KENANGA PREMIER FUND No. 25-1 Jalan Kota ... the Fund continued with its strategy of investing in companies ... Consumer staples and FMCG, iii) Healthcare, iv) Plantations on a

ANNUAL REPORT

For the Financial Period 1 January 2013 to 28 February 2014

KENANGA PREMIER FUND

Kenanga Investors Berhad (353563-P)

KENANGA PREMIER FUND

Contents Page

Corporate Directory ii

Directory of Manager’s Offi ces iii

Fund Information 1

Manager’s Report 2 - 6

Fund Performance 7 - 9

Trustee’s Report 10 - 11

Independent Auditor’s Report 12 - 13

Statement by the Manager 14

Financial Statement 15 - 44

ii Kenanga Premier Fund Annual Report

CORPORATE DIRECTORY

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

BOARD OF DIRECTORS INVESTMENT COMMITTEEDatuk Syed Ahmad Alwee Alsree Bruce Kho Yaw Huat (Chairman) (Chairman)Syed Zafi len Syed Alwee Syed Zafi len Syed Alwee (Independent Director) (Independent Member)YM Raja Dato’ Seri Abdul Aziz bin Raja Salim Vivek Sharma (Independent Director) (Independent Member)Vivek Sharma Peter John Rayner (Independent Director) (Independent Member)Peter John Rayner Abdul Razak bin Ahmad (Independent Director)Bruce Kho Yaw HuatAbdul Razak bin Ahmad

COMPANY SECRETARY: NORLIZA ABD SAMAD (MAICSA 7011089)9th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.Tel: 03-2162 1490 Fax: 03-2161 4990 TRUSTEE: CIMB COMMERCE TRUSTEE BERHAD (Company No. 313031-A) REGISTERED OFFICE BUSINESS OFFICE Level 13, Menara CIMB Level 21, Menara CIMBJalan Stesen Sentral 2 Jalan Stesen Sentral 2Kuala Lumpur Sentral Kuala Lumpur Sentral50490 Kuala Lumpur. 50490 Kuala Lumpur.Tel: 03-2261 8888 Tel: 03-2261 8888Fax: 03-2261 0099 Fax: 03-2261 9889Website: www.cimb.com

AUDITOR: ERNST & YOUNG (AF: 0039)Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 Kuala Lumpur.Tel: 03-7495 8000 Fax: 03-2095 5332

TAX ADVISER: ERNST & YOUNG TAX CONSULTANTS SDN BHD (Company No. 179793-K)Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 Kuala Lumpur.Tel: 03-7495 8000 Fax: 03-2095 5332

MEMBERSHIP: FEDERATION OF INVESTMENT MANAGERS MALAYSIA (FIMM)19-06-1, 6th Floor, PNB Damansara, 19 Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur.Tel: 03-2093 2600 Fax: 03-2093 2700 Website: www.fi mm.com.my

iiiKenanga Premier Fund Annual Report

DIRECTORY OF MANAGER’S OFFICES

REGIONAL BRANCH OFFICES:

Kuala LumpurSuite 12.02, 12th FloorKenanga InternationalJalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTel: 03-2057 3688Fax: 03-2161 8807

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 Merpati98000 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

1 Kenanga Premier Fund Annual Report

1. FUND INFORMATION

1.1 Fund Name

Kenanga Premier Fund (KPF or the Fund)

1.2 Fund Type / Category

Equity / Growth

1.3 Investment Objective

The Fund aims to provide consistent annual returns and medium to long-term capital appreciation.

1.4 Investment Strategy

The Fund will invest principally in a diversifi ed portfolio of equity and equity-related securities.

1.5 Duration

The Fund was launched on 26 November 1996 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 continue.

1.6 Performance Benchmark

FTSE-Bursa Malaysia 100 Index

1.7 Distribution Policy

The Fund intends to pay income by way of distributions or by the creation of additional units after the end of each Accrual Period or any specifi ed period, where possible.

1.8 Breakdown of unit holdings of KPF as at 28 February 2014

Size of holdings No. of unitholders No. of units held 5,000 and below 408 948,008 5,001 - 10,000 355 2,575,730 10,001 - 50,000 1,124 28,876,856 50,001 - 500,000 629 78,835,838 500,001 and above 48 125,480,025 Total 2,564 236,716,457

2Kenanga Premier Fund Annual Report

2. MANAGER’S REPORT

2.1 Explanation on whether the Fund has achieved its investment objective.

The Fund has appreciated by 19.01% in Net Asset Value terms for the period under review, thus achieving the Fund’s stated objective of medium to long term capital appreciation.

2.2 Comparison between the Fund’s performance and performance of the benchmark

Performance Chart Since Launch (26/11/1996– 28/02/2014)Kenanga Premier Fund vs FTSE-Bursa Malaysia 100 Index

Source: Lipper

2.3 Investment strategies and policies employed during the period under review

For the period under review, the Fund continued with its strategy of investing 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 relatively 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 Transformation Program.

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


2.4 The Fund’s asset allocation as at 28 February 2014 and comparison with the previous fi nancial year as at 31 December 2012.

Asset 28 Feb 2014 31 Dec 2012 Equity 90.5% 91.9% Short term deposits and cash 9.5% 8.1%

Reason for the differences in asset allocation

As at 28 February 2014, the asset allocation of the Fund stood at 90.50% in equities and the balance of 9.50% in liquidity. The equity exposure remains high because the Manager was confi dent that there is still upside potential to the market.

2.5 Fund performance analysis based on NAV per unit (adjusted for income distribution; if any) since last review period.

Period under review Kenanga Premier Fund 19.01% FTSE-Bursa Malaysia 100 Index 9.32%

Source: Lipper

For the period under review to 28th February 2014, the Fund appreciated by 19.01%, outperforming the 9.32% increase in the FBM-100. The outperformance was mainly due to better stock selection. The top 5 performers during the period were (1) Dayang Enterprise (+119.32%); (2) Tenaga Nasional (+72.91%); (3) Dialog Group (+41.25%); (4) Sapurakencana Petroleum (+40.63%); and (5) TSH Resources (+39.63%).

2.6 Review of the market

Market Review

Stock market performance in the region can be broken up into two parts for the period under review. The Nikkei had a fantastic year (+31.6% from January 2013 to June 2013) following the Japanese government’s surprise decision to infl ate the long stagnant economy with a US-style quantitative easing programme, valued at US$1.5 trillion. The emerging countries of ASEAN were clear outperformers, led by Philippines and Thailand which rose by 11.6% and 11.2% for the same period, respectively as investors reacted positively to the underlying domestic 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 adopting a loose monetary policy to help economic recovery.

Malaysia lagged regional markets especially in the 1Q2013 due to uncertainty over the 13th Malaysia General Election but caught up after Barisan Nasional retained power albeit with a slightly lesser majority. The FTSE Shariah (FBMS) Index was up by 6.7% in the fi rst half of the fi nancial year, helped by May’s jump of 6.3% month-on-month. This could be attributed to the removal of risk premium associated with the uncertainty over the general election. On the economic side, the 1Q’13 GDP growth of 4.1% fell short of expectation. This was attributed to weaker exports and slower growth in private investments due to uncertainty from the election outcome.


2.6 Review of the market (Contd.)

Market Review (Contd.)

The major downturn came in June when equity markets reacted strongly on the negative after the Fed’s chairman, Ben Bernanke commented that it would be appropriate to moderate the monthly purchase of assets backed securities later this year. It sparked investors’ fear that US’ QE3 will be tapering off earlier than expected. The situation was made worse when the PBoC initially 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 (PCOMP -7.9%) and Hong Kong (HSI -7.1%) in June 2013. The FBMS Index held up relatively well as it was only down by 0.9% month-on-month in June 2013.

The developed markets in the region rebounded signifi cantly in the fi nal quarter of FYE 2013 sparked by the US Congress decision to pass a bill to reopen the government and raise the debt ceiling. This helped the US government to avoid a debt default as well as expectation that the US QE tapering being later as the recovery of the US economy is still uncertain.

The emphasis from the 2014 Budget is on further fi scal consolidation through a more prudent operating and development expenditure. It was generally viewed as stock market-neutral. The KLCI and the FBM Shariah indices remained relatively fl at in November despite investors selling property and construction stocks after the introduction of real property gain tax.

Thailand and Indonesia were sold aggressively in November and December, 2013, down 10% and 5.2% respectively due to continued fear over the weakening currencies and political uncertainty in the latter. Thailand was hit by street demonstration after the Constitutional Court ruled that the Government effort to amend the constitution was illegal.

The KLCI Index rose by 3.0% in December 2013 as the often commented “window dressing” activities in selected counters helped to push the index higher.

Markets reacted positively after the US Federal Reserve Chairman in her fi rst public comments remarked that she is committed to help the economy to return to full employment and return infl ation to 2% in the fi rst two months of the year. Regional emerging markets reacted positively led by Philippines and Indonesia foreign funds fl owed back into these markets. Unfortunately, Malaysia continued to experienced fund outfl ow in 2014 as the KLCI index fell 1.7%.

Market Outlook

We believe volatility will be extended into Q2, as global fi nancial markets which benefi ted greatly from a powerful combination of lifting growth and vast liquidity, continue to adjust to a period of easing quantitative measures (Malaysia saw a net foreign outfl ow of RM6bn in Q1 this year). Seasonally, Q2 tend to be a slower period and corresponds this time around to the World Cup Season and Ramadan fasting in June. Hence, we expect intermittent weakness during the quarter, presenting an opportunity to position for stronger 2H as export recovery in Asia gather momentum.


2.6 Review of the market (Contd.)

Market Outlook (Contd.)

Externally, a fi rmer US economy, coupled with recovering EU and Japan, are expected to lift the outlook for Asia. However, China remains a wildcard with monetary easing likely in Q2/Q3 as activity data continue to show further weakness. Economists now expect GDP growth to slow down to below 7.5% in Q1 and possibly drop below 7% in Q2, warranting some expansionary fi scal/ monetary policy (Regulatory Reserve Requirement cuts etc) to shore up economic growth.

Malaysian corporate earnings are expected to grow 8% this year. Against the backdrop of a robust 2014 GDP growth forecast of 4.5-5.5%, the major earnings drivers are higher crude palm oil prices, increased exports and continuous capital expenditure in the oil & gas sector. Valuations wise, if we peg the market at 16.5 times forward PE, the KLCI has a potential to trade up to 1,990 points, which is more than a 5% upside from here. The key to outperformance lies with disciplined stock picking.

Strategy

In the immediate term, we are of the view that the risk-award scale is at best balanced, with a possible tilt towards further consolidation as market valuations have remained elevated at 16 times. Therefore, we have raised more cash with our investment levels now averaging 80-85% (down from more than 90%) for relative-return funds, and 75%-85% for absolute-return funds. We will look to add on weakness, and aim to increase our investment level back to above 90% by end of Q2/ early Q3.

In terms of our investment strategy and sector selections, we maintain our barbell strategy of holding a good balance of high yielding/defensive stocks and beta stocks to ride through the volatility. Our stock selection favours sectors that will benefi t from being the main drivers of the economy such as the oil & gas (which will continue to form the core holdings due to robust CAPEX programme underpinning earnings growth), construction (benefi ciary of ETP programme), exporters/manufacturers (benefi ciaries of weak Ringgit and recovering external demand like glove, technology, ICT, etc) and plantation sector (rebound of CPO price from a decline in 2013), as well as property (pent up demand post digestion of cooling measures and compelling valuations).


2.7 Income Distribution

For the fi nancial period under reviewed, the Fund has declared the followings income distribution:

Gross Net distribution distribution Cum-NAV Ex-NAV per unit per unit per unit per unit Distribution Date (sen) (sen) (RM) (RM)

27 February 2014 3.01 3.00 0.4664 0.4364

2.8 Details of any unit split exercise

The Fund did not carry out any unit split exercise during the fi nancial period under review.

2.9 Signifi cant changes in the state of affair of the Fund during the period

Pursuant to a supplemental deed dated 19 November 2013 between Kenanga Investors Berhad and CIMB Commerce Trustee Berhad, CIMB Commerce Trustee Berhad has agreed to act as the trustee for the fund and replaced HSBC (Malaysia) Trustee Berhad.

In addition to the above, the fi nancial year end for the Fund was changed to 28 February from 31 December.

2.10 Circumstances that materially affect any interests of the unitholders

During the period under review, there were no circumstances that materially affected any interests of the unitholders. However there was a change in the trustee of the Fund and fi nancial year end as detailed in 2.9.

2.11 Rebates & Soft commissions

Any rebates received are channeled back to the Fund. On the other hand, soft commissions received from the stockbrokers for goods and services such as technical analysis software, fundamental database, fi nancial wire services, stock quotation system and portfolio management software incidental to investment management of the Fund shall be retained by the Manager. For the period under review, the Manager has received soft commissions from stockbrokers.


3. FUND PERFORMANCE

3.1 Details of portfolio composition of Kenanga Premier Fund (“the Fund”) for the fi nancial period as at 28 February 2014 and last 2 fi nancial years as at 31 December are as follows:

a. Distribution among industry sectors and category of investments:

As at FY FY 28.2.2014 2012 2011 % % %

Trading/Services 29.4 31.1 36.7 Finance 15.3 11.2 22.6 Plantations 13.0 5.4 6.8 Consumer product 8.9 8.8 - Infrastructure 4.6 4.9 - Construction 4.1 - 16.1 Industrial product 2.3 6.5 6.4 Properties 1.2 4.5 2.9 Loan stocks 0.4 - - REITs 11.3 19.5 - Short term deposits and cash 9.5 8.1 8.5 100.0 100.0 100.0

Note: The above mentioned percentages are based on total investment market value plus cash.

b. Distribution among markets

The Fund invested in local quoted securities and cash instruments only.


3.2 Performance details of the Fund for the fi nancial period ended 28 February 2014 and last 2 fi nancial years ended 31 December are as follows:

Period 1.1.2013 to FY FY 28.2.2014 2012 2011

Net asset value (“NAV”) (RM Million) 103.70* 97.17 111.05 Units in circulation (Million) 236.72 246.93 281.12 NAV per unit (RM) 0.4381* 0.3935 0.3950 Highest NAV (RM/Unit) 0.4700 0.4180 0.4479 Lowest NAV (RM/Unit) 0.3838 0.3887 0.3564 Total return (%) 19.01 5.91 3.18 - Capital growth (%) 11.33 (0.38) (5.48) - Income distribution (%) 7.68 6.29 8.66 Gross distribution per unit (sen) 3.01# 2.48 3.62 Net distribution per unit (sen) 3.00# 2.44 2.82 Management expense ratio (“MER”) (%)1 1.86 1.91 1.62 Portfolio turnover ratio (“PTR”) (times)2 0.92 1.37 0.55

Note: Total return is the actual return of the Fund for the respective fi nancial period/years, computed based on NAV per unit and net of all fees.

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. PTR is computed based on the average of the total acquisitions and total disposals of investment securities of the Fund divided by the average fund size calculated on a daily basis.

Above prices and NAV are not shown as ex-distribution as there were no distribution declared by the Fund in the current year under review.

1 MER is lower against last fi nancial year mainly due to higher average fund size in current

fi nancial period.

2 PTR is lower against previous year due to less trading activities incurred.

* Based on bid price fair valuation method on all investments held by the Fund as at 28 February 2014, the NAV and price would be RM102.98 million and RM0.4350 respectively.

(As disclosed under Note 11 of the fi nancial statements)

# Date of distribution is shown in part 2.7 - Income Distribution.


3.3 Average total return of the Fund

1 Year 3 Years 5 Years 28 Feb 13 28 Feb 11 28 Feb 09 - 28 Feb 14 - 28 Feb 14 - 28 Feb 14

Kenanga Premier Fund 20.08% 10.15% 19.04% FTSE-Bursa Malaysia 100 Index 12.37% 8.01% 22.97%

Source: Lipper

3.4 Annual total return of the Fund

Period under review 1 Year 1 Year 1 Year 1 Year 31 Dec 12 31 Dec 11 31 Dec 10 31 Dec 09 31 Dec 08 - 28 Feb 14 -31 Dec 12 -31 Dec 11 -31 Dec 10 -31 Dec 09

Kenanga Premier Fund 19.01% 5.91% 3.18% 14.83% 33.56% FTSE-Bursa Malaysia 100 Index 9.32% 9.60% 1.94% 21.76% 48.00%

Source: Lipper

Investors are reminded that past performance is not necessarily indicative of future performance. Unit prices and investment returns may fl uctuate.


4.1 TRUSTEE’S REPORT TO THE UNITHOLDERS OF KENANGA PREMIER FUND

We have acted as Trustee of KENANGA PREMIER FUND (“the Fund”) for the fi nancial period from 1 January 2013 to 2 December 2013. To the best of our knowledge, KENANGA INVESTORS BERHAD (“the Manager”), has operated and managed the Fund in accordance with the following:

a) limitations imposed on the investment powers of the Manager and the Trustee under

the Deeds, the Securities Commission’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws;

b) valuation/pricing is carried out in accordance with the Deeds and any regulatory requirements; and

c) creation and cancellation of units are carried out in accordance with the Deeds and

any regulatory requirements.

For HSBC (MALAYSIA) TRUSTEE BERHAD

TAN BEE NIE Head, Trustee Operations

Kuala Lumpur, Malaysia 25 April 2014


4.2 TRUSTEE’S REPORT TO THE UNITHOLDERS OF KENANGA PREMIER FUND

We, CIMB COMMERCE TRUSTEE BERHAD (“the Trustee”), being the Trustee of KENANGA PREMIER FUND (“the Fund”) are of the opinion that KENANGA INVESTORS BERHAD (“the Manager”), acting in the capacity of Manager of the Fund, has fulfi lled its duties in the following manner for the fi nancial period from 3 December 2013 to 28 February 2014:

a) The Fund has been managed in accordance with the limitations imposed on the

investment powers of the Manager and the Trustee under the Deed, the Securities Commission Malaysia’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws during fi nancial period from 3 December 2013 to 28 February 2014;

b) Valuation/pricing of units of the Fund has been carried out in accordance with the Deed and relevant regulatory requirements;

c) Creation and cancellation of units have been carried out in accordance with the Deed

and relevant regulatory requirements; and d) The distribution of returns by the Fund is tied to and refl ects the investment objective

of the Fund.

For and on behalf of CIMB COMMERCE TRUSTEE BERHAD (313031-A)

LEE KOOI YOKE Chief Operating Offi cer

Kuala Lumpur, Malaysia

25 April 2014


5. INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OF KENANGA PREMIER FUND

Report on the fi nancial statements

We have audited the fi nancial statements of Kenanga Premier Fund (“the Fund”), which comprise the statement of fi nancial position as at 28 February 2014, and the statement of comprehensive income, statement of changes in net asset value and statement of cash fl ows for the fi nancial period then ended, and a summary of signifi cant accounting policies and other explanatory information, as set out on pages 15 to 44.

Manager’s and Trustee’s responsibility for the fi nancial statements and fair presentation

The Manager of the Fund is responsible for the preparation of fi nancial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error. The Trustee is responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of these fi nancial statements.

Auditors’ responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Fund’s preparation of fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.


5. INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OF KENANGA PREMIER FUND (CONTD.)

Opinion

In our opinion, the fi nancial statements give a true and fair view of the fi nancial position of the Fund as at 28 February 2014 and of its fi nanical performance, changes in net asset value and cash fl ows of the Fund for the fi nancial period then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

Other matters This report is made solely to the unit holders 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.

Ernst & Young Gloria Goh Ewe Gim AF: 0039 No. 1685/04/15(J) Chartered Accountants Chartered Accountant


25 April 2014


6. STATEMENT BY THE MANAGER

I, Abdul Razak Bin Ahmad, being the director of Kenanga Investors Berhad, do hereby state that, in the opinion of the Manager, the accompanying statement of fi nancial position as at 28 February 2014 and the related statement of comprehensive income, statement of changes in net asset value and statement of cash fl ows for the fi nancial period ended 28 February 2014 together with notes thereto, are drawn up in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the fi nancial position of Kenanga Premier Fund as at 28 February 2014 and of its fi nancial performance and cash fl ows for the period then ended and comply with the requirements of the Deed.

For and on behalf of the Manager Kenanga Investors Berhad

Abdul Razak Bin Ahmad


25 April 2014

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

Kenanga Premier Fund Annual Report15

7. FINANCIAL STATEMENT

7.1 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD 1 JANUARY 2013 TO 28 FEBRUARY 2014

1.1.2013 to 1.1.2012 to Note 28.2.2014 31.12.2012 RM RM

INVESTMENT INCOMEInterest income 376,859 438,092Dividend income 3,982,176 2,728,107Net gain from investments: - Financial assets at fair value throught profi t or loss (“FVTPL”) 16,115,808 4,860,571 20,474,843 8,026,770EXPENSESManager’s fee 4 1,795,279 1,654,445Trustee’s fee 5 78,759 77,207Auditors’ remuneration 20,000 21,000Tax agent’s fee 3,078 3,001Administration expenses 25,080 61,575Brokerage and other transaction costs 740,974 291,032 2,663,170 2,108,260

NET INCOME BEFORE TAX 17,811,673 5,918,510

Income tax expense 6 (79,360) (114,800)

NET INCOME AFTER TAX, REPRESENTING TOTAL COMPREHENSIVE INCOME FOR THE PERIOD/YEAR 17,732,313 5,803,710

Net income after tax is made up as follows: Realised gain 12,406,045 14,340,959 Unrealised gain/(loss) 5,326,268 (8,537,249) 17,732,313 5,803,710

Distribution for the period/year:Net distribution 12 6,765,021 6,024,973

Gross distribution per unit (sen) 12 3.0078 2.4864

Net distribution per unit (sen) 12 3.0000 2.4400


Kenanga Premier Fund Annual Report 16

7.2 STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2014

Note 28.2.2014 31.12.2012 RM RM

INVESTMENT

Financial assets at FVTPL 7 92,967,448 94,229,231Short term deposits 8 9,322,429 8,799,361 102,289,877 103,028,592OTHER ASSETSOther receivables 9 2,051,918 2,836Tax recoverable 347,637 405,268Cash at bank 491,672 11,313 2,891,227 419,417

TOTAL ASSETS 105,181,104 103,448,009

LIABILITIESAmount due to Manager 144,006 136,686Amount due to Trustee 3,998 6,023Other payables 187,149 673,115Distribution payable 1,870,452 6,024,973TOTAL LIABILITIES 2,205,605 6,840,797

EQUITY

Unitholders’ contribution 52,611,029 56,790,963Retained earnings 50,364,470 39,816,249NET ASSET VALUE (“NAV”) ATTRIBUTABLE TO UNITHOLDERS 10 102,975,499 96,607,212

TOTAL EQUITY AND LIABILITIES 105,181,104 103,448,009

NUMBER OF UNITS IN CIRCULATION 10(a) 236,716,456 246,925,115

NET ASSET VALUE PER UNIT - EX DISTRIBUTION (RM) 11 0.4350 0.3912


Kenanga Premier Fund Annual Report17

7.3 STATEMENT OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL PERIOD 1 JANUARY 2013 TO 28 FEBRUARY 2014

Unitholders’ Retained Total net Note contribution earnings asset value

RM RM RM

28.2.2014At beginning of the period 56,790,963 39,816,249 96,607,212Total comprehensive income - 17,732,313 17,732,313Creation of units 10(a) 10,394,488 - 10,394,488Cancellation of units 10(a) (13,195,844) - (13,195,844)Distribution equalisation 10(a) (1,797,649) - (1,797,649)Income distribution 12 419,071 (7,184,092) (6,765,021)At end of the period 52,611,029 50,364,470 102,975,499

31.12.2012At beginning of the year 71,013,439 40,037,512 111,050,951Total comprehensive income - 5,803,710 5,803,710Creation of units 10(a) 5,918,894 - 5,918,894Cancellation of units 10(a) (16,465,307) - (16,465,307)Distribution equalisation 10(a) (3,676,063) - (3,676,063)Income distribution 12 - (6,024,973) (6,024,973)At end of the year 56,790,963 39,816,249 96,607,212


Kenanga Premier Fund Annual Report 18

7.4 STATEMENT OF CASH FLOWS FOR THE FINANCIAL PERIOD 1 JANUARY 2013 TO 28 FEBRUARY 2014

1.1.2013 to 1.1.2012 to 28.2.2014 31.12.2012 RM RM

CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES

Proceeds from sale of fi nancial assets at FVTPL 101,377,602 158,246,814Purchase of fi nancial assets at FVTPL (86,914,044) (145,669,258)Net dividends received 3,492,368 2,695,278Interest received 378,587 443,913Manager’s fee paid (1,804,398) (1,670,979)Trustee’s fee paid (80,784) (77,979)Auditors’ remuneration paid (21,000) (8,500)Tax agent’s fee paid (3,578) -Payment for other fees and expenses (18,480) (96,822)Cash generated from operating and investing activities 16,406,273 13,862,467Income tax refund 99,263 24,087Net cash generated from operating and investing activities 16,505,536 13,886,554

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from units created 10,662,125 5,921,356Cash paid on units cancelled (15,244,692) (20,136,048)Distribution paid (10,919,542) (7,927,593)Net cash used in fi nancing activities (15,502,109) (22,142,285)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,003,427 (8,255,731)CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD/YEAR 8,810,674 17,066,405CASH AND CASH EQUIVALENTS AT END OF THE PERIOD/YEAR 9,814,101 8,810,674

Cash and cash equivalents comprise: Cash at bank 491,672 11,313 Short term deposits 9,322,429 8,799,361 9,814,101 8,810,674


7.5 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD 1 JANUARY 2013 TO 28 FEBRUARY 2014

1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Kenanga Premier Fund (herein after referred to as “the Fund”) was constituted pursuant to the executed Deed dated 21 November 1996 (collectively, together with deeds supplemental thereto, referred to as “the Deed”) between the Manager, Kenanga Investors Berhad and Universal Trustee (Malaysia) Berhad (“the Trustee” prior to 15 April 2005). The Fund changed its trustee to HSBC (Malaysia) Trustee Berhad (“the Trustee” for the period 15 April 2005 to 2 December 2013) via a Fourth Supplemental Deed dated 15 April 2005. Subsequently, the Fund has changed its trustee to CIMB Commerce Trustee Berhad (“the Trustee” with effect from 3 December 2013). The aforesaid change was effected on 3 December 2013 via a Fourth Master Supplemental Deed dated 19 November 2013. The Fund commenced operation on 26 November 1996 and will continue to be in operation until terminated as provided under Part 12 of the Deed.

Kenanga Investors Berhad is a wholly-owned subsidiary of Kenanga Investment Bank Berhad, which in turn is a wholly-owned subsidiary of K & N Kenanga Holdings Berhad, listed on the main board of Bursa Malaysia Securities Berhad. All of these companies are incorporated in Malaysia.

The principal place of business of the Manager is Suite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur.

The Fund seeks to provide Unitholders with consistent annual returns and medium to long term capital appreciation.

The Fund changed its fi nancial year end from 31 December to 28 February pursuant to the Fourth Master Supplemental Deed dated 19 November 2013.

The fi nancial statements were authorised for issue by the Chief Executive Offi cer of the Manager on 25 April 2014.

2. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES

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 and the Trustee would like to highlight that this list does not purport to constitute an exhaustive list of all the risks inherent in an investment in the Fund.

The Fund has an approved set of investment guidelines and policies as well as internal controls which sets out its overall business strategies to manage these risks to optimise returns and preserve capital for the unitholders, consistent with the long term objectives of the Fund.


2. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk Market risk is the risk that the fair value or future cash fl ows of a fi nancial instrument

will fl uctuate because of changes in market prices. Market risk includes interest rate risk and price risk.

Market risk arises when the value of the fi nancial instruments fl uctuate in response to the activities of individual companies, general market or economic conditions. It stems from the fact that there are economy-wide perils, which threaten all businesses. Hence, investors are exposed to market uncertainties. Fluctuation in the prices of fi nancial instruments caused by uncertainties in the economic, political and social environment will affect the fair value of the Fund.

The Manager manages the risk of unfavorable changes in prices by cautious review of the investments and continuous monitoring of their performance and risk profi les.

i. Interest rate risk

The Fund is not exposed to signifi cant interest rate risk as its deposits are short term in nature and have fi xed interest rates.

Interest rate risk exposure

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


2. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.)

i. Interest rate risk (Contd.)

Interest rate risk exposure (Contd.)

Non- Weighted exposure average to interest effective Up to rate interest 1 year movement Total rate* RM RM RM % 28.2.2014AssetsFinancial assets at FVTPL 446,945 92,520,503 92,967,448 Short term deposits 9,322,429 - 9,322,429 2.98Other assets - 2,543,590 2,543,590 9,769,374 95,064,093 104,833,467

LiabilitiesOther liabilities - 2,205,605 2,205,605 - 2,205,605 2,205,605

Total interest rate sensitivity gap 9,769,374 92,858,488 102,627,862

31.12.2012AssetsFinancial assets at FVTPL - 94,229,231 94,229,231Short term deposits 8,799,361 - 8,799,361 2.83Other assets - 14,149 14,149 8,799,361 94,243,380 103,042,741LiabilitiesOther liabilities - 6,840,797 6,840,797 - 6,840,797 6,840,797

Total interest rate sensitivity gap 8,799,361 87,402,583 96,201,944

* Computed based on interest-bearing assets only.


2. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.) ii. Price risk

Price risk is the risk of unfavorable changes in the fair values of fi nancial assets at FVTPL. The Fund invests in fi nancial assets at FVTPL which are exposed to price fl uctuations. This may then affect the unit price of the Fund.

Price Risk Sensitivity

Manager’s best estimate of the effect on the profi t for the period due to a reasonably possible change in fi nancial assets at FVTPL with all other variables held constant is indicated in the table below:

Effect on profi t Changes in price for the period/year Increase/(Decrease) Increase/(Decrease) Basis points RM 28.2.2014 Financial assets at FVTPL 5/(5) 46,484/(46,484)

31.12.2012 Financial assets at FVTPL 5/(5) 47,115/(47,115)

In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material.

Price risk concentration

The following table set out the Fund’s exposure and concentration to price risk based on its portfolio as at the reporting date.

Fair value Percentage of NAV 28.2.2014 31.12.2012 28.2.2014 31.12.2012 RM RM % % Financial assets at FVTPL 92,967,448 94,229,231 90.3 97.5


2. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.) ii. Price risk (Contd.)

Price Risk Concentration (Contd.)

The Fund’s concentration of equity price risk analysed by the Fund’s equity securities and collective investment scheme by sector is as follows:

Fair value Percentage of NAV 28.2.2014 31.12.2012 28.2.2014 31.12.2012 RM RM % %

Trading/Services 30,048,292 31,749,116 29.2 32.9 Finance 15,738,691 11,544,425 15.3 12.0 Plantation 13,365,835 5,506,690 13.0 5.7 Consumer products 9,179,900 8,992,890 8.9 9.3 Infrastructure 4,789,368 5,061,000 4.6 5.2 Construction 4,234,140 - 4.1 - Industrial products 2,381,580 6,677,020 2.3 6.9 Properties 1,196,800 4,582,170 1.2 4.7 REITs 11,585,897 20,115,920 11.3 20.8 Loan stocks 446,945 - 0.4 - 92,967,448 94,229,231 90.3 97.5

b. Credit Risk

Credit risk is the risk that the counterparty to a fi nancial instrument will cause a fi nancial loss to the Fund by failing to discharge an obligation. The Manager manages the credit risk by undertaking credit evaluation to minimise such risk.

i. Credit risk exposure

At the reporting 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 position.

ii. Financial assets that are either past due or impaired

As at the reporting date, there are no fi nancial assets that are either past due or impaired.


2. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) b. Credit Risk (Contd.)

iii. Credit quality of fi nancial assets

The Fund deposits only with reputable fi nancial institutions. The following table analyses the fi nancial institutions by rating category:

Short term deposits

Percentage of total short term deposits Percentage of NAV 28.2.2014 31.12.2012 28.2.2014 31.12.2012 % % % %

Rating P1 100.0 100.0 9.1 9.1 100.0 100.0 9.1 9.1

c. Liquidity Risk

Liquidity risk is defi ned as the risk that the Fund will encounter diffi culty in meeting obligations associated with fi nancial liabilities that are to be settled 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 liabilities or cancel its units earlier than expected. The Fund is exposed to cancellation of its units on a regular basis. Units sold to unitholders by the Manager are cancellable at the unitholder’s option based on the Fund’s net asset value per unit at the time of cancellation calculated in accordance with the Fund’s Trust Deed.

The liquid assets comprise cash, deposits with licensed fi nancial institutions and other instruments, which are capable of being converted into cash within 7 days.

The following table analyses the maturity profi le of the Fund’s fi nancial assets and fi nancial liabilities in order to provide a complete view of the Fund’s contractual commitments and liquidity.


2. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) c. Liquidity Risk (Contd.)

Up to 1 year Note RM

28.2.2014 Assets Financial assets at FVTPL 92,967,448 Short term deposits 9,322,429 Other assets 2,543,590 (i) 104,833,467

Liabilities Other liabilities (ii) 2,205,605

Net asset value 102,975,499

Liquidity gap (iii) 102,627,862

31.12.2012 Assets Financial assets at FVTPL 94,229,231 Short term deposits 8,799,361 Other assets 14,149 (i) 103,042,741

Liabilities Other liabilities (ii) 6,840,797

Net asset value 96,607,212

Liquidity gap (iii) 96,201,944


2. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) c. Liquidity Risk (Contd.)

i. Financial assets

Analysis of fi nancial assets at FVTPL into maturity groupings is based on the expected date on which these assets will be realised. The Fund’s investments have been included in the “up to 1 year” category on the assumption that these are highly liquid investments which can be realised should all of the Fund’s unitholders’ equity be required to be redeemed. For other assets, the analysis into maturity groupings is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the expected date on which the assets will be realised.

ii. Financial liabilities

The maturity grouping is based on the remaining period from the end of the reporting period to the contractual maturity dated. When 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 redemption of their units, they have been categorised as having a maturity of “up to 1 year”. As a result, it appears that the Fund has a liquid gap within “up to 1 year”. However, the Fund believes that it would be able to liquidate its investments should the need arises to satisfy all the redemption requests of the Fund.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Accounting

The fi nancial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”) as issued by Malaysian Accounting Standards Board (“MASB”) and International Financial Reporting Standards (“IFRS”) issued by International Accounting Standards Board (“IASB”).

The fi nancial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

b. Standard and Interpretations Issued But Not Yet Effective

As at the date of authorisation of these fi nancial statements, the following Standards and Amendments have been issued by MASB but are not yet effective and have not been adopted by the Fund.

Effective for fi nancial period beginning Description on or after

Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities 1 January 2014 Amendments to MFRS 10, MFRS 12, and MFRS 127: Investment Entities 1 January 2014 Amendments to MFRS 136: Recoverable Amount Disclosure for Non-Financial Assets 1 January 2014 IC Interpretation 21 Levies 1 January 2014 Amendments to MFRSs contained in the documents entitled Annual Improvements 2010 - 2012 cycle 1 July 2014 Amendments to MFRSs contained in the documents entitled Annual Improvements 2011 - 2013 cycle 1 July 2014 MFRS 9: Financial Instruments (IFRS 9 Issued by IASB in November 2009) To be announced MFRS 9: Financial Instruments (IFRS 9 Issued by IASB in October 2010) To be announced MFRS 9: Financial Instruments: Hedge Accounting and amendments to MFRS 9, MFRS 7 and MFRS 139 To be announced

The Fund will adopt the above pronouncements when they become effective in the respective fi nancial periods. These pronouncements are not expected to have any signifi cant impact to the fi nancial statements of the Fund upon their initial application, other than MFRS 9.

MFRS 9 refl ects the fi rst phase of work on the replacement of MFRS 139 and applies to classifi cation and measurement of fi nancial assets and fi nancial liabilities as defi ned in MFRS 139. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to MFRS 9: Mandatory Effective Date of MFRS 9 and Transition Disclosures, issued in March 2012, moved the mandatory effective date to 1 January 2015. Subsequently, on 14 February 2014, it was announced that the new effective date will be decided when the project is closer to completion. The adoption of the fi rst phase of MFRS 9 will have an effect on the classifi cation and measurement of the Fund’s fi nancial assets, but will not have an impact on classifi cation and measurements of the Fund’s fi nancial liabilities. The Fund will quantify the effect in conjunction with the other phases, when the fi nal standard including all phases is issued.



c. Financial Assets

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

When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of fi nancial assets not at FVTPL, directly attributable transaction costs.

The Fund determines the classifi cation of its fi nancial assets at initial recognition, which are receivables.

i. 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 initial recognition.

Financial assets held for trading include quoted equity securities, collective investment schemes, warrants and unsecured loan stocks acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, fi nancial assets at FVTPL are measured at fair value. Changes in the fair value of those fi nancial instruments are recorded in profi t or loss.

Interest earned and dividend revenue elements of such instruments are recorded separately in “interest income” and “dividend income” respectively.

ii. Receivables

Financial assets with fi xed or determinable payments that are not quoted in an active market are classifi ed as receivables.

Subsequent to initial recognition, receivables are measured at amortised cost using the effective interest method. Gain or loss is recognised in profi t or loss when the receivable is derecognised or impaired, and through the amortisation process.

A fi nancial asset is derecognised when the contractual right to receive cash fl ows from the asset has expired. On derecognition of a fi nancial asset, the difference between the carrying amount and the sum of the consideration received is recognised in profi t or loss.



d. Impairment of Financial Assets

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

To determine whether there is objective evidence that an impairment loss on fi nancial assets has been incurred, the Fund considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash fl ows discounted at the fi nancial asset’s original effective rate of return. The impairment loss is recognised in profi t or loss.

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

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

e. Income

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 consideration received or receivable.

Interest income is recognised using the effective interest rate method.

Dividend income is recognised on declared basis, when the right to receive the dividend is established.

f. Cash and Cash Equivalents For the purposes of the statement of cash fl ows, cash and cash equivalents include

cash at bank and short term deposits with fi nancial institutions.

g. Income Tax Expense

Income tax on the profi t or loss for the fi nancial period comprises current tax. Current tax is the expected amount of income taxes payable in respect of the taxable profi t for the fi nancial period.



h. Unrealised Reserves Unrealised reserves represent the net gain or loss arising from carrying investments

at their fair values at reporting date. This reserve is not distributable in nature.

i. Financial Liabilities

Financial liabilities are classifi ed according to the substance of the contractual arrangements entered into and the defi nitions of a fi nancial liability.

Financial liabilities are recognised in the statement of fi nancial position when, and only when, the Fund becomes a party to the contractual provisions of the fi nancial instrument. The Fund’s fi nancial liabilities are classifi ed as other fi nancial liabilities. The Fund’s fi nancial liabilities are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

A fi nancial liability is derecognised when the obligation under the liability is extinguished. Gains and losses are recognised in profi t or loss when the liabilities are derecognised, and through amortisation process.

j. Unitholders’ Contribution – NAV Attributable to Unitholders

The unitholders’ contribution to the Fund is classifi ed as equity instruments. Distribution equalisation represents the average amount of undistributed net income

included in the creation or cancellation price of units. This amount is either refunded to unitholders by way of distribution and/or adjusted accordingly when units are released back to the Trustee.

k. Functional and Presentation Currency The fi nancial statements of the Fund are measured using the currency of the primary

economic environment in which the Fund operates (“the functional currency”). The fi nancial statements are presented in Ringgit Malaysia (“RM”), which is also the Fund’s functional currency.

l. Distribution

Distributions are at the discretion of the Fund Manager. A distribution to the Fund’s unitholders is accounted for as a deduction from retained earnings.



m. Signifi cant Accounting Judgments and Estimates

The preparation of fi nancial statements requires the use of certain accounting estimates and exercise of judgment. Estimates and judgments are continually evaluated and are based on past experience, reasonable expectations of future events and other factors.

i. Critical judgments made in applying accounting policies

There are no major judgments made by the Manager in applying the Fund’s accounting policies.

ii. Key sources of estimation uncertainty

There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year.

4. MANAGER’S FEE The Manager’s fee is computed on a daily basis at a rate not exceeding 2.0% per annum

of the NAV of the Fund as provided under Division 13.1 of the Deed. The Manager is currently charging Manager’s fee of 1.50% per annum of the NAV of the Fund.

5. TRUSTEE’S FEE

The Trustee’s fee is computed on a daily basis at a rate not exceeding 0.15% per annum of the NAV of the Fund as provided under Division 13.2 of the Deed.

The Trustee’s fee is computed at 0.05% per annum of the NAV of the Fund with effect from 3 December 2013. Prior to 3 December 2013, the Trustee’s fee was computed at 0.07% per annum of the NAV of the Fund.


6. INCOME TAX EXPENSE

1.1.2013 to 1.1.2012 to 28.2.2014 31.12.2012 RM RM Malaysian income tax: Current period tax 75,300 114,800 Underprovision for pior year 4,060 - 79,360 114,800

Income tax is calculated at the Malaysian statutory tax rate of 25% of the estimated assessable income for the fi nancial period. The statutory tax rate will be reduced to 24% effective from year of assessment 2016.

Income tax is calculated on investment income less partial deduction for permitted expenses as provided for under Section 63B of the Income Tax Act, 1967.

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

1.1.2013 to 1.1.2012 to 28.2.2014 31.12.2012 RM RM Net income before tax 17,811,673 5,918,510

Tax at Malaysian statutory tax rate of 25% (fi nancial year ended 31 December 2012: 25%) 4,452,900 1,479,600 Tax effect of: Income not subject to tax (4,997,700) (3,987,100) Loss not subject to tax - 2,134,300 Expenses not deductible for tax purposes 207,500 99,000 Restriction on tax deductible expenses for unit trust fund 412,600 389,000 Underprovision of tax in prior years 4,060 - Tax expense for the period/year 79,360 114,800

7. FINANCIAL ASSETS AT FVTPL

28.2.2014 31.12.2012 RM RM

Financial assets held for trading, at FVTPL: Quoted equity securities 80,934,606 94,229,231 Collective investment schemes 11,585,897 - Unsecured loan stocks 446,945 - 92,967,448 94,229,231

Net gain on fi nancial assets at FVTPL comprised: Realised gain on disposals 10,789,540 13,397,820 Unrealised change in fair values 5,326,268 (8,537,249) 16,115,808 4,860,571


7. FINANCIAL ASSETS AT FVTPL (CONTD.)

Details of fi nancial assets at FVTPL as at 28 February 2014:

Aggregate Percentage Quantity Cost Fair value of NAV Shares/Units RM RM %

Quoted equity securities

Trading/ServicesAEON CO. (M) BHD. 137,100 1,813,864 1,974,240 1.9 Amway (M) Holdings Berhad 278,400 3,058,471 3,413,184 3.3 Barakah Offshore Petroleum Berhad 1,350,000 1,199,535 2,065,500 2.0 Caring Pharmacy Group Berhad 366,900 697,630 719,124 0.7 Daya Materials Berhad 1,810,000 624,450 733,050 0.7 Dayang Enterprise Holdings Bhd. 625,500 1,877,535 2,176,740 2.1 Deleum Berhad 746,900 2,820,723 3,629,934 3.6 Dialog Group Berhad 700,000 1,426,106 2,359,000 2.3 MBM Resources Berhad 560,000 2,130,718 1,836,800 1.8 Perdana Petroleum Berhad 1,212,800 1,792,320 2,219,424 2.2 PESTECH International Berhad 62,400 204,577 227,136 0.2 PETRONAS Dagangan Berhad 65,000 1,454,629 1,976,000 1.9 SapuraKencana Petroleum Berhad 540,000 1,182,975 2,381,400 2.3 Tenanga Nasional Berhad 362,000 2,837,276 4,336,760 4.2 8,817,000 23,120,809 30,048,292 29.2

FinanceCIMB Group Holdings Berhad 254,644 2,144,731 1,815,612 1.8 Hong Leong Financial Group Berhad 220,000 2,822,677 3,454,000 3.4 LPI Capital Bhd 123,300 1,686,046 2,083,770 2.0 Malayan Banking Berhad 313,698 2,829,052 3,064,829 3.0 Public Bank Berhad 115,000 1,654,505 2,191,900 2.1 Syarikat Takaful Malaysia Berhad 286,500 2,273,488 3,128,580 3.0 1,313,142 13,410,499 15,738,691 15.3

PlantationBatu Kawan Berhad 196,100 3,699,339 3,839,638 3.7 Genting Plantations Berhad 158,400 1,472,837 1,644,192 1.6 IOI Corporation Berhad 500,000 2,094,500 2,305,000 2.3 Sarawak Oil Palms Berhad 235,900 1,573,195 1,403,605 1.4 TSH Resources Berhad 733,000 1,950,893 2,199,000 2.1 United Plantations Berhad 80,000 2,084,264 1,974,400 1.9 1,903,400 12,875,028 13,365,835 13.0



Details of fi nancial assets at FVTPL as at 28 February 2014 (Contd.):


Quoted equity securities (Contd.)

Consumer productsDutch Lady Milk Industries Berhad 54,000 2,478,890 2,554,200 2.5 Guinness Anchor Berhad 112,000 1,707,328 1,632,960 1.6 Nestle (M) Berhad 37,000 2,277,149 2,468,640 2.4 UMW Holdings Berhad 215,000 2,861,148 2,524,100 2.4 418,000 9,324,515 9,179,900 8.9

InfrastructureDiGi.Com Berhad 933,600 4,423,052 4,789,368 4.6

ConstructionGamuda Berhad 550,000 2,545,444 2,475,000 2.4 Hock Seng Lee Berhad 1,011,000 2,111,654 1,759,140 1.7 1,561,000 4,657,098 4,234,140 4.1

Industrial productsPETRONAS Gas Berhad 101,000 1,939,242 2,381,580 2.3

PropertiesMatrix Concepts Holdings Berhad 320,000 1,040,000 1,196,800 1.2

Total quoted equity securities 15,367,142 70,790,243 80,934,606 78.6



Details of fi nancial assets at FVTPL as at 28 February 2014 (Contd.):


Quoted collective investment schemes

Axis Real Estate Investment Trust 743,854 2,231,191 2,298,509 2.2 CapitaMalls Malaysia Trust 1,551,000 2,660,226 2,264,460 2.2 IGB Real Estate Investment Trust 1,540,000 2,063,600 1,786,400 1.8 Pavilion Real Estate Investment Trust 2,248,400 3,306,763 3,012,856 2.9 Sunway Real Estate Investment Trust 1,684,600 2,568,066 2,223,672 2.2

Total quoted collective investment schemes 7,767,854 12,829,846 11,585,897 11.3

Quoted loan stocksBarakah Offshore Petroleum Berhad maturing on 24.10.2018 333,000 70,655 446,945 0.4

Total quoted loan stocks 333,000 70,655 446,945 0.4

Total quoted investments 83,690,744 92,967,448 90.3

Excess of fair value over cost 9,276,704


8. SHORT TERM DEPOSITS

Short term deposits are held with licensed commercial banks in Malaysia at the prevailing interst rate.

9. OTHER RECEIVABLES

28.2.2014 31.12.2012 RM RM Amount due from brokers 1,681,994 - Dividend receivable 368,816 - Interest income from short term deposits 1,108 2,836 2,051,918 2,836

10. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS

NAV attributed to unitholders is represented by:

28.2.2014 31.12.2012 Note RM RM Unitholders’ contribution (a) 52,611,029 56,790,963 Retained earnings: Realised reserves 41,087,766 35,865,813 Unrealised reserves 9,276,704 3,950,436 50,364,470 39,816,249 102,975,499 96,607,212

(a) Unitholders’ contribution

1.1.2013 to 28.2.2014 1.1.2012 to 31.12.2012 No. of units RM No. of units RM

At beginning of the period/year 246,925,115 56,790,963 281,120,334 71,013,439 Distribution equalisation - (1,797,649) - (3,676,063) Add: Creation of units 25,549,676 10,394,488 15,159,340 5,918,894 Less: Cancellation of units (35,758,335) (13,195,844) (49,354,559) (16,465,307) Income distribution - 419,071 - - At end of period/year 236,716,456 52,611,029 246,925,115 56,790,963 The number of units legally or benefi cially held by the Manager, Kenanga Investors

Berhad and parties related to the Manager (if any), as of 28 February 2014 were nil (31 December 2012: nil).


11. NET ASSET VALUE PER UNIT – EX DISTRIBUTION

NAV attributable to unitholders is classifi ed as equity in the statement of fi nancial position.

In line with the adoption of MFRS 139, quoted fi nancial assets have been valued at the bid prices at the close of business. In accordance with the Deed, the calculation of NAV attributable to unitholders per unit for the creation and cancellation of units is computed based on quoted fi nancial assets valued at the last done market price.

A reconciliation of NAV attributable to unitholders for creating/cancelling of units and the NAV attributable to unitholders per the fi nancial statements is as follows:

28.2.2014 31.12.2012 RM RM/Unit RM RM/Unit

NAV attributable to unitholders for creation/ cancellation of units 103,695,005 0.4381 97,173,851 0.3935 Effect from adopting bid prices as fair value (719,506) (0.0031) (566,639) (0.0023) NAV attributable to unitholders per statement of fi nancial position 102,975,499 0.4350 96,607,212 0.3912

12. INCOME DISTRIBUTION

Distributions to unitholders for the fi nancial period ended 28 February 2014 are from following sources:

1.1.2013 to 1.1.2012 to 28.2.2014 31.12.2012 RM RM Taxable income 70,286 2,869,035 Tax exempt income 3,248,176 443,914 Undistribution income 4,287,695 4,639,764 7,606,157 7,952,713

Less: Expense (404,488) (1,813,060) Less: Income tax expense (17,577) (114,680) Distribution out of realised reserve 7,184,092 6,024,973 (Set-off)/distribution out of distribution equalisation (419,071) - Distribution for the period/year 6,765,021 6,024,973

Gross distribution per unit (sen) 3.0078 2.4864

Net distribution per unit (sen) 3.0000 2.4400

Date of distrubution 27.2.2014 31.12.2012


13. PORTFOLIO TURNOVER RATIO

The portfolio turnover ratio (“PTR”) for the current fi nancial period 1 January 2013 to 28 February 2014 is 0.92 times (fi nancial year ended 31 December 2012: 1.37 times).

PTR is the ratio of the average of the acquisitions and disposals of investments of the Fund for the period/year to the average NAV of the Fund, calculated on a daily basis.

14. MANAGEMENT EXPENSE RATIO

The management expense ratio (“MER”) for the current fi nancial period 1 January 2013 to 28 February 2014 is 1.86% (fi nancial year ended 31 December 2012: 1.96%).

MER is the ratio of total fees and recovered expenses of the Fund expressed as a percentage of the Fund’s average NAV, calculated on a daily basis.


15. TRANSACTIONS WITH FINANCIAL INSTITUTIONS

Brokerage, stamp duty Transaction Percentage and clearing Percentage Value of total fee of total RM % RM %

Kenanga Investment Bank Berhad* 38,057,098 20.5 94,958 19.5 Hong Leong Investment Bank Berhad 19,298,814 10.4 46,896 9.6 KAF-Seagroatt & Campbell Securities Sdn Bhd 15,615,435 8.4 40,625 8.4 Maybank Investment Bank Berhad 14,209,625 7.6 36,444 7.5 Citigroup Global Markets Malaysia Sdn Bhd 13,105,774 7.1 39,993 8.2 JP Morgan Securities (Malaysia) Sdn Bhd 10,726,123 5.8 31,767 6.5 Affi n Investment Bank Berhad 10,343,618 5.6 27,011 5.6 Credit Suisse Securities (Malaysia) Sdn Bhd 9,607,557 5.2 24,900 5.1 MIDF Amanah Investment Bank Berhad 9,410,032 5.1 24,268 5.0 HwangDBS Investment Bank Berhad 9,179,087 4.9 24,051 4.9 Others 36,105,348 19.4 95,691 19.7 185,658,511 100.0 486,604 100.0

The above transaction values were in respect of quoted investment securities.

*Kenanga Investment Bank Berhad is a related party of Kenanga Investors Berhad.

The directors of the Manager are of the opinion that the transactions with the related party have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties. The Manager is of the opinion that the above dealings have been transacted on an arm’s length basis.


16. SEGMENTAL REPORTING

a. Business Segment

In accordance with the objective of the Fund, the Fund can invest 70% to 98% in quoted Malaysian investment securities and others. The following table provides an analysis of the Fund’s revenue, results, assets and liabilities by business segments:

Quoted investment Other securities investments Total RM RM RM

28.2.2014 Revenue Segment income 20,097,984 376,859Segment expenses (740,974) -Net segment income representing segment results 19,357,010 376,859 19,733,869Unallocated expenditure (1,922,196)Net income before tax 17,811,673Income tax expense (79,360)Net income after tax 17,732,313

AssetsInvestments 92,967,448 9,322,429Other segment assets 2,050,810 1,108Total segment assets 95,018,258 9,323,537 104,341,795Unallocated assets 839,309 105,181,104

LiabilitiesOther segment liabilities represent total segment liabilities 141,050 - 141,050Unallocated liabilities 2,064,555NAV attributable to unitholders 102,975,499 105,181,104


16. SEGMENTAL REPORTING (CONTD.) Quoted investment Other securities investments Total RM RM RM

31.12.2012 Revenue Segment income 7,588,678 438,092Segment expenses (291,032) -Net segment income representing segment results 7,297,646 438,092 7,735,738Unallocated expenditure (1,817,228)Net income before tax 5,918,510Income tax expense (114,800)Net income after tax 5,803,710

AssetsInvestments 94,229,231 8,799,361Other segment assets - 2,836Total segment assets 94,229,231 8,802,197 103,031,428Unallocated assets 416,581 103,448,009

LiabilitiesOther segment liabilities represent total segment liabilities 632,115 - 632,115Unallocated liabilities 6,208,682NAV attributable to unitholders 96,607,212 103,448,009

b. Geographical Segments

As all of the Fund’s investments are located in Malaysia, the Fund does not have separate identifi able geographical segments.


17. FINANCIAL INSTRUMENTS

a. Classifi cation of fi nancial instruments

The Fund’s fi nancial assets and fi nancial liabilities are measured on an ongoing basis at either fair value or at amortised cost based on their respective classifi cation. The signifi cant accounting policies in Note 3 describe how the classes of fi nancial instruments are measured, and how income and expenses, including fair value gain and loss, are recognised.

The following table analyses the fi nancial assets and liabilities of the Fund in the statement of fi nancial position by the class of fi nancial instrument to which they are assigned and therefore by the measurement basis.

Financial assets at Financial FVTPL Receivables liabilities Total RM RM RM RM

28.2.2014 Assets Quoted equity securities 80,934,606 - - 80,934,606Quoted collective investment schemes 11,585,897 - - 11,585,897Quoted loan stocks 446,945 - - 446,945Short term deposits - 9,322,429 - 9,322,429Other receivables - 2,051,918 - 2,051,918Cash at bank - 491,672 - 491,672 92,967,448 11,866,019 - 104,833,467

LiabilitiesAmount due to Manager - - 144,006 144,006 Amount due to Trustee - - 3,998 3,998 Other payable - - 187,149 187,149 Distribution payable - - 1,870,452 1,870,452 - - 2,205,605 2,205,605

31.12.2012AssetsQuoted equity securities 74,113,311 - - 74,113,311Quoted collective investment schemes 20,115,920 - - 20,115,920Short term deposits - 8,799,361 - 8,799,361Other receivables - 2,836 - 2 ,836Cash at bank - 11,313 - 1 1,313 94,229,231 8,813,510 - 103,042,741

LiabilitiesAmount due to Manager - - 1 36,686 136,686Amount due to Trustee - - 6,023 6,023Other payable - - 673,115 673,115Distribution payable - - 6,024,973 6,024,973 - - 6,840,797 6,840,797


17. 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 prices in active markets.

The following table shows the fair value measurements by level of the fair value measurement hierarchy:

Level 1 Level 2 Level 3 Total RM RM RM RM

Investments: 28.2.2014 - Quoted equity securities 80,934,606 - - 80,934,606 - Quoted collective investment schemes 11,585,897 - - 11,585,897 - Quoted loan stocks 446,945 - - 446,945

31.12.2012 - Quoted equity securities 74,113,311 - - 74,113,311 - Quoted collective investment schemes 20,115,920 - - 20,115,920

Level 1: Quoted prices in active market Level 2: Model with all signifi cant inputs which are observable market data Level 3: Model with inputs not based on observable market data

The fair value of quoted equity securities, quoted collective investment schemes and unsecured loan stocks are determined by reference to Bursa Malaysia Securities Berhad’s bid price at reporting date.

c. Financial instruments not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The carrying amounts of the Fund’s other fi nancial assets and liabilities that are not carried at fair value approximate their fair values due to the relatively short term maturity of these fi nancial instruments.


18. CAPITAL MANAGEMENT

The capital of the Fund can vary depending on the demand for creation and cancellation of units to the Fund.

The Fund’s objectives for managing capital are:

a. To invest in investments meeting the description, risk exposure and expected return indicated in its prospectus;

b. To maintain suffi cient liquidity to meet the expenses of the Fund, and to meet cancellation requests as they arise; and

c. To maintain suffi cient fund size to make the operation of the Fund cost-effi cient.

No changes were made to the capital management objectives, policies or processes during the current and previous fi nancial period/year.

Investor Services Center Head Offi ce, Kuala LumpurToll Free Line: 1 800 88 3737 Suite 12.02, 12th Floor, Kenanga International,Fax: +603 2057 3722 Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.Email: [email protected] Tel: 03-2057 3688 Fax: 03-2161 8807

Documents

KENANGA PREMIER FUND No. 25-1 Jalan Kota ... the Fund continued with its strategy of investing in companies ... Consumer staples and FMCG, iii) Healthcare, iv) Plantations on a