deposit 3,724 3,729

Amortisatiom of premium on corporate sukuk (106) (169)

Net realised gain from sale of Shariah-compliant investments 7,862 (585)

16,445 7,064

Less:

Expenses 7,427 10,145

Taxation - -

Previous year's realised gain 9,018 (3,081)

Distribution out of realised reserves 315,277 349,775Distribution for the period 324,295 346,694

Units in circulation at book closing date 5,404,915 5,778,235

Gross distribution per unit (sen) 6 6

Net distribution per unit (sen) 6 6Date of distribution 26.04.2013 27.04.2012

The Shariah Adviser confirmed that the investments portfolio of the Fund is Shariah-compliant,which comprises:

Equity securities listed on Bursa Malaysia which have been classified as Shariah-compliantby the Shariah Advisory Council of the Securities Commission Malaysia;

Sukuk as per the list of approved sukuk issued by the Securities Commission Malaysia;and

Cash placements and liquid assets in local market, which are placed in Shariah-compliantinvestments and/or instruments.

82

DMP

12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY)

Note 30.06.2013 30.06.2012

RM RM

Unit holders' capital (a) 5,994,677 6,598,428

Retained earnings

- Realised (b) 3,671,219 2,524,431

- Unrealised (c) 232,066 238,801

3,903,285 2,763,232



Number Number



of year 5,574,487 5,863,028 6,005,190 6,539,990

Add: Creation of units 292,952 456,785 306,840 447,553

Less: Cancellation of units (225,235) (242,486) (279,664) (322,077)

Distribution equalisation - (82,650) - (67,038)

Balance at end ofperiod 5,642,204 5,994,677 6,032,366 6,598,428


30.06.2013 30.06.2012

RM RM

Balance at the beginning of period 2,745,348 2,056,977

Net income after taxation

Net unrealised loss/(gain) attributable to 1,433,569 486,359

Shariah-compliant investments held

transferred to unrealised reserve (183,403) 327,789

Distribution out of realised reserve (324,295) (346,694)Balance at the end of period 3,671,219 2,524,431

01.01.2013 to 30.06.2013 01.01.2012 to 30.06.2012

In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 14August 2006, the maximum number of units that can be issued for circulation is 100 million units.As at 30 June 2013 the number not yet issued is 94,357,796 units (2012: 93,816,217 units).

83

DMP

12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY) [CONTD.]

(c) Unrealised - Non-distributable

30.06.2013 30.06.2012

RM RM

Balance at the beginning of period 48,663 566,590

Net unrealised (loss)/gain attributable to

Shariah-compliant investment held

transferred from realised reserve 183,403 (327,789)Balance at the end of period 232,066 238,801




to unitholders for





to unitholders per




units NAV units NAV

RM RMDirectors of the Manager# 322,130 565,238 249,931 388,242

The Directors of the Manager are legal and beneficial owner of the units.

30 June 2013 30 June 2012

30.06.2013 30.06.2012

Net asset value attributable to unitholders is classified as equity in the statement of financialposition.

Quoted financial assets in the financial statements have been valued at the bid prices at the close ofbusiness in accordance with the provisions of MFRS 139. For the purpose of calculation of net assetvalue attributable to unitholders per unit for the issuance and redemption of units in accordance withthe Deed, quoted financial assets are stated at the last done market price.

A reconciliation of net asset value attributable to unitholders for issuing/redeeming units at and thenet value attributable to unitholders per the financial statements is as follows:-

84

DMP


1 January 2013 to 30 June 2013

% of Total

Value of % of Total Brokerage Brokerage

Trade Trade Fees Fees

RM % RM %

RHB Investment Bank Bhd 15,541,000 49.66 - -

MIMB Investment Bank Bhd 2,950,000 9.43 - -

MIDF Amanah Investment

- Bank Bhd 6,280,000 20.07 - -

Kenanga Investment Bank Bhd 1,161,642 3.71 2,621 22.40

KAF Investment Bank Bhd 980,000 3.13 - -

Affin Investment Bank Bhd 936,025 2.99 2,114 18.06

Hong Leong Investment

- Bank Bhd 762,647 2.44 864 7.38

JP Morgan Securities (M)

- Sdn Bhd 536,685 1.71 1,226 10.48

Nomura Securities Malaysia

- Sdn Bhd 414,826 1.32 937 8.01

Maybank Investment Bank Bhd 364,973 1.17 823 7.03

Other brokers 1,366,847 4.37 3,118 26.6431,294,645 100.00 11,703 100.00

16. MANAGEMENT EXPENSE RATIO

30.06.2013 30.06.2012


17. PORTFOLIO TURNOVER RATIO

30.06.2013 30.06.2012


This is the ratio of the sum of the fees (inclusive of manager's trustee's audit and other professionalfees) and other administrative expenses of the Fund to the average NAV of the Fund calculated on adaily basis. The average NAV of the Fund for the period ended 30 June 2013 was RM9,142,192 (30June 2012: RM9,434,041)

This is the ratio of the average of acquisitions and disposals of Shariah-compliant investments forthe period to average NAV of the Fund for the year calculated on a daily basis.

Details of transactions with stockbroking companies and other investment banks for the periodended 30 June 2013 are as follows:

85

DMP


The Manager , the appointed External Investment Manager and Investment Committee of the Fundare responsible for allocating resources available to the Fund in accordance with the overallinvestment strategies as set out in the investment Guidelines of the Fund. The Fund is managed bytwo segments:

● A portfolio of Shariah-compliant equity instruments● A portfolio of sukuk and Islamic deposits with financial institutions.

The investment objective of each segment is to achieve consistent returns from the investments ineach segment while safeguarding capital by investing in diversified portfolios. There have been nochanges is reportable segments in the current financial period. The segment information provided ispresented to the Manager, the appointed External Investment Manager and Investment Committeeof the Fund.

Shariah- Islamic Shariah- Islamic

compliant Deposit compliant Deposit

Equity and Sukuk Total Equity and Sukuk Total

Portfolio Portfolio Portfolio PortfolioRM RM RM RM RM RM


Profit from Islamic

deposits with licensed financial

institutions and sukuk - 60,897 60,897 - 41,814 41,814

Net gain on financial assets

at FVTPL 1,404,117 - 1,404,117 441,347 - 441,347

Amortisation of premium, net of

accretion of discount on

AFS financial assets (1,356) (1,356) (7,106) (7,106)

Total segment operating incomefor the period 1,476,837 59,541 1,536,378 522,129 34,708 556,837

Islamic deposits

with financial institutions 6,136,056 6,136,056 3,529,043 3,529,043


AFS financial assets 504,100 504,100 1,510,700 1,510,700Other assets 21,187 8,420 29,607 4,981 12,738 17,718


Other liabilities - - - 82,853 - 82,853Total segment liabilities - - - 82,853 - 82,853


01.01.2013 to 30.06.2013 01.01.2012 to 30.06.2012

86

DMP


30.06.2013 30.06.2012

RM RM

Net reportable segment operating income / (loss) 1,536,378 584,947

Expenses (95,996) (97,221)

Net (Loss)/income before tax 1,440,382 487,726

Tax expense (6,813) (1,367)Net (Losses)/income after tax 1,433,569 486,359

30.06.2013 30.06.2012

RM RM



Other receivables - 9,147

Amount due from broker 218,231 106,071

Cash at bank 504,552 1,321,353


Total segment liabilities - 82,853

Other payables and accruals (685) 10,625






Expenses of the Fund are not considered part of the performance of any operating segment. Thefollowing table provides a reconciliation between reportable segment income and operatingprofits/(loss).

In addition, certain assets and liabilities are not considered to be part of the net assets or liabilitiesof an individual segment. The following table provides reconciliation between the total reportablesegment asse ts and l iabi l i t ies and tota l asse ts and l iabi l i t ies o f the Fund.

The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either fairvalue or at amortised cost based on their respective classification. The significant accountingpolicies in Note 2 describe how the classes of financial instruments are measured, and how incomeand expenses, including fair value gains and losses are recognized. The following table analyses thefinancial assets and liabilities of the Fund in the statement of financial position by the class offinancial instrument to which they are assigned, and therefore by the measurement basis.

87

DMP


(a) Classification of financial instruments (contd.)

Financial

liabilities

Financial AFS at

assets at financial Receivables amortised

FVTPL assets cost Total

RM RM RM RM RM

30 June, 2013

AssetsQuoted Shariah-compliant

equities 2,491,666 504,100 - - 2,995,766

Islamic deposits with -

licensed financial institutions - - 6,136,056 - 6,136,056


Cash at bank - - 504,552 - 504,552Total financial assets 2,491,666 504,100 6,888,446 - 9,884,212


Liabilities


Other payables and accruals - - - (685) (685)Total financial liabilities - - - 12,157 12,157

30 June, 2012

AssetsQuoted Shariah-compliant

equities 2,954,778 1,510,700 - - 4,465,478

Islamic deposits with -

licensed financial institutions - - 3,529,043 - 3,529,043




Liabilities

Amount due to brokers - - - 82,853 82,853


Other payables and accruals - - - 10,625 10,625Total financial liabilities - - - 105,959 105,959

88

DMP


(b) Fair value


The Fund held the following financial instruments carried at fair value on the statement of

financial position as at the end of the period:


RM RM RM

2,491,666 - 2,491,666

- 504,100 504,100

2,491,666 504,100 2,995,766

2,954,778 - 2,954,778

- 1,510,700 1,510,700

2,954,778 1,510,700 4,465,478

As at 30 June 2013Financial assets at FVTPL- Quoted Shariah-compliant equities

AFS financial assets- Sukuk

The Fund’s financial assets at FVTPL and AFS financial assets are carried at fair value.The fair values of these financial assets were determined using prices in active marketsfor identical assets.

Quoted Shariah-compliant equity instrumentsFair value is determined directly by reference to their published market bid price onBursa Malaysia at the reporting date.

Unquoted sukukThe published market prices for RM-denominated unquoted sukuk are based on BursaMalaysia at the reporting date.

The Fund uses the following level of fair value hierarchy for determining and disclosingthe fair value of financial instruments carried at fair value in the statement of financialposition:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: Inputs other than quoted prices included within Level 1 that are observablefor the asset or liability either directly or indirectly

Level 3: Inputs for the asset or liability that are not based on observable market data

As at 30 June 2012Financial assets at FVTPL- Quoted Shariah-compliant equities

AFS financial assets- Sukuk

89

DMP


(b) Fair value (Contd.)

(ii) Financial instruments not carried at fair value


(i) Market Risk


Equity price risk is the adverse changes in the fair value of Shariah-compliant equities asa result of changes in the levels of Shariah-compliant equity indices and the value ofindividual Shariah-compliant shares. The equity price risk exposure arises from the Fund'sinvestments in quoted Shariah-compliant equity securities.

The Fund maintains investment portfolios in a variety of quoted and unquoted financial instrumentsas dictated by its Deed and investment management strategy.

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk andequity price risk), credit risk, stock specific risk, liquidity risk and reclassification of Shariah statusrisk. Whilst these are the most important types of financial risks inherent in each type of financialinstruments, the Manager and the Trustee would like to highlight that this list does not purport toconstitute an exhaustive list of all the risks inherent in an investment in the Fund.

The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk isinherent in the Fund’s activities, but it is managed through a process of ongoing identification,measurement and monitoring of risks. Financial risk management is also carried out through soundinternal control systems and adherence to the investment restrictions as stipulated in the Trust Deed,the Securities Commission’s Guidelines on Unit Trust Funds and the Capital Markets and ServiceAct, 2007.

The Fund’s principal exposure to market risk arises primarily due to changes ordevelopments in the market environment and typically includes changes in regulations,politics and the economy of the country. Market risk is also influenced by global economicsand geopolitical developments. The Fund seeks to diversify away some of this risk byinvesting into different sectors to mitigate risk exposure to any single asset class.

The Fund's market risk is affected primarily due to changes in market prices and interestrates.

Financial instruments not carried at fair value comprise of financial assets and financialliabilities classified as receivables and financial liabilities at amortised cost respectively.The carrying amount of these financial instruments at the end of the financial yearapproximated their fair values due to their short term to maturity.

90

DMP



(a) Equity Price Risk (Contd.)

Effect on profit

or loss and equity

Change in Shariah-compliant Increase/(Decrease)

equity price (%) RM

30/06/2013+6/-6 149,500 /(149,500)

30/06/2012+6/-6 177,287 /(177,287)


Effect on profit

or loss and equity

Increase/(Decrease)

Change In Basis Points* RM

30/06/2013+25/-25 3,504/ (3,504)

30/06/2013+25/-25 2,988/ (2,988)

* The assumed movement in basis points for interest rate sensitivity analysis is

based on the currently observable market environment

The risk refers to the effect of interest rate changes on the demand for sukuk and Islamicdeposits with financial institutions. In the event of rising interest rates, the return onIslamic deposits with financial institutions will rise while demand for sukuk will decreaseand vice versa, thus affecting the net asset value of the Fund. This risk will be minimizedvia the management of the duration structure of the portfolio of sukuk and Islamicdeposits with financial institutions.

Interest rate is a general economic indicator that will have an impact on the managementof fund regardless of whether it is a Shariah-compliant fund or otherwise. It does not inany way suggest that this fund will invest in conventional financial instruments. Allinvestments carried out for this fund are in accordance with requirement of the Shariah.

The following table demonstrates the sensitivity of the profit/(loss) and equity of theFund to a reasonably possible change in interest rates, with all other variables heldconstant:

The table below summarises the effect of sensitivity from the Fund's underlyinginvestments in quoted Shariah-compliant equities on the profit or loss and equity of theFund due to possible changes in Shariah-compliant equity prices, with all other variablesheld constant:

91

DMP


(ii) Credit Risk


1 month - Above

30 June 2013 3 months 3 months Total

RM RM RM

Financial Assets:

Financial assets at FVTPL 2,491,666 - 2,491,666

AFS financial assets 504,100 504,100

Islamic deposits 6,136,056 - 6,136,056

with financial institutions

Other assets 752,391 - 752,391

Total undiscounted financial

assets: 9,380,112 504,100 9,884,212



Total Assets 9,380,112 532,365 9,912,477


Other liabilities 12,157 - 12,157

Total undiscounted financial liabilities 12,157 12,157

Unitholders NAV 9,900,320 - 9,900,319Liquidity gap (532,365) 532,365

This risk occurs in thinly traded or illiquid Shariah-compliant securities. Should the Fundneeds to sell a relatively large amount of such securities, the act itself may significantlydepress the selling price. As the fund is exposed to daily redemption of units, the risk isminimised by placing a prudent level of funds in short term Islamicdeposits and by investingin Shariah-compliant stocks whose liquidity is adjudged to commensurate with the expectedexposure level of the Fund.

The following table summarises the maturity profile of the Fund's financial liabilities and thecorresponding assets available to meet commitments associated with those financial liabilitiesand redemption by unitholders.

The Fund 's principal exposure to credit risk arises primarily due to changes in the financialconditions of companies issuing sukuk, which may affect their creditworthiness. This in turnmay lead to default in the payment of principal and profit . Such events can lead to loss ofcapital or delayed or reduced income for the Fund resulting in a reduction in the Fund's assetvalue and thus unit price. This risk is mitigated by vigorous credit analysis and diversificationof the sukuk portfolio of the Fund.

As at the date of Financial Position, 30 June 2013, the fund only invested in a relatively stablesukuk issued by the Government of Malaysia.

92

DMP


(ii) Credit Risk

30 June 2012 1 month - Above

3 months 3 months

Financial Assets: RM RM

Financial assets at FVTPL

AFS financial assets 2,954,778 - 2,954,778

Islamic deposits 1,510,700 1,510,700

with financial institutions 3,529,043 - 3,529,043

Other assets

Total undiscounted financial 1,454,288 - 1,481,903

assets:

7,938,109 1,510,700 9,448,809



Total Assets 7,938,109 1,538,314 9,476,424


Other liabilities

Total undiscounted financial liabilities 105,959 - 105,959

105,959 105,959

Unitholders NAV

Liquidity gap 9,370,465 - 9,370,465(1,538,314) 1,538,314



The Fund is exposed to the individual risk of the respective companies issuing Shariah-compliant securities which includes changes to the business performance of the compnay,consumer tastes and demand, lawsuits and management practices. This is minimised throughthe well diversied nature of the Fund.

The Fund's exposure to Shariah-compliant securities issued by any issuer is limited to notmore than a certain percentage of its net asset value. Under such restriction, the risk exposureto the securities of any issuer is minimised.

93

DMP


(vi) Reclassification of Shariah Status Risk

(vii) Capital Management

This risk refers to the risk that the currently held Shariah-compliant securities in the portfolioof Shariah-compliant funds may be reclassified to be Shariah non-compliant upon review ofthe securities by the Shariah Advisory Council of Securities Commission ("SACSC")performed twice yearly. If this occurs, the Manager will take the necessary steps to dispose ofsuch securities.

The capital is represented by unitholders' subscription to the Fund. The amount of capital canchange significantly on a daily basis as the Fund is subject to daily redemption andsubscription at the discretion of unitholders. The Manager manages the Fund's capital with theobjective of maximising unitholders' value, while maintaining sufficient liquidity to meetunitholder's redemption as explained in Note 20 (iii) above.

94


PIF

[email protected]

95Your Need

is our Focus

22 August 2013


PIF

[email protected]

96Your Need

is our Focus

22 August 2013


PIF

[email protected]

97Your Need

is our Focus

STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM INCOME FUND

In the opinion of the Manager, the accompanying unaudited financial statements ofPheim Income Fund are drawn up in accordance with Malaysian Financial ReportingStandards, International Financial Reporting Standards and the Securities Commission'sGuidelines on Unit Trust Funds in Malaysia so as to give the true and fair view of thefinancial position of Pheim Income Fund as at 30 June 2013 and of its results, changesin net assets value and cash flows for the period then ended.





PIF

PHEIM INCOME FUND



Note 30.06.2013 30.06.2012

RM RM

INVESTMENT INCOME


Interest Income :

- loans and receivables 54,701 23,127

- available-for-sale ("AFS") financial assets 109,256 125,032

Net gain on financial assets at fair value through

profit or loss ("FVTPL") 7 31,621 441,327

Accretion of discounts, net of amortisation of

premiums on AFS financial assets 8 14,030 48,660

Net realised (loss)/gain on foreign exchange (6,019) 37,909

274,871 704,392

EXPENSES

Manager's fee 3 71,732 75,387





100,719 98,659

Net income before tax 174,152 605,733

Tax expense 5 (5,063) (569)Net income for the period 169,089 605,164

Other comprehensive incomeNet (loss)/gain on change in fair value of AFS financial assets (21,840) 3,765

Total comprehensive income for the period 147,249 605,164

Net income after tax is made up of the following:

Net realised income 601,337 755,229

Net unrealised loss (432,248) (150,065)169,089 605,164

Distribution for the year :

Net distribution 12 649,280 204,817

Net distribution per unit (sen) 12 5 1.5

Gross distribution per unit (sen) 12 5 1.5


98

PIF

PHEIM INCOME FUND


Note 30.06.2013 30.06.2012 30.06.2011

RM RM RM

ASSETS

Investments 6 7,846,408 9,141,530 9,832,768

Deposits with licensed financial institutions 9 5,303,688 1,710,000 1,228,700

Amount due from brokers 372,572 169,728 922,871


Tax recoverable 29,683 28,983 19,329

Cash at bank 10 828,592 4,017,346 4,614,364

TOTAL ASSETS 14,493,876 15,143,805 16,681,990

LIABILITIES

Amount due to Manager 11 11,221 15,132 13,536


Amount due to brokers - - 228,461

Other payables and accruals 8,150 10,232 16,707

TOTAL LIABILITIES 20,752 26,790 260,183

EQUITY


(Accumulated losses)/Retained earnings 183,662 367,472 (412,786)

Available-for-sale reserve 16,557 59,561 52,235

TOTAL EQUITY 13 14,473,124 15,117,015 16,421,807


UNITS IN CIRCULATION 13 (a) 13,248,752 13,661,993 15,551,847



99

PIF

PHEIM INCOME FUND





Capital earnings/ reserves Equity

(Accumulated

losses)

Note 13(a) Note 13(b) Note 13(d)

and 13(c)

RM RM RM RM

At 1 January 2012 15,276,085 (32,875) 55,796 15,299,006


the period 605,164 3,765 608,929

Creation of units 525,038 525,038

Cancellation of units (1,094,142) (1,094,142)

Distribution equalisation (16,999) (16,999)

Distribution (204,817) (204,817)Balance at 30 June 2012 14,689,982 367,472 59,561 15,117,015

At 1 January 2013 13,599,529 663,853 38,397 14,301,779

Effects of adopting FRS 139 - - - -

13,599,529 663,853 38,397 14,301,779


the period - 169,089 (21,840) 147,249

Creation of units 1,567,754 - - 1,567,754

Cancellations of units (901,370) - - (901,370)

Distribution equalisation 6,992 - - 6,992

Distribution for the period - (649,280) - (649,280)Balance at 30 June 2013 14,272,905 183,662 16,557 14,473,124

100

PIF

PHEIM INCOME FUND



01.01.2013 01.01.2012

to to

30.06.2013 30.06.2012

RM RM



Proceeds from sale of investments 3,621,231 2,977,828

Purchase of investments (2,493,305) (2,527,561)

Proceeds received from bonds on maturity - -


Interest received 165,541 149,781



Payment for other fees and expenses (23,594) (22,166)

Income distribution paid (18,247) (675)

Net cash generated from operating

and investing activities 1,186,941 497,822



Payment for cancellation of units (943,140) (1,094,594)

Net cash generated from/(used in) financing activities 8,456 (769,566)

NET INCREASE/(DECREASE) IN CASH

AND CASH EQUIVALENTS 1,195,397 (271,744)

CASH AND CASH EQUIVALENTS AT THE

BEGINNING OF THE YEAR 4,936,883 5,999,090



Deposits with licensed financial institutions (Note 9) 5,303,688 1,710,000

Cash at bank (Note 10) 828,592 4,017,3466,132,280 5,727,346


101

PIF

PHEIM INCOME FUND






The unaudited financial statements of the Fund have been prepared under the historical cost conventionunless otherwise indicated in this summary of significant accounting policies. The financial statementscomply with Malaysian Financial Reporting Standards ("MFRSs"), International Financial ReportingStandards ("IFRSs") and the Securities Commission's Guidelines on Unit Trust Funds in Malaysia.

All significant accounting policies set out below are consistent with those applied in the previous yearother than the adoption of the new and revised Malaysian Financial Reporting Standards ("MFRS") andAmendments to MFRSs issued by the Malaysian Accounting Standards Board ("MASB") which aremandatory for the financial periods beginning on or after 1 January 2013 as disclosed in Note 2.2 below.

Pheim Income Fund ("the Fund") was constitued pursuant to a Master Deed dated 11 January 2002 asamended by second Supplemental Master Deed dated 29 April 2013 between the Manager; Pheim Unit TrustsBerhad, the Trustee; Maybank Trustees Berhad and the registered unit holders of the Fund.

The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 of the MasterDeed, which includes investments in equities and fixed income securities traded on Bursa Malaysia SecuritiesBerhad ("Bursa Malaysia") or any other market considered as an Eligible Market. The Fund commencedoperation on 28 January 2002 and will continue its operations until terminated by the Trustee as providedunder Part 12 of the Master Deed.

The Manager, Pheim Unit Trusts Berhad, is a public company incorporated in Malaysia. It is a wholly ownedsubsidiary of Pheim Asset Management Sdn Bhd, a private company incorporated in Malaysia. Its principalactivity is the management of unit trust funds. Pheim Asset Management Sdn Bhd has been appointed by theManager as the External Investment Manager of the Fund with responsibility for the provision of investmentmanagement services to the Fund.

The principal place of business of the Fund is located at 7th Floor, Menara Hap Seng, Jalan P. Ramlee, 50250Kuala Lumpur.


The unaudited financial statements were authorised for issue by the Board of Directors of the Manager inaccordance with the resolution of the directors on 22 August 2013.

102

PIF














2.3 New MFRSs and Amendments to MFRSs That Are Not Yet Effective and

Have Not Been Early Adopted

Effective for

financial period

beginning

on or after

Amendments to MFRS 132 Financial Instruments : Presentation 1 January 2014


MFRS 9 Financial Instruments (IFRS 9 issued by International 1 January 2015

Accounting Standards Board ("IASB") in

November 2009)

MFRS 9 Financial Instruments (IFRS 9 issued by 1 January 2015

IASB in October 2010)

The adoption of the above new and revised MFRSs and Amendments to MFRSs did not result insignificant changes to the Company's accounting policies and have no significant financial impact on theamounts reported int the financial statements.

The Fund has not early adopted the following new MFRSs and amendments to MFRSs issued by theMalaysian Accounting Standards Board ("MASB") that are relevant to its operations but are not yeteffectrive:-

The fund will adopt the above MFRSs and amendments when they become effective and they are notexpected to have any significant impact on the financial statements of the Fund upon their initialapplication other than the classification and measurement of financial assets under MFRS 9. MFRS 9replaces the multiple classification and measurement models in MFRS 139 with a single model thatclassifies financial assets into only two categories: measured at fair value through profit or loss, or atamortised cost, depending on the entity's business model for managing the financial assets and thecontractual cash flow characteristics of the financial assests.

103

PIF




(i) Financial assets at fair value through profit or loss ("FVTPL")

(ii) Available-for-sale ("AFS") financial assets

Financial assets are classified as financial assets at FVTPL if they are held for trading or aredesignated as such by the Manager upon initial recognition. Financial assets held for tradinginclude securities and fixed income securities acquired principally for the purpose of selling themin near term.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value at the dateof the statement of financial position. Changes in the fair value of those financial instruments arerecorded in "Net gain or loss on financial assets at FVTPL". Interest earned and dividend revenueelements such instruments are recorded separately in "Interest income" and "Dividend income",respectively. Foreign exchange differences on financial assets at FVTPL are not recognisedseparately in profit or loss but included in net gains or net losses on changes in fair value offinancial assets at FVTPL.

AFS financial assets are financial assets that are designated as available for sale or are notclassified as financial assets at FVTPL or loans and receivables.

After initial recognition, AFS financial assets are measured at fair value. Gains or losses fromchanges in fair value of the AFS financial assets are recognised in other comprehensive income,except that impairment losses, foreign exchange gains and losses on monetary instruments,dividend income and interest calculated using effective interest method are recognised in profit orloss.

The cumulative gains or loss previously recognised in other comprehensive income is reclassifiedfrom equity to profit or loss as a reclassification adjustments when the financial assets isderecognised. Interest income calculated using the effective interest method is recognised in profitor loss. Dividends on an AFS equity instrument are recognised in profit or loss when the Fund'sright to receive payment is established.

Fair value is the amount for which an asset could be exchanged, or liability settled, betweenknowledgeable, willing parties in an arm's length transaction. The fair value for financialinstruments traded in active markets at the reporting date is based on their quoted price or bindingdealer price quotations, without deduction for transaction costs.

Financial assets are recognised in the statement of financial position when, and only when, the Fundbecomes a party to the contractual provisions of the financial instruments. Regular way of purchase andsale of investments in financial instruments are recognised on trade dates. When financial assets arerecognised initially, they are measured at fair value, plus attributable transaction cost, for investment notat fair value through profit or loss.

The Fund determines the classification of its financial assets at the initial recognition, and the categoriesinclude financial assets at fair value through profit or loss, available-for-sale financial assets and loansand receivables.

104

PIF




(ii) Available-for-sales ("AFS") financial assets (Contd.)

(iii) Loans and receivables



A financial asset is derecognised when the asset is disposed and the contractual right to receivecash flows from the asset has expired. On derecognition of a financial assets in its entirety, thedifference between the carrying amount and the sum of the consideration received and anycumulative gain or loss that had been recognised in other comprehensive income is recognised inprofit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery ofassets within the period generally established by regulation or convention in the market placeconcerned. All regular way purchases and sales of financial assets are recognised or derecognisedon trade date, i.e. the date that the Fund commits to purchase or sell the asset.

Financial assets with fixed or determinable payments that are not quoted in an active market areclassified as loans and receivables. The Fund includes short term receivables such as balances duefrom broker, Manager and other receivables in the classification. Loans and receivables arerecognised initially at fair value including transaction costs.

Subsequent to initial recognition, loans and receivables are measured at amortised cost usingeffective interest method. Gains and losses are recognised in profit or loss when the loans andreceivables are derecognised or impaired, and through the amortisation process.

The Fund assesses at each reporting date whether there is any objective evidence that a financial asset isimpaired.

Significant or prolonged decline in fair value below cost, weaken fundamental, significant financialdifficulties of the issuer or obligor, and the disappearance of an active trading market areconsiderations to determine whether there is objective evidence that investment securitiesclassified as AFS financial assets are impaired. At end of each financial year, the Manager wouldreceive impairment proposal from the Fund's external investment manager, if any financial assetsof the Fund, in their professional opinion, warrant an impairment exercise.

105

PIF



(b) Impairment of Financial Assets (Contd.)

(i) AFS financial assets (Contd.)



Impairment losses on AFS equity investments are not reversed in profit or loss in the subsequentperiod. Increase in fair value, if any, subsequent to impairment loss is recognised in othercomprehensive income. For AFS debt investments, impairment losses are subsequently reversed inprofit or loss, up to the amount previously recognised as impairment loss, if an increase in the fairvalue of the investment can be objectively related to an event occurring after the recognition of theimpairment loss in profit or loss.

To determine whether there is objective evidence that an impairment loss on financial assets hasbeen incurred, the Fund considers factors such as the probability of insolvency or significantfinancial difficulties of the debtor and default or significant delay in payments.

If any such evidence exists, the amount of impairment loss is measured as the difference betweenthe assets's carrying amount and the present value of estimated future cash flows discounted at thefinancial asset's original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for allfinancial assets with the exception of trade receivables, where the amount is reduced through theuse of an allowance account. When a trade receivable becomes uncollectible, it is written offagainst the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognised, the previouslyrecognised impairment loss is reversed to the extent that the carrying amount of the asset does notexceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

Unrealised gain and losses comprise changes in fair value of financial instruments for the period fromreversal of prior period's unrealised gain and losses for financial instruments which were realised (i.e.sold, redeemed or matured) during the reporting period.

Realised gains and losses on disposals of financial instruments classified as part of "at fair value throughprofit or loss" are calculated using weighted average method. They represent the difference between aninstrument's initial carrying amount and disposal amount, or cash payment or receipts made of derivativecontracts (excluding payments or receipts on collateral margin accounts for such investments).

In an AFS assets is impaired, an amount comprising the diffrence between its cost (net of anyprincipal payment and amortisation) and its current fair value, less any impairment loss previouslyrecognised in profit or loss, is transferred from equity to profit or loss.

106

PIF




(e) Foreign Currencies


Financial liabilities are classified according to the substance of the contractual arrangements entered intoand the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial positionwhen, only when, the Fund becomes a party to the contractual provisions of the financial instrument.Financial liabilities are classified as other financial liabilities.

The Fund's financial liabilities which include trade and other payables are recognised initially at fairvalue plus directly attributable transaction costs and subsequently measured at the amortised cost usingeffective interest method.

A financial liability is derecognised when the obligation under the liability is extinguished. Gains andlosses are recognised in profit or loss when the liabilities are derecognised, and through the amortisationprocess.

The financial statements of the Fund are measured using the currency of the primary economicenvironment in which the Fund operates ("the functional currency"). The financial statements arepresented in Ringgit Malaysia (RM), which is also the Fund's functional currency.

In preparing the financial statements, transactions in currencies other than the Fund's functional currency(foreign currencies) are recorded in the functional currency using the exchange rates prevailing at thedates of the transactions. At the end of each reporting period, foreign currency monetary assets andliabilities are translated at exchange rates prevailing at the end of the reporting period. Non-monetaryitems that are measured at fair value in foreign currency are translated using exchange rates at the datewhen the fair value was determined.

Exchange differences arising from the settlement of foreign currency transactions and from the translationof foreign currency monetary assets and liabilities are recognised in profit or loss.

Exchange differences arising from the translation of non-monetary items carried at fair value are includedin profit or loss for the period except for the differences arising on the translation of non-monetary itemsin respect of which gains or losses are recognised directly in equity. Exchange differences arising fromsuch non-monetary items are recognised directly to equity.

The unitholders' contributions to the Fund meet the definition of puttable instruments classified as equityinstruments under MFRS 132.

Distribution equalisation represents the average distributable amount included in the creation andcancellation prices of units. This amount is either refunded to unitholders by way of distribution and/oradjusted accordingly when units are cancelled.

107

PIF





(i) Income Recognition

(j) Income Tax


Income distributions are at the discretion of the Manager. Income distribution to the Fund's unitholders isaccounted for as a deduction from realised reserves except where the distribution is sourced out ofdistribution equalisation which is accounted for as deduction from unitholders' capital.

Cash and cash equivalents comprise cash at bank and deposits with financial institutions which haveinsignificant risk of changes in value.

Income is recognised to the extent that is probable that the economic benefits will flow to the Fund andthe income can be realiably measured. Income is measured at fair value of consideration received orreceivable.


Interest income, which includes the accretion of discount and amortisation of premium on fixed incomesecurities, is recognised using effective interest method.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to thetax authorities. The tax rates and tax laws used to compute the amount are those that are enacted orsubstantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognisedoutside profit or loss, either in other comprehensive income or directly in equity.

No deferred tax is recognised as there are no material temporary differences.

For management purposes, the Fund is managed by 2 main portfolios, namely (1) equity securities and(2) fixed income instruments. Each segment engages in separate business activities and the operatingresults are regularly reviewed by the Manager, External Investment Manager and the Fund's InvestmentCommittee. The External Investment Manager and the Fund Investment Committee jointly assumes therole of chief operation decision maker, for performance assessment purposes and to make decision aboutresources allocated to each investment segment.

108

PIF



3. MANAGER'S FEE

4. TRUSTEE' S FEE

5. TAXATION

30.06.2013 30.06.2012

RM RM

Current year Malaysian tax 5,063 569

Under provision in prior years - -Malaysian tax expense based on result for the period 5,063 569

Income tax is calculated at Malaysian Statutory tax rate 25% (2012: 25%) of the estimated assessable netincome for the period.

The tax charge for the period is in relation to the taxable income earned by the Fund after deducting allowableexpenses. In accordance with Schedule 6 of Income Tax Act 1967, interest income earned by the Fund isexempted from tax.

The preparation of financial statements in accordance with MFRS and IFRS requires the use of certainaccounting estimates and exercise of judgements. Estimates and judgements are continually evaluatedand are based on past experience, reasonable expectations of future events and other factors.

No major judgements have been made by the Manager in applying the Fund's accounting policies. Thereare no key assumptions concerning the future and other key sources of estimation uncertainty at thereporting date, that have significant risk of causing material adjustment to the carrying amounts of assetsand liabilities within next year.

The Manager is entitiled to an annual management fee of 1.0% p.a. of net asset value of the Fund (beforededucting Manager's and Trustees fees for the day) calculated and accrued on a daily basis.

The Trustee is entitled to a fee of 0.07% p.a. based on net asset value of the Fund (before deducting Manager'sand Trustee's fees for the day) calculated and accrued on a daily basis subject to a minimum of RM18,000 p.a.

109

PIF

5. TAXATION (Contd.)

30.06.2013 30.06.2012

RM RM


Taxation at Malaysian statutory rate of 25% (2012: 25%) 43,538 151,433

Tax effects of:

Income not subject to tax (68,718) (176,098)


Restriction on tax deductible expenses for unit trust funds 24,703 20,605Tax expense for the financial period 5,063 569

6. INVESTMENTS

Financial assets at fair value through profit or loss 30.06.2013 30.06.2012

(Note 7) RM RM

Quoted Equities

- in Malaysia 47,000 607,280

- outside Malaysia 1,190,568 1,221,930

1,237,568 1,829,210

Available-for-sale financial assets (Note 8)

Unquoted fixed income

securities in Malaysia 6,608,840 7,312,320Total investments 7,846,408 9,141,530


30.06.2013 30.06.2012

RM RM

Financial assets at FVTPL:Quoted equity investments 1,237,568 1,829,210

Net gain on financial assets at FVTPL comprised:

Realised gain on disposals 463,869 591,392

Unrealised loss on changes in fair values (432,248) (150,065)31,621 441,327

A reconciliation of income tax expense applicable to income before tax at the statutory income tax rate toincome expense at the effective income tax rate of the Fund is as follows:

110

PIF


The currency exposure profile of financial assets at

FVTPL is as follows :

- Ringgit Malaysia 47,000 607,280

- Hong Kong Dollar 980,004 1,016,141

- Singapore Dollar 210,564 147,169

- Thai Baht - 58,6201,237,568 1,829,210

Financial assets at FVTPL as at 30 June 2013 are as detailed below:


RM RM NAV

QUOTED EQUITY INVESTMENTS

- IN MALAYSIA

Main Market

Trading/Services

Engtex Group Berhad 50,000 51,683 47,000 0.32

TOTAL QUOTED

EQUITY INVESTMENTS- IN MALAYSIA 50,000 51,683 47,000 0.32

111

PIF



RM RM NAV

QUOTED EQUITY INVESTMENTS

- OUTSIDE MALAYSIA

Hong Kong Stock Exchange

("HKSE")

Agricultural Bank of China 180,000 246,642 234,616 1.62

China Merchants Bank-H 72,000 441,540 379,492 2.62

K Wah International Holdings 80,000 130,416 116,005 0.80

Lai Sun Development 1,500,000 136,767 123,418 0.85

Tungda Innovative Lighting Holdings Ltd 420,000 - - -

West China Cement Limited 270,000 148,391 126,473 0.87

2,522,000 1,103,756 980,004 6.76

Singapore Stock Exchange

("SGX")

Golden Agri-Resources Limited 80,000 140,575 111,073 0.77

Indofood Agri Resources

Limited 41,000 168,111 99,491 0.69

121,000 308,686 210,564 1.46

TOTAL QUOTED

EQUITY INVESTMENTS

- OUTSIDE MALAYSIA 2,643,000 1,412,442 1,190,568 8.22

TOTAL QUOTED EQUITIES 2,693,000 1,464,125 1,237,568 8.54


EXCESS OF FAIR VALUEOVER COST (226,557)

112

PIF


30.06.2013 30.06.2012

RM RM

Unquoted fixed income securities 6,608,840 6,616,650

Accretion of discounts, net of amortisationof premiums of AFS financial assets 14,030 29,905

Unrealised gain on changes in fair values 16,557 56,000

AFS financial assets as at 30 June 2013 are as detailed below:

Nominal

Name of Counter Amount Cost* Fair value % of

RM RM NAV

UNQUOTED FIXED INCOME SECURITIES

Government Investment Issues - 02/14 2,800,000 2,810,303 2,822,960 19.50

Malaysian Government Securities - 10/15 1,300,000 1,305,452 1,300,130 8.98

WCT Engineering - 12/13 (Rating : AA-) 2,500,000 2,476,528 2,485,750 17.17

6,600,000 6,592,283 6,608,840 45.65


* Cost of fixed income security includes accretion of discount and/or amortisation of premium.

9. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

30.06.2013 30.06.2012

RM RM

Licensed investment banks 5,303,688 1,710,000

Average

remaining

WAEIR maturities

30.06.2013 30.06.2012 30.06.2013 30.06.2012

% % Days Days

Licensed investment banks 2.93 2.95 3 2

The weighted average effective interest rate ("WAEIR") per annum and the average remaining maturities ofdeposits and placement are as follows:

113

PIF

10. CASH AT BANK

The currency exposure profile of bank balances is as follows:-

30.06.2013 30.06.2012

RM RM

Indonesia Ruppiah - 463,661

Thai Bath - 623,309

Hong Kong Dollar - 693,641

Singapore Dollar - 1,760,987


Ringgit Malaysia 824,533 24,601828,592 4,017,346

11. AMOUNT DUE TO MANAGER

30.06.2013 30.06.2012

RM RM

Amount arising from release of units - (3,184)

Management fee 11,221 (11,947)11,221 (15,131)

12. INCOME DISTRIBUTION


2013 2012RM RM

Dividend Income 867 63,417

Interest Income 64,515 10,228

Net realised gain from sale of investment 182,205 49,437

Net realised loss on foreign exchange - -

Net accretion of discount on corporate bond 5,631 7,569

Other Income 133 141

253,351 130,792

Less:

Expenses 39,764 49,911

Taxation - -

Current year's realised income 213,587 80,881

Distribution out of previous year's realised reserves 435,693 123,936Distribution for the year 649,280 204,817

Unit in circulation at book closing date 12,985,601 13,654,480

Gross distribution per unit (sen) 5.0 1.5

Net distribution per unit (sen) 5.0 1.5Date of distribution 26.4.2013 27.4.2012

114

PIF

13. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY)

Note 30.06.2013 30.06.2012

RM RM

Unitholder's capital (a) 14,272,905 14,689,982

Retained earnings/(Accumulated losses)

- Realised earnings/(losses) (b) (520,157) 34,187

- Unrealised earnings (c) 703,819 333,285

183,662 367,472



Number Number



of year 12,665,752 13,599,529 14,179,802 15,276,085

Add: Creation of units 1,413,206 1,567,754 483,720 525,038

Less: Cancellation of units (830,206) (901,370) (1,001,529) (1,094,142)

Distribution equalisation - 6,992 - (16,999)Balance at end of period 13,248,752 14,272,905 13,661,993 14,689,982

01.01.2013 to 30.06.2013 01.01.2012 to 30.06.2012

In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 14 August2006, the maximum number of units that can be issued for circulation is 100,000,000 units. As at 30 June2013, the number not yet issued is 86,751,248 units (30 June 2012: 86,338,007).

115

PIF

13. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (CONTD.)


30.06.2013 30.06.2012

RM RM

Balance at the beginning of period 392,282 (216,095)

Net income after taxation 169,089 605,164

Net unrealised gain attributable to investments

held transferred to unrealised reserve (426,229) (187,974)

Net unrealised foreign exchange loss/(gain)

attributable to foreign currency monetary

item transferred to unrealised reserve (6,019) 37,909

Distribution out of realised reserve (649,280) (204,817)Balance at the end of period (520,157) 34,187

(c) Unrealised - Non-distributable

30.06.2013 30.06.2012

RM RM

Balance at the beginning of period 271,571 183,220

Net unrealised gain attributable to investment

held transferred from realised reserve 426,229 187,974

Net unrealised foreign exchange (loss)/gain

attributable to foreign currency monetary

item transferred from realised reserve 6,019 (37,909)Balance at the end of period 703,819 333,285

116

PIF




to unitholders for





to unitholders per




units NAV units NAV

RM RMDirectors of the Manager # 420,560 459,425 359,278 397,542

# The Directors of the Manager are legal and beneficial owners of the units.

30 June 2013 30 June 2012

30.06.2013 30.06.2012

Net asset value attributable to unitholders is classified as equity in the statement of financial position.

Quoted financial assets in the financial statements have been valued at the bid prices at the close of businessin accordance with the provision of MFRS 139. For the purpose of calculation of net asset value attributableto unitholders per unit for the issuance and redemption of units in accrodance with the Deed, quoted financialassets are stated at the last done market price.

A reconciliation of net asset value attributable to unitholders for issuing/redeeming units and the net assetvalue attributable to unitholders per the financial statements is as follows:-

117

PIF


Trading % of total Brokerage % of total

value trading fees brokerage

RM value RM fees

MIDF Amanah Investment Bank Bhd 12,680,000 58.22 - -

Hwang-DBS Investment Bank Bhd 2,600,000 11.94 - -

CCB International Securities Ltd 1,100,472 5.05 3,241 18.54

DBS Vicker Securities Pte Ltd - Hong Kong 1,094,777 5.03 3,043 17.41

CIMB-GK Securities Ltd - Hong Kong 783,169 3.59 1,956 11.19BOCI Securities Ltd 719,475 3.30 3,275 18.73

RHB Investment Bank Bhd 540,930 2.48 1,218 6.97

CIMB Investment Bank Bhd 431,169 1.98 972 5.56

Hong Leong Investment Bank 407,065 1.87 174 1.00

PT Mandiri Sekuritas 226,768 1.04 878 5.02

Others 1,196,904 5.50 2,724 15.5821,780,729 100.00 17,481 100.00

17. MANAGEMENT EXPENSE RATIO

30.06.2013 30.06.2012


18. PORTFOLIO TURNOVER

30.06.2013 30.06.2012


This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other professional fees)and other administrative expenses of the Fund to the average net asset value NAV of the Fund calculated on adaily basis.The average NAV of the Fund for the period ended 30 June 2013 was RM 14,632,723(2012:RM15,233,331)

This is the the ratio of the average of acquisitions and disposals of the Fund for the period to average NAV ofthe Fund for the year calculated on daily basis.

Details of transactions with stockbroking companies and other investment banks for the period ended 30 June2013 are as follows:

118

PIF


The Manager, the appointed External Investment Manager and Investment Committee of the Fund areresponsible for allocating resources available to the Fund in accordance with the overall investment strategiesas set out in the investment Guidelines of the Fund. The Fund is managed by two segments:

● A portfolio of equity instruments● A portfolio of fixed income portfolio, including debt securities and deposits with financial institutions.

The investment objective of each segment is to achieve consistent returns from the investments in eachsegment while safeguarding capital by investing in diversified portfolios. There have been no changes inreportable segments in the current financial period. The segment information provided is presented to theManager, the appointed External Investment Manager and Investment Committee of the Fund.

01.01.2013 to 30.06.2013 01.01.2012 to 30.06.2012

Fixed Fixed

Equity income Equity Income

Portfolio Portfolio Total Portfolio Portfolio Total

RM RM RM RM RM RM


Interest Income - 163,957 163,957 - 181,959 181,959

Net gain on financial assets

at ("FVTPL") 31,621 - 31,621 441,327 - 441,327

Accretion of discount,net of

amortisation of premium 14,860 14,860

AFS financial assets - 14,030 14,030 - - -

Net realised (loss)/gain onforeign exchange (6,019) - (6,019) 37,909 - 37,909

Total segment operating incomefor the period 96,884 177,987 274,871 507,573 196,819 704,392

Deposit with financial institutions 5,303,688 5,303,688 - 1,710,000 1,710,000


AFS financial assets - 6,608,840 6,608,840 7,312,320 7,312,320Other assets 56,665 56,268 112,933 21,705 54,514 76,219



119

PIF


30.06.2013 30.06.2012

RM RM

Net reportable segment operating income 274,871 704,392

Expenses (100,719) (98,659)


Tax expense (5,063) (569)Net income for the year 169,089 605,164

30.06.2013 30.06.2012

RM RM



Amount due from broker 372,572 -

Cash at bank 828,592 4,017,346


Total segment liabilities - -


Other payables and accruals 8,150 10,232





Expenses of the Fund are not considered part of the performance of any operating segment. The followingtable provides a reconciliation between reportable segment income and operating profits.

In addition, certain assets and liabilities are not considered to be part of the assets and liabilities of anindividual segment. The following table provides reconciliation between total reportable segment assets andliabilities and total assets and liabilities of the Fund.

The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either fair valueor at amortised cost based on their respective classification. The significant accounting policies in Note 2describe how the classes of financial instruments are measured, and how income and expenses, includingfair value gains and losses are recognised. The following table analyses the financial assets and liabilitiesof the Fund in the statement of financial position, by the class of financial instrument to which they areassigned, and therefore by the measurement basis.

120

PIF


(a) Classification of financial instruments (Contd.)

Financial

liabilities

Financial AFS at

assets at financial Loan and amortisedFVTPL assets receivables cost Total

RM RM RM RM RM

30 June 2013

Assets

Investments 1,237,568 6,608,840 - - 7,846,408


financial institutions - - 5,303,688 - 5,303,688Amount due from brokers 372,572 - - - 372,572


Cash at bank - - 828,592 - 828,592Total financial assets 1,610,140 6,608,840 6,245,213 - 14,464,193


Liabilities



30 June 2012

Assets

Investments 1,829,210 7,312,320 - - 9,141,530

Deposits with licensedfinancial institutions - - 1,710,000 - 1,710,000

Amount due from brokers 169,728 - 0 - 169,728




Liabilities



121

PIF


(b) Fair Value



RM RM RM

As at 30 June 2013

Financial assets as FVTPL

- Quoted Equities 1,237,568 - 1,237,568



1,237,568 6,608,840 7,846,408

As at 30 June 2012

Financial assets as FVTPL

- Quoted equities 1,829,210 - 1,829,210



1,829,210 7,312,320 9,141,530

The Fund’s financial assets at FVTPL and AFS financial assets are carried at fair value. The fairvalues of these financial assets were determined using prices in active markets for identical assets.

Quoted equity instrumentsFair value is determined directly by reference to their published market bid prices on the relevantstock exchanges at the reporting date.

Unquoted fixed income securitesThe published market prices for RM-denominated unquoted bonds are based on informationprovided by Bond Pricing Agency Malaysia Sdn Bhd.

The Fund uses the following level of fair value hierarchy for determining and disclosing the fairvalue of financial instruments carried at fair value in the statement of financial position :

Level 1 : Quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2 : Inputs other than quoted prices indcluded within Level 1 that are observable for the asset

or liability either directly or indirectly

Level 3 : Inputs for the asset or liability that are not based on observable market data

The Fund held the following financial instruments carried at fair value on the statement of financialposition as at the end of the period :

122

PIF


(b) Fair Value (Contd.)

(ii) Financial Instruments not carried at fair value


(i) Market Risk


Effect on profit

or loss and equity

Change in equity price (%) Increase/(Decrease)

RM

30 June 2013+6/-6 74,254/ (74,254)

30 June 2012+6/-6 109,753/ (109,753)

The Fund maintains investment portfolios in a variety of quoted and unquoted financial instruments asdictated by its Trust Deed and investment management strategy.

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk, equity pricerisk and currency risk), credit risk, and liquidity risk. Whilst these are the most important types of financialrisks inherent in each type of financial instruments, the Manager and the Trustee would like to highlight thatthis list does not purport to constitute an exhaustive list of all the risks inherent in an investment in the Fund.

The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk is inherent inthe Fund’s activities, but it is managed through a process of ongoing identification, measurement andmonitoring of risks. Financial risk management is also carried out through sound internal control systems andadherence to the investment restrictions as stipulated in the Trust Deed, the Securities Commission’sGuidelines on Unit Trust Funds and the Capital Markets and Service Act, 2007.

The Fund's principal exposure to market risk arises primarily due to changes or developments in themarket environment and typically includes changes in regulations, politics and the economy of thecountry. Market risk is also influenced by global economics and geopolitical developments. The Fundseeks to diversify away some of this risk by investing into different sectors to mitigate risk exposure toany single asset class.

The Fund's market risk is affected primarily due to changes in market prices and interest rates and

foreign currency exchange rates.

Equity price risk is the adverse changes in the fair value of equities as a result of changes in thelevels of equity indices and the value of individual shares. The equity price risk exposure arisesfrom the Fund's investments in quoted equity securities.

The table below summarises the effect of sensitivity from the Fund's underlying investments inquoted equities on the profit or loss and equity of the Fund due to possible changes in equity prices,with all other variables held constant:

Financial instruments not carried at fair value comprise financial assets and financial liabilitiesclassified as loans and receivables anf financial liabilities at amortised cost respectively. Thecarrying amount of these financial instruments at the end of the financial year approximated theirfair value due to their short term to maturity.

123

PIF




Effect on profit

or loss and equity

Change In Basis Points* Increase/(Decrease)

RM

2013+25/-25 5,754/ (5,724)

2012+25/-25 3,811/ (3,811)

* The assumed movement in basis points for interest rate sensitivity analysis is based on the currently

observable market environment

(c) Currency Risk

Effect on profit or loss

and equity

30 June 2013 30 June 2012

RM RM

Indonesian Rupiah - 46,366

Thai Baht - 68,193

Hong Kong Dollar 98,000 170,978

Singapore Dollar 21,057 190,816

United States Dollar 406 45,115119,463 521,468

This risk refers to the effect of interest rate changes on the market value of fixed income securitiesand deposits with financial institutions. In the event of rising interest rates, the return on depositswith financial institutions will rise while prices of fixed income securities will decrease and viceversa, thus affecting the net asset value of the Fund. This risk will be minimized via themanagement of the duration structure of the portfolio of fixed income securities and deposits withfinancial institutions.

The following table demonstrates the sensitivity of the profit or loss and equity of the Fund to areasonably possible change in interest rates, with all other variables held constant:

The Fund is exposed to currency risk primarily through its investment in overseas quoted equitiesand bank balances that are denominated in foreign currencies. The Fund's foreign currencyexposure profiles of it's investment in quoted equities and bank balances has been disclosed underNote 7 and Note 10 respectively.

A 10% strenghtening or weakening of the RM againts the following foreign currencies as at theend of the period would have decreased or increased respectively the profit or loss and equity ofthe Fund by the amount shown below. The analysis assumes all othe variables are held constant.

124

PIF


(ii) Credit Risk


1 month - 3 Above 3

30 June 2013 months months Total

RM RM RM

Financial Assets

Financial assets at FVTPL 1,237,568 - 1,237,568



Other assets 1,314,097 1,314,097

Total undiscounted financial asset: 7,855,353 6,608,840 14,464,193

Non-Financial Asset


Total Assets 7,855,353 6,638,523 14,493,876


Other liabilities 20,752 20,752

Total undiscounted

financial liabilities 20,752 20,752

Unitholder's NAV 14,473,124 - 14,473,124Liquidity gap (6,638,523) 6,638,523 -

This risk occurs in thinly traded or illiquid equity securities. Should the Fund need to sell a relativelylarge amount of such securities, the act itself may significantly depress the selling price. As the Fund isexposed to daily redemption of units, the risk is minimized by placing a prudent level of funds in short-term deposits and by investing in stocks whose liquidity is adjudged to be commensurate with theexpected exposure level of the Fund.

The following table summarises the maturity profile of the Fund's financial liabilities and thecorresponding assets available to meet commitments associated woth those financial liabilities andredemption by unitholders.

The Fund's principal exposure to credit risk arises primarily due to changes in the financial conditions ofcompanies issuing debt securities and stockbroking companies, which may affect their creditworthiness.This in turn may lead to default in the payment. Such events can lead to loss of capital or delayed orreduced income for the Fund resulting in a reduction in the Fund's asset value and thus unit price. Thisrisk is mitigated by vigorous credit analyses and diversification of the bond portfolio of the Fund and toengage different stockbroking companies with good reputation. Bond rating of the Fund's portfolio hasbeen disclosed in Note 8.

125

PIF


(iii) Liquidity Risk (Contd.)

30 June 2012

Financial Assets

Financial assets at FVTPL 1,829,210 1,829,210

AFS financial assets 7,312,320 7,312,320

Deposits with financial institutions 1,710,000 1,710,000

Other assets 4,263,293 4,263,293

Total undiscounted financial asset: 7,802,503 7,312,320 15,114,823

Non-Financial Asset


Total Assets


Other liabilities - 26,790 26,790

Total undiscounted

financial liabilities - 26,790 26,790

Unitholder's NAV 15,117,015 15,117,015Liquidity gap (7,314,513) 7,314,513 -



(vi) Capital Management

The Fund is exposed to the individual risk of the respective companies issuing securities which includeschanges to the business performance of the company, consumer tastes and demand, lawsuits andmanagement practices. This risk is minimised through the well diversified nature of the Fund.

The Fund's exposure to securities issued by any issuer is limited to not more than a certain percentage ofits net asset value. Under such restriction, the risk exposure to the securities of any issuer is minimised.

The capital is represented by untiholder's subscription to the Fund. The amount of capital can changesignificantly on a daily basis as the Fund is subject to a daily redemption and subscription at thediscretion of unitholders. The Manager manages the Fund's capital with the objectives of maximisingunitholders' value, while maintaining sufficient liquidity to meet unitholders' redemption as explained inNote 21 (iii) above.

126

Interim report cover page- 30062013

Documents

Transcript of Interim report cover page- 30062013