From the CEO’s deskFund Manager’s Report - February 2014

Economic Snapshot

Key Economic Indicators

Equity Market Review

Money Market ReviewSome of macroeconomic indicators improved during February 2014, as forex reserves rebounded to the level of USD 8.7bn after touching the lowest level of USD 7.98bn at the end of previous month. The country received second tranche of Coalition support Fund worth USD 352mn during the month and repaid two installments to IMF totaling USD 296mn. Owing to better reserves, currency also remained stable during the month as it registered a slight uptick of 1.7%.During the month under review, the CPI in�ation clocked in at 7.93%, down 0.32% MoM. The average CPI in�ation for the period July-February 2014 stands at 8.65%. Decline in in�ation was mainly led by slow down in food in�ation. Soft CPI numbers will lead to status quo in the upcoming monetary policy, which will be announced in the month of March.The remittances sent by oversee Pakistanis also increased by 10% during 7MFY14 to USD 9.03bn as compared to 8.21bn in the corresponding period last year. Trade de�cit narrowed by 4.6% in 7MFY14 as exports surged by 4.64% and imports surged only by 0.48%, while current account de�cit widened to 2bn in 7MFY14 as opposed to 441mn in the 7MFY13. As a % of GDP the current account reached to 1.4% as compared to only 0.3% in the same period last year. Large scale manufacturing also registered a growth of 6.76% during 1HFY14 as compared to the corresponding period last year.In the upcoming months, the macroeconomic situation is expected to improve further on the back of privatization process and 3G Auction, which will help to rebuild forex reserves and cover �scal de�cit.

The equity market remained highly volatile and underwent correction during the month of February 2014 as opposed to other regional markets which performed well as compared to previous month. The benchmark index shed around 1000 points and closed at 25,783.3 points, down 3.7% MoM. Though most of the corporate results were in line with market expectations, lower earnings and payout by few companies including Nishat Chunian, Hubco and Kapco coupled with heightened militant activities leading to uncertainty on peace talk had dampened the investor con�dence during the month. Trading activity also remained dull during the month as average daily traded volume stood at 141 million shares, down 25% as compared to previous month. Foreign participation also declined to net FIPI in�ow of USD 9.52mn as compared to net in�ow of USD 31.79mn in the month of January. Going forward, the conclusion of ongoing peace talks between the government and TTP coupled with foreign in�ows and macroeconomic trends will determine the direction of the market.

SBP conducted two T-Bill auctions during the month. Target of the �rst auction (6 Feb) was PKR 300 billion against which SBP accepted PKR 25 billion (maturities PKR 97 billion). Cut o� for the 3-month, 6-month and 1 year were 9.9741%, 9.9791%, 9.9868% respectively. Target for the second auction (20 Feb) was PKR 500 billion against which SBP accepted PKR 328 billion (maturities PKR 561 billion). Cut o� for the 3-month and 6-month were 9.9564% and 9.9791% respectively. One year was rejected. SBP also conducted a PIB auction on 27 Feb with a target of PKR 60 billion. Accepted amount was 245 billion against the maturities of PKR 26 billion. Cut o� for 3,5 and 10 years PIBs came at 12.0962%, 12.5522% and 12.9083% respectively.

Source: SBP, MoF, PBSn.a.=Not Available

The new millennium has not been kind to equity investors. Two market crashes soured many on the equity markets. Some cut their allocations to equities, and others deserted the stock market altogether. A global rally from the depths of early 2009 has made up for the losses on paper—but it has not felt like a bull market to many investors. Bonds became the kings of the new millennium. They generated higher returns — with a lot less volatility.Stocks have always been volatile. Yet patient investors are usually rewarded for staying the course—provided they are able and willing to stick around long enough for prices to catch up with improving corporate earnings and balance sheets.What causes the bumpy ride? Equities are much more volatile than bonds because their future cash �ows are much more uncertain (bonds pay �xed coupons). Volatility is rarely enjoyable. Markets tend to climb slowly and steadily—but fall with a thud. Equities though more volatile than bonds, have generated enough returns to compensate investors for the anxiety. Individual stock prices are ultimately determined by fundamentals such as cash �ows, earnings and sales.In the short term, however, prices can swing wildly. Reasons:• Small changes in expectations of future earnings growth (especially for high-flying growth equities) can translate into big moves in share prices.• Discount rates matter, especially for interest-rate sensitive sectors such as utilities.• Stock markets have been prone to manias and panics for centuries. Prices deviate from fundamentals as investor sentiment swings between fear and greed.Investing in equities is an imprecise science over periods of a year or less. Fundamentals are often swamped by swings in market sentiment. The risk of losses declines as investors extend their holding periods. Timing is (almost) everything in investing. Those who buy equities near peaks in the market’s valuation have to wait a long time before seeing the value of their investments recover—espe-cially after accounting for the impact of in�ation.On the domestic front, during the month under review, Cement dispatches were highest ever in history, Govt. approved power projects of about 2630 MW while talks with Iran and India have been expedited to import 1500 MW. In�ation rose to 7.93%, while Forex reserves rise to 3.1 bln gave rupee some strength against USD inching towards 103.98. Lots of action going on the international front: China is slowly rebalancing its economy. A gentle downward drift in the (still phenomenal) growth of �xed asset investment tells the story. China’s new leadership is determined to reduce its dependence on investment and boost consumption. Doomsayers predict this will trigger an economic implosion. Even some China bulls concede growth is likely to slow to around 5% by the end of the decade.Geopolitical risk is rising for global markets. Ukraine has 45 million people. The country’s position between the European Union and the former Soviet states makes it geopolitically important. Russian military intervention in Crimea and Russian parliament giving President Vladimir Putin authorization for an intervention in Ukraine have raised fears of geopolitical con�ict that could extend well beyond its borders. Russian corporate are among the most active in the international debt markets and Russia has tried hard (and successfully) to open up its local currency debt market to foreign investors while making inroads in improving the investment climate. We believe it’s our responsibility to help investors of all sizes, to succeed in the New World of Investing. We were built to provide the global market insight, breadth of capabilities, unbiased investment advice and deep risk management expertise these times require. Investing with PRIMUS gives you access to every asset class and investment style, as well as extensive market intelligence and risk analysis, to help build the dynamic, diverse portfolios �exible with the changing times.When you invest with PRIMUS, you invest with con�dence. We believe in a disciplined and methodical approach to investing. It is the foundation of everything we do and the best way to create long term value for investors. PRIMUS is one of the top mutual fund companies in Pakistan whose strength and credibility have made it one of the most respected �nancial institutions.We will do our best to re�ect all this in positioning the savings and investments you have entrusted to us to manage. We will be emphasizing the importance of economic growth and work very hard to identify opportunities that remain attractive. We will seek to navigate this environment for you by maintaining a higher degree of operational agility and a solid dose of resilience.Thank you for the trust you have placed in us. We value your con�dence, and will continue to work diligently to meet your expectations. If you have any query regarding any of your PRIMUS funds investments please contact your account manager at 0092-213-529-0006. We also invite you to visit our website www.primusinvestments.com to learn more about our fund, views and thought leadership.Regards, CEO

Feb-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14External Sector IndicatorsOverall Balance of Payments USD million (191) 206 (534) (351) (529) 211 (261) n.a.Current Account Balance USD million (596) (569) (608) (166) (589) 173 (473) n.a.Exports USD million (1,427) 1,983 2,023 2034 1,849 2,358 2164 n.a.Imports USD million 3,364 3,581 3,627 3690 3,205 3,563 3595 n.a.Worker's Remittances USD million - 1233 1,283 1348 1,131 1,385 - n.a.Foreign Direct Investment USD million (14) 3 92.5 52.8 47.1 85 106.9 n.a.Foreign Portfolio Investment USD million 30 23 0.1 33.6 (73.0) 17 31.5 n.a.Forex Reserves USD billion 13.19 9.99 10.21 9.52 8.25 8.31 7.99 8.65Exchange Rate against PKRUSD Month Avg. 97.97 103.17 105.34 106.27 108.56 107.51 106.97 105.39Inflation IndicatorsGeneral CPI YoY change 7.4% 8.5% 7.4% 9.1% 10.9% 9.2% 7.9% 7.9%Food CPI YoY change 7.4% 10.3% 7.9% 9.8% 13.0% 9.3% 7.2% 7.6%Core (NFNE) YoY change 9.6% 8.5% 8.7% 8.4% 8.50% 8.2% 8.0% 7.8%Core (Trimmed) YoY change 9.2% 7.9% 7.6% 9.0% 9.20% 8.7% 8.2% 8.1%Monetary GrowthBroad Money (M2) YoY growth 15.8% 16% 15.7% 14.2% 14.2% 14.4% 13.1% 12.9%GoP's Borrowing from SBP YoY growth 24.2% 82.3% 84.3% 83.6% 78.0% 69.1% 77.1% 64.2%Pvt. Sector Credit YoY growth 3.1% -1.5% 0.8% 1.1 1.0% 1.9% 3.8% 4.4%Interest RatesSBP Policy Rate Current 9.50% 9.00% 9.50% 9.50% 10.00% 10.00% 10.00% 10.00%6 Month KIBOR Month Avg. 9.43% 9.12% 9.27% 9.55% 10.08% 10.15% 10.19% 10.13%12 Month KIBOR Month Avg. 9.78% 9.52% 9.71% 10.02% 10.43% 10.48% 10.47% 10.43%3 Month T-Bill Yield Month Avg. 9.15% 8.95% 9.00% 9.32% 9.86% 10.12% 9.97% 9.95%6 Month T-Bill Yield Month Avg. 9.29% 9.11% 9.16% 9.46% 9.97% 10.15% 9.99% 9.97%12 Month T-Bill Yield Month Avg. 9.39% 9.42% 9.40% 9.77% 10.09% 10.22% 10.01% 9.99%10 Year PIB Yield Month Avg. 11.97% 11.97% 12.24% 12.85% 13.08% 12.75% 12.81% 12.80%

Fund Manager’s Review

Portfolio Allocation (as % of total assets)Fund Objective

Fund Details

Investment Committee Members

Fund TypeCategoryFund Stability RatingBenchmark

Inception DateDealing DaysCut-o� TimePricing MechanismManagement FeeLoadRisk Pro�leListing

Trustee

AuditorLegal AdvisorFund Manager

Open End

Management Co. Rating AM3 by JCR-VIS

Money Market

Portfolio Allocation (as % of total assets)

Feb‘14

Cash at BanksPlacements with DFIsPlacements with Banks

Total

T-BillsOthers including receivables

Feb‘1410.95%19.68%19.59%

100.00%

49.30%0.48%

Credit Quality of Portfolio (as % of total assets)

AAAAA+AA

NR (Others including receivables)Total

Feb‘1469.55%19.60%10.38%

0.48%100.00%

A 0.00%

Jan‘1438.42%10.20%

1.77%

100.00%

48.96%0.64%

Jan‘1487.31%10.22%

1.79%

0.64%100.00%

0.04%

AA+ by PACRA50% 3 months PKRV + 3 months average

Ahmed AteeqRahaila AleemM. Ali KazmiSalman Kazmi

CEOCFO & Company SecretaryChief Investment O�cerFund Manager

Arfeen ZiaAli Kamal

Head of RiskHead of Research

Fund StatisticsNet Asset (PKR mn)

WWF Disclosure

NAV per Unit (PKR)Weighted Average Maturity (days)Sharpe Ratio *

5,812.300100.034122

-3.1304Information RatioStandard Deviation ** Annualized

0.56050.352%

deposit rate of AA & above rated Banks

1st January 2013Daily (days when Banks are open for business)

4.00 pmForward0.45%0% (Front-end) 0% (Back-end)Low RiskIslamabad Stock Exchange

Leverage NilCentral Depository Company of PakistanLtd.Deloitte PakistanMohsin Tayebaly & Co.Salman Kazmi

The fund generated an annualized return of 8.78% versus the benchmark return of 8.62% for the month of February. The fund once again outperformed the benchmark by 16bps and remained the best performing fund in the money market category generating a YTD return of 8.67% compared to the its benchmark return of 8.34% (an outperformance of 33bps).We have maintained exposure in T-bills to its maximum limit allowed, maintaining almost 50% allocation throughout the month. Furthermore, taking advan-tage of the money market movements, we have increased our exposure by 27% in TDRs and LOPs at attractive rates. The weighted average time to maturity of the portfolio is 22 days.Going forward, we plan to increase the duration of the fund to take full advantage of any unexpected movement in the yield curve.

The objective of the fund is to generate consistent returns with minimal risk by investing primarily in Government Securities, cash and near cash instru-ments

* Please note that WWF liability for PRIMUS Daily Reserve Fund till the close of �nancial year ended June 30, 2013 since inception will be borne by the management company *The scheme has maintained provision against Worker’s Welfare Fund’s liability to the tune of Rs.5,923,586, if the same were not made the NAV per unit/year to date (YTD) return of the scheme would be higher by Rs. 0.1019/ 0.1531% enhancing the YTD return to 8.83% p.a”

Fund PerformanceSince Inception 9.43% 8.69% 8.18% 8.67% 8.34%

*Simple Annualized**Morning Star

***Average of reporting period n.a = not applicable

PDRF* PDRF** Benchmark***

-

PDRFFYTD

-8.78% 9.14% 8.62%Feb-14- -8.93% 9.30% 8.62%Jan -14

BenchmarkFYTD

Fund Manager’s Report - February 2014Daily Reserve Fund

Placements with DFIs19.68%Placements with

Banks19.59%

Others including receivables

0.48%

Cash at Bank10.95%

T-Bills49.30%

Portfolio Allocation (as % of total assets) Jan‘14

Placements with DFIs10.20%

Placements with Banks1.77%

Others including receivables

0.64%

Cash at Bank38.42%

T-Bills48.96%

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%

Benchmark PDRF

Fund Manager’s Review

Portfolio Allocation (as % of total assets)Fund Objective

Fund Details

Investment Committee Members

Fund TypeCategoryFund Stability RatingBenchmark

Inception DateDealing DaysCut-o� TimePricing MechanismManagement FeeLoadRisk Pro�leListing

Trustee

AuditorLegal AdvisorFund Manager

Open EndMoney Market

Portfolio Allocation (as % of total assets)

Placements with Banks

Cash at BankT-Bills

Total

Feb‘14

Feb‘14

Feb‘14

9.68%

11.81%78.41%

Others including receivables 0.10%

100.00%

Credit Quality of Portfolio (as % of total assets)

AAA 97.78%AA+ 0.01%AA 2.11%

Total 100.00%

Placements with DFIs 0.00%

A 0.00%NR (Others including receivables) 0.10%

Jan‘14

Jan‘14

9.13%

10.67%75.37%

0.27%

100.00%

86.01%4.57%

9.13%

100.00%

4.56%

0.01% 0.27%

AAA(f ) by PACRA3 months PKRV

Management Co. Rating AM3 by JCR-VIS

Ahmed AteeqRahaila AleemM. Ali KazmiSalman Kazmi

CEOCFO & Company SecretaryChief Investment O�cerFund Manager

Arfeen ZiaAli Kamal

Head of RiskHead of Research

Fund StatisticsNet Asset (PKR mn)

WWF Disclosure

NAV per Unit (PKR)Weighted Average Maturity (days)Sharpe Ratio *

2,811.306100.017722

-5.9525Information RatioStandard Deviation ** Annualized

0.22010.348%

9th August 2012Daily (days when Banks are open for business)

4.00 pmForward1.25%0% (Front-end) 0% (Back-end)Low RiskKarachi Stock Exchange

Leverage NilCentral Depository Company of PakistanLtd.Deloitte PakistanMohsin Tayebaly & Co.Salman Kazmi

The fund generated a return of 7.72% against the benchmark return of 9.92% for the month of February. Though, the concentration in T-bill holdings was increased by around 4% to 79% of net assets, the weighted average time to maturity of the portfolio contracted to 22 days.We intend to increase our T-bill holding of longer maturities and plan to maintain limited cash to provide for daily liquidity requirements.

The objective of the fund is to generate consistent returns with minimal risk by investing primarily in Government Securities, cash and near cash instruments

The scheme has maintained provision against Worker’s Welfare Fund’s liability to the tune of Rs. 2,805,093, if the same were not made the NAV per unit/year to date (YTD) return of the scheme would be higher by Rs. 0.0998/ 0.1499% enhancing the YTD return to 7.88% p.a”

Fund PerformanceSince Inception 8.55% 8.36% 9.44%

*Simple Annualized**Morning Star

***Average of reporting period n.a = not applicable

PCF* PCF** Benchmark***PCF

FYTD

- -7.72% 7.84% 9.92%Feb-14- -8.41% 8.74% 9.93%Jan-14

7.73% 9.42%

BenchmarkFYTD

Fund Manager’s Report - February 2014Cash Fund

Placements with Banks9.68%

T-Bills78.41%

Cash at Bank11.81%

Others including receivables

0.10%

Portfolio Allocation (as % of total assets) Jan‘14

Placements with Banks9.13%

Placements with DFIs4.56%

T-Bills75.37%

Cash at Bank10.67%

Others including receivables

0.27%

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%

Aug-

12Se

p-12

Oct-1

2No

v-12

Dec-1

2Ja

n-13

Feb-

13Ma

r-13

Apr-1

3Ma

y-13

Jun-

13Ju

l-13

Aug-

13Se

p-13

Oct-1

3No

v-13

Dec-1

3Ja

n-14

Feb-

14

Benchmark Avg. PCF

Feb‘14

Fund Performance

Since Inception 5.12% 8.42%**

-3.22% -2.10%**Feb-14

*Absolute Returns**Weighted Average Returns

PSMAF* Benchmark5.12%

PSMAFFYTD

- -4.64% 3.87%**Jan-14 - -

8.42%

BenchmarkFYTD

Fund Manager’s Review

Portfolio Allocation (as % of total assets)Fund Objective

Fund Details

Investment Committee Members

Fund TypeCategoryFund Stability RatingBenchmark

Inception DateDealing DaysCut-o� TimePricing MechanismManagement FeeLoadRisk Pro�leListing

Trustee

AuditorLegal AdvisorFund Manager

Open EndBalanced Fund

Portfolio Allocation (as % of total assets)

Equity Securities

Others Including ReceiveablesTotal

Total

Cash at Bank

Feb‘1460.66%

7.96%100.00%

31.38%

Feb‘14

Feb‘14

Sector Allocation (as % of Total Assets)

Credit Quality of Portfolio (as % of total assets)

AAAAA- & AboveNR (includes equity investments)

Current Top Ten Holdings-Equity

S.No.123456789

10

NMLKOHCDGKCPSONCPLNCLKAPCOAICLFCCLBAFL

9.14%9.10%8.07%7.25%5.79%4.29%3.72%3.35%2.62%2.24%

Scrip Current Exposure

1.12%30.26%68.62%

100.00%

Jan‘1459.58%

8.02%100.00%

32.40%

Jan‘1422.66%

9.74%67.60%

100.00%

N/AWeighted average KSE-100 Index, 3 month PKRV andDaily Pakistan Rupee Spot Gold Prices at the PMEX

Management Co. Rating AM3 by JCR-VIS

Ahmed Ateeq CEORahaila Aleem CFO & Company SecretaryM. Ali Kazmi Chief Investment O�cerSamir Malik Head of EquityArfeen Zia Head of RiskAli Kamal Head of Research

Fund StatisticsNet Asset (PKR mn)

WWF Disclosure

NAV per Unit (PKR)Sharpe Ratio ^^

112.699104.31470.1783

Treynor Ratio^^Standard Deviation *^^

3M PKRV yield used as Risk‐Free rate. ^^ The look back period is 126 working days (Since inception).* Annualized.**^R‐Square measures the correlation between the benchmark and the fund

0.0216Beta^^ 0.7856R-Square**^^^ 39.30%Value at Risk 0.99%

9.54%

23rd August 2013Daily (days when Banks are open for business)

4.00 pmForward2% p.a.2% (Front-end) 0% (Back-end)Moderate to HighKarachi Stock Exchange

Leverage NilCentral Depository Company of PakistanLtd.Deloitte PakistanMohsin Tayebaly & Co.Samir Malik

The Fund generated a return of -3.2%, compared to its benchmark return of -2.1% for the month of February. The KSE100 generated a return of -3.74% in the outgoing month. The lower than expected earnings and dividend announcements by HUBC and KAPCO and the lower than expected core earnings announced by NCL for the outgoing quarter triggered a major sell o� in the said scripts and dragged the fund returns to underperform its benchmark. We are of the view that the market has witnessed a healthy correction and is likely to rebound and make up for the underperformance of the outgoing month. We have decreased our exposure in Electricity and increased our exposure in Oil and Gas and Chemicals sectors. Going forward global factors such as the crises engul�ng Ukraine, growth concerns in China and course of action taken by the Federal Reserve over upcoming FOMC meeting will direct the local market along with local events including end of winter gas load shedding for Industries, positive developments on peace talks with Tehrik-e-Taliban and lower in�ation numbers.

The objective of PIML-SMAF, an open-end balanced scheme, is o�ering retail and institutional clients a product that aims to maximize return and minimize risk. For this purpose, a balanced portfolio is created that has an optimal mix of equity, debt securities and commodity.

The scheme has maintained provision against Worker’s Welfare Fund’s liability to the tune of Rs. 129,960. if the same were not made the NAV per unit/year to date (YTD) return of the scheme would be higher by Rs. 0.1203 / 0.1153% enhancing the YTD return to 5.23% p.a”

Fund Manager’s Report -February 2014Strategic Multi Asset Fund

Equity Securities60.66%

Cash at Bank 31.38%

7.96%

Others including receivables

Jan‘14Construction and Materials (Cement) 20.73% 23.12%Personal Goods (Textile) 13.43% 14.38%Electricity 9.51% 12.30%Oil and Gas 7.25% -Non Life Insurance 3.35% 3.27%Chemicals 2.98% 1.64%Commercial Banks 2.24% 3.71%Fixed Line Telecommunication 1.17% 1.17%Total 60.66% 59.58%

-3.50%-2.50%-1.50%-0.50%0.50%1.50%2.50%3.50%4.50%5.50%

Aug-13 Sep-13 Oct-13 Nov 13 Dec-13 Jan-14 Feb-14

Benchmark Avg. PSMAF

Contact Details

Sonam Peswani Head of Marketing, SMAs & Investor ServicesNadeem A. Khan Manager Investor ServicesSha�q ur Rehman Bhatti

+922135290006-9+922135290006-9+923218968076Regional Head Corporate Sales

Asif Ahmed Siddiqui +923002278139Regional Head Corporate Sales