KENANGA MALAYSIAN INC FUND...Sarawak, Malaysia. ii KENANGA MALAYSIAN INC FUND (KMIF) Report to Unit Holders for the 6-Month Financial Period Ended 30 June 2013 DIRECTORY OF MANAGER’S

INTERIM REPORT

For the Financial Period Ended 30 June 2013

KENANGA MALAYSIAN INC FUND

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KENANGA MALAYSIAN INC FUND (KMIF)Report to Unit Holders for the 6-Month Financial Period Ended 30 June 2013

Contents Page

CORPORATE DIRECTORY i

DIRECTORY OF MANAGER’S OFFICES ii

MANAGER’S REPORT 1- 8

1.0 FUND INFORMATION 1

2.0 FUND REVIEW 2

3.0 MARKET REVIEW & OUTLOOK 4

4.0 PERFORMANCE DATA 6

5.0 PORTFOLIO COMPOSITION 8

TRUSTEE’S REPORT 10

STATEMENT BY THE MANAGER 11

STATEMENT OF COMPREHENSIVE INCOME 12

STATEMENT OF FINANCIAL POSITION 13

STATEMENT OF CHANGES IN EQUITY 14

STATEMENT OF CASH FLOWS 15

NOTES TO THE FINANCIAL STATEMENTS 16 - 51

i


CORPORATE DIRECTORY

MANAGER: KENANGA INVESTORS BERHAD (Company No. 353563-P) REGISTERED OFFICE BUSINESS OFFICEKenanga Investors Berhad (KIB) Suite 12.02, 12th Floor, Kenanga Interna onal,8th Floor, Kenanga Interna onal, Jalan Sultan Ismail,Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.50250 Kuala Lumpur, Malaysia. Tel: 03-2057 3688 / 03-2713 3188Tel: 03-2162 1490 Fax: 03-2161 8807 / 03-2713 5868Fax: 03-2161 4990 E-mail: [email protected] Website: www.KenangaInvestors.com.my

BOARD OF DIRECTORSDatuk Syed Ahmad Alwee Alsree (Chairman)Syed Zafi len Syed Alwee (Independent Director)YM Raja Dato’ Seri Abdul Aziz bin Raja Salim (Independent Director)Vivek Sharma (Independent Director)Bruce Kho Yaw HuatAbdul Razak bin AhmadPeter John Rayner

COMPANY SECRETARY: Norliza Abd Samad, (MAICSA 7011089)9th Floor, Kenanga Interna onal, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia. TRUSTEE: HSBC (MALAYSIA) TRUSTEE BERHAD (Company No. 1281-T) REGISTERED AND BUSINESS OFFICE 13th Floor, Bangunan HSBC, South Tower, No.2, Leboh Ampang, 50100 Kuala Lumpur, Malaysia. Tel: 03-2075 7800 Fax: 03-2026 1273

AUDITOR: ERNST & YOUNG

Room 300-303, 3rd Floor, Wisma Bukit Mata Kuching, Jalan Tunku Abdul Rahman, 93100 Kuching, Sarawak, Malaysia.

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DIRECTORY OF MANAGER’S OFFICES

REGIONAL BRANCH OFFICES:

Kuala LumpurSuite 12.02, 12th FloorKenanga Interna onalJalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTel: 03-2057 3688 / 03-2713 3188Fax: 03-2161 8807 / 03-2713 5868

Petaling JayaUnit B-6-2, Sunway Giza MallDataran Sunway, PJU 5/14Kota Damansara47810 Petaling JayaSelangor Darul EhsanTel: 03-6148 1871 / 03-6150 3983Fax: 03-6148 1872

KlangNo. 12 Jalan Batai Laut 3Taman Intan, 41300 KlangSelangor Darul EhsanTel:03-3341 8818 / 03-3348 7889Fax:03-3341 8816

PenangBlok A, Aras 3,Wisma PerkesoNo. 269, Jalan Burma10538 George Town, PenangTel: 04-226 4880Fax: 04-226 5120

MelakaNo. 25-1 Jalan Kota Laksamana 2/17Taman Kota Laksamana Seksyen 275200 MelakaTel: 06-281 8913 / 06-282 0518Fax: 06-281 4286

Agency Offi ceMiri (Sarawak)c/o Lot 1084, 2nd Floor,Jalan Merpa 98000 MiriSarawak, MalaysiaTel: 085-427 782

Johor BahruLot 11.03, 11th FloorMenara MSC Cyberport5 Jalan Bukit Meldrum80300 Johor Bahru, JohorTel: 07-223 7505 / 4798Fax: 07-223 4802

Kuching1st Floor, No 71, Lot 7Lot 10900, Jalan Tun Jugah93350 Kuching, SarawakTel: 082-572 228Fax: 082-572 229

Kota KinabaluA-03-11, 3rd FloorBlock A Warisan SquareJalan Tun Fuad Stephens88000 Kota Kinabalu, SabahTel: 088-447 089 / 088-448 106Fax: 088-447 039

IpohNo. 5A, Persiaran Greentown 9Greentown Business Centre30450 IpohPerak Darul RidzuanTel: 05-254 7573 / 7570Fax: 05-254 7606

SerembanSuite 08-3, Seremban City CentreJalan Pasar70000 SerembanTel: 06-761 5678Fax: 06-761 2243

1


MANAGER’S REPORT

Dear Unit Holders,

We are pleased to present the Manager’s Interim report and the fi nancial statements of the KENANGA MALAYSIAN INC FUND for the 6-month fi nancial period ended 30 June 2013.

1.0 FUND INFORMATION

1.1 Fund Name KENANGA MALAYSIAN INC FUND (KMIF or the Fund)

1.2 Fund Category / Type Equity / Growth

1.3 Investment Objec ve The Fund aims to provide consistent annual returns and medium to long-term capital apprecia on

by inves ng in Malaysian securi es with global reach.

1.4 Investment Strategy The Fund will invest principally in equi es of companies with a global vision and proven track

record that can poten ally tap regional and global market base.

1.5 Asset Alloca on Up to 98% in Malaysian equi es and minimum 2% in liquid assets.

1.6 Dura on The Fund was launched on 9 November 2007 and shall exist as long as it appears to the Manager

and the Trustee that it is in the interests of the unit holders for it to con nue.

1.7 Performance Benchmark FTSE-Bursa Malaysia 100 Index.

1.8 Distribu on Policy The Fund intends to pay income by way of distribu on or by the crea on of addi onal units a er

the end of each Accrual Period (i.e. 12-month period ending on the last day of December of each year) or any specifi ed period, where possible.

2


2.0 FUND REVIEW

2.1 Fund performance vs benchmark performance

NAV per unit (RM)1 Fund Return2 Benchmark Return2

30/6/2013 30/6/2012 (%) (%) 0.5268 0.4752 10.86 6.89

1 Published NAV per unit based on last done price. 2 Source: Lipper. Performance returns are adjusted for all distribu ons (on a reinvested basis) and unit splits.

For the period under review to 30th June 2013, the Fund appreciated by 10.86%, outperforming the 6.89% increase in the FBM-100. The outperformance was mainly due to be er stock selec on. The top 5 performers during the period were (1) Dayang Enterprise (+105.9%); (2) Sunway Bhd (+48.8%); (3) Sapurakencana Petroleum (+29.8%); (4) Tenaga (+19.5%) and (5) MBM Resources (+19.3%).

2.2 Has the Fund achieved its objec ve?

For the 3-yr period ended 30th June 2013, despite the Fund under-performing its benchmark, it managed to return a posi ve 32.26%*, thus achieving the Fund’s stated objec ve of medium term capital apprecia on. However, since incep on, the Fund has under-performed the benchmark with returns of only 5.36% thus, not mee ng the Fund’s objec ve on a longer term basis.

* Source: Lipper.

2.3 Strategies & policies employed

For the period under review, the Fund con nued with its strategy of inves ng in companies with sustainable business models and competent management, whilst trading at a discount to their intrinsic / fair value. The Fund focused on companies whose top line / revenue should prove to be rela vely more resilient to a global economic slowdown and have the ability to maintain their profi t margins. We also focused on companies likely to benefi t from Malaysia’s on-going Economic Transforma on Program.

Sectors that we favor include: i) REITs, ii) Consumer staples and FMCG, iii) Healthcare, iv) Planta ons on a longer term, and v) Oil & Gas.

2.4 State of Aff airs of the Fund

There were no other signifi cant changes to the state of aff airs of the Fund and no circumstances that materially aff ect the interests of Unit Holders up to the date of this Manager’s report.

3


2.5 Unit Holders’ Profi le

As at 30 June 2013, the number of units of the Fund in circula on stood at 30,164,413 (includes Manager Stock) units out of an approved Fund size of 400 million units.

Breakdown of Unit Holdings by Size Unit Holders Unit Holdings Size of holdings Number % Units % 5,000 and below 44 12.26 138,715.82 0.46 5,001 - 10,000 65 18.11 503,180.61 1.67 10,001-50,000 151 42.06 3,670,769.03 12.17 50,001-500,000 90 25.07 10,629,533.25 35.24 500,001 and above 9 2.51 15,222,214.53 50.46 Total 359 100.00 30,164,413.24 100.00

Manager and Related Party Holdings Breakdown of holdings by the Manager and related par es as at 30 June 2013 is as follows:- No. of Units Held Manager# - Director of the Manager - Other related par es -

Total - # excludes normal & EPF bookings

2.6 Rebates & So Commission

The Manager from me to me may receive rebates which are then paid to the Fund. During the fi nancial period under review, no rebates were received by virtue of transac ons conducted by the Fund. The Manager received so commission from its brokers by virtue of transac ons conducted by the Fund in the form of research and advisory services. These services assist in the decision-making process rela ng to the investments of the Fund and are of a demonstrable benefi t to the Unit Holders.

4


3.0 MARKET REVIEW & OUTLOOK

3.1 Market Review

Equi es market in the region performance can be broken up into three parts for the period under review. The Nikkei had a fantas c year (+31.8% yoy) following the government’s surprise decision to follow the US “quan ta ve easing programme” with a poten al value of US$1.5 trillion in an eff ort to infl ate the long stagnant economy. The emerging countries of ASEAN were clear outperformers led by Indonesia and Philippines which rose by 11.6% and 11.2% respec vely as investors react posi vely to the underlying domes c economic growth of these economies. The strong infl ow of funds into these countries was also helped by US’s QE3 programme.

Governments around the world were generally adop ng a loose monetary policy to help economic recovery. The major underperforming countries were China, Hong Kong and Korea as the benchmark indices of these countries fell by 13%, 8% and 7% respec vely. Investors were worried the Chinese government might ghten further to rein in infl a on especially for property and non-produc ve sectors.

Malaysia on the other hand, lagged regional market especially in the 1Q ’13 due to uncertainty over the ming and result of the 13th Malaysia General Elec on. The FBMS index soared to record level, especially a er results of the 13th General Elec on is known helped by the strong infl ows of foreign funds as well as par cipa on from “cashed up” domes c funds. The KLCI Index rose by 5% whilst the broader FBM Shariah Index grew by 6.7%.

The market reacted posi vely a er Barisan Na onal retained power albeit with a slightly lesser majority. The KLCI index rose by 4.8% on the fi rst day a er the announcement of the elec on result. This could be a ributed to the removal of risk premium associated with the uncertainty over the general elec on. On the economic side, the 1Q’13 GDP growth of 4.1% fell short of expecta on. This was a ributed to weaker exports and slower growth in private investments due to uncertainty from the elec on outcome. The 1Q repor ng season in Malaysia came in within analysts’ expecta on with 60% of the results met consensus expecta on whilst around 17% was above expecta on. The disappointment came mostly from the oil & gas, planta on, and gaming related companies.

Equi es market reacted strongly on the nega ve in June a er the Fed’s chairman, Ben Bernanke commented that it would be appropriate to moderate the monthly pace of purchases later this year. It sparked investors’ fear that US’ QE3 will be tapering off earlier than expected. The situa on was made worse when the PBoC ini ally refused to ease a liquidity squeeze in the interbank market which caused a sharp spike in SHIBOR rate to peak at 13.4%. The decline was led by China SHComp (-14%), Philippines (-7.9%) and Hong Kong (-7.1%). Malaysia was the only market that managed to stay fl at as domes c funds managed to absorb the foreigners selling. The Ringgit weakened from RM2.96/US$ to RM3.22/US$ as a result of the ou low.

5


3.2 Market Outlook

A er the sterling performance in 2Q2013 amidst the posi ve recep on to the outcome of the 13th General Elec on wherein the benchmark FBMKLCI chalked up 6.1% q-o-q, we expect 3Q2013 to be in consolida ve mode given the prospects of the US QE being tapered off and the Chinese government higher tolerance for lower economic growth in an eff ort to regulate sector such as property. We believe the market will experience heightened vola lity in view of poten al por olio ou lows to developed markets in view of improvement in the underlying economy which in turn fuels corporate earnings. Having said that, this may just be a temporary phase of adjustment due to the reversal of short term capital, which incidentally will coincide with the lull month of Ramadan.

The Malaysian equity market remains supported by strong fundamentals underpinned by its sustainable GDP growth of 5.1% in 2013 and 5.4% in 2014 which is driven by private consump on growth and the new investment cycle; and strong domes c liquidity. Valua ons remain elevated at long term mean of 15-16x CY2013EPS, but jus fi ed by the 5-10% EPS growth in CY13/14; not to men on its underperformance vis-à-vis the region since September 2010.

Sector wise, we remain posi ve on key domes c sectors such as oil and gas, construc on and banks, which will con nued newsfl ow from the government’s ETP in the various sectors/projects such as the MRT2 and MRT3, High Speed Rail, Petronascapex plan, although we remain cau ous on the property sectors following murmurs of possible ghtening by Bank Negara to prevent specula on; and have turned mildly posi ve on the planta on sector following the bo oming out of CPO prices a er the sizeable drawdown in inventory.

3.3 Strategy

We maintain our barbell strategy of holding a good balance of high yielding/defensive stocks and beta stocks. We will con nue to deploy the excess funds on dips, as we believe market will fare be er in the later part of the year due to improving economic condi ons.

Our stock selec on will move towards sectors that will benefi t from being the main drivers of the economy such as the oil & gas, construc on and planta on sector.

This will be balanced out with having a signifi cant por on of your por olio invested in high yielding stocks to ensure stability. Sectors that we favour include REITs, consumer staples and FMCG, healthcare, O&G and planta ons on a longer term.

6


4.0 PERFORMANCE DATA

4.1 Performance Chart

PERFORMANCE CHART SINCE LAUNCH (09/11/2007 – 30/6/2013)KENANGA MALAYSIAN INC FUND vs. BENCHMARK

Source: Lipper

4.2 Average Total Returns

1 year 3 years 5 years 30/6/12 - 30/6/13 30/6/10 - 30/6/13 30/6/08 - 30/6/13 KMIF (%) 12.64% 10.75% 5.81% Benchmark (%) 12.45% 13.25% 11.46% Source: Lipper

4.3 Annual Total Returns Period Under Review 2012 2011 2010 2009 2008 Since Incep on 31/12/12 31/12/11 31/12/10 31/12/09 31/12/08 31/12/07 23/04/04 -30/6/13 -31/12/12 -31/12/11 -31/12/10 -31/12/09 -31/12/08 -30/6/13 KMIF (%) 10.86% 3.60% 3.71% 10.66% 26.25% -36.53% 5.36% Benchmark (%) 6.89% 9.60% 1.94% 21.76% 48.00% -40.92% 32.50% Source: Lipper

Investors are reminded that past performance is not necessarily indica ve of future performance and that unit prices and investment returns may fl uctuate.

7


4.4 Other Performance Data Performance details of the Fund as at 30 June 2013 and the two previous fi nancial years are as

follows: 6-months ended 12-months ended 12-months ended 12-months ended

30/6/2013 31/12/2012 31/12/2011 31/12/2010 Net Asset Value (RM’000 ) 1 15,892 16,693 23,240 36,911 Net Asset Value Per Unit (RM) 0.5268 0.4724 0.4587 0.4423 Units In Circula on (‘000 units) 30,164 35,687 50,665 83,451 Highest Net Asset Value Per Unit (RM) 0.5423 0.4802 0.4797 0.4492 Lowest Net Asset Value Per Unit (RM) 0.4625 0.4505 0.3829 0.3753 Total Return (%) 2 10.86 3.60 3.71 10.66 - Capital Growth (%) 2 10.86 3.60 3.71 10.66 - Gross Income Distribu on (%) - - - - Gross Distribu on Per Unit (RM) - - - - Net Distribu on Per Unit (RM) - - - - Unit Split (Ra o) - - - - Management Expenses Ra o (%) 3 1.10 3.19 1.97 1.97 Por olio Turnover ( mes) 4 0.66 1.58 0.66 0.57 Source: Lipper

1 NAV computed based on last done price. 2 Source: Lipper. Total return is the annualised return of the Fund for the respec ve fi nancial

period / years computed based on the net asset value per unit and net of all fees. 3 Management Expense Ra o (MER) is computed based on the total fees and expenses incurred

by the Fund divided by the average fund size calculated on a daily basis. MER is lower against previous fi nancial years as the computa ons are for 6 months only.

4 Por olio Turnover Ra o (PTR) is computed based on the average of the total acquisi ons and total disposals of investment securi es of the Fund divided by the average fund size calculated on a daily basis. PTR is lower against previous years as the computa ons are for 6 months only.

4.5 Distribu on / Unit Split for the Period under Review

No distribu on / unit split was made during the period under review.

Investors are reminded that past performance is not necessarily indica ve of future performance and that unit prices and investment returns may fl uctuate.

8


5.0 PORTFOLIO COMPOSITION

5.1 Por olio Composi on

As at 30th June 2013, the asset alloca on of the Fund stood at 90.10% in equi es and the balance of 9.90% in liquidity. The increase in equi es in 1H 2013 was because the Manager was confi dent that there is more upside poten al to the market.

For a snapshot of the Fund’s asset alloca on as at 30th June 2013, please refer to the pie charts below.

KENANGA ASIA PACIFIC ORIENTAL FUND

Asset Alloca on as at 30 June 2013

Asset Alloca on as at 30 June 2013

Equity90.10%

Liquidity9.90%

Proper es 3.90%Industrial Products 2.50%

Construc on 4.00%Infrastructure 4.20%

Planta on 8.00%

Consumer Products 9.30%

Liquidity9.90%

Real EstateInvestment Trusts

12.90%

Finance16.50%

Trading/Services28.80%

9


5.2 Por olio Composi on – Compara ve Table Details of por olio composi on of the Fund as at 30 June 2013 and the two previous fi nancial

years are as follows:

Sectors 30/6/2013 31/12/2012 31/12/2011 31/12/2010 % of NAV % of NAV % of NAV % of NAV

Main Board Construc on 4.00 - 17.36 11.17 Consumer Products 9.30 9.53 - 9.65 Industrial Products 2.50 6.52 5.60 1.25 Infrastructure Project Companies 4.20 4.96 - 1.11 Planta on 8.00 4.06 9.42 2.75 Proper es 3.90 6.19 3.80 - Trading / Services 28.80 31.98 32.47 36.98 Finance 16.50 11.72 22.14 28.45 Technology - - - - ACE Market - - - -

Deriva ve Securi es Warrants / ICULS - - - - Trust, REITs 12.90 18.96 - - Preference Shares - - -

Total quoted/ unquoted investment 90.10 93.92 90.79 91.35 Bonds - - - - Collec ve Investment Scheme - - - - Liquidity (Cash at Banks / Receivables) 9.90 6.08 9.21 8.65 Total 100.00 100.00 100.00 100.00

10


TRUSTEE’S REPORT

To the Unit Holders of Kenanga Malaysian Inc Fund

We have acted as Trustee of Kenanga Malaysian Inc Fund (“the Fund”) for the fi nancial period ended 30 June 2013. To the best of our knowledge, Kenanga Investors Berhad (“the Manager”), has operated and managed the Fund in accordance with the following:

(a) limita ons imposed on the investment powers of the Manager and the Trustee under the Deed, the Securi es Commission’s Guidelines on Unit Trust Funds in Malaysia, the Capital Markets and Services Act 2007 and other applicable laws;

(b) valua on/pricing is carried out in accordance with the Deed and any regulatory requirements;

and (c) crea on and cancella on of units are carried out in accordance with the Deed and any regulatory

requirements. For HSBC (Malaysia) Trustee Berhad

Tan Bee Nie Head, Trustee Opera ons

Kuala Lumpur, Malaysia 28 August 2013

11


STATEMENT BY THE MANAGER

To the Unit Holders of Kenanga Malaysian Inc Fund

We, Abdul Razak Bin Ahmad and Bruce Kho Yaw Huat, being two of the directors of Kenanga Investors Berhad, the Manager, do hereby state that in the opinion of the Manager, the accompanying fi nancial statements set out on pages 12 to 51 are drawn up in accordance with Malaysian Financial Repor ng Standards so as to give a true and fair view of the fi nancial posi on of Kenanga Malaysian Inc Fund as at 30 June 2013 and of its fi nancial performance and cash fl ows for the period then ended.

The fi nancial statements also comply with the Interna onal Financial Repor ng Standards as issued by the Interna onal Financial Repor ng Board.

For and on behalf of the Manager,Kenanga Investors Berhad

Bruce Kho Yaw Huat Abdul Razak Bin AhmadDirector Director

Kuala Lumpur, Malaysia28 August 2013

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KENANGA MALAYSIAN INC FUND (KMIF)

STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2013 UNAUDITED

1.1.2013 1.1.2012 Note to 30.6.2013 to 30.6.2012 RM RM

INCOMEGross dividend income 283,609 253,951Interest income 24,179 31,736Net gain from investments: - fi nancial assets at fair value through profi t and loss (“FVTPL”) 8 1,563,252 396,614 1,871,040 682,301

EXPENSESManager’s fee 5 138,411 194,748Trustee’s fee 6 11,938 9,014Auditors’ remunera on 8,093 6,975Tax agents’s fee 1,471 1,660Administra ve expenses 5,379 8,150Brokerage and other transac on costs 9,474 - 174,766 220,547

Net income before tax 1,696,274 461,754

Income tax expense 7 (5,488) (5,100)

Net income a er tax 1,690,786 456,654

Total comprehensive income for the period 1,690,786 456,654

Net income a er tax is made up as follows:Net realised income/(loss) 1,212,312 1,799,324 Net unrealised (loss)/gain 478,474 (1,342,670) 1,690,786 456,654

The accompanying notes form an integral part of the fi nancial statements.


13


STATEMENT OF FINANCIAL POSITIONFOR THE FINANCIAL PERIOD ENDED 30 JUNE 2013 UNAUDITED

As at As at Note 30.6.2013 30.6.2012 RM RM

ASSETSInvestments 8 14,254,707 16,982,246Deposits with licensed fi nancial ins tu ons 9 997,000 3,597,301Tax recoverable 58,729 40,780Interest receivable 80 724Dividends receivable 26,198 10,900Amount due from stockbrokers 11 478,324 -Cash at bank 71,178 9,039TOTAL ASSETS 15,886,216 20,640,990

LIABILITIESOther payables and accruals 19,661 11,667 Amount due to Manager 10 35,665 30,060 Amount due to stockbrokers 11 - 258,753 TOTAL LIABILITIES 55,326 300,480

UNITHOLDERS’ EQUITY

Unitholders’ capital 27,500,864 33,914,058 Retained earnings (11,669,974) (13,573,548)

TOTAL EQUITY 12 15,830,890 20,340,510 TOTAL EQUITY AND LIABILITIES 15,886,216 20,640,990

UNITS IN CIRCULATION 13 30,164,413 43,496,017

NET ASSET VALUE (“NAV”) PER UNIT (RM) 14 0.5248 0.4676


14


STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL PERIOD ENDED 30 JUNE 2013 UNAUDITED

Unitholders’ Retained capital earnings Total equity

(Note 12) (Note 12) RM RM RM At 1 January 2012 37,269,984 (14,030,202) 23,239,782Total comprehensive income for the period - 456,654 456,654Crea on of units 61,445 - 61,445Cancella on of units (4,579,204) - (4,579,204)Distribu on equalisa on 1,161,833 - 1,161,833At 30 June 2012 33,914,058 (13,573,548) 20,340,510

At 1 January 2013 30,219,270 (13,360,760) 16,858,510Total comprehensive income for the period - 1,690,786 1,690,786Crea on of units 181 - 181Cancella on of units (3,299,776) - (3,299,776)Distribu on equalisa on 581,189 - 581,189At 30 June 2013 27,500,864 (11,669,974) 15,830,890

15


STATEMENT OF CASH FLOWS FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2013 UNAUDITED

1.1.2013 1.1.2012 to 30.6.2013 to 30.6.2012 RM RM

OPERATING AND INVESTING ACTIVITIESProceeds from sale of investments 11,635,508 16,176,686Purchase of investments (8,972,999) (11,405,693)Net dividends received 228,716 261,417Interest received 24,172 31,358Manager’s fee paid (144,699) (200,839)Trustee’s fee paid (8,971) (9,145)Auditors’ remunera on paid (16,000) (8,000)Payment for other fees and expenses (3,664) (14,793)Tax refunded - -Net cash fl ows generated from opera ng and inves ng ac vi es 2,742,063 4,830,991

FINANCING ACTIVITIESCash received from units created 145 61,342 Cash paid on units cancelled (2,728,075) (3,428,690)Net cash fl ows used in fi nancing ac vi es (2,727,930) (3,367,348)

NET INCREASE IN CASH AND CASH EQUIVALENTS 14,133 1,463,643 CASH AND CASH EQUIVALENTS AT 1 JANUARY 1,054,045 2,142,697

CASH AND CASH EQUIVALENTS AT 30 JUNE 1,068,178 3,606,340

Cash and cash equivalents comprise: Cash at bank 71,178 9,039 Deposits with fi nancial ins tu ons 997,000 3,597,301 1,068,178 3,606,340


16

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD ENDED 30 JUNE 2013

1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Kenanga Malaysian Inc Fund (the “Fund”) was cons tuted pursuant to the execu on of a Deed of Trust dated 29 August 2007, followed by a fi rst supplementary Deed of Trust dated 29 November 2007, master supplementary Deed of Trust dated 1 June 2009 and second master supplementary Deed of Trust dated 13 October 2010 made between the Manager, Kenanga Investors Berhad, the Trustee, HSBC (Malaysia) Trustee Berhad and the registered Unitholders of the Fund.

The Fund’s registered offi ce is at 8the Floor, Kenanga Interna onal, Jalan Sultan Ismail, 50250 Kuala Lumpur.

The objec ve of the Fund is to provide consistent annual returns and medium to long-term capital apprecia on by inves ng in Malaysia securi es with global reach.

The principal ac vity of the Fund is to invest in “Permi ed Investments” as defi ned under Division 7.1 of the Deed of Trust, which include securi es of Malaysian companies listed on Bursa Malaysia Securi es Berhad, unlisted securi es approved or exempt stock market declared by the Minister under the Securi es Industry Act 1983, which are off ered directly to the scheme, bankers’ acceptances and other tradable money-market instruments in the money market, ringgit-denominated deposits placed with commercial banks, merchant banks and fi nance companies and placements of money at call with discount houses, future contracts and op ons traded in the futures and op ons market of an exchange approved under the Futures Industry Act 1993 for hedging purposes, units or shares in other collec ve investment schemes and any other investments. The Fund commenced opera ons on 9 November 2007 and will con nue its opera ons un l terminated by the Trustee as provided under Division 12.3 of the Deed of Trust.

The Manager, a company incorporated and domiciled in Malaysia, is a wholly-owned subsidiary of Kenanga Investment Bank Berhad, a company incorporated and domiciled in Malaysia. The principal ac vi es of the Manager are the promo on and management of unit trust funds and management of investment funds.

17


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTD.

2.1 Basis of prepara on (Contd.)

The fi nancial statements of the Fund have been prepared on in accordance with the Malaysian Financial Repor ng Standards (“MFRS”).

The fi nancial statements also comply with Interna onal Financial Repor ng Standards (“IFRS”) as issued by Interna onal Accoun ng Standards Board.

The fi nancial statements have been prepared on the historical cost basis, except for fi nancial assets and fi nancial liabili es held at fair value through profi t or loss, that have been measured at fair value.

The fi nancial statements are presented in Ringgit Malaysia (“RM”), being the Fund’s func onal currency.

2.2 Changes in accoun ng policies

The accoun ng policies adopted are consistent with those of the previous fi nancial period except as follows:

On 1 January 2013, the Fund adopted the following new and amended MFRS and IC Interpreta ons mandatory for annual fi nancial periods beginning on or a er 1 January 2013.

Eff ec ve for annual periods beginning on Descrip on or a er MFRS 10 Consolidated Financial Statements 1 January 2013 MFRS 11 Joint Arrangements 1 January 2013 MFRS 12 Disclosure of Interests in Other En es 1 January 2013 MFRS 13 Fair Value Measurement 1 January 2013 MFRS 119 Employee Benefi ts (IAS 19 as amended by IASB in June 2012) 1 January 2013 MFRS 127 Separate Financial Statements (IAS 27 as amended by IASB in May 2012) 1 January 2013 MFRS 128 Investments in Associates and Joint Ventures (IAS 28 as amended by IASB in May 2012) 1 January 2013 Amendment to MFRS 7 Disclosures: Off se ng Financial Assets and Financial Liabili es 1 January 2013 Amendment to MFRS 1 First- me Adop on of Malaysian Financial Repor ng Standards - Government Loans 1 January 2013 IC Interpreta on 20 Stripping Costs in the Produc on Phase of a Surface Mine 1 January 2013 Annual Improvements 2009-2012 Cycle 1 January 2013

18



2.2 Changes in accoun ng policies (Contd.)

Eff ec ve for annual periods beginning on Descrip on or a er Amendments to MFRS 10 Consolidated Financial Statements, MFRS 11 Joint Arrangements and MFRS 12 Disclosed of Interests in other En es 1 January 2013 MFRS 3 Business combina on (IFRS 3 Business Combina ons issued by IASB in March 2004) 1 January 2013 MFRS 127 Consolida on and Separate Financial Statements (IAS 27 Consolidated and Separate Financial Statements revised by IASB in December 2003) 1 January 2013

Adop on of the above Standards and Interpreta ons did not have any signifi cant eff ect on the fi nancial performance and posi on of the Fund except for those discussed below:

MFRS 9 Financial Instruments: Classifi ca on and Measurement

MFRS 9 refl ects the fi rst phase of the work on the replacement of MFRS 139 Financial Instruments: Recogni on and Measurement and applies to classifi ca on and measurement of fi nancial assets and fi nancial liabili es as defi ned in MFRS 139 Financial Instruments: Recogni on and Measurement. The adop on of the fi rst phase of MFRS 9 will have an eff ect on the classifi ca on and measurement of the Fund’s fi nancial assets. The Fund will quan fy the eff ect in conjunc on with the other phases, when the fi nal standard including all phases is issued.

2.3 Financial assets

Financial assets are recognised in the statement of fi nancial posi on when, and only when, the Fund becomes a party to the contractual provisions of the fi nancial instrument.

When fi nancial assets are recognised ini ally, they are measured at fair value, plus, in the case of fi nancial assets not at fair value through profi t or loss, directly a ributable transac on costs.

The Fund determines the classifi ca on of its fi nancial assets at ini al recogni on, and

the categories include fi nancial assets at fair value through profi t or loss and loans and receivables.

19



2.3 Financial assets (contd.)

(ii) Financial assets at FVTPL

Financial assets are classifi ed as fi nancial assets at FVTPL if they are held for trading or are designated as such upon ini al recogni on. Financial assets held for trading include equity securi es and collec ve investment schemes acquired principally for the purpose of selling in the near term. All transac on costs for such investment upon ini al recogni on are recognised directly in profi t or loss.

Subsequent to ini al recogni on, fi nancial assets at FVTPL are measured at fair value. Changes in the fair value of those fi nancial instruments are recorded in ‘Net gain or loss on fi nancial assets at fair value through profi t or loss’. Interest earned and dividend revenue elements of such instruments are recorded separately in ‘Interest income’ and ‘Gross dividend income’, respec vely. Exchange diff erences on fi nancial assets at FVTPL are not recognised separately in profi t or loss but are included in net gains or net losses on changes in fair value of fi nancial assets at FVTPL.

(ii) Loans and receivables

Non-deriva ve fi nancial assets with fi xed or determinable payments that are not quoted in an ac ve market are classifi ed as loans and receivables. The Fund includes short term receivables in this classifi ca on.

Subsequent to ini al recogni on, loans and receivables are measured at amor sed cost using the eff ec ve interest method less any allowance for impairment. Gains and losses are recognised in profi t or loss when the loans and receivables are derecognised or impaired, and through the amor sa on process.

The eff ec ve interest method is a method of calcula ng the amor sed cost of a fi nancial asset or a fi nancial liability and of alloca ng the interest income or interest expense over the relevant period. The eff ec ve interest rate is the rate that exactly discounts es mated future cash payments or receipts through the expected life of the fi nancial instrument or, when appropriate, a shorter period to the net carrying amount of the fi nancial asset or fi nancial liability. When calcula ng the eff ec ve interest rate, the Fund es mates cash fl ows considering all contractual terms of the fi nancial instruments, but does not consider future credit losses. The calcula on includes all fees paid or received between par es to the contract that are an integral part of the eff ec ve interest rate, transac on costs and all other premiums or discounts.

20



2.3 Financial assets (contd.)

A fi nancial asset is derecognised where the asset is disposed and the contractual right to receive cash fl ows from the asset has expired. On derecogni on of a fi nancial asset in its en rety, the diff erence between the carrying amount and the sum of the considera on received and any cumula ve gain or loss that had been recognised in other comprehensive income is recognised in profi t or loss.

Regular way purchases or sales are purchases or sales of fi nancial assets that require delivery of assets within the me frame generally established by regula on or conven on in the marketplace concerned. All regular way purchases and sales of fi nancial assets are recognised or derecognised on the trade date i.e., the date that the Fund commit to purchase or sell the asset.

2.4 Financial liabili es Financial liabili es are classifi ed according to the substance of the contractual

arrangements entered into and the defi ni ons of a fi nancial liability.

Financial liabili es, within the scope of MFRS 139, are recognised in the statement of fi nancial posi on when, and only when, the Fund becomes a party to the contractual provisions of the fi nancial instrument. Financial liabili es are classifi ed as other fi nancial liabili es.

The Fund’s fi nancial liabili es are recognised ini ally at fair value plus directly a ributable transac on costs and subsequently measured at amor sed cost using the eff ec ve interest method as described in Note 2.3 (ii).

A fi nancial liability is derecognised when the obliga on under the liability is discharged, cancelled or expired. Gains and losses are recognised in profi t or loss when the liabili es are derecognised, and through the amor sa on process.

2.5 Determina on of fair value The fair value for fi nancial instruments traded in ac ve markets at the repor ng date is

based on their quoted price or binding dealer price quota ons (bid price for long posi ons and ask price for short posi ons), without any deduc on for transac on costs.

Where the Fund has assets and liabili es with off se ng market risks, it uses mid-market prices as a basis for establishing fair values for the off se ng risk posi ons and applies the bid or ask price to the net open posi on as appropriate.

21



2.5 Determina on of fair value (contd.)

For all other fi nancial instruments not traded in an ac ve market, the fair value is determined by using appropriate valua on techniques. Valua on techniques include: using recent arm’s length market transac ons; reference to the current market value of another instrument that is substan ally the same; discounted cash fl ow analysis and op on pricing models making as much use of available and supportable market data as possible. An analysis of fair values of fi nancial instruments and further details as to how they are measured are provided in Note 20 (b).

2.6 Impairment of fi nancial assets The Fund assesses at each repor ng date whether a fi nancial asset or group of fi nancial

assets classifi ed as loans and receivables is impaired. A fi nancial asset or a group of fi nancial assets is deemed to be impaired if, and only if, there is an objec ve evidence of impairment as a result of one or more events that have occurred a er the ini al recogni on of the asset (an incurred ‘loss event’) and that loss event has an impact on the es mated future cash fl ows of the fi nancial asset or the group of fi nancial assets that can be reliably es mated. Evidence of impairment may include indica ons that the debtor, or a group of debtors, is experiencing signifi cant fi nancial diffi culty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other fi nancial reorganisa on and, where observable data indicate that there is a measurable decrease in the es mated future cash fl ows, such as changes in arrears or economic condi ons that correlate with defaults. If there is objec ve evidence that an impairment loss has been incurred, the amount of the loss is measured as the diff erence between the asset’s carrying amount and the present value of es mated future cash fl ows (excluding future expected credit losses that have not yet been incurred) discounted using the asset’s original eff ec ve interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profi t or loss as ‘Credit loss expense’.

Impaired debts, together with the associated allowance, are wri en off when there is no realis c prospect of future recovery and all collateral has been realised or has been transferred to the Fund. If, in a subsequent period, the amount of the es mated impairment loss increases or decreases because of an event occurring a er the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjus ng the allowance account. If a previous write-off is later recovered, the recovery is credited to the ‘Credit loss expense’.

Interest revenue on impaired fi nancial assets is recognised using the rate of interest used to discount the future cash fl ows for the purpose of measuring the impairment loss.

22



2.7 Net gain or loss on fi nancial assets and liabili es at FVTPL

This item includes changes in the fair value of fi nancial assets and liabili es held for trading or designated upon ini al recogni on as ‘at fair value through profi t or loss’ and excludes interest and dividend income and expenses.

Unrealised gains and losses comprise changes in the fair value of fi nancial instruments for the period and from reversal of prior period’s unrealised gains and losses for fi nancial instruments which were realised (i.e. sold, redeemed or matured) in the repor ng period.

Realised gains and losses on disposals of fi nancial instruments classifi ed as part of ‘at FVTPL’ are calculated using weighted average method. They represent the diff erence between an instrument’s ini al carrying amount and disposal amount, or cash payments or receipts made of Islamic deriva ve contracts (excluding payments or receipts on collateral margin accounts for such instruments).

2.8 Off se ng fi nancial instruments

Financial assets and fi nancial liabili es are off set and the net amount reported in the statement of fi nancial posi on if, and only if, there is a currently enforceable legal right to off set the recognised amounts and there is an inten on to se le on a net basis, or to realise the asset and se le the liability simultaneously.

2.9 Func onal and presenta on currency

The Fund’s func onal currency is RM, which is the currency of the primary economic environment in which it operates. The Fund’s performance is evaluated and its liquidity is managed in RM. Therefore, the RM is considered as the currency that most faithfully represents the economic eff ects of the underlying transac ons, events and condi ons. The fund’s presenta on currency is also the RM.

2.10 Due to and due from brokers

Amounts due to brokers are payables for securi es purchased (in a regular way transac on) that have been contracted for but not yet delivered on the repor ng date. Refer to the accoun ng policy for ‘fi nancial liabili es, other than those classifi ed as at fair value through profi t or loss’ for recogni on and measurement.

Amounts due from brokers include margin accounts and receivables for securi es sold (in a regular way transac on) that have been contracted for but not yet delivered on the repor ng date. Refer to accoun ng policy for ‘loans and receivables’ for recogni on and measurement.

Margin accounts represent cash deposits held with brokers as collateral against open futures contracts.

23



2.11 Unitholders’ capital

The Unitholders’ contribu ons to the Fund meet the defi ni on of pu able instruments.

Distribu on equalisa on represents the average distributable amount included in the crea on and cancella on prices of units. This amount is either refunded to Unitholders by way of distribu on and/or adjusted accordingly when units are cancelled.

2.12 Distribu ons

Distribu ons are at the discre on of the Fund. A distribu on to the Fund’s Unitholders is accounted for as a deduc on from realised reserves except where the distribu on is sourced out of distribu on equalisa on which is accounted for as a deduc on from Unitholders’ capital. A proposed distribu on is recognised as a liability in the period in which it is approved by the Manager. No income distribu on was declared by the Fund for the fi nancial period ended 30 June 2013.

2.13 Cash and cash equivalents

Cash and cash equivalents in the statement of fi nancial posi on comprise cash at bank and deposits with licensed fi nancial ins tu ons which are subject to an insignifi cant risk of changes in value, with original maturi es of three months or less.

Short-term investments that are not held for the purpose of mee ng short-term cash commitments and restricted margin accounts are not considered as ‘cash and cash equivalents’.

For the purpose of the statement of cash fl ows, cash and cash equivalents consist of cash and cash equivalents as defi ned above, net of outstanding bank overdra s when applicable.

2.14 Income Recogni on

Income is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Fund and the income can be reliably measured. Income is measured at the fair value of considera on received or receivable.

Dividend income is recognised when the Fund’s right to receive payment is established which is presented gross of any non-recoverable income taxes, which are disclosed separately in the statement of comprehensive income.

Interest income, which includes the accre on of discount and amor sa on of premium on fi xed income securi es, is recognised using the eff ec ve interest method.

24



2.15 Fees

Manager’s fee and Trustee’s fee are recognised on an accrual basis.

2.16 Income tax

Current tax assets and liabili es are measured at the amount expected to be recovered from or paid to the tax authori es. The tax rates and tax laws used to compute the amount are those that are enacted or substan vely enacted by the repor ng date.

The Fund is exempted from income taxes, except for certain investment income that are subject to tax deducted at the source of the income. The Fund presents the income tax separately from the gross investment income in the statement of comprehensive income. For the purpose of the statement of cash fl ows, cash infl ows from investments are presented net of income taxes, when applicable.

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

2.17 Segment repor ng

For management purposes, the Fund is managed by a single por olio, equity securi es. The Investment Commi ee assumes the role of chief opera ng decision maker, for performance assessment purposes and to make decisions about resources allocated to the investment segment.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTD.

The prepara on of the Fund’s fi nancial statements requires the Manager to make judgments, es mates and assump ons that aff ect the reported amounts of revenues, expenses, assets and liabili es, and the disclosure of con ngent liabili es at the repor ng date. However, uncertainty about these assump ons and es mates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability in the future.

The prepara on of the Fund’s fi nancial statements requires management to make judgements, es mates and assump ons that aff ect the reported amounts recognised in the fi nancial statements and disclosure of con ngent liabili es. However, uncertainty about these assump ons and es mates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability aff ected in future periods.

25


3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTD.

Judgements

In the process of applying the Fund’s accoun ng policies, management has made the following judgements, which have the most signifi cant eff ect on the amounts recognised in the fi nancial statements:

Going Concern

The Fund’s management has made an assessment of the Fund’s ability to con nue as a going concern and is sa sfi ed that the Fund has the resources to con nue in business for the foreseeable future. Furthermore, management is not aware of any material uncertain es that may cast signifi cant doubt upon the Fund’s ability to con nue as a going concern. Therefore, the fi nancial statements con nue to be prepared on the going concern basis.

Es mates and assump ons

The key assump ons concerning the future and other key sources of es ma on uncertainty at the repor ng date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabili es within the next fi nancial year, are discussed below. The Fund based its assump ons and es mates on parameters available when the fi nancial statements were prepared. However, exis ng circumstances and assump ons about future developments may change due to market changes or circumstances arising beyond the control of the Fund. Such changes are refl ected in the assump ons when they occur.

Fair value of fi nancial instruments

When the fair value of fi nancial assets and fi nancial liabili es recorded in the statement of fi nancial posi on cannot be derived from ac ve markets, their fair value is determined using a variety of valua on techniques that include the use of mathema cal models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, es ma on is required in establishing fair values. The es mates include considera ons of liquidity and model inputs such as credit risk (both own and counterparty’s), correla on and vola lity. Changes in assump ons about these factors could aff ect the reported fair value of fi nancial instruments in the statement of fi nancial posi on and the level where the instruments are disclosed in the fair value hierarchy. The models are calibrated regularly and tested for validity using prices from any observable current market transac ons in the same instrument (without modifi ca on or repackaging) or based on any available observable market data. MFRS 7 requires disclosures rela ng to fair value measurements using a three-level fair value hierarchy. The level within which the fair value measurement is categorised in its en rety is determined on the basis of the lowest level input that is signifi cant to the fair value measurement in its en rety. Assessing the signifi cance of a par cular input requires judgement, considering factors specifi c to the asset or liability. To assess the signifi cance of a par cular input to the en re measurement, the Fund performs sensi vity analysis or stress tes ng techniques.

26


4. STANDARDS ISSUED BUT NOT YET EFFECTIVE

Standards issued but not yet eff ec ve up to the date of issuance of the Fund’s fi nancial statements are listed below. The Fund intends to adopt applicable standards when they become eff ec ve:

Eff ec ve for annual periods beginning on Descrip on or a er Amendment to MFRS 132 Off se ng Financial Assets and Financial Liabili es 1 January 2014 MFRS 9 Financial instruments (IFRS 9 issued by IASB in November 2009) 1 January 2015 MFRS 9 Financial instruments (IFRS 9 issued by IASB in October 2010) 1 January 2015

5. MANAGER’S FEE

The Manager is currently charging Manager’s fee of 1.80% (30.6.2012: 1.80%) per annum of the NAV of the Fund. This is calculated on a daily basis by dividing the NAV of the Fund before deduc ng the Manager’s fee and Trustee’s fee for the par cular day by the number of days in the period and mul plying the total with the rate of the annual fee disclosed in the current prospectus of the Fund. However, under Part 13.1.2 of the Deed of Trust, the Manager is en tled to a fee not exceeding 2.00% (30.6.2012: 2.00%) per annum of the NAV of the Fund.

6. TRUSTEE’S FEE

The Trustee’s fee is currently computed at 0.08% (30.6.2012: 0.08%) per annum on the NAV of the Fund. This is calculated on a daily basis by dividing the NAV of the Fund before deduc ng the Manager’s fee and Trustee’s fee for the par cular day by the number of days in the period and mul plying the total with the rate of the annual fee disclosed in the current prospectus of the Fund. However, Division 13.2 of the Deed of Trust provides that the Trustee is en tled to a fee not exceeding 1.00% (30.6.2012: 1.00%) of the NAV of the Fund, subject to a minimum of RM18,000 (2012: RM18,000) per annum.

27


7. INCOME TAX EXPENSE

1.1.2013 1.1.2012 to 30.6.2013 to 30.6.2012 RM RM

Income tax: Tax expense for the period 5,113 5,100 Underprovision in prior year 375 - 5,488 5,100 Income tax is calculated at the Malaysian statutory tax rate of 25% (30.6.2012: 25%) of the

es mated assessable income for the fi nancial period.

The Malaysian tax charge for the fi nancial period is in rela on to the taxable income earned by the Fund a er deduc ng tax allowable expenses. In accordance with Schedule 6 of the Income Tax Act 1967, interest income earned by the Fund is exempted from tax.

A reconcilia on of income tax expense applicable to net income before taxa on at the statutory income tax rate to income tax expense at the eff ec ve income tax rate of the Fund is as follows:

1.1.2013 1.1.2012 to 30.6.2013 to 30.6.2012 RM RM

Net income before tax 1,696,274 461,754

Tax at Malaysian statutory rate of 25% (30.6.2012: 25%) 424,069 115,439 Eff ect of (unrealised gain not subject to tax)/ unrealised loss not allowable for tax (119,618) 335,667 Eff ect of income not subject to tax (340,157) (496,609) Restric on on tax deduc ble expenses for unit trust funds 40,819 50,603 Underprovision in prior years 375 -

Tax expense for the period 5,488 5,100

28


8. INVESTMENTS

A reconcilia on of income tax expense applicable to net income before tax at the statutory income tax rate to income tax expense at the eff ec ve income tax rate of the Fund is as follows:

1.1.2013 1.1.2012 to 30.6.2013 to 30.6.2012 RM RM

Financial assets at FVTPL Financial assets held for trading: Quoted equi es 14,254,707 16,982,246

Net gain on fi nancial assets at FVTPL comprised: Realised gain/(loss) on disposals 1,084,778 1,739,284 Unrealised changes in fair values 478,474 (1,342,670) 1,563,252 396,614

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

Fair % of Name of counter Quan ty Cost value NAV RM RM %

QUOTED EQUITIES Main Market Construc on IJM Corpora on Berhad 57,000 332,845 319,770 2.02 Hock Seng Lee Berhad 157,000 328,559 312,430 1.97 661,404 632,200 3.99

Consumer Products Dutch Lady Milk Industries Berhad 9,000 413,138 423,180 2.67 Guinness Anchor Berhad 20,000 304,881 380,000 2.40 Nestle (Malaysia) Berhad 8,000 498,310 535,200 3.38 UMW Holdings Berhad 10,000 128,083 145,200 0.92 1,344,412 1,483,580 9.37

Industrial Products Petronas Gas Berhad 19,000 371,954 394,820 2.49

29


8. INVESTMENTS CONTD.


QUOTED EQUITIES

Main Market Infrastructure Digi.com Berhad 140,000 650,479 659,400 4.16

Finance CIMB Group Holding Berhad 40,000 338,959 330,800 2.09 Hong Leong Financial Group Berhad 41,000 529,812 590,400 3.73 LPI Capital Berhad 31,000 432,989 468,720 2.96 Malayan Banking Berhad 50,492 462,346 523,097 3.30 RHB Capital Berhad 20,000 174,696 172,000 1.09 Syarikat Takaful Malaysia Berhad 69,000 496,876 520,950 3.29 2,435,678 2,605,967 16.46

Planta on Batu Kawan Berhad 19,000 357,570 355,300 2.24 Gen ng Planta ons Berhad 40,400 376,364 372,488 2.35 IOI Corpora on Berhad 66,000 342,596 357,720 2.26 TSH Resources Berhad 77,000 201,070 184,030 1.16 1,277,600 1,269,538 8.01

Proper es KLCC Property Holding Berhad 46,000 338,988 310,500 1.96 Mul -Purpose Holdings Berhad 65,500 64,184 89,735 0.57 Sunway Berhad 62,000 161,379 218,240 1.38 564,551 618,475 3.91 REITS Axis Real Estate Investment Trust 115,669 348,477 422,192 2.67 Capitamalls Malaysia Trust 168,000 292,500 294,000 1.86 IGB Real Estate Investment Trust 230,000 308,390 303,600 1.92 Pavilion Real Estate Investment Trust 400,500 590,469 604,755 3.82 Sunway Real Estate Investment Trust 269,500 417,157 415,030 2.62 1,956,993 2,039,577 12.89

30


8. INVESTMENTS CONTD.


QUOTED EQUITIES

Main Market Trading/Services Amway (Malaysia) Holdings Berhad 40,000 425,740 484,000 3.06 Axiata Group Berhad 50,000 258,775 331,000 2.09 Dayang Enterprise Holdings Berhad 65,000 213,202 317,850 2.01 Dialog Group Berhad 110,000 261,021 310,200 1.96 MBM Resources Berhad 128,200 487,814 487,160 3.08 Media Prima Berhad 158,000 463,422 436,080 2.75 Mul -Purpose Holdings Berhad 131,000 482,965 472,910 2.99 Perdana Petroleum Berhad 201,000 295,970 379,890 2.40 Petronas Dagangan Berhad 14,000 316,165 351,960 2.22 Sapurakencana Petroleum Berhad 80,000 157,652 324,000 2.05 Tenaga Nasional Berhad 60,000 432,135 494,400 3.12 Telekom Malaysia Berhad 30,000 175,046 161,700 1.02 3,969,907 4,551,150 28.75

Total fi nancial assets at FVTPL 13,232,978 14,254,707 90.03

Excess of fair value over cost 1,021,729

9. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

As at As at 30.6.2013 30.6.2012 RM RM

These are short-term placements with: Commercial bank 997,000 3,597,301

The weighted average interest rate of the Fund during the period is 2.95% (30.6.2012: 2.74%) per annum and the maturity of deposits was 1 to 5 days (30.6.2012: 1 day).

31


10. AMOUNT DUE TO MANAGER

As at As at 30.6.2013 30.6.2012 RM RM

Payable in rela on to units cancelled 13,256 - Management fee 22,409 30,060 35,665 30,060

Amount payable for units cancelled was payable within 10 days from the transac on date.

11. AMOUNT DUE FROM/ TO STOCKBROKERS

The amount due from stockbrokers arose from the ordinary course of sale of quoted investments but not yet se led.

The amount due to stockbrokers arose from the ordinary course of purchase of quoted investments but not yet se led.

12. TOTAL EQUITY

As at As at Note 30.6.2013 30.6.2012 RM RM

Unitholders’ capital 13 27,500,864 33,914,058 Retained earnings - Realised (12,691,703) (14,354,817) - Unrealised 1,021,729 781,269 15,830,890 20,340,510

13. UNITHOLDERS’ CAPITAL AND UNITS IN CIRCULATION

2013 2012 No. of units RM No. of units RM

As at 1 January 35,687,102 30,219,270 50,664,681 37,269,984 Crea on of units 306 181 128,780 61,445 35,687,408 30,219,451 50,793,461 37,331,429

Cancella on of units (5,522,995) (3,299,776) (7,297,444) (4,579,204) Distribu on equalisa on - 581,189 - 1,161,833 As at 30 June 30,164,413 27,500,864 43,496,017 33,914,058

The approved size of the Fund is 400,000,000 units. As at 30 June 2013, the number of units not in issue are 369,835,587 (30.6.2012: 356,503,983).

32


14. NET ASSET VALUE “NAV” PER UNIT

The NAV per unit has been calculated based on the Fund’s NAV of RM15,886,216 (30.6.2012: RM20,340,510) and on the number of units in circula on of 30,164,413 (30.6.2012: 43,496,017) at the date of the Statement of Financial Posi on.

Net asset value a ributable to unitholders is classifi ed as equity in the statements of fi nancial posi on.

In line with the requirement of MFRS, quoted fi nancial assets have been valued at the bid price at the close of business. In accordance with the Deed, the calcula on of net asset value a ributable to unitholders per unit for the issuance and cancella on of units is computed based on quoted fi nancial assets valued at the last done market price.

A reconcilia on of net assets a ributable to unitholders for issuing/redeeming of units and the net assets value a ributable to unitholders per the fi nancial statements is as follows:

RM RM/Unit

Net asset value a ributable to unitholders for issuing/redeeming of units 15,891,573 0.5268 Eff ect from adop ng bid prices as fair value (60,683) (0.0020) Net asset value a ributable to unitholders per statement of fi nancial posi on 15,830,890 0.5248

15. UNITS HELD BY RELATED PARTIES

There were no units held by related par es as at 30 June 2013 (30 June 2012: Nil).

33


16. TRANSACTIONS WITH STOCKBROKERS/INVESTING BANKERS AND BOND DEALERS

% of % Value of Total Brokerage of Total Trade Trade Fees Brokerage RM % RM %

Affi n Bank Berhad 66,132,000 61.92 - - Kenanga Investment Bank Berhad* 23,544,358 22.05 7,958 18.83 Public Investment Bank Berhad 3,527,898 3.30 7,083 16.76 KAF-Seagroa & Campbell Securi es Sdn. Bhd. 1,921,277 1.80 3,839 9.08 Credit Suisse Securi es (Malaysia) Sdn. Bhd. 1,498,944 1.40 2,997 7.09 Hong Leong Investment Bank Berhad 1,467,930 1.37 2,940 6.96 Hwang-DBS Investment Bank Berhad 1,390,372 1.30 2,784 6.59 AmInvestment Bank Berhad 1,271,539 1.19 2,550 6.03 Affi n Investment Bank Berhad 1,178,102 1.10 2,357 5.58 MIDF Amanah Investment Bank Berhad 1,066,815 1.00 2,136 5.06 102,999,235 96.44 34,644 81.98

* Kenanga Investment Bank Berhad is the holding company of Kenanga Investors Berhad.

The directors of the Manager are of the opinion that the transac ons with the related par es have been entered into in the normal course of business and have been established on terms and condi ons that are not materially diff erent from that obtainable in transac ons with unrelated par es. The Manager is of the opinion that the above dealings have been transacted on an arm’s length basis.

34


17. MANAGEMENT EXPENSE RATIO “MER”

The MER of the Fund is the ra o of the sum of fees and expenses incurred by the Fund to the average NAV of the Fund calculated on a daily basis. The fees and expenses include Manager’s fee, Trustee’s fee, auditors’ remunera ons, tax agent’s fee and administra ve expenses and brokerage and other transac on costs. For the fi nancial period ended 30 June 2013, the MER of the Fund stood at 1.10% (30.6.2012: 0.97%) calculated as follows:

RM A = Manager’s fee 138,411 B = Trustee’s fee 11,938 C = Auditors’ remunera on 8,093 D = Tax agent’s fee 1,471 E = Administra ve expenses 5,379 F = Brokerage and other transac on costs 9,474 G = Average NAV of the Fund 15,853,976

MER = (A + B + C + D + E + F) x 100 G

= RM174,766 x 100 RM15,853,976

= 1.10%

The average NAV of the Fund for the fi nancial period ended 30 June 2013 was RM15,853,976 (30.6.2012: RM21,760,945).

35


18. PORTFOLIO TURNOVER RATIO “PTR”

The PTR of the Fund is the ra o of the average of the acquisi ons and disposals of the Fund for the fi nancial period to the average NAV of the Fund calculated on a daily basis. For the fi nancial period ended 30 June 2013, the PTR of the Fund stood at 0.66 mes (30.6.2012: 0.41 mes).

The PTR of the Fund is calculated as follows:

RM Total acquisi ons of the Fund 8,903,992 Total disposals of the Fund 12,113,832 Average NAV of the Fund 15,853,976

PTR = (Total acquisi ons + Total disposals) / 2 Average NAV of the Fund

= RM10,508,912 RM15,853,976

= 0.66 mes

The average NAV of the Fund for the fi nancial period ended 30 June 2013 was RM15,853,976 (30.6.2012: RM21,760,945).

19. SEGMENT INFORMATION

The Manager and Investment Commi ee of the Fund are responsible for alloca ng resources available to the Fund in accordance with the overall investment strategies as set out in the Investment Guidelines of the Fund.

For management purposes, the Fund is organised into one main opera ng segment which invests in equity securi es. The fi nancial results from this segment are equivalent to the fi nancial statements of the Fund as a whole.

36


20. FINANCIAL INSTRUMENTS

(a) Classifi ca on of fi nancial instruments

The following table analyses the fi nancial assets and liabili es of the Fund in the statement of fi nancial posi on as at 30 June 2013 and 2012 by the class of fi nancial instrument to which they are assigned, and therefore by the measurement basis.

Financial Financial liabili es at assets at amor sed FVTPL Receivables cost Total RM RM RM RM

As at 30 June 2013 Assets Amount due from stockbroker - 478,324 - 478,324 Quoted investments 14,254,707 - - 14,254,707 Deposits with licensed fi nancial ins tu ons - 997,000 - 997,000 Interest receivable - 80 - 80 Dividend receivable - 26,198 - 26,198 Cash at bank - 71,178 - 71,178 Total fi nancial assets 14,254,707 1,572,780 - 15,827,487

Total non-fi nancial assets 58,729 15,886,216

Liabili es Other payables and accruals - - 19,661 19,661 Amount due to stockbrokers - - - - Amount due to Manager - - 35,665 35,665 Total fi nancial liabili es - - 55,326 55,326

Income, expense, gains and losses Net gains 1,563,252 - - Interest income - 24,179 -

37


20. FINANCIAL INSTRUMENTS CONTD.

(a) Classifi ca on of fi nancial instruments (contd.)

Financial Financial liabili es at assets at amor sed FVTPL Receivables cost Total RM RM RM RM

As at 30 June 2012 Assets Quoted investments 16,982,246 - - 16,982,246 Deposits with licensed fi nancial ins tu ons - 3,597,301 - 3,597,301 Interest receivable - 724 - 724 Dividend receivable - 10,900 - 10,900 Cash at bank - 9,039 - 9,039 Total fi nancial assets 16,982,246 3,617,964 - 20,600,210

Total non-fi nancial assets 40,780 20,640,990

Liabili es Other payables and accruals - - 11,667 11,667 Amount due to stockbrokers - - 258,753 258,753 Amount due to Manager - - 30,060 30,060 Total fi nancial liabili es - - 300,480 300,480

Income, expense, gains and losses

Net gains 396,614 - - Interest income - 31,736 -

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20. FINANCIAL INSTRUMENTS CONTD.

(b) Financial instruments that are carried at fair value

The Fund’s fi nancial assets at FVTPL are carried at fair value. The fair values of these fi nancial assets were determined using quoted prices in ac ve markets for iden cal assets.

Quoted equity instruments

Fair value is determined directly by reference to their published market bid price at the repor ng date.

For instruments quoted on Bursa Malaysia, the market bid prices are determined by reference to the theore cal closing market price as published by Bursa Malaysia. The market bid prices of equity instruments quoted on other stock exchanges are determined by reference to informa on made publicly available by these respec ve stock exchanges.

The following table shows fi nancial instruments recognised at fair value, analysed between those whose fair value is based on:

• Quoted prices in ac ve markets for iden cal assets or liabili es (Level 1) • Those involving inputs other than quoted prices included in Level 1 that are observable for

the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2) • Those with inputs for the asset or liability that are not based on observable market data

(unobservable inputs) (Level 3)

Level 1 Level 2 Level 3 Total RM RM RM RM

30 June 2013

Financial assets at FVTPL Quoted equi es 14,254,707 - - 14,254,707

As at 30 June 2012

Financial assets at FVTPL Quoted equi es 16,982,246 - - 16,982,246

No transfers between any levels of the fair value hierarchy took place during the current period and the compara ve period. There were also no changes in the purpose of any fi nancial asset that subsequently resulted in a diff erent classifi ca on of that asset.

39


20. FINANCIAL INSTRUMENTS

(b) Financial instruments that are carried at fair value (contd.)

The determina on of NAV based on last done prices of the fund diff ers from the determina on of NAV in accordance with the requirement of MFRSs. A common diff erence is the measurement of NAV using last done prices as opposed to the FRS measurement basis (of using bid prices of investments).

The following table shows a reconcilia on between NAV based on last prices and bid prices:

NAV Adjustment NAV calculated in arising from calculated in accordance with last-done prices accordance last done prices to bid prices with MFRS RM RM RM

Investments 15,891,573 (60,683) 15,830,890

(c) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approxima on of fair value

The following are classes of fi nancial instruments that are not carried at fair value and whose carrying amounts are reasonable approxima on of fair value:

• Deposits with licensed fi nancial ins tu ons • Dividends receivable • Interest receivable • Other payables and accruals • Amounts due from/to Manager • Amounts due from/to stockbrokers • Distribu on payable

There were no fi nancial instruments which are not carried at fair values and whose carrying amounts are not reasonable approxima on of their respec ve fair values.

The methods and basis for the determina on of fair value of the Fund’s fi nancial instruments in the current fi nancial period were consistent with that of the previous fi nancial period.

40


21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES

(a) Introduc on

The Fund maintains investment por olios in a variety of listed and unlisted fi nancial instruments 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 and price risk), credit risk, and liquidity risk. Whilst these are the most important types of fi nancial risks inherent in each type of fi nancial instruments, the Manager would like to highlight that this list does not purport to cons tute an exhaus ve list of all the risks inherent in an investment in the Fund.

The Fund’s objec ve in managing risk is the crea on and protec on of Unitholders’ value. Risk is inherent in the Fund’s ac vi es, but it is managed through a process of ongoing iden fi ca on, measurement and monitoring of risks. Financial risk management is also carried out through sound internal control systems and adherence to the investment restric ons as s pulated in the Trust Deed, the Securi es Commission’s Guidelines on Unit Trust Funds and the Capital Markets and Services Act, 2007.

(b) Risk management structure

The Fund’s Manager is responsible for iden fying and controlling risks. The Board of Directors of the Manager is ul mately responsible for the overall risk management approach within the Fund.

(c) Risk measurement and repor ng system

Monitoring and controlling risks is primarily set up to be performed based on limits established by the Manager. These limits refl ect the investment strategy and market environment of the Fund as well as the level of the risk that Fund is willing to accept. In addi on, the Fund monitors and measures the overall risk bearing capacity in rela on to the aggregate risk exposure across all risks type and ac vi es.

(d) Risk mi ga on

The Fund has investment guidelines that set out its overall business strategies, its tolerance for risk and its general risk management philosophy. The Manager also has a Compliance Department to ensure that the Fund complies with the various regula ons and guidelines as s pulated in its Trust Deed, the Securi es Commission’s Guidelines on Unit Trust Funds and the Capital Markets and Services Act, 2007.

It is, and has been throughout the current and previous fi nancial period, the Fund’s policy that no deriva ves shall be undertaken for either investment risk management purposes.

41


21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES CONTD.

(e) Excessive risk concentra on

Concentra on indicates the rela ve sensi vity of the Fund’s performance to developments aff ec ng a par cular industry or geographical loca on. Concentra ons of risk arise when a number of fi nancial instruments or contracts are entered into with the same counterparty, or where a number of counterpar es are engaged in similar business ac vi es, or ac vi es in the same geographic region, or have similar economic features that would cause their ability to meet contractual obliga ons to be similarly aff ected by changes in economic, poli cal or other condi ons. Concentra ons of foreign exchange risk may arise if the Fund has a signifi cant net posi on in a single foreign currency, or aggregate net posi ons in several currencies that tend to move together.

In order to avoid excessive concentra on of risk, the Fund’s policies and procedures include specifi c guidelines to focus on maintaining a diversifi ed por olio in accordance with the Fund’s Trust Deed, Investment Manager’s guidelines and the Securi es Commission’s Guidelines on Unit Trust Funds. Por olio diversifi ca on across a number of sectors and industries minimises the risk not only of any single company’s securi es becoming worthless but also of all holdings suff ering uniformly adverse business condi ons. Specifi cally, the Fund’s Trust Deed and Securi es Commission’s Guidelines on Unit Trust Funds limits the Fund’s exposure to a single en ty/industry sector to a certain percentage of its NAV.

(f) Market risk

Market risk is the risk that the fair value or future cash fl ows of fi nancial instruments will fl uctuate due to changes in market variables such as interest rates, foreign exchange rates and equity prices. The maximum risk resul ng from fi nancial instruments equals their fair value.

(i) Interest rate risk

Interest rate risk will aff ect the value of the Fund’s investments, given interest rate movements, which are infl uenced by regional and local economic developments as well as poli cal developments.

Domes c interest rates on deposits and placements with licensed fi nancial ins tu ons are determined based on prevailing market rates.

42



(e) Market risk (Contd.)

(i) Interest rate risk (Contd.)

Interest rate risk sensi vity

The following table demonstrates the sensi vity of the Fund’s profi t/(loss) for the period and other comprehensive income to a reasonably possible change in interest rates, with all other variables held constant.

The sensi vity is the eff ect of the assumed changes in interest rates on:

• The net profi t income for the period, based on the fl oa ng rate fi nancial assets held at the end of the repor ng period; and

• Changes in fair value of investments for the period, based on revaluing fi xed rate fi nancial assets at the end of the repor ng period.

Sensi vity of changes Sensi vity in fair value Sensi vity of of other Shariah- profi t income comprehensive compliant Changes in and profi t income investments basis (decrease)/ (decrease)/ (decrease)/ points* increase increase increase RM RM RM As at 30 June 2013 +25/-25 2,493/(2,493) - 2,493/(2,493)

As at 30 June 2012 +25/-25 8,994/(8,994) - 8,994/(8,994)

* The assumed movement in basis points for interest rate sensi vity analysis is based on the currently observable market environment.

In prac ce, the actual trading results may diff er from the sensi vity analysis below and the diff erence could be material.

43





Interest rate risk exposure

The following table analyses the Fund’s interest rate risk exposure. The Fund’s assets and liabili es are included at fair value and categorised by the earlier of contractual re-pricing or maturity dates.

Non- exposure to Eff ec ve 0-3 3 months 5-10 interest rate rate months -5 years years movement Total of return* RM RM RM RM RM %

As at 30 June 2013

Assets Financial assets held at FVTPL - - - 14,254,707 14,254,707 Deposits with licensed fi nancial ins tu ons 997,000 - - - 997,000 Other assets - - - 634,509 634,509 Total assets 997,000 - - 14,889,216 15,886,216

Liabili es Other liabili es - - - 55,326 55,326

Total liabili es - - - 55,326 55,326 Total interest sensi vity gap 997,000 - - 14,833,890 15,830,890

44





Interest rate risk exposure (Contd.)

Non- exposure to Eff ec ve 0-3 3 months 5-10 interest rate rate months -5 years years movement Total of return* RM RM RM RM RM %

As at 30 June 2012

Assets Financial assets held at FVTPL - - - 16,982,246 16,982,246

Deposits with licensed fi nancial ins tu ons 3,597,301 - - - 3,597,301 2.66 Other assets - - - 61,443 61,443 Total assets 3,597,301 - - 17,043,689 20,640,990

Liabili es Other liabili es - - - 300,480 300,480

Total liabili es - - - 300,480 300,480 Total interest sensi vity gap 3,597,301 - - 16,743,209 20,340,510

* Computed based on Islamic deposits

45



(f) Market risk (Contd.)

(ii) Equity price risk

Equity price risk is the risk of unfavourable changes in the fair values of equi es as the result of changes in the levels of equity indices and the value of individual shares. The equity price risk exposure arises from the Fund’s investments in quoted equity securi es.

Equity price risk sensi vity

Management’s best es mate of the eff ect on the profi t/(loss) for the period and other comprehensive income due to a reasonably possible change in equity indices, with all other variables held constant is indicated in the table below:

Eff ects on other Eff ects on profi t comprehensive Changes in for the period income Eff ects on equity Market index equity price increase/ increase/ increase/ (decrease) (decrease) (decrease) % RM RM RM

As at 30 June 2013 FTSE Bursa Malaysia 100 Index +5/-5 71,274/ - 71,274/ (71,274) (71,274)

As at 30 June 2012 FTSE Bursa Malaysia 100 Index +5/-5 1,027,562/ - 1,027,562/ (1,063,443) (1,063,443)

In prac ce, the actual trading results may diff er from the sensi vity analysis below and the diff erence could be material.

46



(f) Market risk (Contd.)

(ii) Equity price risk (contd.)

Equity price risk is the risk of unfavourable changes in the fair values of equi es as the result of changes in the levels of equity indices and the value of individual shares. The equity price risk exposure arises from the Fund’s investments in quoted equity securi es.

Equity price risk sensi vity

The following table set out the Fund’s exposure to equity price risk base on its por olio to equity instruments as at the repor ng date:

As at 30 June 2013 As at 30 June 2012 As a% of As a% of RM NAV RM NAV

Malaysia 14,254,707 90.03 16,982,246 83.49

The Fund’s concentra on of equity price risk analysed by the Fund’s equity instruments by sector is as follows:

As at 30 June 2013 As at 30 June 2012 As a% of As a% of RM NAV RM NAV

REITS 2,039,577 12.89 - - Construc on 632,200 3.99 1,329,100 6.54 Consumer product 1,483,580 9.37 1,437,350 7.07 Industrial products 394,820 2.49 621,120 3.05 Infrastructure 659,400 4.16 510,000 2.51 Finance 2,605,967 16.46 2,739,996 13.47 Planta on 1,269,538 8.01 2,055,392 10.10 Proper es 618,475 3.91 1,016,860 5.00 Trading/Services 4,551,150 28.75 7,272,428 35.75 14,254,707 90.03 16,982,246 83.49

(g) Credit risk

Credit risk is the risk that the counterparty to a fi nancial instrument will cause a fi nancial loss for the Fund by failing to discharge an obliga on. The Fund is exposed to the risk of credit-related losses that can occur as a result of a counterparty or issuer being unable or unwilling to honour its contractual obliga ons to make mely repayments of interest, principal and proceeds from realisa on of investments. These credit exposures exist within fi nancing rela onships, deriva ves and other transac ons.

47



(g) Credit risk (contd.)

The Manager manages the Fund’s credit risk by undertaking credit evalua on and close monitoring of any changes to the issuer/counterparty’s credit profi le to minimise such risk. It is the Fund’s policy to enter into fi nancial instruments with reputable counterpar es. The Manager also closely monitors the creditworthiness of the Fund’s counterpar es (e.g., brokers, custodian, banks, etc.) by reviewing their credit ra ngs and credit profi le on a regular basis.

Credit risk exposure

At the repor ng date, the Fund’s maximum exposure to credit risk is represented by the carrying amount of each class of fi nancial assets recognised in the statement of fi nancial posi on.

None of the Fund’s fi nancial assets were past due nor impaired as at 30 June 2013 and 30 June 2012.

(h) Liquidity risk

Liquidity risk is defi ned as the risk that the Fund will encounter diffi culty in mee ng obliga ons associated with fi nancial liabili es that are se led by delivering cash or another fi nancial asset. Exposure to liquidity risk arises because of the possibility that the Fund could be required to pay its liabili es or redeem its units earlier than expected. The Fund is exposed to cash redemp ons of its units on a regular basis. Units sold to Unitholders by the Manager are redeemable at the Unitholder’s op on based on the Fund’s net asset value per unit at the me of redemp on calculated in accordance with the Fund’s Trust Deed.

The Manager’s policy is to always maintain a prudent and suffi cient level of liquid assets so as to meet normal opera ng requirements and expected redemp on requests by Unitholders. Liquid assets comprise cash, deposits with licensed fi nancial ins tu ons and other instruments which are capable of being converted into cash within 7 days.

The following table summarises the maturity profi le of the Fund’s units in issue (classifi ed as equity instruments) and fi nancial liabili es. Balances due within six months equal their carrying amounts, as the impact of discoun ng is insignifi cant. The table also analyses the maturity profi le of the Fund’s fi nancial assets (undiscounted where appropriate) and equity in order to provide a complete view of the Fund’s contractual commitments and liquidity.

48



(h) Liquidity risk (Contd.)

Less than 1 month- 3 months- 1 year- 5-10 1 month 3 months 1 year 5 years years Total RM RM RM RM RM RM

As at 30 June 2013

Financial assets: Financial assets held at FVTPL 14,254,707 - - - - 14,254,707 Deposits with licensed fi nancial ins tu ons 997,000 - - - - 997,000 Other assets 634,509 - - - - 634,509

Total undiscounted fi nancial assets 15,886,216 - - - - 15,886,216

Financial liabili es: Other liabili es 55,326 - - - - 55,326

Total undiscounted fi nancial liabili es 55,326 - - - - 55,326

Total equity 15,830,890 - - - - 15,830,890

Liquidity gap - - - - - -

49



(h) Liquidity risk (Contd.)

Less than 1 month- 3 months- 1 year- 5-10 1 month 3 months 1 year 5 years years Total RM RM RM RM RM RM

As at 30 June 2012

Financial assets: Financial assets held at FVTPL 16,982,246 - - - - 16,982,246 Deposits with licensed fi nancial ins tu ons 3,597,301 - - - - 3,597,301 Other assets 61,443 - - - - 61,443

Total undiscounted fi nancial assets 20,640,990 - - - - 20,640,990

Financial liabili es: Other liabili es 300,480 - - - - 300,480

Total undiscounted fi nancial liabili es 300,480 - - - - 300,480

Total equity 20,340,510 - - - - 20,340,510

Liquidity gap - - - - - -

50



(h) Liquidity risk

Notes:

(i) Financial assets

Analysis of fi nancial assets at fair value through profi t or loss into maturity groupings is based on the expected date on which these assets will be realised. Quoted equity securi es have been included in the “Less than 1 month category” on the assump on that these are highly liquid investments which can be realised should all of the Fund’s unitholders’ capital are required to be redeemed. For other assets, the analysis into maturity groupings is based on the remaining period from the end of the repor ng period to the contractual maturity date or if earlier, the expected date on which the assets will be realised/maturity dates of debt securi es.

(ii) Financial liabili es

The maturity grouping is based on the remaining period from the end of the repor ng period to the contractual maturity date. When a counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Fund can be required to pay.

(iii) Equity

As Unitholders can request for redemp on on their units without giving the Manager any no ce period and the redemp ons are repayable within 10 days, they have been categorised as having a maturity of “Less than 1 month”.

(i) Specifi c risk

The Fund is exposed to the individual risk of the respec ve companies issuing securi es which includes changes to the business performance of the company, consumer tastes and demand, lawsuits and management prac ces. This risk is minimised through the well diversifi ed nature of the Fund.

(j) Infl a on risk

The Fund is subject to the risk of Unitholders’ investment not growing propor onately to the infl a on rate thereby decreasing the Unitholders’ purchasing power even though the investment in monetary terms may have increased.

51



(k) Compliance risk

Non-compliance of regula ons imposed by the Securi es Commission Act 1993 and the Securi es Commission’s Guidelines on Unit Trust Funds may aff ect the Unitholders’ investment.

(l) Single issuer risk

Internal policy restricts the Fund from inves ng in securi es issued by any issuer of not more than a certain percentage of its net assets value. Under such restric on, the risk exposure to the securi es of any issuer is managed based on internal/external ra ngs.

(m) Regulatory risk

Any changes in na onal policies and regula ons may have an eff ect on the capital market.

(n) Management risk

Poor management of a fund may cause considerable losses to the Fund that in turn will aff ect the capital invested by Unitholders.

22. CAPITAL MANAGEMENT

The capital of the Fund can vary depending on the demand for redemp ons and subscrip ons to the Fund. The Fund’s approved fund size and units in issue at the end of the fi nancial period is disclosed in Note 13.

The Funds’ objec ves for managing capital are:

(a) To invest in investments mee ng the descrip on, risk exposure and expected return indicated in its prospectus;

(b) To achieve consistent returns while safeguarding capital by using various investment strategies;

(c) To maintain suffi cient liquidity to meet the expenses of the Fund, and to meet redemp on requests as they arise; and

(d) To maintain suffi cient fund size to make the opera on of the Fund cost-effi cient.

No changes were made to the capital management objec ves, policies or processes during the current fi nancial period.

23. EVENTS AFTER THE REPORTING PERIOD

There were no events occurring since the last repor ng date and before the comple on of these fi nancial statements.

52


53


Documents

KENANGA MALAYSIAN INC FUND...Sarawak, Malaysia. ii KENANGA MALAYSIAN INC FUND (KMIF) Report to Unit Holders for the 6-Month Financial Period Ended 30 June 2013 DIRECTORY OF MANAGER’S