annual report cover page- 31122012

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

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A N N U A L R E P O R T31 DECEMBER 2012

MASTER TRUST

Pheim Emerging Companies Balanced Fund

Dana Makmur Pheim

Pheim Income Fund

PHEIM Master Trust Annual Report 31.12.2012

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)

TRUSTEEHSBC (Malaysia) Trustee Berhad (1281-T)

AUDITORSFolks DFK & Co

TAXATION CONSULTANTFolks Taxation Sdn Bhd (178104-M)


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 Audited FinancialStatements:

Pheim Emerging Companies Balanced Fund

Dana Makmur Pheim

Pheim Income Fund

1 – 4

5 – 13

14 – 29

30 – 63

64 – 97

98 – 133


Fund Information

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Dear Valued Unit Holders

We are pleased to present the Manager’s Report and the audited financial statements for theperiod from 1 January 2012 to 31 December 2012 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.


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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.


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1.6 Breakdown Of Unit Holdings By Size As At 31.12.2012

1.6.1 PECBFNo. of units held Unitholders

Sizeof holding (‘000) %

No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

140,760 0.91 50 23.92 43 22.40

5,001 - 10,000 311,535 2.05 44 21.05 42 21.88

10,001 -50,000

1,441,868 9.46 70 33.49 65 33.85

50,001 -500,000

5,731,976 37.62 41 19.62 38 19.79

500,001 andabove

7,611,457 49.96 4 1.92 4 2.08

Total 15,237,596 100.00 209 100.00 192 100.00

1.6.2 DMP

No. of units held Unitholders


No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

171,909 3.07 63 31.03 58 30.52

5,001 - 10,000 371,313 6.62 51 25.12 50 26.32

10,001 -50,000

1,431,565 26.11 75 36.95 69 36.32

50,001 -500,000

1,826,011 32.57 13 6.41 12 6.32

500,001 andabove

1,773,689 31.63 1 0.49 1 0.52

Total 5,574,487 100.00 203 100.00 190 100.00


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1.6.3 PIF

No. of units held Unitholders


No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

74,916 0.59 27 21.77 24 21.82

5,001 - 10,000 137,910 1.09 20 16.13 16 14.55

10,001 -50,000

858,091 6.86 42 33.87 39 35.45

50,001 -500,000

5,103,190 40.25 29 23.39 25 22.73

500,001 andabove

6,491,645 51.21 6 4.84 6 5.45

Total 12,665,752 100.00 124 100.00 110 100.00


Funds’ Performances

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2 FUND PERFORMANCE

2.1 Pheim Emerging Companies Balanced Fund

2.1.1 Portfolio composition

FYE31.12.2012

(%)

FYE31.12.2011

(%)

FYE31.12.2010

(%)

(Percentage of Net Asset Value)

Biochemical & Biotechnology 2.30 0.96 -

Construction 5.64 2.77 4.96

Consumer Products 4.61 1.72 3.21

Energy & Water Supply - 2.20 -

Finance 16.84 8.08 -

Home Furniture 0.27 - -

Infrastructure 3.85 - -

Industrial Products 4.36 8.14 14.71

Manufacturing - 1.89 -

Mining 1.34 1.68 -

Plantations 1.59 11.16 6.96

Pharmacy & Cosmetic 1.53 2.17 -

Properties 1.16 0.80 0.95

Technology - - 1.33

Telecommunications 1.05 1.33 -

Trading / Services 7.79 3.81 7.88

Trusts - 0.44 -

Utilities 1.78 - -

Foreign Investments - - 17.07

Unquoted/Quoted Corporate Bonds 33.71 34.38 20.54

Cash and cash equivalents 12.18 18.47 22.39

Total 100.00 100.00 100.00



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PECBF

2.1.2 Other financial and performance data

FYE31.12.2012

FYE31.12.2011

FYE31.12.2010

Net asset value (RM‘000) 17,512.03 17,963.17 22,498.24

Units in circulation (‘000) 15,237.39 16,305.63 18,989.44

Net asset value per unit (RM) 1.1493 1.1017 1.1848

NAV/ unit (RM) – ex-distribution

NAV/ unit 1.1493 1.1017 1.1848

Highest NAV/ unit for the period

NAV/ unit 1.2123 1.2402 1.1910

Lowest NAV/ unit for the period

NAV/ unit 1.0864 1.0041 1.0434

Total returns for the period(RM’000)

Capital growth (582.00) (1,150.24) 1,413.66

Income distribution 2,019.31 344.89 9.47

Income Distribution (Final)On

27.04.2012On

28.04.2011n.a.

Gross distribution per unit (sen) 6.00 6.00 -

Net distribution per unit (sen) 6.00 6.00 -

Management expense ratio (MER)(%)

1.82 1.78 1.87

Portfolio turnover ratio (PTR)(time)

0.64 0.84 1.12

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 year isincreased compare with the previous year.

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 decrease in PTR for the year was mainly due to lower investment trading.



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PECBF

2.1.3 Average total return ended 31 December 2012

(%)

One Year +9.86

Three Years +6.11

Five Years +1.33

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.



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2.2 Dana Makmur Pheim


FYE31.12.2012

(%)

FYE31.12.2011

(%)

FYE31.12.2010

(%)


Construction 10.58 6.47 5.81

Consumer Products 4.82 - 1.61

Finance 1.63 - -



Plantations - 14.12 14.78

Properties 3.99 - 3.78

Technology - - 1.80

Trading / Services 16.09 12.14 8.31

Sukuk 5.85 16.51 6.65

Cash and Other Assets 36.31 36.76 38.07

Total 100.00 100.00 100.00


FYE31.12.2012

FYE31.12.2011

FYE31.12.2010






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DMP

2.2.2 Other financial and performance data (continued)

FYE31.12.2012

FYE31.12.2011

FYE31.12.2010

NAV/ unit (RM) – ex-distribution

NAV/ unit 1.5537 1.5272 1.5666

Highest NAV/ unit for the period

NAV/ unit 1.6554 1.6446 1.5721


NAV/ unit 1.5208 1.3983 1.3792


Capital growth (517.93) (112.03) 328.75

Income distribution 772.33 521.56 187.36

Income Distribution (Final)

On27.04.2012

On28.04.2011

n.a.




2.09 2.06 2.18

Portfolio turnover ratio (PTR)time)

0.72 0.64 0.79


average value of the fund calculated on a daily basis. The MER for the year increasemainly due to the decrease in averaged NAV for the year.

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 increase in PTR for the year was mainly due to higher investmentactivity.



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DMP


(%)

One Year +5.87

Three Years +6.05

Five Years +3.27



2012 +5.87

2011 +1.7

2010 +10.7

2009 +35.1

2008 -27.1






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2.3 Pheim Income Fund


FYE31.12.2012

(%)

FYE31.12.2011

(%)

FYE31.12.2010

(%)


Construction 1.71 - 0.59

Consumer Product 2.14 0.83 -

Finance 7.65 5.91 -

Home Furniture 0.74 - -



Plantation 0.90 4.28 -

Properties - - 1.41

Trusts - 0.35 -

Trading/ Services 3.02 - 3.31

Technology - - 1.08

Foreign Investments - - 2.38

Unquoted Corporate Bonds 46.27 47.74 27.15

Cash and Other Assets 34.77 39.38 55.50

Total 100.00 100.00 100.00


FYE31.12.2012

FYE31.12.2011

1.12.231.12.2010




NAV/ unit (RM) – ex-distributionNAV/ unit 1.1292 1.0789 1.0956

Highest NAV/ unit for the periodNAV/ unit 1.1318 1.0987 1.0969


NAV/ unit 1.0804 1.0425 1.0537


Capital growth 88.35 687.20 (440.64)

Income distribution 748.77 (374.40) 721.17



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PIF

2.3.2 Other financial and performance data (continued)

FYE31.12.2012

FYE31.12.2011

FYE31.12.2010

Income Distribution (Final)On

27.04.2012On

28.04.2011n.a.




1.31 1.28 1.19

Portfolio turnover ratio (PTR)(time)

0.42 0.62 0.66


average value of the fund calculated on a daily basis. The MER for the year is increasedcompare with the previous year.

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 decrease inPTR for the year was mainly due to the decrease in investment activity.


(%)

One Year +6.02

Three Years +4.58

Five Years +4.71



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PIF



2012 +6.02

2011 +4.36

2010 +3.4

2009 +10.4

2008 -0.3





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3 MANAGER’S REPORT

3.1 Performance Review

3.1.1 PECBF

For the year ended 31 December 2012, PECBF, based on its net asset value (NAV) perunit, increased by 4.32%, under-performed the benchmark by 7.96%. However, in thesecond half of 2012, PECBF, under-performed the benchmark by 3.02% as equitymarket dropped. The total NAV decreased marginally from approximately RM17.9millionto RM17.5 million during the year mainly due to depreciation in value of investments.

The Fund has made an income distribution of 6.00 sen per unit (net of tax) on 27 April2012 for the period ended 29 February 2012. The NAV per unit as at 27 April 2012before distribution was RM1.1980 and after distribution was RM1.1380. The Fund isconsistent with the aim to provide capital appreciation over a long term period.

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

Benchmark/ FundAs at

31.12.2012As at

30.06.2012Change

%

Benchmark of PECBF 94.81% 88.21% +6.60

PECBF – NAV per unit (RM) 1.1493 1.1096 +3.58

Performance table for financial year 2012 (1 year):


31.12.2012As at

31.12.2011Change

%

Benchmark of PECBF 94.81% 82.53% +12.28

PECBF – NAV per unit (RM) 1.1493^ 1.1017 +4.32

^adjusted for income distribution on 27.04.2012


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3.1.2 DMP

For the year ended 31 December 2012, DMP, based on its NAV per unit, increased by1.74%, under-performed the benchmark marginally by 13.02%. However, in the secondhalf of 2012, DMP, under-performed the benchmark by 6.41% as the equity marketdropped. The total NAV decreased from approximately RM9.2 million to RM RM8.6million during the year mainly due to depreciation in value of investments and unit incirculation.




31.12.2012As at

30.06.2012Change

%

Benchmark of DMP 90.55% 84.12% +6.43

DMP – NAV per unit (RM) 1.5537 1.5534 +0.02



31.12.2012As at

31.12.2011Change

%

Benchmark of DMP 90.55% 75.79% +14.76

DMP – NAV per unit (RM) 1.5537^ 1.5272 +1.74


3.1.3 PIF

For the year ended 31 December 2012, PIF, based on its NAV per unit, increased by4.66%, out-performed the benchmark marginally 1.49%. In the second half of 2012, PIFout-performed the benchmark by 0.46% mainly due to the rise in the interest rate formoney market. The total NAV decreased from approximately RM15.3 million to RM14.3million during the year due to decrease in value of investments.


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3.1.3 PIF (contd.)




31.12.2012As at

30.06.2012Change

%

1-year fixed deposit rate at 2.85% (pro-rated)

38.28% 36.69% +1.59

PIF – NAV per unit (RM) 1.1292 1.1065 +2.05



31.12.2012As at

31.12.2011Change

%

1-year fixed deposit rate at 2.85%(pro-rated)

38.28% 35.11% +3.17

PIF – NAV per unit (RM) 1.1292^ 1.0789 +4.66


3.2 Performance Chart Since Inception

3.2.1 PECBF


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3.2.2 DMP

3.2.3 PIF

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


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

3.3.1 PECBF

Asset ClassAs at

31.12.2012

As at31.12.2011 Change

Equity Securities – in Malaysia 20.56 29.92 -9.36

Equity Securities – outside Malaysia 33.55 17.23 +16.32

Corporate Bonds 33.71 34.38 -0.67

Cash and cash equivalent 12.18 18.47 -6.29

Total 100.00 100.00

3.3.2 DMP

Asset ClassAs at

31.12.2012As at

31.12.2011 Change

Shariah-compliant equity securities– in Malaysia

57.84 46.73 +11.11

Sukuk 5.85 16.51 -10.66

Cash and cash equivalent 36.31 36.76 -0.45

Total 100.00 100.00

3.3.3 PIF

Asset ClassAs at

31.12.2012As at

31.12.2011 Change

Corporate Bonds – in Malaysia 46.27 47.74 -1.47

Money market & cash 34.77 39.38 -4.61

Equity Securities – in Malaysia 3.36 8.85 -5.49

Equity Securities – outside Malaysia 15.60 4.03 +11.57

Total 100.00 100.00


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3.4 Funds’ Strategies and Policies Employed

3.4.1 PECBF

During the year, the total equity exposure increased by 6.96% as we made someadditional investment in this year. As the equity market is unstable, we remain cautiousand reduced in equity exposure. As at 31 December 2012, PECBF’s total equityexposure was 54.1% whereby 20.6% was invested in domestic equities and 33.6% inforeign equities.

We continued our strategy to diversify our investments to include the Asia countriesexcluding Japan. During the year, the Fund had invested in foreign equities listed in HongKong/China, Singapore, Indonesia, and Thailand. The Fund’s bond investmentsdecreased from 34.4% to 33.7% as we invested in a domestic corporate bonds and agovernment paper. We continued to invest in bond that met our credit and maturityprofile.

For the period ended 31 December 2012, PECBF recorded the following gains orlosses in the various markets invested.

Market

Net realised andunrealised gain/ (loss)

RM’000

Malaysia 1,446Indonesia 23Thailand 27Singapore (143)Hong Kong/China 471

3.4.2 DMP

During the year, the total Shariah-compliant equity exposure increased marginally duringthe period by 11.1%. As at 31 December 2012, DMP’s total Shariah-compliant equityexposure was 57.8% where all were invested in domestic Shariah-compliant equities.The Fund did not invest in any Shariah-compliant foreign securities during the period.

We continued our strategy to diversify our Shariah-compliant investments in variousindustry sectors as well as concentrate on our philosophy of value investing. The Fund’sinvestment in sukuk as at 31 December 2012 stood at 5.9% as we added a sukuk. Goingforward, we continue to invest only in domestic sukuk that met our credit and maturityprofile.

For the period ended 31 December 2012, DMP recorded a net realised and unrealisedgain of RM979,068 due to investments in domestic Shariah-compliant equities.


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3.4.3 PIF

As at 31 December 2012, PIF’s bonds exposure was lower at 46.3% as compared to47.7% as at 31 December 2011. During the period, the fund invested in a new corporatebond. With interest rates still low in Malaysia, our investment approach has been to stayinvested in shorter-dated bonds in order to mitigate the impact of capital loss.

We have invested into some equities to strive to improve the returns of the Fund. TheFund equities investment includes foreign equities listed in Hong Kong, Singapore andIndonesia. As at 31 December 2012, PIF’s total equity exposure was 19.0% whereby3.4% was invested in domestic equities and 15.6% in foreign equities.

For the period ended 31 December 2012, PIF recorded the following gains or losses inthe various markets invested.

Market

Net realised andunrealised gain/ (loss)

RM’000

Malaysia 527Indonesia 56Thailand (3)Singapore (39)Hong Kong/China 285

3.5 Market Review, Outlook and Strategy

3.5.1 Malaysian Bond/Sukuk Market

3.5.1.1 Bond/Sukuk Market Review

Amid the challenging economic environment and low inflationary pressure, the Malaysiangovernment bonds/sukuk have staged a commendable performance in 2012. Accordingto Asian Development Bank, the Malaysia’s total local currency bonds/sukuk outstandingincreased by 15.7% y.o.y to RM972.2 bil as at end-September 2012.

The total local currency government bonds/sukuk increased by 16.1% y.o.y while thetotal local currency corporate bonds/sukuk increased by 15.3% as at end-September2012. According to Bank Negara Malaysia, new private debt securities/sukuk issuancesincreased to RM32.6 bil in 3Q2012 (2Q2012: RM20.6 bil) mainly used for financing andworking capital, general corporate expenses and operating expense. Amid the lowinterest rate environment, the pace of new issuances of private debt securities/sukuk isexpected to remain strong in the year 2013.

The buoyant bond/sukuk market was partly backed by foreign buying interest asforeigners sought out higher returns from the bond/sukuk market. While some mildselling was seen in the year 2012 due to profit-taking activities, foreign holdings in localgovernment bonds/sukuk has increased by 29.3% y.o.y to RM119.8 bil as at end-September 2012. Aside from the excess liquidity from the quantitative measures, theforeign holdings were supported by the rising risks from the European debt crisis.


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3.5.1.2 Bond/Sukuk Market Outlook and Strategy

Despite the external headwinds, the Malaysian economy is expected to grow in 2013supported by higher domestic consumer spending, healthy exports level, lowunemployment, manageable inflation and low interest rate environment. Against thebackdrop of cautious optimism, the imminent general elections and as well as high levelsof liquidity in the financial system may provide support the demand for both the MalaysianGovernment Securities (MGS) and Government Investment Issues (GII).

Although a slightly higher inflationary pressure is expected in 2013, we opine that BankNegara may keep its overnight policy rate (OPR) at 3.0% for 1st half of 2013 as theinflation rate is still tolerable and would unlikely pose a threat to the Malaysian economy.Even if there is a potential upward in the OPR rates, it would probably be on a gradualbasis with a potential hike of 25 basis points.

Aside from a potentially higher inflationary pressure, we opine that yields of the MSG/GIImarket could potential trend higher post-election. As the external and internaluncertainties clears up in the 2nd half of 2013, there may higher fund inflows to higheryielding asset classes such as private debt securities/sukuk and equities.

Increasing, there could be more demand from the retail bonds/sukuk in Malaysia. Underthe framework for retail bonds/sukuk developed by the Securities Commission Malaysia(SC), it is to facilitate greater retail participation in the bonds/sukuk market which maymeet the retailers demand for a wider range of investment products in Malaysia. It will beavailable through bond/sukuk unit trusts fund and exchange traded funds. It also allowsthe issuers to have a larger pool of investors as the issuers may choose to issuebonds/sukuk via Bursa Malaysia or over-the-counter (OTC).

Given the challenging economic outlook, we would continue to adopt a tight creditassessment policy. Among the fundamental assessment on the bonds/sukuk include theissuers’ credit profile, management, financial performance and industry outlook.

In order to mitigate the risks of the potential uptrend in the MGS/GII in the immediateterm, we would prefer to invest in bonds/sukuk which offer shorter-dated maturities. Apartfrom investing in high quality bonds/sukuk that meets our investment criteria, we wouldensure that the bonds/sukuk invested would be able to give investors a decent yield forthe risks undertaken.

3.5.2 Stock Markets Review

3.5.2.1 Malaysian Stock Market – (Bursa Malaysia)

Bursa Malaysia has been relatively volatile in the year of 2012, due to global headwindsand fear of an imminent general election on the home front given the uncertainty of theelection result. The market started off with a slow and quiet market in the 1QFY12 butsteadily climbing up 5.0% or 75.9 points in the FBM KLCI benchmark up to 3rd April.Although economic data releases were weak, confidence of central bank policy actionsprovided a strong support to global and local equities, which stood up against theunappealing returns of alternative asset classes. Despite the concerted efforts by major


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central banks to embark on further quantitative easing, a new wave of selling pressureemerged towards the month of September. Some of the notable positive efforts were (1)The US government implementation of an open-ended QE3, (2) European Central Bank(ECB) launched a conditional bond-buying programme for troubled Eurozone countries,(3) Japan adding $11 tri yen to its asset-purchasing programme. Whilst global equitiesreacted positively to these moves, the rally was short-lived as investors became doubtfulof whether it will translate to better economic outlook. In addition, the sharper-than-expected economic slowdown in China and India as well as disappointing US economicdata releases also came back to haunt investors. The local bourse, in particular, cameunder more intense selling pressures and the FBM KLCI benchmark plunged to a low of1,612.38 on 24 September, likely due to renewed speculation of an imminent generalelection. Market remained volatile thereafter due to (1) concern of a divided USgovernment may not be able to reach an agreement to avert the fiscal cliff, (2) weakeconomic data releases around the globe and (3) less-than-positive development introubled Greece as it struggled to find a solution to bridge its funding gap. Howeverbargain-hunting activities came back in the late December and the market closed at anall-time high of 1,688.95 on the very last day of the year.

In The Malaysian Budget for 2013, the gross development expenditure is projected atRM47.8 bil, down 4.2% vis-à-vis RM49.8 bil estimated for 2012. The allocation will gopredominantly to rural infrastructure (RM4.5 bil), Entry Point Projects (RM3 bil),affordable housing (RM1.9 bil) and building, improvement and maintenance of schools(RM1 bil). Despite the moves to continue rolling out measures to assist the general publicin 2013, the Government still expects its budget deficit to be brought down to a lowerlevel of 4.0% of GDP or RM40 bil during the year, from a revised deficit of 4.5% of GDPestimated for 2012. Indeed, these initiatives are not expected to put a significant dent tothe Government’s fiscal position, as operating expenditure is projected to drop slightly by0.3% during the year, while revenue is envisaged to pick up by 0.7%.The headline inflation rate held stable at 1.3% y.o.y in September-October, the slowestpace in more than two years, after easing to +1.4% in July-August and from a high of+2.7% in January. This was on account of a slower increase in food & non-alcoholicbeverage prices in October. This was, however, offset partially by a pick-up in the coreinflation rate in October.

We feel that inflation is envisaged to trend up in 2013, but it will likely remainmanageable and unlikely pose a major threat to the economy. Therefore Bank NegaraMalaysia (BNM) will likely keep its key policy rate stable until economic recovery is moreentrenched. Furthermore, inflation will likely be driven by cost-push rather than demand-pull factors that will unlikely prompt the Central Bank to tighten its monetary policy. Also,the US Federal Reserve is envisaged to maintain its key policy rate at 0-0.25% until mid-2015. We believe the Central Bank will likely keep its Overnight Policy Rate (OPR)unchanged at 3.0% throughout 2013.

We believe that the local market will remain volatile until the general election is over by1H 2013 given the uncertainty of its outcome. However value may arise if there is anysharp sell down due to any unexpected election result. Among the sectors that we favorare Banks, Oil and Gas, Construction and Consumer Products.


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3.5.3 Foreign Securities Investment - Market Review

3.5.3.1 Singapore Market

During the year ended 2012, the FSSTI index posted a gain of 19.7% on increasedstimulus measures and improving economic data which offsets the concerns of a globaleconomic slowdown. The SGD appreciated by 5.8% against the USD during the year2012 to close at 1.2218 as at end-December 2012.

According to the Ministry of Trade and Industry, the Singapore’s GDP expanded by anannualised 1.8% in the 4th quarter compared to the previous quarter. Year-on-year,Singapore grew by 1.1% bringing the growth for 2012 to 1.2%.

For 2012, inflation in Singapore stood at 4.6% mainly due to higher contribution from thecost of accommodation and cars. Inflation in Singapore is expected to cool further on theback of slower gains in the property prices. That being said, the persistent tightness inthe labour market may cause higher wages and consumer prices in 2013.

According to the Ministry of Manpower, the unemployment rate was 1.9% in the 3Q2012compared to 2% in 2Q2012. The labour market which remained tight was supported bydomestic-oriented activities and tightening in foreign manpower controls.

In line with the gradual stabilization of the gradual stabilization of the global conditions,we expect moderate economic growth in Singapore for 2013. As the FSSTI index is nolonger cheap, investors are unlikely to invest aggressively. That being said, the FSSTIindex is still perceived as a safe haven due to the economic stability in Singapore.

3.5.3.2 Hong Kong/ China Market

The Hang Seng Index closed the year at 22,657, up 22.9% y.o.y this was due to equitymarket had a strong run in Dec amid positive Chinese economic data. Hang SengFinance sector gained 4.2% m.o.m in Dec alone led by China insurers, whereasproperties underperformed (+1.5% m.o.m). For year 2012, MSCI HK surged 24%,outperforming the MSCI APxJ by 5.5% y.o.y.

Hong Kong’s trade figures came in stronger than expected in Nov, exports was up10.5% y.o.y and imports was up 9% y.o.y, these were driven by the strong exports toChina (up 10.5% m.o.m) and Japan (up 20% m.o.m). However exports to developedcountries including US and Germany remained sluggish. CPI increased 3.7% y.o.y inNov. Housing prices increased 5.2% y.o.y, for which private and public rentals picked up5% y.o.y and 9.7% y.o.y respectively. Going forward, domestic price pressure will likelyto continue to put pressure on Hong Kong’s inflation, and the trade sector will continue tofeel stress from weak developed markets demand in 2013.

The China economic recovery is gaining further traction, particularly supported byimprovement in domestic demand. In the month November, industrial production was up1.1% m.o.m, retail sales was doing well up 1.5% m.o.m, and the notable one was FAI(foreign assets investment) was up 20.7% y.o.y. Inflation wise, China’s November CPIinflation rate came in line with expectation at 2.0% y.o.y, compared to 1.7% y.o.y in


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October. Looking ahead, CPI is expected to gradually pick up but should not bealarming.

The People’s Bank of China cut RRR (Reserve Requirement Ratio) twice in 2012. Oncein February (50bps) and a further cut in May (25bps), bringing the RRR for major banksdown to 20%. In November 2012, China macro data points to a steady recovery into2013, with a rebound in prices, solid investment, robust consumption and strongindustrial production figures painting a rosy picture for 4Q12 and the year ahead.

China has been using public investment as the vehicle for stimulating economic activity.This will continue in 2013 as China continues its urbanization plans and modernizesinfrastructure. Solid loan growth of 15% is expected, in line with last year’s number andwithout taking account of an improved economy. A favourable government policytogether with new leadership heralds a resumption of more investment projects,implementation of tax reform and the continuing urbanization of the rural population.China's urbanization rate of 50% is materially behind the average of 70% for its EastAsian neighbours. China market currently is one of the cheapest in Asia, trading at aprospective P/E multiple of just 9.9x for the year of 2013. Going into 2013, with thecombined effects of cyclical and structural factors, we believe that China economyshould grow by close to 8% in 2013, compared to 7.6% in 2012.

3.5.3.3 Indonesia Market

The JCI rose by 12.9% in local currency terms to close 2012 at 4,316 points. The Rupiahon the other hand continued to depreciate further by 7.98% y.o.y against the US Dollar toIDR9,793/USD.

Bank Indonesia (BI) cut its benchmark rate (BI rate) by 25 bps to 5.75% in February andit was maintained at that level for the rest of the year 2012. The decision that surprisedthe market was made to boost the economic growth amidst decreasing global economicperformance. The policy rate is expected to be maintained at this level as thegovernment intends to reduce the current account deficit which came from strong importsand declining exports.

Despite the low policy rate, inflation has been benign, hovering within the target range of3.5-5.5% as the CPI expanded by 4.3% in 2012 helped by the absence of fuel price hike,soft commodity prices, mild wage and housing costs component. However, the inflationtarget range is still maintained at 3.5-5.5% for 2013 despite the 15% planned increase ofelectricity tariffs and the minimum wage hike.

Bank Indonesia expects a 6.3% economic growth for 2012 after it posted a 6.2% growthfor 3Q12 amid weak export performance caused by global economic slowdown.However, strong domestic demand has supported the economy from the worst of theglobal economic condition. In the 4Q12 Monetary Policy Report, Bank Indonesiaestimated the GDP will expand by 6.1-6.5% in 2013 and 6.3-6.7% in 2014.

Moody’s upgraded Indonesia’s sovereign credit rating to Baa3 from Ba1 in January whichbrought the economy to investment grade with a stable outlook for the first time in morethan a decade. In addition to that, Fitch also has affirmed the republic’s sovereign credit


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rating at BBB- in November on the back of relatively high economic growth. The upgradeand affirmation are considered as votes of confidence on Indonesia’s progress insustaining strong and resilient economic growth and reducing the public-debt ratios.

3.5.3.4 Thailand Market

The SET index wrapped with a total return of 35.76% y.o.y in local currency terms to endat 1391.93 points. December recorded a CPI rose 0.7% m.o.m and 3.6% y.o.y based ona low year-ago base and jump in food prices. However, the full year headline CPIaveraged at 3.02% y.o.y. The Baht appreciated by 3.0% against US Dollar toTHB30.59/USD.

Strong domestic demand kept the Thai economy progressing in 2012 where exports grew3.1% y.o.y (vs. Commerce Ministry’s target of +4.5%) and imports grew 8.2%(vs.Commerce Ministry’s target of +10.5%). Despite having to battle turbulence generated bythe Eurozone crisis, the US debt and fiscal cliff situations and slowdowns in keyemerging markets, Thailand performance remained strong regionally. The NationalEconomics and Social Development Board (NESDB) reported Thailand’s 3Q12 GDProse by 3% y.o.y basis (+1.2% on a seasonally adjusted q.o.q) and these figures were inline with market estimates.

The Bank of Thailand (BOT) cut the benchmark interest rate twice last year to 2.75% inorder to support the economy as it recovered from the floods effects of 2011 and fromweakened global demand for exports. The government has raised minimum wages,offered a diesel-tax subsidy and lowered taxes on first-time home and car buyers whichbenefited the property and auto sectors together with corporate income tax cut from 30%to 23% benefited many listed companies that have no Board of Investment of Thailand(BOI) privileges to boost consumption resulted in a healthy domestic demand.

Thailand’s benchmark stock index is rated as the best performer among Asia’s majorequity markets in 2012 has remained firm throughout the Asean region. The floods from2011 affected them but yet again Thailand has proven their comeback with a GDP growthof 5.9%, forecasted by the Bank of Thailand. The overall domestic consumption andinvestment has shown the expansion of the economy internally and in the followingmonths to come, we might see future growth both internally and externally.

3.5.3.5 Philippine Market

The PSEi was the second best performing market in the region after Thailand for year of2012 rising by 33% in local currency terms to close at 5,812.73 points. Peso appreciatedby 6.5% against the USD to PHP41.005/USD.

Philippine 3Q12 GDP surprised the market with a 7.1% y.o.y growth, thanks to healthyprivate consumption and investment. This brings growth for the first nine months to 6.5%,on track for 6.3% real GDP growth target in 2012.

The Monetary Board of Bangko Sentral ng Pilipinas (BSP) cut the interest rate four timesto end the year at 3.50% for the overnight borrowing or reverse repurchase facility and


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5.50% for the overnight lending or repurchase facility. Philippine’s annual averageheadline inflation rate slowed to 3.2% in 2012, well within the government’s 3% to 5%target range, indicating that the monetary policies are appropriate.

Overseas foreign worker (OFW) remittances rose by 7.6% y.o.y in November to USD1.9bil. This is a slowdown from October's 8.5% y.o.y growth. On a cumulative basis, 11months 2012 remittances reached USD19.4 bil, a 6% y.o.y growth.

Fundamentally, Philippines economy is poised to continue its strong growth with lowinterest rate environment, strong business process outsourcing (BPO) and the incumbentrolling out of more PPP projects in 2013 based on political commitment to improvinginfrastructure in the country. However, we will be watchful of the potential risks of highercommodity prices and lower funds inflow, in the wake of the recovering of China and theUS economies.

3.5.3.6 Taiwan Stock Market

The TWSE increased by 8.9% in local currency terms, to close at 7,699.5 points in 2012.Strong market performance in the first quarter which was driven by the post-election rallysomewhat failed to persist but dragged by disappointment in sales outlook from thelaunch of the iPad mini and Windows 8, weakness in iPhone 5 sell-through, uncertaintyin US fiscal/monetary policy, and weak local economics. The Taiwanese Dollardepreciated by 4.1% against US Dollar to TWD29.033/USD.

Taiwan’s 3Q12 GDP report showed moderate improvement in economic activity, withreal GDP rising at 0.98% y.o.y, lower than the government’s initial estimate of a 1.02%gain. A recovery in China boosted Taiwan’s industrial output and exports but it isundermined by poor private consumption expenditure due to recent weakening in generalconsumer sentiments. According to the latest statement by Taiwan’s government, it istargeting an average 4.5% GDP growth from 2013 to 2016. Exports in December rose9% y.o.y compared to merely 0.9% y.o.y growth in November, amid stronger demandfrom the U.S. and China.

On the other hand, inflation in Taiwan registered a slower growth of 2.36% y.o.y inOctober, and it is expected to ease further to meet the target of 1.93% for the year.

Looking ahead, Taiwanese economy, which is highly dependent on the export sector,would benefit from the economic recovery of China and the US.

3.5.3.7 South Korean Stock Market

Amid the challenging global economic conditions, the KOSPI index posted a gain of 9.4%in the year 2012 on the back of improved economic data from China and US. The KRWappreciated by 7.6% against the USD driven by capital inflows and economic recovery.

In the year 2012, the South Korea’s GDP growth was 2.0%, down from 3.6% growth in2011. The slow pace of growth was partly due to the fact that the South Korean’seconomy is more exposed to the swings in global demand as the economy is highly


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reliant on the overseas markets. However, the GDP outlook is expected to improve in2013 on the back of government economic stimulus measures and nascent economicrecovery in China.

In line with the slow pace of economic growth, the South Korea’s inflation growth easedto 1.4% y.o.y in December 2012, from 1.6% in November. As inflationary pressuresremains contained for the time being, there has been less pressure for the Bank of Koreato increase interest rates.

The unemployment rate in South Korea was marginally higher at 2.90% in December2012, from 2.80% in November. Although the European debt crisis is dragging down theexports market for Korean companies, there have been an increasing number of self-employed workers and service sector jobs in Korea.

Despite the challenging economic outlook, we expect further upside potential on theKOSPI index on the back of foreign buying interest, supportive economic policies andbetter earnings momentum. However, the upside potential may be capped by thechallenging global economic outlook. Although the KRW is one of the best performingcurrencies traded in Asia fuelled by a trade surplus and rising foreign investment, theKRW may continue to rise due to Korea’s recent current account surplus. In addition, thenew government does not see the need for an intervention.

3.5.3.8 Australian Stock Market

The ASX 200 index recorded a strong gain for 2012, rising by 14.6% in local currencyterms to close the year at 4,648 points. The Aussie Dollar appreciated 1.4% against theUS dollar to AUD0.9620/USD.

Australia’s GDP rose 0.5% q.o.q in 3Q (+0.6% in 2Q) and 3.1% y.o.y (+3.8% in 2Q). Theweak rate of expansion was mainly due to the government sector dragging the economy,slicing 0.4% of growth. According to the central bank, Australia's rate of economic growthis expected to slow in 2013 amid falling commodity prices and reduced investment inmining. The RBA revised its forecasts for gross domestic product (GDP) growth to 3% in2013, lower than the 3.75% in 2012. In the previous release, it forecast GDP growth of2.75-3.25% in 2013.

The RBA trimmed the cash rate five times in 2012 for the total easing of 125bps, takingthe rate to as low as 3.0% in December in line with market expectations. A softeninglabour market and approaching peak in mining capital expenditure gave the central bankthe scope for easing.

The CPI rose only by 0.2% q.o.q, below market expectations in Q4. The headline inflationrate remained within the RBA’s long term 2-3% target range, expanded by 2.2% y.o.y(2.0% y.o.y in 3Q) compared to the central bank’s forecast of 2.5% and economists’estimates of 2.4% for Q4. The downside surprise, mainly due to falls in food, electronicsand drugs prices, increases the possibility of another rate cut by the RBA.


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3.5.4 Foreign Securities Investment - Market Outlook and Strategy

For the year of 2012, MSCI Far East Ex Japan was up 19.42%, outperforming the globalequities by almost 6%. Emerging markets corporates had an outstanding year in 2012,the total return of 14% for the year is one of the highest among the various asset classesthis year and third highest historically. Given the strong gains and substantial growth inthe asset class, it is perhaps not surprising to expect more moderate performance in thecoming year. Nevertheless, we think emerging markets will still deliver a decentperformance especially China, with total returns at a respectable 7.5-8.5%. Based on therecent encouraging macro data announced from China, it is not the outcome of a simpleshort-term rebound but rather the first inklings that the economy has entered the initialupswing of a four-year economic cycle. Macro data for the last two months, includingboth official statistics and real economic indicators, look promising. For the year 2012,the top three best performing markets in US dollars were Philippines (+42.0%), Thailand(+40.1%) and Singapore (+27.0%). Indonesia (+7.2%) and Taiwan (+13.4%) were theworst performing markets.

In the year ahead, we remain positive on equity risk and global recovery (if patchy andinconsistent), expecting a combination of improving demand, unchallenging valuations,and rising market liquidity all to support stocks. The outlook for 2013 is moderately moreconstructive. Underlying this improvement is acceleration in China’s growth to 8% from7.6% in 2012. The “fiscal cliff” has, for now at least, all too predictably been avoided witha last-minute fix. And stock markets have, predictably, reacted positively.

Several factors will be positive for equities. Firstly, we expect a policy-led cyclicaleconomic recovery in China as conditions continue to improve, driven by the removal ofU.S uncertainty, stabilising exports to Europe and the end of inventory adjustments in. Acyclical improvement without much inflation pressure is generally good for Asian equities.Secondly, we expect liquidity conditions to remain positive for the time being. Thoughthere is less scope for interest rate cuts and easing in Asia in 2013, we are still in aphase of the cycle where central banks are accommodative, rather than taking liquidityaway from markets.

Thirdly, we believe the valuation case for equities remains positive with both P/B and P/Eratios below longer term averages. The best guide to valuation remains trailing price-to-book. Trailing valuations remain below the mean of the past 18 years. The MSCI AC AsiaPacific ex-Japan’s trailing PB is now 1.7x, compared with a mean of 1.8x over the past 18years. Similarly, the index is now trading at 13x trailing PE, based on companies withpositive earnings. This compares with a trailing mean valuation of 14x since 1995.

Finally, foreign capital net-inflows to Asia have significant scope to intensify in 2013,buoyed by China’s economic recovery, QE3 and the eventual fading of US ‘Fiscal Cliff’fears.

Within the broader Asia-Pacific ex-Japan region, our preference is for the more cyclicallydriven markets of Northeast Asia. Not only will these markets derive greater direct growthand earnings benefits from the pickup in US and Chinese demand, they are alsogenerally cheaper than many of their SE-Asian peers.


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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,data quotation services and computer software incidental to the management of theFunds.

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


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22 February 2013


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STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM EMERGING COMPANIES BALANCED FUND

We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Pheim Emerging Companies Balanced Fund aredrawn up in accordance with the Deed, Malaysian Financial Reporting Standards,International Financial Reporting Standards and Securities Commission’s Guidelines onUnit Trust Funds in Malaysia so as to give a true and fair view of the financial positionof Pheim Emerging Companies Balanced Fund as at 31 December 2012 and of itsfinancial performance and cash flows for the financial year then ended.

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

AZMI MALEK MERICANDirector

HOI WENG KONGDirector

Kuala Lumpur, Malaysia22 FEB 2013

PECBF

INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF

PHEIM EMERGING COMPANIES BALANCED FUND

Report on the financial statements

We have audited the financial statements of Pheim Emerging Companies Balanced Fund ("theFund"), which comprise statement of financial position as at 31 December 2012, and statement ofcomprehensive income, statement of changes in equity and statement of cash flows for the yearthen ended, and a summary of significant accounting policies and other explanatory information.

Manager’s and Trustee’s responsibility for the financial statements

The Manager of the Fund, Pheim Unit Trusts Berhad, is responsible for the preparation offinancial statements so as to give a true and fair view in accordance with Malaysian FinancialReporting Standards, International Financial Reporting Standards and the requirements of theSecurities Commission's Guidelines on Unit Trust Funds in Malaysia. The Manager is alsoresponsible for such internal control as the Manager determines is necessary to enable thepreparation of financial statements that are free from material misstatement, whether due to fraudor error. The Trustee is responsible for ensuring that the Manager maintains proper accounting andother records as are necessary to enable fair presentation of these financial statements.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with approved standards on auditing in Malaysia. Thosestandards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on our judgment,including the assessment of risks of material misstatement of the financial statements, whether dueto fraud or error. In making those risk assessments, we consider internal control relevant to theentity’s preparation of financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of accounting estimatesmade by the Manager, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.

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Opinion

Other Matters

1.

2.

FOLKS DFK & CO. KHOO PEK LING

AF: 0502 No. 900/03/14(J/PH)

CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT

Kuala Lumpur

Date : 22 February 2013

In our opinion, the financial statements give a true and fair view of the financial position of theFund as at 31 December 2012 and of its financial performance and cash flows for the year thenended in accordance with Malaysian Financial Reporting Standards, International FinancialReporting Standards and the requirements of the Securities Commission's Guidelines on Unit TrustFunds in Malaysia.

This report is made solely to the unitholders of the Fund, as a body, and for no other purpose.We do not assume responsibility to any other person for the content of this report.

As stated in Note 2.1 to the financial statements, Pheim Emerging Companies Balanced Fundadopted Malaysian Financial Reporting Standards on 1 January 2012 with a transition date of1 January 2011. These standards were applied retrospectively by the Manager to thecomparative information in these financial statements, including the statements of financialposition as at 31 December 2011 and 1 January 2011, and the statement of comprehensiveincome, statement of changes in equity and statement of cash flows for the year ended 31December 2011 and related disclosures. We were not engaged to report on the restatedcomparative information and it is unaudited. Our responsibilities as part of our audit of thefinancial statements of the Fund for the year ended 31 December 2012 have, in thesecircumstances, included obtaining sufficient appropriate audit evidence that the openingbalances as at 1 January 2012 do not contain misstatements that materially affect the financialposition as at 31 December 2012 and financial performance and cash flows for the year thenended.

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STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

Note 2012 2011

RM RM

INVESTMENT INCOME/(LOSS)

Gross dividend income 267,785 267,657

Interest income

- loans and receivables 31,994 49,221

- available-for-sale ("AFS") financial assets 203,596 208,887

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

profit or loss ("FVTPL") 7 1,485,072 (637,481)

Accretion of discounts, net of amortisation of

premiums on AFS financial assets 8 36,211 36,647

Net realised loss on foreign exchange (7,991) (2,374)

2,016,667 (77,443)

EXPENSES

Manager's fee 3 266,505 319,158

Trustee's fee 4 18,000 18,000

Auditor's remuneration 8,244 6,200

Tax agent's fee 4,086 4,172

Administrative expenses 25,985 31,417

322,820 378,947

Net income/(loss) before tax 1,693,847 (456,390)

Tax expense 5 (3,050) (51,368)

Net income/(loss) for the year 1,690,797 (507,758)

Other comprehensive income

Net (loss)/gain on change in fair value of AFS financial assets (17,508) 16,684

Total comprehensive income/(loss) for the year 1,673,289 (491,074)

Net income/(loss) after tax is made up of the following:

Net realised income 2,272,798 564,090

Net unrealised loss (582,001) (1,071,848)1,690,797 (507,758)

Distribution for the year:

Net distribution 12 915,456 1,221,270

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.

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STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2012

Note 2012 31.12.2011 1.1.2011

RM RM RM

ASSETS

Investments 6 15,372,882 14,644,412 17,464,924

Deposits with licensed financial institutions 9 801,527 1,980,000 -

Tax recoverable 17,141 17,141 55,198

Other receivable 50,315 40,553 46,037

Amount due from Manager - - 3,987

Cash at bank 10 1,304,787 1,385,314 5,392,016TOTAL ASSETS 17,546,652 18,067,420 22,962,162

LIABILITIES

Amount due to brokers - - 450,000

Amount due to Manager 11 20,500 84,964 -

Amount due to Trustee 1,525 1,385 1,525

Other payables and accruals 12,601 17,900 12,400

TOTAL LIABILITIES 34,626 104,249 463,925

UNITHOLDERS' EQUITY

Unitholders' capital 8,700,042 9,909,020 12,731,742

Retained earnings 8,781,983 8,006,642 9,735,670

Available-for-sale reserve 30,001 47,509 30,825

TOTAL EQUITY 13 17,512,026 17,963,171 22,498,237

TOTAL EQUITY AND LIABILITIES 17,546,652 18,067,420 22,962,162

UNITS IN CIRCULATION 13 (a) 15,237,393 16,305,634 18,989,437

NET ASSET VALUE ("NAV") PER UNIT 14 1.1493 1.1017 1.1848


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STATEMENT OF CHANGES IN EQUITY



Unitholders' Retained AFS Total

capital earnings reserve EquityRM RM RM RM

At 1 January 2011 12,731,742 9,735,670 30,825 22,498,237

Total comprehensive loss for

the year - (507,758) 16,684 (491,074)Creation of units 3,826,099 - - 3,826,099

Cancellation of units (6,334,546) - - (6,334,546)

Distribution equalisation (314,275) - - (314,275)

Income distribution (Note 12) - (1,221,270) - (1,221,270)Balance at 31 December 2011 9,909,020 8,006,642 47,509 17,963,171

Total comprehensive income for

the year - 1,690,797 (17,508) 1,673,289

Creation of units 1,065,039 - - 1,065,039

Cancellation of units (2,020,533) - - (2,020,533)Distribution equalisation (253,484) - - (253,484)

Income distribution (Note 12) - (915,456) - (915,456)Balance at 31 December 2012 8,700,042 8,781,983 30,001 17,512,026

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STATEMENT OF CASH FLOWS


2012 2011

RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sale of investments 10,809,437 18,451,640

Purchase of investments (12,041,434) (17,178,888)

Dividends received 258,307 246,364

Interest received 238,752 294,939

Proceeds received from bonds on maturity 2,000,000 500,000

Tax refunded - 8,626

Management fee paid (267,488) (324,759)

Trustee's fee paid (17,860) (18,140)

Payment for other fees and expenses (50,800) (36,115)

Income distribution paid (19,586) (20,645)

Net cash generated from operating

and investing activities 909,328 1,923,022

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from creation of units 194,087 2,988,168

Payment for cancellation of units (2,362,415) (6,937,892)

Net cash used in financing activities (2,168,328) (3,949,724)

NET DECREASE IN CASH

AND CASH EQUIVALENTS (1,259,000) (2,026,702)

CASH AND CASH EQUIVALENTS AT THE

BEGINNING OF THE YEAR 3,365,314 5,392,016

CASH AND CASH EQUIVALENTS AT THE END OFTHE YEAR 2,106,314 3,365,314

Cash and cash equivalents comprise the following:

Deposits with licensed financial institutions (Note 9) 801,527 1,980,000

Cash at bank (Note 10) 1,304,787 1,385,3142,106,314 3,365,314


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NOTES TO THE FINANCIAL STATEMENTS


1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

Pheim Emerging Companies Balanced Fund ("the Fund") was established pursuant to a Master Deeddated 11 January 2002 as amended by a Supplemental Master Deed dated 3 November 2008 between theManager; Pheim Unit Trusts Berhad, the Trustee; HSBC (Malaysia) Trustee Berhad and the registeredunitholders of the Fund.

The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 of theMaster Deed, which includes investments in equities and fixed income securities traded on BursaMalaysia Securities Berhad ("Bursa Malaysia") or any other markets considered as Eligible Market. TheFund commenced operations on 28 January 2002 and will continue its operations until terminated by theTrustee 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 whollyowned subsidiary of Pheim Asset Management Sdn Bhd, a private company incorporated in Malaysia. Itsprincipal activity is the management of unit trust funds. Pheim Asset Management Sdn Bhd has beenappointed by the Manager as the External Investment Manager of the Fund with responsibility for theprovision 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 financial statements are presented in Ringgit Malaysia (RM).

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

The financial statements of the Fund have been prepared in accordance with Malaysian FinancialReporting Standards ("MFRSs"), International Financial Reporting Standards ("IFRSs") and theSecurities Commission's Guidelines on Unit Trust Funds in Malaysia.

These financial statements of the Fund are the first set of financial statements prepared inaccordance with MFRSs and, MFRS 1, First-time Adoption of Malaysian Financial ReportingStandards, has been applied. Previously, the financial statements of the Fund were prepared inaccordance with Financial Reporting Standards in Malaysia. The transition to MFRSs did not resultin any impact on the financial position, financial performance and cash flows of the Fund.

The accounting policies disclosed below have been consistently applied in the preparation offinancial statements of the Fund for the year ended 31 December 2012, the comparative figures forthe year ended 31 December 2011 and the opening MFRS statement of financial position as at 1January 2011 (date of transition to MFRSs).

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.1 Basis of Preparation (Contd.)

2.2 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

MFRS 9 Financial Instruments (IFRS 9 issued 1 January 2015*by International Accounting StandardsBoard ("IASB") in November 2009)

MFRS 9 Financial Instruments (IFRS 9 issued 1 January 2015*by IASB in October 2010)

MFRS 13 Fair Value Measurement 1 January 2013Amendments to MFRS 101 Presentation of Financial Statements 1 January 2013

- (Annual improvements 2009-2011 Cycle)Amendments to MFRS 132 Financial Instruments : Presentation 1 January 2013

- (Annual improvements 2009-2011 Cycle)Amendments to MFRS 134 Interim Financial Reporting 1 January 2013

- (Annual improvements 2009-2011 Cycle)Amendments to MFRS 101 Presentation of Financial Statements 1 July 2012

- Presentation of Items of OtherComprehensive Income

Amendments to MFRS 7 Financial Instruments : Disclosures 1 January 2013- Offsetting Financial Assets and

Financial LiabilitiesAmendments to MFRS 132 Financial Instruments : Presentation 1 January 2014

- Offsetting Financial Assets andFinancial Liabilities

*

The financial statements of the Fund are prepared under the historical cost convention unlessotherwise indicated in this summary of significant accounting policies.

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

The mandatory effective date of MFRS 9 has been changed from 1 January 2013 to 1 January2015 by the MASB through the issuance of Mandatory Effective Date of MFRS 9 and TransitionDisclosures [Amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009), MFRS 9 (IFRS9 issued by IASB in October 2010) and MFRS 7], which are effective on 1 March 2012.

The Fund will adopt the above MFRSs and amendments to MFRSs when they become effective andthey are not expected to have any significant impact on the financial statements of the Fund upontheir initial application other than the classification and measurement of financial assets underMFRS 9. MFRS 9 replaces the multiple classification and measurement models in MFRS 139 witha single model that classifies financial assets into only two categories: measured at fair valuethrough profit or loss, or at amortised cost, depending on the entity's business model for managingthe financial assets and the contractual cash flow characteristics of the financial assets.

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2.3 Significant Accounting Policies

(a) Financial Assets

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

(ii) Available-for-sale ("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 way ofpurchase and sale of investments in financial instruments are recognised on trade dates. Whenfinancial assets are recognised initially, they are measured at fair value, plus attributable transactioncost, for 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-sale financialassets and loans and receivables.

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 includesecurities and fixed income securities and collective investment schemes acquired principallyfor the purpose of selling them in near term.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value at thedate of statement of financial position. Changes in the fair value of those financialinstruments are recorded in "Net gain or loss on financial assets at FVTPL". Interest earnedand dividend revenue elements of such instruments are recorded separately in "Interestincome" and "Gross dividend income", respectively. Foreign exchange differences onfinancial assets at FVTPL are not recognised separately in profit and loss but included in netgains or net losses 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 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 comprehensiveincome, except that impairment losses, foreign exchange gains and losses on monetaryinstruments, dividend income and interest calculated using effective interest method arerecognised 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 the financialasset is derecognised. Interest income calculated using the effective interest method isrecognised in profit or loss. Dividends on an AFS equity instrument are recognised in profitor loss when the Fund's right to receive payment is established.

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2.3 Significant Accounting Policies (Contd.)

(a) Financial Assets (Contd.)

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

(iii) Loan and receivables

Regular way purchases or sales are purchases or sales of financial assets that require deliveryof assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised orderecognised on trade date, i.e. the date that the Fund commit to purchase or sell the asset.

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 a 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 other comprehensiveincome is recognised in profit or loss.

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 orbinding dealer price quotations, without deduction for transaction costs.

Financial assets with fixed or determinable payments that are not quoted in an active marketare classified as loans and receivables. The Fund includes short term receivables such asbalances due from broker, Manager and other receivables in the classification. Loans andreceivables are recognised 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 loansand receivables are derecognised or impaired, and through the amortisation process.

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(b) Impairment of Financial Assets

(i) AFS financial assets

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

The Fund assesses at each reporting date whether there is any objective evidence that a financialasset is impaired.

To determine whether there is objective evidence that an impairment loss on financial assetshas been incurred, the Fund considers factors such as the probability of insolvency orsignificant financial 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 differencebetween the asset's carrying amount and the present value of estimated future cash flowsdiscounted at the financial asset's original effective interest rate. The impairment loss isrecognised 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 throughthe use of an allowance account. When a trade receivable becomes uncollectible, it is writtenoff against the allowance account.

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

Significant or prolonged decline in fair value below cost, weaken fundamental, significantfinancial difficulties of the issuer or obligor, and the disappearance of an active tradingmarket are considerations to determine whether there is objective evidence that investmentsecurities classified as AFS financial assets are impaired. At end of each financial year, theManager would receive impairment proposal from the Fund's external investment manager,if any financial assets of the Fund, in their professional opinion, warrant an impairmentexercise.

If an AFS financial asset is impaired, an amount comprising the difference between its cost(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 to profit orloss.

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 debt investments, impairment losses aresubsequently reversed in profit or loss, up to the amount previously recognised asimpairment loss, if an increase in the fair value of the investment can be objectively relatedto an event occurring after the recognition of the impairment loss in profit or loss.

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(c) Classification of Realised and Unrealised Gain and Losses

(d) Financial Liabilities

(e) Foreign Currencies

Unrealised gain and losses comprise changes in fair value of financial instruments for the periodfrom reversal of prior period's unrealised gain and losses for financial instruments which wererealised (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 valuethrough profit or loss" are calculated using weighted average method. They represent the differencebetween an instrument's initial carrying amount and disposal amount, or cash payment or receiptsmade of derivative contracts (excluding payments or receipts on collateral margin accounts for suchinvestments).

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

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

The Fund's financial liabilities which include amount due to broker, Manager and other payablesare recognised initially at fair value plus directly attributable transaction costs and subsequentlymeasured at the amortised cost using effective interest method.

A financial liability is derecognised when the obligation under the liability is extinguished. Gainsand losses are recognised in profit or loss when the liabilities are derecognised, and through theamortisation 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 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 functionalcurrency (foreign currencies) are recorded in the functional currency using the exchange ratesprevailing at the dates of the transactions. At the end of each reporting period, foreign currencymonetary assets and liabilities are translated at exchange rates prevailing at the end of the reportingperiod. Non-monetary items that are measured at fair value in a foreign currency are translated usingexchange rates at the date when the fair value was determined.

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

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(e) Foreign Currencies (Contd.)

(f) Unitholders' Capital

(g) Income Distribution

(h) Cash and Cash Equivalents

(i) Income Recognition

The unitholders' contributions to the Fund meet the definition of puttable instruments classified asequity instruments 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 distributionand/or adjusted accordingly when units are cancelled.

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

Income is recognised to the extent that is probable that the economic benefits will flow to the Fundand the income can be reliably measured. Income is measured at fair value of considerationreceived 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 fixedincome securities, is recognised using effective interest method.

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.

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

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(j) Income Tax

(k) Segment Reporting

2.4 Significant Accounting Estimates and Judgements

3. MANAGER'S FEE

4. TRUSTEE' S FEE

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

The Trustee is entitled to a fee of 0.08% per annum based on NAV of the Fund (before deducting themanager's and trustee's fee for the day) calculated and accrued on a daily basis, subject to a minimum ofRM18,000 per annum.

The preparation of financial statements in accordance with MFRS and IFRS requires the use ofcertain accounting estimates and exercise of judgements. Estimates and judgements are continuallyevaluated and are based on past experience, reasonable expectations of future events and otherfactors.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paidto the tax authorities. The tax rates and tax laws used to compute the amount are those that areenacted 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.

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

No major judgements have been made by the Manager in applying the Fund's accounting policies.There are no key assumptions concerning the future and other key sources of estimation uncertaintyat the reporting date, that have a significant risk of causing a material adjustment to the carryingamounts of assets and liabilities within next year.

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5. TAXATION

2012 2011

RM RM

Current year Malaysian tax 3,050 13,734

Under provision in prior years - 37,634

Malaysian tax expense based onresult for the year 3,050 51,368

2012 2011

RM RM


Taxation at Malaysian statutory rate of 25% (2011 : 25%) 423,462 (114,097)

Tax effects of:

Income not subject to tax (504,137) 41,298

Expenses not deductible for tax purposes 11,285 12,710

Restriction on tax deductible expenses for unit trust

funds 72,440 73,823

Under provision in prior years - 37,634Tax expense for the financial year 3,050 51,368

6. INVESTMENTS

2012 2011

RM RM

Financial assets at fair value through

profit or loss (Note 7)

Quoted equities

- in Malaysia 3,597,601 5,375,988

- outside Malaysia 5,872,131 3,093,084

9,469,732 8,469,072

Available-for-sale financial assets

(Note 8)

- Unquoted fixed income securities

in Malaysia 5,903,150 6,175,340Total investments 15,372,882 14,644,412

Income tax is calculated at the Malaysian statutory tax rate of 25% (2011 : 25%) of the estimatedassessable income for the financial year.

The tax charge for the financial year is in relation to the taxable income earned by the Fund afterdeducting allowable expenses. In accordance with Schedule 6 of Income Tax Act 1967, interest incomeearned by the Fund is exempted from tax.

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

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7. FINANCIAL ASSETS AT FVTPL

2012 2011RM RM

Financial assets at FVTPL:Quoted equities 9,469,732 8,469,072

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

Realised gain on disposals 2,065,433 512,754

Unrealised loss on changes in fair values (580,361) (1,150,235)1,485,072 (637,481)

The currency exposure profile of financial assets at

FVTPL is as follows :

- Ringgit Malaysia 3,597,601 5,375,988

- Hong Kong Dollar 4,970,034 2,101,447

- Indonesian Rupiah 522,455 445,912

- Singapore Dollar 379,642 387,474

- Thai Baht - 158,2519,469,732 8,469,072

Financial assets at FVTPL as at 31 December 2012 are as detailed below:

Name of Counter Quantity Cost Fair value % of

RM RM NAV

QUOTED EQUITIES

- IN MALAYSIA

Main Market

Construction

Benalec Holdings Berhad 283,000 356,981 393,370 2.25

IJM Corporation Berhad 72,000 386,834 356,400 2.04

355,000 743,815 749,770 4.29

Finance

CIMB Group Holding Berhad 47,000 341,484 358,610 2.05

RHB Capital Berhad 587 3,827 4,491 0.03

47,587 345,311 363,101 2.08

Infrastructure

Time Dotcom Berhad 20,000 68,179 78,000 0.45

Industrial Products

Ann Joo Resources Berhad 100,000 237,369 132,000 0.75

Favelle Favco Berhad 150,000 259,399 246,000 1.40

Jaya Tiasa Holdings Berhad 64,000 156,080 127,360 0.73

Ta Ann Holdings Berhad 75,000 348,952 259,500 1.48

389,000 1,001,800 764,860 4.36

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7. FINANCIAL ASSETS AT FVTPL (CONTD.)


RM RM NAV

QUOTED EQUITIES

- IN MALAYSIA (Contd.)

Plantations

TH Plantations Berhad 140,000 351,022 278,600 1.59

Trading/Services

Dayang Enterprise Holdings Bhd 100,000 176,846 235,000 1.34

Genting Berhad 35,000 351,093 321,650 1.84

Media Prima Berhad 80,000 184,758 187,200 1.07

Parkson Holdings Berhad 75,000 355,599 363,750 2.08

Tenaga Nasional Berhad 37,000 258,644 255,670 1.46

327,000 1,326,940 1,363,270 7.79

TOTAL QUOTED

EQUITIES

- IN MALAYSIA 1,278,587 3,837,067 3,597,601 20.56

QUOTED EQUITIES

- OUTSIDE MALAYSIA

Hong Kong Stock Exchange

("HKSE")

Anhui Conch Cement Co Ltd-H 20,000 189,404 222,481 1.27

Anhui Expressway Co Ltd-H 100,000 176,391 172,778 1.00

Asia Cement China Holdings 130,000 175,080 195,894 1.13

Agricultural Bank of China-H 200,000 250,908 302,953 1.73

Bank of China Ltd 270,000 332,723 369,579 2.11

China Merchants Bank-H 45,000 257,888 303,190 1.73

China Resources Power Holdings 40,000 254,128 310,842 1.78

Chongqing Rural Commercial-H 190,000 272,612 318,534 1.82

Dah Sing Financial Holdings Ltd 41,363 345,337 567,813 3.24

Fufeng Group Ltd 300,000 483,204 402,359 2.30

Ind & Comm Bank of China 239,275 509,291 519,127 2.96

KWG Property Holdings Limited 89,000 172,057 203,976 1.16

Prince Frog International 160,000 183,802 205,756 1.17

Sihuan Pharmaceutical Holdings 200,000 231,616 268,240 1.53

Stelux International Ltd 270,000 173,257 270,528 1.54

Vodone Ltd 635,800 468,609 183,087 1.05

Xiangyu Dredging Holdings Ltd 190,000 187,809 152,897 0.87

3,120,438 4,664,116 4,970,034 28.39

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Name of Counter Quantity Cost Fair value % ofRM RM NAV

QUOTED EQUITIES- OUTSIDE MALAYSIA (Contd.)

Jakarta Stock Exchange

("JSX")

PT Bank Pembangunan

Daerah Jawa 1,800,000 262,258 205,050 1.17

Tambang Batubara Bukit

Asam TBK 50,000 369,340 234,075 1.34

PT Waskita Karya 600,000 74,983 83,330 0.48

2,450,000 706,581 522,455 2.99

Singapore Exchange

("SGX")

Courts Asia Limited 22,000 43,008 46,798 0.27

Indofood Agri Resources Ltd 100,000 460,314 332,844 1.90

122,000 503,322 379,642 2.17

TOTAL QUOTED

EQUITIES

- OUTSIDE MALAYSIA 5,692,438 5,874,019 5,872,131 33.55

TOTAL FINANCIAL ASSETSAT FVTPL 9,711,086 9,469,732 54.11

EXCESS OF FAIR VALUEOVER COST (241,354)

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8. AFS FINANCIAL ASSETS

2012 2011

RM RM

Unquoted fixed income securities 5,903,150 6,175,340

Accretion of discounts, net ofamortisation of premiums on AFS financial assets 36,211 36,647

AFS financial assets as at 31 December 2012 are as detailed below:

Nominal

Name of Counter Amount Cost * Fair value % of

RM RM NAV

UNQUOTED FIXED INCOME SECURITIES

Government Investment Issues 1,700,000 1,711,181 1,724,140 9.85

- 02/14 (Not Rated)

Malaysian Government Securities 1,700,000 1,708,653 1,709,010 9.76

-10/15

WCT Engineering 2,500,000 2,453,315 2,470,000 14.10

- 12/13 (Rating: AA-)

5,900,000 5,873,149 5,903,150 33.71

EXCESS OF FAIR VALUEOVER COST 30,001

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

9. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

2012 2011

RM RM

Licensed investment bank 801,527 1,980,000

2012 2011 2012 2011

% % Days Days

Licensed investment bank 2.93 2.85 2 2

WAEIR

Average

remaining

maturities

The weighted average effective interest rate ("WAEIR") per annum and the average remaining maturitiesof deposits and placement are as follows:

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10. CASH AT BANK

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

2012 2011

RM RM

Ringgit Malaysia 56,396 27,204

United States Dollar 98,342 60,851

Singapore Dollar 24,801 251,272

South Korean Won 111,408 106,405

Thai Baht 30,327 114,074

Philippines Peso 16,959 16,438

Indonesian Rupiah 327,528 310,432

Hong Kong Dollar 639,026 498,6381,304,787 1,385,314

11. AMOUNT DUE TO MANAGER

2012 2011

RM RM

Amount arising from (creation)/release of units (1,500) 61,980

Management fee 22,000 22,98420,500 84,964

12. INCOME DISTRIBUTION

Distributions to unitholders are from the following sources:

2012 2011

RM RM

Dividend income 4,296 19,060

Interest income 27,175 29,554

Net realised gain from sale of investments 304,607 231,400

Net accretion of discount/(amortisation of premium) on corporate bond 4,584 (5,494)

Other income 40 4,743

340,702 279,263

Less:

Expenses 41,550 54,968

Taxation - 7

Current year's realised income 299,152 224,288

Distribution out of previous year's realised reserves 616,304 996,982Distribution for the year 915,456 1,221,270

Units in circulation at book closing date 15,257,606 20,354,496

Gross distribution per unit (sen) 6 6

Net distribution per unit (sen) 6 6Date of distribution 27.4.2012 28.4.2011

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

Note 2012 2011

RM RM

Unitholders' capital (a) 8,700,042 9,909,020

Retained earnings

- Realised earnings (b) 9,436,428 8,079,086

- Unrealised losses (c ) (654,445) (72,444)

8,781,983 8,006,642

AFS reserve 30,001 47,509Total equity/ Net asset value 17,512,026 17,963,171

(b) Realised - Distributable

2012 2011RM RM

Balance at the beginning of the year 8,079,086 8,736,266

Net income/(loss) after tax 1,690,797 (507,758)

Net unrealised loss attributable to

investments held transferred to

unrealised reserve 580,361 1,150,235

Net unrealised foreign exchange

loss/(gain) attributable to foreign currency

monetary items transferred to unrealised

reserve 1,640 (78,387)

Distribution out of realised reserve (915,456) (1,221,270)Balance at the end of the year 9,436,428 8,079,086

In accordance with Article 6.1.1 of the Deed and Securities Commision's approval letter dated 19December 2001, the maximum number of units that can be issued for circulation is 100 million units. Asat 31 December 2012, the number of units not in issue is 84,762,607 (2011: 83,694,366) units.

(a) Unitholders' Capital

Number Number

of units RM of units RM

Balance at beginning

of the year 16,305,634 9,909,020 18,989,437 12,731,742

Add: Creation of units 962,242 1,065,039 3,461,519 3,826,099

Less: Cancellation of units (2,030,483) (2,020,533) (6,145,322) (6,334,546)

Distribution equalisation - (253,484) - (314,275)

Balance at endof the year 15,237,393 8,700,042 16,305,634 9,909,020

2012 2011

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

(c) Unrealised - Non-distributable

2012 2011RM RM

Balance at the beginning of year (72,444) 999,404


investment held transferred from

realised reserve (580,361) (1,150,235)

Net unrealised foreign exchange

(loss)/gain attributable to foreign

currency monetary items transferred from

realised reserve (1,640) 78,387Balance at the end of the year (654,445) (72,444)

14. NET ASSET VALUE PER UNIT

RM RM/Unit RM RM/Unit

NAV attributable to unitholders

for issuing/redeeming units 17,572,829 1.1533 18,026,633 1.1055

Effect from adopting bid prices

as fair value (60,803) (0.0040) (63,462) (0.0038)

NAV attributable to unitholdersper financial statements 17,512,026 1.1493 17,963,171 1.1017

15. UNITS HELD BY RELATED PARTIES

2012 2011

Number of Valued at Number of Valued at

units NAV units NAV

RM RM

Directors of the Manager 147,070 169,025 137,049 150,981

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

2012 2011

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 theprovisions of MFRS 139. For the purpose of calculation of net asset value attributable to unitholders perunit for the issuance and redemption of units in accordance with the Deed, quoted financial assets arestated at the last done market price.

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

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16. TRANSACTIONS WITH BROKERS

% of Total

Value of % of Total Brokerage Brokerage

Trade Trade Fees Fees

RM % RM %

MIDF Amanah Investment Bank 18,230,000 48.70 - -

Bhd

CCB International Securities Ltd 3,140,862 8.39 7,840 14.23

Aminvestment Bank Bhd (IPO) 2,378,756 6.36 5,359 9.73

Hwang-DBS Investment Bank Bhd 1,573,537 4.20 3,549 6.44

CIMB-GK Securities Ltd 1,544,952 4.13 3,856 7.00

- Hong Kong

RHB Investment Bank Bhd 1,453,054 3.88 3,271 5.94

Citic Securities Brokerage (HK)

Ltd 1,210,147 3.23 2,691 4.88

PT Mandiri Sekuritas 907,340 2.42 5,177 9.40

JP Morgan Securities (Malaysia)

Sdn Bhd 878,185 2.35 1,588 2.88

CIMB Investment Bank Bhd 870,108 2.32 4,090 7.42

Others 5,243,813 14.02 17,667 32.0837,430,754 100.00 55,088 100.00

17. MANAGEMENT EXPENSE RATIO

2012 2011

Management expense ratio 1.82% 1.78%

18. PORTFOLIO TURNOVER RATIO

2012 2011

Portfolio turnover (times) 0.64 0.84

This is the ratio of average acquisitions and disposals of the Fund for the financial year to the averageNAV of the Fund calculated on a daily basis.

Details of transactions with stockbroking companies and other investments banks for the financial yearended 31 December 2012 are as follows:

This is the ratio of the sum of the fees (inclusive of the 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 year ended 31 December 2012 was RM 17,762,963(2011: RM21,287,398).

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19. SEGMENT INFORMATION

The Manager and Investment Committee of the Fund are responsible for allocating resources available tothe Fund in accordance with the overall investment strategies as set out in the investment Guidelines ofthe 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 year. The segment information provided is presented to theManager, External Investment Manager and Investment Committee of the Fund.

2012 2011

Fixed Fixed

Equity Income Equity Income

Portfolio Portfolio Total Portfolio Portfolio TotalRM RM RM RM RM RM

Gross dividend income 267,785 - 267,785 267,657 - 267,657

Interest income - 235,590 235,590 - 258,108 258,108

Net gain/(loss) on financial

assets at FVTPL 1,485,072 - 1,485,072 (637,481) - (637,481)

Accretion of discounts, net of

amortisation of premiums

on AFS financial assets - 36,211 36,211 - 36,647 36,647

Net realised loss on

foreign exchange (7,991) - (7,991) (2,374) - (2,374)

Total segment operatingincome/(loss) for the year 1,744,866 271,801 2,016,667 (372,198) 294,755 (77,443)

Deposits with financial institutions - 801,527 801,527 - 1,980,000 1,980,000

Financial assets at FVTPL 9,469,732 - 9,469,732 8,469,072 - 8,469,072

AFS financial assets - 5,903,150 5,903,150 - 6,175,340 6,175,340Other assets 9,763 40,552 50,315 2,512 38,041 40,553

Total segment assets 9,479,495 6,745,229 16,224,724 8,471,584 8,193,381 16,664,965

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

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19. SEGMENT INFORMATION (CONTD.)

2012 2011

RM RM

Net reportable segment operating income/(loss) 2,016,667 (77,443)

Expenses (322,820) (378,947)


Tax expense (3,050) (51,368)Net income/(loss) for the year 1,690,797 (507,758)

2012 2011

RM RM

Total segment assets 16,224,724 16,664,964

Tax recoverable 17,141 17,141

Cash at bank 1,304,787 1,385,314

Total assets of the Fund 17,546,652 18,067,419

Total segment liabilities - -

Other payables and accruals 12,601 17,900

Amount due to Manager 20,500 84,964

Amount due to Trustee 1,525 1,385

Total liabilities of the Fund 34,626 104,249

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).

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

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20. FINANCIAL INSTRUMENTS (CONTD.)

(a) Classification of financial instruments (Contd.)

Financial

liabilities

Financial AFS at

assets at financial Loans and amortised

FVTPL assets receivables cost Total

RM RM RM RM RM

2012

Assets

Investments 9,469,732 5,903,150 - - 15,372,882

Deposits with licensed

financial institutions - - 801,527 - 801,527

Other receivables - - 50,315 - 50,315

Cash at bank - - 1,304,787 - 1,304,787Total financial assets 9,469,732 5,903,150 2,156,629 - 17,529,511

Total non-financial assets 17,14117,546,652

Liabilities

Amount due to Manager - - - 20,500 20,500Amount due to Trustee - - - 1,525 1,525

Other payables - - - 12,601 12,601Total financial liabilities - - - 34,626 34,626

2011

Assets

Investments 8,469,072 6,175,340 - - 14,644,412

Deposits with licensed

financial institutions - - 1,980,000 - 1,980,000




Liabilities


Other payables - - - 17,900 17,900Total financial liabilities - - - 104,249 104,249

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(b) Fair Value

(i) Financial instruments that are carried at fair value

Level 1 Level 2 TotalRM RM RM

2012

Financial assets at FVTPL- Quoted equities 9,469,732 - 9,469,732

AFS financial assets- Fixed income securities - 5,903,150 5,903,150

9,469,732 5,903,150 15,372,882

2011

Financial assets at FVTPL- Quoted equities 8,469,072 - 8,469,072

AFS financial assets- Fixed income securities - 6,175,340 6,175,340

8,469,072 6,175,340 14,644,412

The Fund uses the following level of fair value hierarchy for determining and disclosing thefair value 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 included within Level 1 that are observable forthe 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’s financial assets at FVTPL and AFS financial assets are carried at fair value. Thefair values of these financial assets were determined using prices in active markets foridentical assets.

Quoted equity instrumentsFair value is determined directly by reference to their published market bid prices on therelevant stock exchanges at the reporting date.

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

The Fund held the following financial instruments carried at fair value on the statement offinancial position as at the end of the financial year :

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(b) Fair Value (Contd.)

(i) Financial instruments not carried at fair value

21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES

(i) Market Risk

(a) Equity Price Risk

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, equityprice risk and currency risk), credit risk, and liquidity risk. Whilst these are the most important types offinancial risks inherent in each type of financial instruments, the Manager and the Trustee would like tohighlight that this list does not purport to constitute an exhaustive list of all the risks inherent in aninvestment in the Fund.

The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk is inherentin the 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 systemsand adherence to the investment restrictions as stipulated in the Trust Deed, the Securities Commission’sGuidelines on Unit Trust Funds and the Capital Market and Services Act, 2007.

Equity price risk is the risk of unfavourable changes in the fair value of equities as the resultof changes in the levels of equity indices and the value of individual shares. The equity pricerisk exposure arises from the Fund’s investments in equity securities.

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. TheFund seeks to diversify away some of this risk by investing into different sectors to mitigate riskexposure to any single asset class.

The Fund’s market risk is affected primarily due to changes in market prices, interest rates andforeign curency exchange rates.

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

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

(i) Market Risk (Contd.)

(a) Equity Price Risk (Contd.)

Effect on profit

or loss and equity

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

RM

2012

+6/-6 568,184 /(568,184)

2011

+6/-6 508,144 /(508,144)

(b) Interest Rate Risk

Effect on profit

or loss and equity

Change in basis points * Increase/ (Decrease)

RM

2012+25/-25 2,004/(2,004)

2011+25/-25 4,011/(4,011)

*

The table below summarises the effect of sensitivity from the Fund’s underlying investmentsin quoted equities on the profit or loss and equity of the Fund due to possible changes inequity prices, with all other variables held constant:

This risk refers to the effect of interest rate changes on the market value of fixed incomesecurities and deposits with financial institutions. In the event of rising interest rates, thereturn on deposits with financial institutions will rise while prices of bond will decrease andvice versa, thus affecting the net asset value of the Fund. This risk will be minimized via themanagement of the duration structure of the portfolio of bond and deposits with financialinstitutions.

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

The assumed movement in basis points for interest rate sensitivity analysis is based onthe currently observable market environment.

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(c) Currency risk

2012 2011

RM RM



South Korean Won 11,141 10,641

Thai Baht 3,033 27,233

Philippines Peso 1,696 1,644


Hong Kong Dollar 560,906 260,008712,052 445,119

(ii) Credit Risk

or loss and equity

Effect on profit

The Fund’s principal exposure to credit risk arises primarily due to changes in the financialconditions of companies issuing debt securities and stockbroking companies, which may affect theircreditworthiness. This in turn may lead to default in the payment. Such events can lead to loss ofcapital or delayed or reduced income for the Fund resulting in a reduction in the Fund’s asset valueand thus unit price. This risk is mitigated by vigorous credit analysis and diversification of the bondportfolio of the Fund and to engage different stockbroking companies with good reputation. Bondrating of the Fund's portfolio is disclosed in Note 8.

The Fund is exposed to currency risk primarily through its investment in overseas quotedequities and bank balances that are denominated in foreign currencies. The Fund's foreigncurrency exposure profiles of its investment in quoted equities and bank balances has beendisclosed under Note 7 and Note 10 respectively.

A 10% strenghtening or weakening of the RM against the following foreign currencies as atthe end of the financial year would have decreased or increased respectively the profit or lossand equity of the Fund by the amount shown below. This analysis assumes all other variablesare held constant.

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(iii) Liquidity Risk

1 month - 3 Above 3

months months Total

2012 RM RM RM

Financial Assets

Financial assets at FVTPL 9,469,732 - 9,469,732

AFS financial assets - 5,903,150 5,903,150

Deposits with financial institutions 801,527 - 801,527

Other assets 1,355,102 - 1,355,102

Total undiscounted

financial assets 11,626,361 5,903,150 17,529,511

Non-Financial Assets

Tax recoverable - 17,141 17,141

Total Assets 11,626,361 5,920,291 17,546,652

Financial Liabilitites

Other liablities 34,626 - 34,626

Total undiscounted

financial liabilities 34,626 - 34,626

Unitholders' NAV 17,512,026 - 17,512,026

Liquidity gap (5,920,291) 5,920,291 -

This risk occurs in thinly traded or illiquid equity securities. Should the Fund need to sell arelatively large amount of such securities, the act itself may significantly depress the selling price.As the Fund is exposed to daily redemption of units, the risk is minimized by placing a prudentlevel of funds in short-term deposits and by investing in stocks whose liquidity is adjudged to becommensurate with the expected exposure level of the Funds.

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

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(iii) Liquidity Risk (Contd.)

1 month - 3 Above 3

months months Total

2011 RM RM RM

Financial Assets:



Deposits with financial institutions 1,980,000 - 1,980,000

Other assets 1,425,867 - 1,425,867

Total undiscounted




Total Assets 11,874,939 6,192,481 18,067,420


Other liablities - 104,249 104,249

Total undiscounted

financial liabilities - 104,249 104,249

Unitholders' NAV 17,963,171 - 17,963,171

Liquidity gap (6,088,232) 6,088,232 -

(iv) Stock Specific Risk

(v) Single Issuer Risk

(vi) Capital Management

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 and subscription atthe discretion of unitholders. The Manager manages the Fund’s capital with the objective ofmaximising unitholders' value, while maintaining sufficient liquidity to meet unitholders' redemptionas explained in Note 21 (iii) above.

The Fund’s exposure to securities issued by any issuer is limited to not more than a certainpercentage of its net asset value. Under such restriction, the risk exposure to the securities of anyissuer is minimised.

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

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[email protected]

64Your Need

is our Focus

22 February 2013


DMP

[email protected]

65Your Need

is our Focus

22 February 2013


DMP

[email protected]

66Your Need

is our Focus

STATEMENT BY MANAGER TO THE UNITHOLDERS OFDANA MAKMUR PHEIM

We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Dana Makmur Pheim are drawn up in accordancewith the Deed, Malaysian Financial Reporting Standards, International FinancialReporting Standards and Securities Commission’s Guidelines on Unit Trust Funds inMalaysia so as to give a true and fair view of the financial position of Dana MakmurPheim as at 31 December 2012 and of its financial performance and cash flows for thefinancial year then ended.





DMP


DANA MAKMUR PHEIM


We have audited the financial statements of Dana Makmur Pheim ("the Fund"), which comprisestatement of financial position as at 31 December 2012, and statement of comprehensive income,statement of changes in equity and statement of cash flows for the year then ended, and asummary of significant accounting policies and other explanatory information.







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DANA MAKMUR PHEIM (CONTD.)

Opinion

Other Matters

1.

2.


AF: 0502 No. 900/03/14(J/PH)


Kuala Lumpur




As stated in Note 2.1 to the financial statements, Dana Makmur Pheim adopted MalaysianFinancial Reporting Standards on 1 January 2012 with a transition date of 1 January 2011.These standards were applied retrospectively by the Manager to the comparative informationin these financial statements, including the statements of financial position as at 31 December2011 and 1 January 2011, and the statement of comprehensive income, statement of changesin equity and statement of cash flows for the year ended 31 December 2011 and relateddisclosures. We were not engaged to report on the restated comparative information and it isunaudited. Our responsibilities as part of our audit of the financial statements of the Fund forthe year ended 31 December 2012 have, in these circumstances, included obtaining sufficientappropriate audit evidence that the opening balances as at 1 January 2012 do not containmisstatements that materially affect the financial position as at 31 December 2012 andfinancial performance and cash flows for the year then ended.

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DANA MAKMUR PHEIM



Note 2012 2011

RM RM

INVESTMENT INCOME


Profit from Shariah compliant investments :

- receivables 87,585 92,679


Net gain on financial assets at fair value through

profit or loss("FVTPL") 7 404,927 16,122

Amortisation of premiums, net of accretion of

discounts on AFS financial assets 8 (3,217) (3,119)

712,233 256,742

EXPENSES

Manager's fee 3 137,421 141,922

Trustee's fee 4 18,000 18,000




191,623 194,474

Net income before tax 520,610 62,268

Tax expense 5 (3,472) (28,323)

Net income for the year 517,138 33,945



Total comprehensive income for the year 513,407 35,664

Net income after tax is made up of the following:

Net realised income 1,035,065 145,970

Net unrealised loss (517,927) (112,025)517,138 33,945


Net distribution (RM) 12 346,694 366,366

Net distribution per unit (sen) 12 6 6

Gross distribution per unit (sen) 12 6 6


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DANA MAKMUR PHEIM



Note 2012 31.12.2011 1.1.2011

RM RM RM

ASSETS

Shariah-compliant investments 6 5,516,369 5,799,618 4,791,251

Islamic deposit with licensed financial institutions 9 3,151,840 3,175,693 2,183,444

Tax recoverable 6,784 6,784 23,872

Other receivables 25,490 14,272 28,720

Cash at bank 38,610 239,514 954,926TOTAL ASSETS 8,739,093 9,235,881 7,982,213

LIABILITIES


Amount due to Manager 11 62,329 43,364 37,133




EQUITY


Retained earnings 2,794,011 2,623,567 2,955,988


TOTAL EQUITY 13 8,661,041 9,171,290 7,734,261





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DANA MAKMUR PHEIM





capital earnings reserve Equity

RM RM RM RM

At 1 January 2011 4,772,259 2,955,988 6,014 7,734,261

Total comprehensive income forthe year - 33,945 1,719 35,664


Cancellation of units (1,203,743) - - (1,203,743)

Distribution equalisation 362,478 - - 362,478

Income distribution (Note 12) - (366,366) - (366,366)

Balance at 31 December 2011 6,539,990 2,623,567 7,733 9,171,290


the year - 517,138 (3,731) 513,407

Creation of units 482,013 - - 482,013

Cancellation of units (896,237) - - (896,237)


Income distribution (Note 12) - (346,694) - (346,694)Balance at 31 December 2012 5,863,028 2,794,011 4,002 8,661,041

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DANA MAKMUR PHEIM



2012 2011

RM RM



Proceeds from sale of Shariah-compliant investments 6,440,646 5,408,032

Purchase of Shariah-compliant investments (6,759,437) (6,606,057)


Proceeds received from sukuk on maturity 1,000,000 -

Profit received from Islamic deposits with licensed

financial institutions and sukuk 144,479 149,376



Payments for other fees and expenses (41,682) (9,299)

Income distribution paid (6,494) (3,702)

Net cash generated from/(used in) operating

and investing activities 772,890 (1,125,040)


Proceeds from creation of units 192,731 3,010,308


Net cash (used in)/generated from financing activities (997,647) 1,401,877

NET (DECREASE)/INCREASE IN CASH

AND CASH EQUIVALENTS (224,757) 276,837





Islamic deposits with licensed financial institutions 3,151,840 3,175,693

Cash at bank 38,610 239,5143,190,450 3,415,207


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DANA MAKMUR PHEIM






Dana Makmur Pheim ("the Fund") was established pursuant to a Master Deed dated 11 January 2002 asamended by the Supplemental Master Deed dated 3 November 2008 between the Manager; Pheim UnitTrusts Berhad, the Trustee; HSBC (Malaysia) Trustee Berhad and the registered unitholders of the Fund.

The principal activity of the Fund is to invest in "Permitted Investments" in compliance with Shariahrequirements as defined under Article 7 of the Master Deed, which includes quoted Shariah-compliantsecurities on the Bursa Malaysia Securities Berhad ("Bursa Malaysia") or any other markets, Shariahcompliant collective investment schemes, sukuk, and other Shariah-compliant investments. The activitiesof the Fund shall be conducted strictly in compliance with Shariah requirements and as approved by theShariah Advisory Council of the Securities Commission and/or the Shariah Adviser of Dana MakmurPheim. The Fund commenced operations on 28 January 2002 and will continue its operations untilterminated according to the conditions in the Master Deed.

The Manager, Pheim Unit Trusts Berhad, is a public company incorporated in Malaysia. It is a whollyowned subsidiary of Pheim Asset Management Sdn Bhd, a private company incorporated in Malaysia. Itsprincipal activity is the management of unit trust funds. Pheim Asset Management Sdn Bhd has beenappointed by the Manager as the External Investment Manager of the Fund with responsibility for theprovision 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 financial statements were authorised for issue by the Board of Directors of the Manager in accordancewith the resolution of the directors on 22 February 2013.

The financial statements of the Fund have been prepared in accordance with Malaysian FinancialReporting Standards ("MFRSs"), International Financial Reporting Standards ("IFRSs") and theSecurities Commission's Guidelines on Unit Trust Funds in Malaysia.

These financial statements of the Fund are the first set of financial statements prepared in accordancewith MFRSs and, MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards, hasbeen applied. Previously, the financial statements of the Fund were prepared in accordance withFinancial Reporting Standards in Malaysia. The transition to MFRSs did not result in any impact onthe financial position, financial performance and cash flows of the Fund.

The accounting policies disclosed below have been consistently applied in the preparation offinancial statements of the Fund for the year ended 31 December 2012, the comparative figures forthe year ended 31 December 2011 and the opening MFRS statement of financial position as at 1January 2011 (date of transition to MFRSs).

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2.2 New MFRSs and Amendments to MFRSs That Are Not Yet Effective andHave Not Been Early Adopted

Effective forfinancial period

beginningon or after

MFRS 9 Financial Instruments (IFRS 9 issued 1 January 2015*by International Accounting StandardsBoard ("IASB") in November 2009)

MFRS 9 Financial Instruments (IFRS 9 issued 1 January 2015*by IASB in October 2010)

MFRS 13 Fair Value Measurement 1 January 2013Amendments to MFRS 101 Presentation of Financial Statements 1 January 2013

- (Annual improvements 2009-2011 Cycle)Amendments to MFRS 132 Financial Instruments : Presentation 1 January 2013

- (Annual improvements 2009-2011 Cycle)Amendments to MFRS 134 Interim Financial Reporting 1 January 2013

- (Annual improvements 2009-2011 Cycle)Amendments to MFRS 101 Presentation of Financial Statements 1 July 2012

- Presentation of Items of OtherComprehensive Income

Amendments to MFRS 7 Financial Instruments : Disclosures 1 January 2013- Offsetting Financial Assets and

Financial LiabilitiesAmendments to MFRS 132 Financial Instruments : Presentation 1 January 2014

- Offsetting Financial Assets andFinancial Liabilities

*

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

The mandatory effective date of MFRS 9 has been changed from 1 January 2013 to 1 January2015 by the MASB through the issuance of Mandatory Effective Date of MFRS 9 and TransitionDisclosures [Amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009), MFRS 9 (IFRS9 issued by IASB in October 2010) and MFRS 7], which are effective on 1 March 2012.

The Fund will adopt the above MFRSs and amendments to MFRSs when they become effective andthey are not expected to have any significant impact on the financial statements of the Fund upon theirinitial application other than the classification and measurement of financial assets under MFRS 9.MFRS 9 replaces the multiple classification and measurement models in MFRS 139 with a singlemodel that classifies financial assets into only two categories: measured at fair value through profit orloss, or at amortised cost, depending on the entity's business model for managing the financial assetsand the contractual cash flow characteristics of the financial assets.


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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 Shariah-compliant securities and sukuk acquired principally for the purpose of sellingthem in near term.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value at thedate of the statement of financial position. Changes in the fair value of those financialinstruments are recorded in "Net gain or loss on financial assets at FVTPL". Profit earned anddividend revenue elements of such instruments are recorded separately in "Profit income" and"Dividend income", respectively. Foreign exchange differences on financial assets at FVTPLare not recognised separately in profit or loss but included in net gains or net losses on changesin fair value of financial assets at FVTPL.

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 purchaseand sale of investments in financial instruments are recognised on trade dates. When financial assetsare recognised initially, they are measured at fair value, plus attributable transaction cost, forinvestment 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-sale financialassets and receivables.

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 onchanges in fair value of the AFS financial assets are recognised in other comprehensiveincome, except that impairment losses, foreign exchange gains and losses on monetaryinstruments, dividend income and profit income calculated using effective profit method arerecognised 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 the financialasset is derecognised. Profit income calculated using the effective profit method is recognisedin profit or loss. Dividends on an AFS Shariah-compliant equity instrument are recognised inprofit or loss when the Fund's right to receive payment is established.

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(iii) Receivables

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 orbinding dealer price quotations, without deduction for transaction costs.

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 asset 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 recognisedin profit 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 orderecognised on trade date, i.e. the date that the Fund commit to purchase or sell the asset.

Financial assets with fixed or determinable payments that are not quoted in an active market areclassified as receivables. The Fund includes short term receivables such as balances due frombroker, Manager and other receivables in the classification. Receivables are recognised initiallyat fair value including transaction costs.

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

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

Significant or prolonged decline in fair value below cost, significant financial difficulties of theissuer or obligor, and the disappearance of an active trading market are considerations todetermine whether there is objective evidence that investment securities classified as AFSfinancial assets are impaired.

If an AFS financial asset is impaired, an amount comprising the difference between its cost (netof any principal payment and amortisation) and its current fair value, less any impairment losspreviously recognised 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 sukuk investments, impairment losses are subsequentlyreversed in profit or loss, up to the amount previously recognised as impairment loss, if anincrease in the fair value of the investment can be objectively related to an event occurring afterthe recognition of the impairment 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 differencebetween the asset'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 for allfinancial assets with the exception of trade receivables, where the amount is reduced throughthe use of an allowance account. When a trade receivable becomes uncollectible, it is writtenoff against 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 doesnot exceed its amortised cost at the reversal date. The amount of reversal is recognised in profitor loss.

77

DMP





(e) Functional and Presentation Currency


The unitholders' contributions to the Fund meet the definition of puttable instruments classified asequity instruments 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 distributionand/or adjusted accordingly when units are cancelled.

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.

Unrealised gains and losses comprise changes in fair value of financial instruments for the periodfrom reversal of prior period's unrealised gains and losses for financial instruments which wererealised (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 valuethrough profit or loss" are calculated using weighted average method. They represent the differencebetween an instrument's initial carrying amount and disposal amount, or cash payment or receiptsmade of Shariah-compliant derivative contracts (excluding payments or receipts on collateral marginaccounts for such investments).

Financial liabilities are classified according to the substance of the contractual arrangements enteredinto and the definition of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financialposition when, and only when, the Fund becomes a party to the contractual provisions of thefinancial 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 subsequentlymeasured at the amortised cost using effective profit 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 theamortisation process.

78

DMP

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)





(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 financial institutionswhich have insignificant risk of changes in value.

Income is recognised to the extent that is probable that the economic benefits will flow to the Fundand the income can be reliably measured. Income is measured at fair value of consideration receivedor receivable.


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

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



79

DMP

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)




3. MANAGER'S FEE

4. TRUSTEE'S FEE

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.There are no key assumptions concerning the future and other key sources of estimation uncertainty atthe reporting date, that have significant risk of causing material adjustment to the carrying amounts ofassets and liabilities within next year.

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

The Trustee is entitled to a fee of 0.08% p.a. based on net asset value of the Fund (before deducting theManager's and Trustee's fees for the day) calculated and accrued on a daily basis, subject to a minimum ofRM18,000 p.a.

For management purposes, the Fund is managed by 2 main portfolios, namely (1) Shariah-compliantequity securities and (2) sukuk and Islamic deposits. Each segment engages in separate businessactivities and the operating results are regularly reviewed by the Manager, External InvestmentManager and the Fund's Investment Committee. The External Investment Manager and the FundInvestment Committee jointly assumes the role of chief operation decision maker, for performanceassessment purposes and to make decision about resources allocated to each investment segment.

80

DMP

5. TAXATION

2012 2011

RM RM

Current year Malaysian tax 3,472 7,493

Underprovision in prior year - 20,830Malaysian tax expense based on results for the year 3,472 28,323

2012 2011

RM RM


Tax at Malaysian statutory rate of 25% (2011: 25%) 130,153 15,567

Tax effects of:

Income not subject to tax (174,586) (52,951)


Restriction on tax deductible expenses for unit trust funds 36,770 33,682

Underprovision in prior year - 20,830Tax expense for the financial year 3,472 28,323

6. SHARIAH-COMPLIANT INVESTMENTS2012 2011

Financial assets at fair value through RM RMprofit or loss (Note 7)

Quoted Shariah-compliant equities

in Malaysia 5,009,269 4,285,568


(Note 8)

Unquoted sukuk 507,100 1,514,050Total Shariah-compliant investments 5,516,369 5,799,618

Income tax is calculated at Malaysian statutory tax rate of 25% of the estimated assessable net income forthe financial year.

The tax charge for the financial year 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 earned by theFund is exempted from tax.

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

81

DMP


2012 2011

RM RM

Financial assets at FVTPL:Quoted Shariah-compliant equities 5,009,269 4,285,568

Net gain on financial assets at FVTPL comprised:

Realised gain on disposals 922,854 128,147

Unrealised loss on changes in fair values (517,927) (112,025)404,927 16,122

Financial assets at FVTPL as at 31 December 2012 are as detailed below:


RM RM NAV

QUOTED SHARIAH-COMPLIANT EQUITIES

- IN MALAYSIA

Main Market

Construction

Benalec Holdings Berhad 239,000 322,511 332,210 3.84

IJM Corporation Berhad 37,000 203,841 183,150 2.11

Hock Seng Lee Berhad 61,200 102,965 89,964 1.04

Kimlun Corporation Berhad 138,000 190,484 191,820 2.21

Protasco Berhad 100,000 93,210 98,500 1.14

WCT Berhad 7,500 15,084 17,550 0.20

WCT Berhad-WD 10,000 - 2,900 0.03

592,700 928,095 916,094 10.57

Consumer Product

Latitude Tree Holdings Berhad 172,500 123,776 119,025 1.37

UMW Holdings Berhad 25,000 250,336 298,500 3.45

197,500 374,112 417,525 4.82

Finance

Syarikat Takaful Malaysia Berhad 26,000 137,371 141,440 1.63

Infrastructure

Time Dotcom Berhad 104,000 361,375 405,600 4.68

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DMP



RM RM NAV

QUOTED SHARIAH-COMPLIANT EQUITIES

- IN MALAYSIA (CONTD.)

Industrial Products

Ann Joo Resources Berhad 110,000 238,035 145,200 1.68

Box-Pax (Malaysia) Berhad 70,000 150,645 148,400 1.71

CB Industrial Product

Holding Bhd 129,000 357,208 344,430 3.98

Daibochi Plastic & Packaging

Berhad 120,000 307,602 300,000 3.46

Favelle Favco Berhad 110,000 182,730 180,400 2.08

Jaya Tiasa Holdings Berhad 40,050 96,650 79,700 0.92

Kossan Rubber Industries Berhad 55,000 171,620 180,400 2.08

Sarawak Cable Bhd 7,000 13,007 11,340 0.13

641,050 1,517,497 1,389,870 16.04

Properties

KSL Holdings Berhad 240,000 343,425 345,600 3.99

Trading/ Services

Dayang Enterprise Holdings

Berhad 120,000 221,028 282,000 3.26

Deleum Berhad 100,000 181,790 194,000 2.24

Pantech Group Holdings Bhd 200,000 137,345 134,000 1.55

Parkson Holdings Berhad 40,000 189,736 194,000 2.24

Perisai Petroleum Teknologi

Berhad 200,000 184,915 216,000 2.49

Tenaga Nasional Berhad 54,000 376,368 373,140 4.31

714,000 1,291,182 1,393,140 16.09

TOTAL QUOTED

SHARIAH-COMPLIANT

EQUITIES 2,515,250 4,953,057 5,009,269 57.82



83

DMP


2012 2011

RM RM

Unquoted sukuk 507,100 1,514,050

Amortisation of premiums, net of accretionof discounts on AFS financial assets (3,217) (3,119)

Unrealised (loss)/gain on changes in fair values (3,731) 1,719

AFS financial assets as at 31 December 2012 are as detailed below :

Nominal

Name of Counter Amount Cost* Fair value % of

RM RM RM NAV

UNQUOTED SUKUK

Government Investment Issues

- 02/14 (Not Rated) 500,000 503,098 507,100 5.85


* Cost of sukuk includes amortisation of premium.

9. ISLAMIC DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

2012 2011

RM RM

Licensed investment banks 3,151,840 3,175,693

2012 2011 2012 2011

% % Days Days

Licensed investment banks 2.81 4.51 8 6

Average

remaining

maturitiesWAEPR

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

84

DMP

10. SHARIAH INFORMATION OF THE FUND

(a)

(b)

(c)


2012 2011

RM RM

Amount arising from release of units 51,291 31,776

Management fee 11,038 11,58862,329 43,364


Distribution to unitholders are from the following sources:

2012 2011

RM RM

Dividend from local quoted Shariah-compliant securitites 1,168 2,083

Profit from corporate sukuk 2,921 1,006

Profit from Islamic deposit 3,729 5,048

Amortisation of premium on corporate sukuk (169) (126)

Net realised (loss)/gain from sale of Shariah-compliant investment (585) 84,051

7,064 92,062

Less:

Expenses 10,145 9,084

Taxation - 12

Current year's realised (loss)/income (3,081) 82,966

Distribution out of previous year's realised reserves 349,775 283,400Distribution for the year 346,694 366,366


Gross distribution per unit (sen) 6 6

Net distribution per unit (sen) 6 6Date of distribution 27.4.2012 28.4.2011

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

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

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.

85

DMP


Note 2012 2011

RM RM


Retained earnings

- Realised (b) 2,745,348 2,056,977

- Unrealised (c ) 48,663 566,590

2,794,011 2,623,567

AFS reserve 4,002 7,733Total equity / Net asset value 8,661,041 9,171,290


2012 2011RM RM

Balance at the beginning of the year 2,056,977 2,277,373

Net income after taxation 517,138 33,945


Shariah-compliant investments held

transferred to unrealised reserve 517,927 112,025

Distribution out of realised reserve (346,694) (366,366)Balance at the end of the year 2,745,348 2,056,977

In accordance with Article 6.1.1 of the Deed and Securities Commision's approval letter dated 19December 2001, the maximum number of units that can issued for circulation is 100 million units. As at 31December 2012, the number of units not in issue is 94,425,513 (2011: 93,994,810) units.


Number Number



of the year 6,005,190 6,539,990 4,936,886 4,772,259

Add: Creation of units 338,499 482,013 2,099,067 2,608,996

Less: Cancellation of units (769,202) (896,237) (1,030,763) (1,203,743)Distribution equalisation - (262,738) - 362,478

Balance at endof the year 5,574,487 5,863,028 6,005,190 6,539,990

2012 2011

86

DMP

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


2012 2011

RM RM

Balance at the beginning of the year 566,590 678,615


Shariah-compliant investment held

transferred from realised reserve (517,927) (112,025)Balance at the end of year 48,663 566,590



2012 2011


units NAV units NAV

RM RM


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


Net asset value attributable

to unitholders for

issuing/redeeming units 8,710,637 1.5626 9,202,713 1.5324

Effect from adopting bid

prices as fair value (49,596) (0.0089) (31,423) (0.0052)


to unitholders perfinancial statements 8,661,041 1.5537 9,171,290 1.5272

2012 2011

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 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 with theDeed, quoted financial assets are stated at the last done market price.

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

87

DMP


% of Total

Value of % of Total Brokerage Brokerage

Trade Trade Fees Fees

RM % RM %

MIDF Amanah Investment

Bank Bhd 14,380,564 33.95 - -

RHB Investment Bank Bhd 11,701,300 27.62 3,517 10.69

Maybank Investment Bank Bhd 3,788,126 8.94 2,398 7.29

KAF Investment Bank Bhd 2,000,000 4.72 - -

JP Morgan Securities (M)

Sdn Bhd 1,868,136 4.41 4,018 12.22

Affin Investment Bank Bhd 1,316,669 3.11 2,994 9.10

CIMB Investment Bank Bhd 1,091,275 2.58 3,632 11.04

Hong Leong Investment Bank 1,009,011 2.38 2,265 6.89

ECM Libra Avenue Securitiies

Sdn Bhd 791,774 1.87 1,783 5.42

Hwang-DBS Investment Bank

Bhd 727,057 1.72 1,642 4.99

Other brokers 3,688,037 8.70 10,640 32.3642,361,949 100.00 32,889 100.00


2012 2011



2012 2011


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

This is the ratio of the sum of the fees (inclusive of manager's, trustee's, audit and other professional fees)and other administrative expenses of the Fund to the average NAV of the Fund calculated on a daily basis.The average NAV of the Fund for the year ended 31 December 2012 was RM9,161,073 (2011:RM9,457,010).

Details of transactions with stockbroking companies and other investment banks for the financial yearended 31 December 2012 are as follows:

88

DMP


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 investmentstrategies as set out in the investment Guidelines of the Fund. The Fund is managed by two 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 in eachsegment while safeguarding capital by investing in diversified portfolios. There have been no changes inreportable segments in the current financial year. The segment information provided is presented to theManager, the appointed External Investment Manager and Investment Committee of the Fund.

2012 2011

Shariah- Islamic Shariah- Islamic

compliant Deposit Total compliant Deposit Total

Equity and Sukuk Equity and Sukuk

Portfolio Portfolio Portfolio PortfolioRM RM RM RM RM RM


Profit from Islamic

deposits with licensed financial

institutions and sukuk - 140,073 140,073 - 138,494 138,494Net gain on financial assets

at FVTPL 404,927 - 404,927 16,122 - 16,122

Amortisation of premium, net of

accretion of discount on

AFS financial assets - (3,217) (3,217) - (3,119) (3,119)

Total segment operating incomefor the year 575,377 136,856 712,233 121,367 135,375 256,742

Islamic deposits withfinancial institutions - 3,151,840 3,151,840 - 3,175,693 3,175,693


AFS financial assets - 507,100 507,100 - 1,514,050 1,514,050Other assets 16,625 8,865 25,490 1,001 13,271 14,272



89

DMP


2012 2011

RM RM

Net reportable segment operating income 712,233 256,742

Expenses (191,623) (194,474)


Tax expense (3,472) (28,323)Net income for the year 517,138 33,945

2012 2011

RM RM



Cash at bank 38,610 239,514Total assets of the Fund 8,739,093 9,235,881




Amount due to Trustee 1,525 1,529Total liabilities of the Fund 78,052 64,591



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

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

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 recognised. 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.

90

DMP



Financial

liabilities

Financial AFS at

assets at financial amortised

FVTPL assets Receivables cost Total

RM RM RM RM RM

2012

Assets

Quoted Shariah-compliant

investments 5,009,269 507,100 - - 5,516,369

Islamic deposits with

licensed financial institutions - - 3,151,840 - 3,151,840


Cash at bank - - 38,610 - 38,610Total financial assets 5,009,269 507,100 3,215,940 - 8,732,309


Liabilities

Other payables and accruals - - - 14,198 14,198


Total financial liabilities - - - 78,052 78,052

2011

Assets

Quoted Shariah-compliant

investments 4,285,568 1,514,050 - - 5,799,618

Islamic deposits with

licensed financial institutions - - 3,175,693 - 3,175,693


Cash at bank - - 239,514 - 239,514Total financial assets 4,285,568 1,514,050 3,429,479 - 9,229,097


Liabilities

Other payables and accruals - - - 19,698 19,698


Total financial liabilities - - - 64,591 64,591

91

DMP


(b) Fair Value


Level 1 Level 2 Total

RM RM RM

2012

Financial assets at FVTPL

- Quoted Shariah-compliant equities 5,009,269 - 5,009,269

AFS financial assets

- Sukuk - 507,100 507,1005,009,269 507,100 5,516,369

2011


- Quoted Shariah-compliant equities 4,285,568 - 4,285,568


- Sukuk - 1,514,050 1,514,0504,285,568 1,514,050 5,799,618

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 :




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

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

Unquoted sukukThe published market prices for RM-denominated unquoted sukuk are based on informationprovided by Bond Pricing Agency Malaysia Sdn Bhd.

The Fund held the following financial instruments carried at fair value on the statement offinancial position as at the end of the financial year :

92

DMP



(ii) Financial instruments not carried at fair value


(i) Market Risk


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

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk and equityprice risk), credit risk, stock specific risk, liquidity risk and reclassification of Shariah status risk. Whilstthese are the most important types of financial risks inherent in each type of financial instruments, theManager and the Trustee would like to highlight that this list does not purport to constitute an exhaustivelist 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 inherentin the 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 systemsand adherence to the investment restrictions as stipulated in the Trust Deed, the Securities Commission’sGuidelines on Unit Trust Funds and the Capital Market and Services Act, 2007.

Equity price risk is the adverse changes in the fair value of Shariah-compliant equities as a resultof changes in the levels of Shariah-compliant equity indices and the value of individual Shariah-compliant shares. The equity price risk exposure arises from the Fund’s investments in quotedShariah-compliant equity securities.

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 exposureto any single asset class.

The Fund’s market risk is affected primarily due to changes in market prices and interest rates.

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

93

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Effect on profit

or loss and equity

Change in Shariah-compliant Increase/(Decrease)

equity price (%) RM

2012+6/-6 300,556 /(300,556)

2011+6/-6 257,134 /(257,134)


Effect on profit

or loss and equity

Increase/(Decrease)

Change in basis points * RM

2012+25/-25 7,880 / (7,880)

2011+25/-25 3,126 / (3,126)

*

This 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 on Islamicdeposits with financial institutions will rise while demand for sukuk 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 sukuk and Islamic deposits withfinancial institutions.

Interest rate is a general economic indicator that will have an impact on the management offund regardless of whether it is a Shariah-compliant fund or otherwise. It does not in any waysuggest that this fund will invest in conventional financial instruments. All investments carriedout for this fund are in accordance with requirement of the Shariah.

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

The table below summarises the effect of sensitivity from the Fund’s underlying investments inquoted Shariah-compliant equities on the profit or loss and equity of the Fund due to possiblechanges in Shariah-compliant equity prices, with all other variables held constant:

The assumed movement in basis points for interest rate sensitivity analysis is based on thecurrently observable market environment.

94

DMP


(ii) Credit Risk


1 month - 32012 months Above 3 months Total

RM RM RMFinancial Assets

Financial assets at FVTPL 5,009,269 - 5,009,269AFS financial assets - 507,100 507,100Islamic deposits

with financial institutions 3,151,840 - 3,151,840Other assets 64,100 - 64,100Total undiscounted

financial assets 8,225,209 507,100 8,732,309

Non-Financial AssetsTax recoverable - 6,784 6,784

Total Assets 8,225,209 513,884 8,739,093

Financial LiabilititesOther liablities 78,052 - 78,052Total undiscounted


Unitholders' NAV 8,661,041 - 8,661,041

Liquidity gap (513,884) 513,884 -

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 turn maylead to default in the payment of principal and profit. Such events can lead to loss of capital ordelayed or reduced income for the Fund resulting in a reduction in the Fund’s asset value and thusunit price. This risk is mitigated by vigorous credit analysis and diversification of the sukuk portfolioof the Fund.

As at the end of the financial year, the Fund only invested in a relatively stable sukuk issued by theGovernment of Malaysia.

This risk occurs in thinly traded or illiquid Shariah-compliant securities. Should the Fund need to sella relatively large amount of such securities, the act itself may significantly depress the selling price.As the Fund is exposed to daily redemption of units, the risk is minimized by placing a prudent levelof funds in short-term Islamic deposits and by investing in Shariah-compliant stocks whose liquidityis adjudged to be commensurate with the expected 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 with those financial liabilities andredemption by unitholders.

95

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1 month - 3

2011 months Above 3 months Total

RM RM RM

Financial assets:



Islamic deposits

with financial institutions 3,175,693 - 3,175,693

Other assets 253,786 - 253,786

Total undiscounted




Total Assets 7,715,047 1,520,834 9,235,881



Total undiscounted


Unitholders' NAV 9,171,290 - 9,171,290

Liquidity gap (1,520,834) 1,520,834 -



The Fund’s exposure to Shariah-compliant securities issued by any issuer is limited to not more thana certain percentage of its net asset value. Under such restriction, the risk exposure to the securitiesof any issuer is minimised.

The Fund is exposed to the individual risk of the respective companies issuing Shariah-compliantsecurities which includes changes to the business performance of the company, consumer tastes anddemand, lawsuits and management practices. This risk is minimised through the well diversifiednature of the Fund.

96

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 portfolio ofShariah-based funds may be reclassified to be Shariah non-compliant upon review of the securitiesby the Shariah Advisory Council of the Securities Commission ("SACSC") performed twice yearly.If this occurs, the Manager will take the necessary steps to dispose of such securities.

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 thediscretion of unitholders. The Manager manages the Fund’s capital with the objective of maximisingunitholders' value, while maintaining sufficient liquidity to meet unitholders' redemption as explainedin Note 21 (iii) above.

97


PIF

[email protected]

98Your Need

is our Focus

22 February 2013


PIF

[email protected]

99Your Need

is our Focus

STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM INCOME FUND

We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Pheim Income Fund are drawn up in accordancewith the Deed, Malaysian Financial Reporting Standards, International FinancialReporting Standards and Securities Commission’s Guidelines on Unit Trust Funds inMalaysia so as to give a true and fair view of the financial position of Pheim IncomeFund as at 31 December 2012 and of its financial performance and cash flows for thefinancial year then ended.





PIF


PHEIM INCOME FUND


We have audited the financial statements of Pheim Income Fund ("the Fund"), which comprisestatement of financial position as at 31 December 2012, and statement of comprehensive income,statement of changes in equity and statement of cash flows for the year then ended, and asummary of significant accounting policies and other explanatory information.







100

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PHEIM INCOME FUND (CONTD.)

Opinion

Other Matters

1.

2.


AF: 0502 No. 900/03/14(J/PH)


Kuala Lumpur




As stated in Note 2.1 to the financial statements, Pheim Income Fund adopted MalaysianFinancial Reporting Standards on 1 January 2012 with a transition date of 1 January 2011.These standards were applied retrospectively by the Manager to the comparative informationin these financial statements, including the statements of financial position as at 31 December2011 and 1 January 2011, and the statement of comprehensive income, statement of changesin equity and statement of cash flows for the year ended 31 December 2011 and relateddisclosures. We were not engaged to report on the restated comparative information and it isunaudited. Our responsibilities as part of our audit of the financial statements of the Fund forthe year ended 31 December 2012 have, in these circumstances, included obtaining sufficientappropriate audit evidence that the opening balances as at 1 January 2012 do not containmisstatements that materially affect the financial position as at 31 December 2012 andfinancial performance and cash flows for the year then ended.

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PHEIM INCOME FUND



Note 2012 2011

RM RM

INVESTMENT INCOME


Interest income :

- loans and receivables 48,979 66,980


Net gain on financial assets at fair value through

profit or loss ("FVTPL") 7 742,219 328,702

Accretion of discounts, net of amortisation of

premiums on AFS financial assets 8 29,905 30,275

Net realised (loss)/gain on foreign exchange (30,490) 127,176

1,096,821 841,739

EXPENSES

Manager's fee 3 148,375 159,618

Trustee's fee 4 18,000 18,000




194,576 204,171


Tax expense 5 (700) (22,087)

Net income for the year 901,545 615,481



Total comprehensive income for the year 884,146 635,443

Net income after tax is made up of the following:

Net realised income/(loss) 813,194 (71,720)

Net unrealised income 88,351 687,201901,545 615,481


Net distribution 12 204,817 853,120

Net distribution per unit (sen) 12 1.5 6

Gross distribution per unit (sen) 12 1.5 6


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PHEIM INCOME FUND



Note 2012 31.12.2011 1.1.2011

RM RM RM

ASSETS

Investments 6 9,329,766 9,267,137 8,923,596

Deposits with licensed financial institutions 9 3,409,410 1,462,472 6,951,142

Tax recoverable 9,078 9,078 24,773

Other receivables 65,268 56,136 78,755

Amount due from brokers - - 339,300

Cash at bank 10 1,527,473 4,536,618 4,262,611TOTAL ASSETS 14,340,995 15,331,441 20,580,177

LIABILITIES


Amount due to Manager 11 25,291 13,006 93,663




EQUITY


Retained earnings/(Accumulated losses) 663,853 (32,875) 204,764


TOTAL EQUITY 13 14,301,779 15,299,006 20,055,712





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PHEIM INCOME FUND





capital earnings/ reserve Equity

(Accumulated

losses)RM RM RM RM

At 1 January 2011 19,815,114 204,764 35,834 20,055,712


the year - 615,481 19,962 635,443


Reinvestment of units - -Cancellation of units (8,661,658) - - (8,661,658)


Income distribution (Note 12) - (853,120) - (853,120)

Balance at 31 December 2011 15,276,085 (32,875) 55,796 15,299,006


the year - 901,545 (17,399) 884,146


Cancellation of units (3,148,971) - - (3,148,971)Distribution equalisation (64,423) - - (64,423)

Income distribution (Note 12) - (204,817) - (204,817)Balance at 31 December 2012 13,599,529 663,853 38,397 14,301,779

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PHEIM INCOME FUND



2012 2011

RM RM



Proceeds from sale of investments 5,604,378 9,768,977

Purchase of investments (6,936,803) (9,904,920)

Proceeds received from bonds on maturity 2,000,000 200,000


Interest received 300,879 341,382



Payment for other fees and expenses (29,570) (21,928)

Income distribution paid (675) (2,850)

Net cash generated from operating

and investing activities 805,309 260,324


Proceeds from creation of units 1,382,556 3,758,139


Net cash used in financing activities (1,867,516) (5,474,987)

NET DECREASE IN CASH

AND CASH EQUIVALENTS (1,062,207) (5,214,663)





Deposits with licensed financial institutions (Note 9) 3,409,410 1,462,472Cash at bank (Note 10) 1,527,473 4,536,618

4,936,883 5,999,090


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PHEIM INCOME FUND






Pheim Income Fund ("the Fund") was constituted pursuant to a Master Deed dated 11 January 2002as amended by a Supplemental Master Deed dated 3 November 2008 between the Manager; PheimUnit Trusts Berhad, the Trustee; HSBC (Malaysia) Trustee Berhad and the registered unitholders ofthe Fund.

The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 ofthe Master Deed, which includes investments in equities and fixed income securities traded onBursa Malaysia Securities Berhad ("Bursa Malaysia") or any other market considered as an EligibleMarket. The Fund commenced operations on 28 January 2002 and will continue its operations untilterminated 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 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 Management SdnBhd has been appointed by the Manager as the External Investment Manager of the Fund withresponsibility 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 financial statements were authorised for issue by the Board of Directors of the Manager inaccordance with the resolution of the directors on 22 February 2013.

The financial statements of the Fund have been prepared in accordance with MalaysianFinancial Reporting Standards ("MFRSs"), International Financial Reporting Standards("IFRSs") and the Securities Commission's Guidelines on Unit Trust Funds in Malaysia.

These financial statements of the Fund are the first set of financial statements prepared inaccordance with MFRSs and, MFRS 1, First-time Adoption of Malaysian Financial ReportingStandards, has been applied. Previously, the financial statements of the Fund were prepared inaccordance with Financial Reporting Standards in Malaysia. The transition to MFRSs did notresult in any impact on the financial position, financial performance and cash flows of theFund.

The accounting policies disclosed below have been consistently applied in the preparation offinancial statements of the Fund for the year ended 31 December 2012, the comparative figuresfor the year ended 31 December 2011 and the opening MFRS statement of financial position asat 1 January 2011 (date of transition to MFRSs).

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Have Not Been Early Adopted

Effective for

financial period

beginning

on or after

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

by International Accounting Standards

Board ("IASB") in November 2009)

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

by IASB in October 2010)

MFRS 13 Fair Value Measurement 1 January 2013

Amendments to MFRS 101 Presentation of Financial Statements 1 January 2013

- (Annual improvements 2009-2011 Cycle)

Amendments to MFRS 132 Financial Instruments : Presentation 1 January 2013


Amendments to MFRS 134 Interim Financial Reporting 1 January 2013


Amendments to MFRS 101 Presentation of Financial Statements 1 July 2012

- Presentation of Items of Other

Comprehensive Income

Amendments to MFRS 7 Financial Instruments : Disclosures 1 January 2013

- Offsetting Financial Assets and

Financial Liabilities

Amendments to MFRS 132 Financial Instruments : Presentation 1 January 2014

- Offsetting Financial Assets and

Financial Liabilities

*

The Fund has not early adopted the following new MFRSs and amendments to MFRSs issuedby the Malaysian Accounting Standards Board ("MASB") that are relevant to its operationsbut are not yet effective :-

The mandatory effective date of MFRS 9 has been changed from 1 January 2013 to 1January 2015 by the MASB through the issuance of Mandatory Effective Date of MFRS 9and Transition Disclosures [Amendments to MFRS 9 (IFRS 9 issued by IASB in November2009), MFRS 9 (IFRS 9 issued by IASB in October 2010) and MFRS 7], which are effectiveon 1 March 2012.


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Have Not Been Early Adopted (Contd.)





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 securities and fixed income securities acquired principally for the purposeof selling them in near term.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value atthe date of the statement of financial position. Changes in the fair value of those financialinstruments are recorded in "Net gain or loss on financial assets at FVTPL". Interestearned and dividend revenue elements of such instruments are recorded separately in"Interest income" and "Dividend income", respectively. Foreign exchange differences onfinancial assets at FVTPL are not recognised separately in profit or loss but included innet gains or net losses on changes in fair value of financial assets at FVTPL.

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

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 loans and receivables.

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

The Fund will adopt the above MFRSs and amendments to MFRSs when they become effectiveand they are not expected to have any significant impact on the financial statements of the Fundupon their initial application other than the classification and measurement of financial assetsunder MFRS 9. MFRS 9 replaces the multiple classification and measurement models in MFRS139 with a single model that classifies financial assets into only two categories: measured atfair value through profit or loss, or at amortised cost, depending on the entity's business modelfor managing the financial assets and the contractual cash flow characteristics of the financialassets.

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(iii) Loans and receivables

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

Subsequent to initial recognition, loans and receivables are measured at amortised costusing effective interest method. Gains and losses are recognised in profit or loss whenthe loans and receivables are derecognised or impaired, and through the amortisationprocess.

After initial recognition, AFS financial assets are measured at fair value. Gains or lossesfrom changes in fair value of the AFS financial assets are recognised in othercomprehensive income, except that impairment losses, foreign exchange gains andlosses on monetary instruments, dividend income and interest calculated using effectiveinterest 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 asset is derecognised. Interest income calculated using the effective interestmethod is recognised in profit or loss. Dividends on an AFS equity instrument arerecognised in profit or loss when the Fund's right to receive payment is established.

Fair value is the amount for which an asset could be exchanged, or 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 dealer 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 a 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 market place concerned. All regular way purchases and sales of financial assets arerecognised or derecognised on trade date, i.e. the date that the Fund commits to purchaseor sell the asset.

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The Fund assesses at each reporting date whether there is any objective evidence that afinancial asset is impaired.

Significant or prolonged decline in fair value below cost, weaken fundamental,significant financial difficulties of the issuer or obligor, and the disappearance of anactive trading market are considerations to determine whether there is objectiveevidence that investment securities classified as AFS financial assets are impaired. Atend of each financial year, the Manager would receive impairment proposal from theFund's external investment manager, if any financial assets of the Fund, in theirprofessional opinion, warrant an impairment exercise.

If an AFS asset is impaired, an amount comprising the difference between its cost (netof 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 period. Increase in fair value, if any, subsequent to impairment loss isrecognised in other comprehensive income. For AFS debt investments, impairmentlosses are subsequently reversed in profit or loss, up to the amount previouslyrecognised as impairment loss, if an increase in the fair value of the investment can beobjectively related to an event occurring after the recognition of the impairment loss inprofit or loss.

To determine whether there is objective evidence that an impairment loss on financialassets has been incurred, the Fund considers factors such as the probability ofinsolvency or significant financial difficulties of the debtor and default or significantdelay in payments.

If any such evidence exists, the amount of impairment loss is measured as the differencebetween the asset's carrying amount and the present value of estimated future cash flowsdiscounted at the financial asset's original effective interest 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 becomesuncollectible, it is written off against the allowance account.

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(b) Impairment of Financial Assets (Contd.)

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



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 representthe difference between an instrument's initial carrying amount and disposal amount, or cashpayment or receipts made of derivative contracts (excluding payments or receipts oncollateral margin accounts for such investments).

Financial liabilities are classified according to the substance of the contractual arrangementsentered into and the definition 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 provisionsof the financial instrument. Financial liabilities are classified as other financial liabilities.

The Fund's financial liabilities which include trade and other payables are recognisedinitially at fair value plus directly attributable transaction costs and subsequently measuredat the amortised cost using effective interest 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.

If in a subsequent period, the amount of the impairment loss decreases and the decreasecan be related objectively to an event occurring 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.

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(e) Foreign Currencies




The financial statements of the Fund are measured using the currency of the primaryeconomic environment in which the Fund operates ("the functional currency"). The financialstatements are presented in Ringgit Malaysia (RM), which is also the Fund's functionalcurrency.

In preparing the financial statements, transactions in currencies other than the Fund'sfunctional currency (foreign currencies) are recorded in the functional currency using theexchange rates prevailing at the dates of the transactions. At the end of each reporting period,foreign currency monetary assets and liabilities are translated at exchange rates prevailing atthe end of the reporting period. Non-monetary items that are measured at fair value in aforeign currency are translated using exchange rates at the date when the fair value wasdetermined.

Exchange differences arising from the settlement of foreign currency transactions and fromthe translation of foreign currency monetary assets and liabilities are recognised in profit orloss.

Exchange differences arising from the translation of non-monetary items carried at fair valueare included in profit or loss for the period except for the differences arising on thetranslation of non-monetary items in respect of which gains or losses are recognised directlyin equity. Exchange differences arising from such non-monetary items are recogniseddirectly to equity.

The unitholders' contributions to the Fund meet the definition of puttable instrumentsclassified as 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.

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 thedistribution is sourced out of distribution equalisation which is accounted for as deductionfrom unitholders' capital.

Cash and cash equivalents comprise cash at bank and deposits with financial institutionswhich have insignificant risk of changes in value.

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(j) Income Tax



Income is recognised to the extent that is probable that the economic benefits will flow tothe Fund and the income can be reliably measured. Income is measured at fair value ofconsideration received or receivable.


Interest income, which includes the accretion of discount and amortisation of premium onfixed income securities, is recognised using effective interest method.

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



The preparation of financial statements in accordance with MFRS and IFRS requires the useof certain 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.

For management purposes, the Fund is managed by 2 main portfolios, namely (1) equitysecurities and (2) fixed income instruments. Each segment engages in separate businessactivities and the operating results are regularly reviewed by the Manager, ExternalInvestment Manager and the Fund's Investment Committee. The External InvestmentManager 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.

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3. MANAGER'S FEE

4. TRUSTEE' S FEE

5. TAXATION

2012 2011

RM RM

Current year Malaysian tax 700 2,182

Under provision in prior years - 19,905

Malaysian tax expense based onresults for the year 700 22,087

2012 2011

RM RM


Taxation at Malaysian statutory rate of 25 % (2011 : 25%) 225,561 159,392

Tax effects of:

Income not subject to tax (271,651) (204,043)


Restriction on tax deductible expenses

for unit trust funds 37,982 37,820

Under provision in prior years - 19,905Tax expense for the financial year 700 22,087

The Manager is entitled to an annual management fee of 1.0% p.a. of net asset value of the Fund(before deducting Manager's and Trustee's fees for the day) calculated and accrued on a dailybasis.

The Trustee is entitled to a fee of 0.08% p.a. based on net asset value of the Fund (before deductingManager's and Trustee's fees for the day) calculated and accrued on a daily basis subject to aminimum of RM18,000 p.a.

Income tax is calculated at Malaysian statutory tax rate of 25% (2011: 25%) of the estimatedassessable net income for the year.

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

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

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6. INVESTMENTS

2012 2011

RM RM

Financial assets at fair value through

profit or loss (Note 7)

Quoted equities

- in Malaysia 481,460 1,354,017

- outside Malaysia 2,231,656 615,777

2,713,116 1,969,794


(Note 8)

Unquoted fixed income

securities in Malaysia 6,616,650 7,297,343Total investments 9,329,766 9,267,137


2012 2011

RM RM

Financial assets at FVTPL:Quoted equity investments 2,713,116 1,969,794

Net gain on financial assets at FVTPL comprised:

Realised gain/(loss) on disposals 619,095 (248,384)Unrealised gain on changes in fair values 123,124 577,086

742,219 328,702

The currency exposure profile of financial assets at

FVTPL is as follows :

- Ringgit Malaysia 481,460 1,354,017

- Hong Kong Dollar 1,564,279 436,099

- Singapore Dollar 521,965 179,678

- Indonesian Rupiah 145,412 -2,713,116 1,969,794

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Financial assets at FVTPL as at 31 December 2012 are as detailed below :


RM RM NAV

QUOTED EQUITY INVESTMENTS

- IN MALAYSIA

Main Market

Construction

Protasco Berhad 100,000 93,210 98,500 0.69

Industrial Products

Daibochi Plastic & Packaging

Berhad 40,000 101,961 100,000 0.70

Trading & Services

Genting Berhad 15,000 154,266 137,850 0.96

Tenaga Nasional Berhad 21,000 146,498 145,110 1.0136,000 300,764 282,960 1.97

TOTAL QUOTED

EQUITY INVESTMENTS

- IN MALAYSIA 176,000 495,935 481,460 3.36


- OUTSIDE MALAYSIA

Hong Kong Stock Exchange

("HKSE")

Agricultural Bank of China 220,000 295,440 333,248 2.33

Anhui Expressway Co Ltd-H 174,000 269,245 300,633 2.10

Bank of China Ltd-H 240,000 302,658 328,515 2.30

Chongqing Rural

Commercial-H 150,000 211,380 251,475 1.76

Ind & Comm Bank of China-H 83,000 148,144 180,076 1.26

Stelux International Ltd 170,000 109,707 170,332 1.19

1,037,000 1,336,574 1,564,279 10.94

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RM RM NAV


- OUTSIDE MALAYSIA (Contd.)

Jakarta Stock Exchange ("JSX")

PT Waskita Karya 1,047,000 134,591 145,412 1.02

Singapore Exchange("SGX")

Golden Agri Resources Ltd 80,000 140,575 129,134 0.90

Court Asia Ltd 50,000 93,349 106,360 0.74

Indofood Agri Resources Ltd 41,000 168,111 136,466 0.95

Wilmar International Ltd 18,000 138,290 150,005 1.05

189,000 540,325 521,965 3.64

TOTAL QUOTED

EQUITY INVESTMENTS

- OUTSIDE MALAYSIA 2,273,000 2,011,490 2,231,656 15.60



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2012 2011

RM RM

Unquoted fixed income securities 6,616,650 7,297,343

Accretion of discounts, net of amortisationof premiums on AFS financial assets 29,905 30,275

Unrealised (loss)/gain on changes in fair values (17,399) 19,962

AFS financial assets as at 31 December 2012 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 2,818,321 2,839,760 19.86

Malaysian Government Securities

-10/15 1,300,000 1,306,617 1,306,890 9.14

WCT Engineering

- 12/13 (Rating: AA-) 2,500,000 2,453,315 2,470,000 17.27

6,600,000 6,578,253 6,616,650 46.27


* Cost of fixed income security includes accretion of discount and/or amortisation of premium.

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9. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

2012 2011

RM RM

Licensed investment banks 3,409,410 1,462,472

2012 2011 2012 2011

% % Days DaysLicensed investment banks 2.94 2.83 2 2

10. CASH AT BANK

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

2012 2,011

RM RM


Thai Baht 382,319 687,989

Hong Kong Dollar 173,687 1,265,609

Singapore Dollar 549,057 1,709,470


Ringgit Malaysia 86,424 70,4251,527,473 4,536,618


2012 2,011

RM RM

Amount arising from release of units 13,183 -

Management fee 12,108 13,00625,291 13,006

Average

remaining

maturitiesWAEIR

The weighted average effective interest rate ("WAEIR") per annum and the average remainingmaturities of deposits and placement are as follows:

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Distribution to unitholders are from the following sources:

2012 2011

RM RM

Dividend income 63,417 9,899

Interest income 10,228 49,868

Net realised gain/(loss) from sale of investment 49,437 (209,881)

Net realised loss on foreign exchange - (410)

Net accretion of discount on corporate bond 7,569 -

Other income 141 7,702

130,792 (142,822)

Less:

Expenses 49,911 52,721

Taxation - 4,195

Current year's realised income/(loss) 80,881 (199,738)

Distribution out of previous year's realised reserves 123,936 1,052,858Distribution for the year 204,817 853,120


Gross distribution per unit (sen) 1.5 6

Net distribution per unit (sen) 1.5 6Date of distribution 27.4.2012 28.4.2011


Note 2012 2011

RM RM


Retained earnings/(Accumulated losses)

- Realised earnings/(losses) (b) 392,282 (216,095)

- Unrealised earnings (c) 271,571 183,220

663,853 (32,875)

AFS reserve 38,397 55,796Total equity / Net asset value 14,301,779 15,299,006

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



2012 2011

RM RM

Balance at the beginning of the year (216,095) 708,745

Net income after taxation 901,545 615,481

Net unrealised gain attributable to

investments held transferred to

unrealised reserve (123,124) (577,086)

Net unrealised foreign exchange loss/(gain)

attributable to foreign currency monetary

items transferred to unrealised reserve 34,773 (110,115)

Distribution out of realised reserve (204,817) (853,120)Balance at the end of the year 392,282 (216,095)


2012 2011

RM RM

Balance at the beginning of the year 183,220 (503,981)

Net unrealised gain attributable to

investments held transferred from

realised reserve 123,124 577,086

Net unrealised foreign exchange (loss)/gain

attributable to foreign currency monetary

items transferred from realised reserve (34,773) 110,115Balance at the end of the year 271,571 183,220

In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 19December 2001, the maximum number of units that can be issued for circulation is 100,000,000units. As at 31 December 2012, the number of units not in issue is 87,334,248 (31 December 2011:85,820,198) units.

Number Number



of the year 14,179,802 15,276,085 18,306,002 19,815,114

Add: Creation of units 1,442,384 1,536,838 4,269,355 4,416,086

Less: Cancellation of units (2,956,434) (3,148,971) (8,395,555) (8,661,658)

Distribution equalisation - (64,423) - (293,457)

Balance at end

of year 12,665,752 13,599,529 14,179,802 15,276,085

2012 2011

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PIF



2012 2011


units NAV units NAV

RM RM


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

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 netasset value attributable to unitholders per unit for the issuance and redemption of units inaccordance with the 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 and thenet asset value attributable to unitholders per the financial statements is as follows:-



to unitholders for

issuing/redeeming units 14,308,985 1.1298 15,327,169 1.0809

Effect from adopting bid

prices as fair value (7,206) (0.0006) (28,163) (0.0020)


to unitholders perfinancial statements 14,301,779 1.1292 15,299,006 1.0789

2012 2011

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PIF


Trading % of total Brokerage % of total

value trading fees brokerage

RM value RM fees

MIDF Amanah Investment

Bank Bhd 22,580,000 64.63 - -

ECM Libra Investment

Bank Bhd 2,035,810 5.83 4,630 12.38

CIMB Investment Bank Bhd 1,337,354 3.83 6,229 16.66

Hwang-DBS Investment

Bank Bhd 1,295,623 3.71 326 0.87

Affin Investment Bank 1,126,911 3.23 2,535 6.78

DBS Vicker Securities Pte-Ltd

Hong Kong 817,574 2.34 2,049 5.48

782,285 2.24 1,950 5.21

MIMB Investment Bank Berhad 564,688 1.62 4,938 13.20

PT Mandiri Sekuritas 516,674 1.48 3,294 8.81

BOCI Securities Ltd 505,172 1.45 1,258 3.37

Other brokers 3,372,871 9.64 10,187 27.2434,934,962 100.00 37,396 100.00


2012 2011



2012 2011


CCB International Securities Ltd

This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and otherprofessional fees) and other administrative expenses of the Fund to the average NAV of the Fundcalculated on a daily basis. The average NAV of the Fund for the year ended 31 December 2012was RM 14,837,509 (2011: RM15,955,088).

This is the ratio of the average of acquisitions and disposals of the Fund for the year to averageNAV of the Fund for the year calculated on daily basis.

Details of transactions with stockbroking companies and other investment banks for the financialyear ended 31 December 2012 are as follows:

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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 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 ineach segment while safeguarding capital by investing in diversified portfolios. There have been nochanges in reportable segments in the current financial year. The segment information provided ispresented to the Manager, the appointed External Investment Manager and Investment Committeeof the Fund.

2012 2011

Fixed Fixed

Equity income Equity income

Portfolio Portfolio Total Portfolio Portfolio TotalRM RM RM RM RM RM


Interest income - 298,157 298,157 - 308,372 308,372

Net gain on financial assets

at FVTPL 742,219 - 742,219 328,702 - 328,702

Accretion of discounts, net of

amortisation of premiums on

AFS financial assets - 29,905 29,905 - 30,275 30,275

Net realised (loss)/gain on

foreign exchange (30,490) - (30,490) 127,176 - 127,176

Total segment operating incomefor the year 768,759 328,062 1,096,821 503,092 338,647 841,739

Deposits with financial institutions - 3,409,410 3,409,410 - 1,462,472 1,462,472


AFS financial assets - 6,616,650 6,616,650 - 7,297,343 7,297,343Other assets 7,416 57,852 65,268 - 56,136 56,136


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2012 2011

RM RM

Net reportable segment operating income 1,096,821 841,739

Expenses (194,576) (204,171)


Tax expense (700) (22,087)Net income for the year 901,545 615,481

2012 2011

RM RM



Cash at bank 1,527,473 4,536,618Total assets of the Fund 14,340,995 15,331,441




Amount due to Trustee 1,525 1,529Total liabilities of the Fund 39,216 32,435



In addition, certain assets and liabilities are not considered to be part of the assets and liabilities ofan individual segment. The following table provides reconciliation between total reportable segmentassets and liabilities and total assets and liabilities of the Fund.

The Fund’s financial assets and financial liabilities are measured on an ongoing basis at eitherfair value or at amortised cost based on their respective classification. The significantaccounting policies in Note 2 describe how the classes of financial instruments are measured,and how income and expenses, including fair value gains and losses are recognised. Thefollowing table analyses the financial assets and liabilities of the Fund in the statement offinancial position, by the class of financial instrument to which they are assigned, and thereforeby the measurement basis.

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 operating profits.

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Financialliabilities

Financial AFS atassets at financial Loans and amortised

FVTPL assets receivables cost TotalRM RM RM RM RM

2012

AssetsInvestments 2,713,116 6,616,650 - - 9,329,766

Deposits with licensedfinancial institutions - - 3,409,410 - 3,409,410

Other receivables - - 65,268 - 65,268Cash at bank - - 1,527,473 - 1,527,473

Total financial assets 2,713,116 6,616,650 5,002,151 - 14,331,917


Liabilities


Other payables and accruals - - - 12,400 12,400Total financial liabilities - - - 39,216 39,216

2011

Assets

Investments 1,969,794 7,297,343 - - 9,267,137Deposits with licensed

financial institutions - - 1,462,472 - 1,462,472Other receivables - - 56,136 - 56,136



Liabilities


Other payables and accruals - - - 17,900 17,900Total financial liabilities - - - 32,435 32,435

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(b) Fair value


Level 1 Level 2 Total

RM RM RM

2012


- Quoted equities 2,713,116 - 2,713,116


- Fixed income securities - 6,616,650 6,616,6502,713,116 6,616,650 9,329,766

2011


- Quoted equities 1,969,794 - 1,969,794


- Fixed income securities - 7,297,343 7,297,3431,969,794 7,297,343 9,267,137

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 :




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 equity instrumentsFair value is determined directly by reference to their published market bid prices on therelevant stock exchanges at the reporting date.

Unquoted fixed income securitiesThe published market prices for RM-denominated unquoted bonds are based oninformation provided by Bond Pricing Agency Malaysia Sdn Bhd.

The Fund held the following financial instruments carried at fair value on the statementof financial position as at the end of the financial year :

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(ii) Financial instruments not carried at fair value


(i) Market Risk


Equity price risk is the adverse changes in the fair value of equities as a result ofchanges in the levels of equity indices and the value of individual shares. The equityprice risk exposure arises from the Fund’s investments in quoted equity securities.

The Fund’s market risk is affected primarily due to changes in market prices, interest ratesand foreign currency exchange rates.

The Fund maintains investment portfolios in a variety of quoted and unquoted financialinstruments as dictated 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 price risk and currency risk), credit risk, and liquidity risk. Whilst these are the mostimportant types of financial risks inherent in each type of financial instruments, the Manager andthe Trustee would like to highlight that this list does not purport to constitute an exhaustive list ofall 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 throughsound internal control systems and adherence to the investment restrictions as stipulated in theTrust Deed, the Securities Commission’s Guidelines on Unit Trust Funds and the Capital Marketand Services Act, 2007.

The Fund's principal exposure to market risk arises primarily due to changes or developmentsin the market environment and typically includes changes in regulations, politics and theeconomy of the country. Market risk is also influenced by global economics and geopoliticaldevelopments. The Fund seeks to diversify away some of this risk by investing into differentsectors to mitigate risk exposure to any single asset class.

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

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Effect on profit

or loss and equity

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

RM

2012+6/-6 162,787 /(162,787)

2011+6/-6 118,188 /(118,188)


Effect on profit

or loss and equity

Change in basis points * Increase/(Decrease)RM

2012+25/-25 8,524 / (8,524)

2011+25/-25 10,499 / (10,499)

*

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

The following table demonstrates the sensitivity of the profit or 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 equities on the profit or loss and equity of the Fund due to possiblechanges in equity prices, with all other variables held constant:

The assumed movement in basis points for interest rate sensitivity analysis is basedon the currently observable market environment.

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(c) Currency Risk

2012 2011

RM RM


Thai Baht 38,232 68,799

Hong Kong Dollar 173,797 170,171


United States Dollar 2,402 38,779367,270 508,197

(ii) Credit Risk

Effect on profit

or loss and equity

The Fund is exposed to currency risk primarily through its investment in overseas quotedequities and bank balances that are denominated in foreign currencies. The Fund's foreigncurrency exposure profiles of its investment in quoted equities and bank balances hasbeen disclosed under Note 7 and Note 10 respectively.

A 10% strenghtening or weakening of the RM against the following foreign currencies asat the end of the financial year would have decreased or increased respectively the profitor loss and equity of the Fund by the amount shown below. This analysis assumes allother variables are held constant.

The Fund’s principal exposure to credit risk arises primarily due to changes in the financialconditions of companies issuing debt securities and stockbroking companies, which mayaffect their creditworthiness. This in turn may lead to default in the payment. Such eventscan lead to loss of capital or delayed or reduced income for the Fund resulting in a reductionin the Fund’s asset value and thus unit price. This risk is mitigated by vigorous creditanalyses and diversification of the bond portfolio of the Fund and to engage differentstockbroking companies with good reputation. Bond rating of the Fund's portfolio has beendisclosed in Note 8.

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1 month - 3 3 months - 5

2012 months years Total

RM RM RM

Financial Assets



Deposits with financial

institutions 3,409,410 3,409,410

Other assets 1,592,741 - 1,592,741

Total undiscounted


Non-Financial Asset


Total Assets 7,715,267 6,625,728 14,340,995



Total undiscounted


Unitholders' NAV 14,301,779 - 14,301,779

Liquidity gap (6,625,728) 6,625,728 -

This risk occurs in thinly traded or illiquid equity securities. Should the Fund need to sell arelatively large amount of such securities, the act itself may significantly depress the sellingprice. As the Fund is exposed to daily redemption of units, the risk is minimized by placing aprudent level of funds in short-term deposits and by investing in stocks whose liquidity isadjudged to be commensurate with the expected 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 with those financial liabilitiesand redemption by unitholders.

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1 month - 3 3 months - 5

2011 months years Total

RM RM RM

Financial Assets



Deposits with financial

institutions 1,462,472 - 1,462,472

Other assets 4,592,754 - 4,592,754

Total undiscounted


Non-Financial Asset


Total Assets 8,025,020 7,306,421 15,331,441



Total undiscounted


Unitholders' NAV 15,299,006 - 15,299,006

Liquidity gap (7,306,421) 7,306,421 -



The Fund is exposed to the individual risk of the respective companies issuing securitieswhich includes changes to the business performance of the company, consumer tastes anddemand, lawsuits and management practices. This risk is minimised through the welldiversified nature of the Fund.

The Fund’s exposure to securities issued by any issuer is limited to not more than a certainpercentage of its net asset value. Under such restriction, the risk exposure to the securities ofany issuer is minimised.

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(vi) Capital Management

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 a 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 meetunitholders' redemption as explained in Note 21 (iii) above.

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annual report cover page- 31122012

Documents