30 june 2013 pheim - pheim unit trusts berhad...pheim asia ex-japan fund & pheim asia ex-japan...

PHEIM

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

Your Need

is our Focus

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

Pheim Asia Ex-Japan Fund

Pheim Asia Ex-Japan Islamic Fund

PHEIM Asia Ex-Japan Fund & PHEIM Asia Ex-Japan Islamic Fund Interim Report 30.06.2013

TRUST DIRECTORY

MANAGERPheim Unit Trusts Berhad (545919-A)

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

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

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

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

INVESTMENT COMMITTEEOng Kheng Liat (Non-independent)

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

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

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

SHARIAH ADVISERAmanie Advisors Sdn Bhd (684050-H)

TRUSTEEMaybank Trustees Berhad (5004-P)

AUDITORSFolks DFK & Co

TAXATION CONSULTANTFolks Taxation Sdn Bhd (178104-M)


CONTENTS

Page No

1. Funds Information

2. Funds Performance

3. Manager’s Report

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

Pheim Asia Ex-Japan Fund

Pheim Asia Ex-Japan Islamic Fund

1 – 3

4 – 9

10 – 23

24 – 57

58 – 91


Fund Information

[email protected]

1 Your Needis our Focus

Dear Valued Unit Holders

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

i. Pheim Asia Ex-Japan Fund (PAXJ)

ii. Pheim Asia Ex-Japan Islamic Fund (PAXJI)

1 FUND INFORMATION

1.1 Fund Category and Type

Fund Category and type

PAXJ PAXJ is an equity growth fund that aims to achieve capital appreciation in thelong term by investing primarily in Asian markets excluding Japan.

PAXJI PAXJI is an equity growth fund that aims to achieve capital appreciation in thelong term by investing primarily in Asian markets excluding Japan throughinvestments that comply with Shariah requirements.

1.2 Fund’s Investment Objective and Strategy

Fund Investment objective and strategy

PAXJ PAXJ aims to achieve capital appreciation in the long term by investingprimarily in Asian markets excluding Japan. PAXJ will invest, without restraint,in securities listed on the stock exchanges of the Asia Pacific region excludingJapan with initial focus in ASEAN countries, Hong Kong SAR, China, Taiwan,Korea, Australia, New Zealand and India.

PAXJI PAXJI aims to achieve capital appreciation in the long term by investingprimarily in Asian markets excluding Japan through investments that complywith Shariah requirements. PAXJI will invest in securities listed on the stockexchanges of the Asia Pacific region excluding Japan with initial focus inASEAN countries, Hong Kong SAR, China, Taiwan, Korea, Australia, NewZealand and India that comply with Shariah requirements.


Fund Information

[email protected]


1.3 Duration of the Funds

Fund Duration of the Funds

PAXJ PAXJ was launched on 30 June 2006 and its offer period ended on 20 July2006. It shall exist for as long as it appears to the Manager and the Trusteethat it is in the interest of the Unit Holders for it to continue.

PAXJI PAXJI was launched on 1 November 2006 and its offer period ended on 21November 2006. It shall exist for as long as it appears to the Manager and theTrustee that it is in the interest of the Unit Holders for it to continue.

1.4 Funds’ Performance Benchmark

The performance benchmark of the PAXJ and PAXJI is 7% growth in NAV per annum over thelong term.

This is not a guaranteed return and is only a measurement of fund performance. The PAXJand PAXJI may or may not achieve the 7% per annum growth rate in any particular financialyear but targets to achieve this growth over the long term.

1.5 Funds’ Distribution Policy

Fund Distribution Policy

PAXJ &PAXJI

Distribution by the Funds is incidental.


Fund Information

[email protected]


1.6 Breakdown Of Unit Holdings By Size As At 30.06.2013

1.6.1 PAXJ

No. of units held Unitholders

Sizeof holding (‘000) %

No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

170.88 0.49 56 22.95 56 23.53

5,001 -10,000

327.04 0.95 48 19.67 47 19.75

10,001 -50,000

1,718.17 4.98 85 34.84 80 33.61

50,001 -500,000

7,910.61 22.91 43 17.62 43 18.07

500,001 andabove

24,397.28 70.67 12 4.92 12 5.04

Total 34,523.98 100.00 244 100.00 238 100.00

1.6.2 PAXJI

No. of units held Unitholders

Sizeof holding (‘000) %

No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

290.86 3.25 89 26.89 87 26.52

5,001 -10,000

597.38 6.68 84 25.38 83 25.30

10,001 -50,000

2,646.21 29.58 138 41.69 138 42.07

50,001 -500,000

1,831.03 20.47 15 4.53 15 4.58

500,001 andabove

3,580.96 40.02 5 1.51 5 1.53

Total 8,946.44 100.00 331 100.00 328 100.00


Fund Performance

[email protected]

4Your Need

is our Focus

2 FUND PERFORMANCE

2.1 Pheim Asia Ex-Japan Fund

2.1.1 Portfolio composition

As at30.06.2013

(%)

As at30.06.2012

(%)

As at30.06.2011

(%)

Industry Sector (Percentage of NAV)

Biochemical and Biotechnology 0.69 0.82 -

Computer - 1.93 -

Construction 2.25 6.37 4.11

Consumer Products 8.04 16.48 3.22

Diversified - 1.50 -

Energy and Water Supply - 1.61 -

Finance 25.52 18.27 2.04

Industrial Products 12.61 16.73 9.37

Infrastructure 1.45 1.23 -

Manufacture 0.67 - -

Mining 1.99 8.35 -

Plantations 2.09 3.19 6.73

Properties 5.83 0.92 2.76

Technology 1.94 7.37 -

Telecommunications 0.77 0.99 -

Trading / Services 0.96 0.72 1.38

Foreign Investments - - 59.97

Unquoted/Quoted Corporate Bonds - - 0.78

Cash and cash equivalents 35.19 13.52 9.64

Total 100.00 100.00 100.00


Fund Performance

[email protected]

5Your Need

is our Focus

PAXJ

2.1.2 Other financial and performance data

6 monthsended

30.06.2013

6 monthsended

30.06.2012

6 monthsended

30.06.2011

Net asset value (RM‘000) 26,597.30 28,987.84 38,786.42

Units in circulation (‘000) 34,523.98 38,779.64 46,226.85

Net asset value per unit (RM) 0.7704 0.7475 0.8390

Highest NAV/ unit for the period

NAV/ unit 0.8518 0.8492 0.9498

Lowest NAV/ unit for the period

NAV/ unit 0.7571 0.7300 0.8250

Total returns for the period (RM’000)

Capital growth (1,483.87) 1,221.14 123.40

Income distribution (1,184.66) 454.50 549.85

Income Distribution (Final)NIL NIL

On28.04.2011

Gross distribution per unit (sen) NIL NIL 2.00

Net distribution per unit (sen) NIL NIL 2.00

Management expense ratio (MER) (%) 0.83 0.86 0.84

Portfolio turnover ratio (PTR) (time) 0.58 0.53 0.58

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

average value of the fund calculated on a daily basis. The MER for the perioddecreased mainly due to the lower total fee and expenses incurred.

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


Fund Performance

[email protected]

6Your Need

is our Focus

PAXJ

2.1.3 Average total return ended 30 June 2013

(%)

One Year +3.08

Three Years -1.19

Since inception +0.87

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

Financial year ended 31 December :(%)

2012 +8.08

2011 -17.39

2010 +6.0

2009 +72.0

2008 -47.0

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

Data source : Bloomberg

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


Fund Performance

[email protected]

7Your Need

is our Focus

2.2 Pheim Asia Ex-Japan Islamic Fund

2.2.1 Portfolio composition

As at30.06.2013

(%)

As at30.06.2012

(%)

As at30.06.2011

(%)

Industry Sector (Percentage of NAV)

Biochemical and Biotechnology 1.67 1.23 -

Computer - 2.10 -

Construction - 5.01 5.63

Consumer Products 10.12 21.77 6.31

Energy and Water Supply 4.13 1.85 -

Industrial Products 17.61 20.03 13.00

Mining 6.85 11.80 -

Plantations 3.28 4.33 6.82

Properties 8.64 1.70 1.81

Technology 4.86 7.09 -

Telecommunications 6.37 5.09 -

Trading / Services 2.41 5.68 4.15

Shariah-compliant Foreign Investments - - 49.63

Cash and cash equivalents 34.06 12.32 12.65

Total 100.00 100.00 100.00


Fund Performance

[email protected]

8Your Need

is our Focus

PAXJI

2.2.2 Other financial and performance data

6 monthsended

30.06.2013

6 monthsended

30.06.2012

6 monthsended

30.06.2011

Net asset value (RM‘000) 7,779.00 10,219.27 14,467.86

Units in circulation (‘000) 8,946.44 13,471.60 17,787.91

Net asset value per unit (RM) 0.8695 0.7586 0.8134

Highest NAV/ unit for the period

NAV/ unit 0.8787 0.8514 0.8848

Lowest NAV/ unit for the period

NAV/ unit 0.8185 0.7389 0.7984

Total returns for the period (RM’000)

Capital growth 864.41 2,459.20 253.10

Income distribution (1,396.67) (591.84) 545.13

Income Distribution (Final)NIL NIL

On28.04.2011

Gross distribution per unit (sen) NIL NIL 2.00

Net distribution per unit (sen) NIL NIL 2.00

Management expense ratio (MER) (%) 1.08 1.08 0.97

Portfolio turnover ratio (PTR) (time) 0.41 0.56 0.54

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

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

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


Fund Performance

[email protected]

9Your Need

is our Focus

PAXJI

2.2.3 Average total return ended 30 June 2013

(%)

One Year +14.81

Three Years +5.74

Since inception +2.62

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

Financial year ended 31 December : (%)

2012 +7.41

2011 -7.59

2010 +6.5

2009 +55.1

2008 -41.8

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

Data source : Bloomberg

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


Manager’s Report

[email protected]


3 MANAGER’S REPORT

3.1 Performance Review

3.1.1 PAXJ

For the six month period ended 30 June 2013, PAXJ, based on its net asset value(NAV) per unit, decreased by 4.89%, under-performing the benchmark by 8.36%. Thetotal NAV decreased to approximately RM26.6 million from RM30 million during thereview period mainly due to decrease in units in circulation.

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

Benchmark/ FundAs at

30.06.2013As at

31.12.2012Change

%

7% per annum (pro-rated) 48.67% 45.20% +3.47

NAV per unit (RM) 0.7704 0.8100 -4.89

3.1.2 PAXJI

For the six month period ended 30 June 2013, PAXJI, based on its net asset value(NAV) per unit, increased by 5.53%, outperforming the benchmark by 2.05%. The totalNAV decreased to approximately RM7.8 million from RM10 million during the reviewperiod mainly due to decrease in units in circulation.

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

Benchmark/ FundAs at

30.06.2013As at

31.12.2012Change

%

7% per annum (pro-rated) 46.30% 42.82% +3.48

NAV per unit (RM) 0.8695 0.8239 +5.53


Manager’s Report

[email protected]


3.2. Performance Chart Since Inception

3.2.1 PAXJ

3.2.2 PAXJI

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


Manager’s Report

[email protected]


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

3.3.1 PAXJ

Asset ClassAs at

30.06.2013As at

31.12.2012 Change

Equity Securities – outside Malaysia 59.45 85.93 -26.48

Equity Securities – in Malaysia 5.36 1.39 +3.97

Cash and cash equivalent 35.19 12.68 +22.51

Total 100.00 100.00

3.3.2 PAXJI

Asset ClassAs at

30.06.2013As at

31.12.2012 ChangeShariah-compliant equity securities –outside Malaysia

50.64 82.24 -31.60

Shariah-compliant equity securities –in Malaysia

15.30 11.97 +3.33

Cash and cash equivalent 34.06 5.79 +28.27

Total 100.00 100.00


Manager’s Report

[email protected]


3.4 Funds’ Strategies and Policies Employed

3.4.1 PAXJ

The fund’s total equity exposure decreased slightly by 22.51% as the fund decreasedexposure in foreign equity due to weaker foreign markets. As at 30 June 2013, PAXJ’stotal equity exposure was 64.8% whereby 59.45% was invested in foreign equities andthe remaining in domestic equities.

During the period, the PAXJ has invested in foreign equities listed in Hong Kong/ China,Singapore, Indonesia, Taiwan, Thailand and Korea.

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

Market

Net realised andunrealised gain/ (loss)

RM’000

Malaysia 221Indonesia (120)Korea (223)Philippines (152)Thailand (1,310)Singapore (1,240)Hong Kong (2,181)Taiwan (1,321)

3.4.2 PAXJI

The fund’s total equity exposure decreased by 28.27% mainly due to reduction in theexposure in weaker foreign markets as compared to domestic market. As at 30 June2013, PAXJI’s total equity exposure was 65.94% whereby 50.64% was invested inShariah-compliant foreign equities and the remaining in domestic Shariah-compliantequities.

During the period, the PAXJI has invested in Shariah-compliant foreign equities listed inHong Kong/ China, Singapore, Korea, Indonesia, Taiwan, Philippines and Thailand. TheFund had not invested in any sukuk.


Manager’s Report

[email protected]


3.4.2 PAXJI (contd.)

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

MarketNet realised and

unrealised gain/ (loss)RM’000

Malaysia 321Indonesia (338)Korea 178Thailand (412)Singapore 336Hong Kong (399)Taiwan (395)

3.5 Market Review, Outlook and Strategy

3.5.1 Malaysian Bond Market

3.5.1.1 Bond Market Review

The Malaysian bond market made history on 8th February 2013 with the debut of the firstretail bond which was issued by DanaInfra Nasional Berhad. Although bonds is relativelya new asset class to most retailers, we believe participation rate has the potential toincrease as retail investors become more knowledgeable about the advantages ofdiversification and having a fixed income component in their portfolios.

Market conditions in the Malaysian fixed income market throughout the early part of the1st half of 2013 might be described as relatively positive with, the overnight policy rate(OPR) maintained at 3.00%. According to Bank Negara Malaysia’s Monetary PolicyCommittee (MPC), the stance on monetary policy was considered to be appropriate giventhe outlook for inflation and growth. Buying interests were also attributed to quantitativeeasing measures undertaken in the US, with some of the liquidity flowing to emergingmarkets for their higher yields. Malaysia has been one of the beneficiaries, for instance,foreign holdings in local currency government bonds surged to 31.2% as end-March 2013from 13.3% as at end-December 2009.

Post-election, which was in the early month of May, the Malaysian Government Securities(MGS) garnered further buying interest as the ruling coalition, Barisan Nasional wasreturned to power. It resulted in a surged in capital flows which brought yields of shortdated MGS to below 3.00%. However, prices slumped towards the end of May and Juneon concerns that the scaling back of the quantitative measures in the US may cause ahike in interest rates. The market seems braced for an outflow by foreign investors hencethe softening bond prices.

That being said, we do not expect a total withdrawal of foreign participation in the localbond market as interest rate differential between US and Malaysia still means thatMalaysia remains a good investment destination for foreign investors. Furthermore,


Manager’s Report

[email protected]


Malaysia’s strong macroeconomic fundamentals as well as stable sovereign credit ratingwould continue to be supportive of the local bond market.

3.5.1.2 Bond Market Outlook and Strategy

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

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

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

3.5.2 Stock Markets Review

3.5.2.1 Malaysia Market – Bursa Malaysia Securities

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

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

Inflation in May inched up to 1.8% y.o.y in May after rising to 1.7% in April mainly due to afaster increase in the core inflation rate. This was mainly due to the increase in the prices


Manager’s Report

[email protected]


of food and non-alcoholic beverages as well as miscellaneous goods and services. Thebenchmark interest rate was maintained at 3.00% throughout the first half 2013 since itwas last adjusted from 2.75% in 2011. The inflation is expected to remain benign for therest of the year.

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

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

3.5.2.2 Singapore Market - Singapore Exchange (SGX)

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

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

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

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

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


Manager’s Report

[email protected]


3.5.2.3 Hong Kong/ China Market – Hong Kong Exchanges (HKSE)

The Hang Seng Index for 1H13 closed at 20,803, down by 8.1% comparing to the2H12. This was due to China’s weaker macro figures. Those that contributed to theindex decline for the period were CNOOC, CCB and Petro China. However stocks likeTencent, AIA Group and Hengan limit the downside.

In Hong Kong, the exports picked up in Mar, growing by 11.2% y.o.y after a drop of16.9% in Feb as a result of seasonal distortions and compared with +0.3% in Jan-Feb.The rebound in exports was mainly fuelled by stronger demand from most major Asianmarkets, including Mainland China, and a lower base of 2012. Exports to majoradvanced economies, on the other hand, remained weak. The recent reported retailsales growth slowed in May. Based on value of sales, retail sales rose 12.8% y.o.y,weaker than market consensus estimate of a 19.4% increase and compared with+20.7% in Apr. The lower than expected retail sales was mainly due to a fall in thesales of consumer durable goods and slower sales of jewellery, watches and valuablegifts, although the latter posted the biggest growth among all the retail categories inMay.

The China industrial production and FAI growth were slightly lower than marketexpectation in May 13, the However we feel that the broad picture shows China’seconomy has stabilized. Although growth may not pick up quickly, but it is unlikely forthe economy to further deteriorate in the near term. The government will take thischance to speed up its economic restructuring and resolve the overcapacity problemfor industrial sectors.CPI in China was pulled down by easing vegetable price given improved weathercondition, but the rebound of pork price will gradually push up the headline CPI in thelonger term. Meanwhile, demand recovery remained slow, as shown by lower-than-expected PPI reading. Liquidity condition will be hard to predict going forward, giventhe surge in short-term rates. However, it is likely the central bank will stay with openmarket operations in the near term to curb the increase.

Both export and import growth in China surprised the market on the downside, giventhe government’s crackdown on unreliable trade data. As external demand remainedweak, a significant improvement in export and the growth rate will stay in the single-digit level in the next few months. But import growth is likely to be supported by state-led investment activities in the medium term, along with support from a low baseeffect.

In line with the consensus, China’s official manufacturing PMI fell to 50.1 in June from50.8 in May, suggesting a slowdown in manufacturing expansion. However the figureis still pointing to a growing manufacturing sector in China although the pace ofexpansion has slowed partly due to a weak recovery in domestic demand andunfavourable foreign orders. In 2Q13, the official PMI remained in the expansionterritory with an average reading of 50.5, similar to the previous quarter. Based on thedata we believed that overall manufacturing activity has remained broadly stable,although certain industries would continue to face downside risks from over-investment and on-going government policies to eliminate inefficient productioncapacity. The Chinese economy should be able to sustain its growth in 2013, with thecontinued expansion in the manufacturing sector in the coming quarters as global


Manager’s Report

[email protected]


conditions improve, as well as a continuation of infrastructure spending and supportivefiscal and credit policies.

3.5.2.4 Indonesia Market – Jakarta Stock Exchange (JSE)

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

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

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

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

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

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


Manager’s Report

[email protected]


3.5.2.5 Thailand Market – Stock Exchange of Thailand (SET)

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

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

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

3.5.2.6 Taiwan Stock Market – Taiwan Stock Exchange (TSE)

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

Taiwan export orders dropped for the 4th consecutive month in May, indicating that itsexport outlook remains flattish. Export orders increased slightly (+1.8% m.om) in May butdeclined 0.4% y.o.y. Total exports for the first five months stood at USD17.4 mil, adecrease of 1.4% as compared to preceding period last year. This was mainly due tolower export to Europe and Japan, which dropped 6.8% y.o.y and 16.5% y.o.yrespectively.

Taiwan’s economy grew 1.54% y.o.y in first quarter 2013, weighed down by sluggishexports and private consumption. The growth was well down from the 3.72% growth inthe fourth quarter 2013. In addition, the figure was barely half of the 3.26% growth


Manager’s Report

[email protected]


estimated by the Directorate-General of Budget, Accounting and Statistics. As a result ofweaker than expected GDP growth in first quarter 2013, the government has lowered its2013 GDP growth forecast to 2.4% from initial forecast of 3.59%.

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

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

3.5.2.7 Philippine Market – The Philippines Stock Exchange (PSE)

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

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

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

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

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

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


Manager’s Report

[email protected]


3.5.2.8 Korea Market – Korean Stock Exchanges (KSE)

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

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

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

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

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

3.5.2.9 Australian Stock Market

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

Australia’s GDP grew just 0.6% q.o.q in 1Q, yielding a growth of 2.5% y.o.y (+3.1% in4Q12), the slowest pace since mid-2011. The expansion was supported by 1% rise inexports and a rise in in household spending of 0.3% but they failed to offset a sharp dropin government investment.

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

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


Manager’s Report

[email protected]


3.5.3 Market Outlook and Strategy

The MSCI Far East ex-Japan (USD) declined by 6.84% in 1H2013, underperforming theMSCI World index which rose 7.1%. During the 1st half of the year, institutional fundswere seen reducing their exposures to emerging markets in favour of the developedmarkets. This has been due mainly to data which shows the US economy has beengaining traction with steady job growth and continued recovery in the housing market.The Dow Jones Industrial index managed to register a gain of 13.8% for the 1st half of2013 – during which it recorded a new record high. Within the Asia ex-Japan equitymarkets, the top three performing markets were Vietnam (+16.3%), Indonesia (+11.6%)and Philippines (+11.2%). On the other hand, the worst performing markets were ChinaH-Shares (-18.6%), Hong Kong (-8.2%) and Korea (-6.7%).

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

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

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

Among the Asia-Pacific ex-Japan region, we are overweight on Hong Kong/China due itsundemanding valuation where both the price to book and price to earnings ratios aretrading below their longer term historical averages. Although there are signs that China isfacing an economic slowdown, we believe China would avoid a hard landing. In fact,China’s projected GDP growth is still one of the highest in the world and it may beunjustifiable for the Hong Kong/China equity markets to trade at their historical lows.

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


Manager’s Report

[email protected]


3.6 Policy On Rebates And Soft Commission

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

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


PAXJ

[email protected]

24Your Need

is our Focus

22 August 2013


PAXJ

[email protected]

25Your Need

is our Focus

STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM ASIA EX-JAPAN FUND

In the opinion of the Manager, the accompanying unaudited financial statements ofPheim Asia Ex-Japan Fund are drawn up in accordance with Malaysian FinancialReporting Standards, International Financial Reporting Standards and the SecuritiesCommission's Guidelines on Unit Trust Funds in Malaysia so as to give a true and fairview of the unaudited financial position of Pheim Asia Ex-Japan Fund as at 30 June2013 and of its results, changes in net asset value and cash flows for the period thenended.

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

AZMI MALEK MERICANDirector

HOI WENG KONGDirector

Kuala Lumpur, Malaysia22 AUG 2013

PAXJ

PHEIM ASIA EX-JAPAN FUND

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE PERIOD ENDED 30 JUNE 2013

Note 30.06.2013 30.06.2012

RM RM

INVESTMENT INCOME/(LOSS)

Gross dividend income 553,879 347,564

Interest Income:

- loans and receivables 64,330 46,641

- available-for-sale ("AFS") financial assets - (236,019)

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

profir or loss ("FVTPL") 7 (1,703,764) 606,091

Net realised gain/ (loss) on foreign exchange 560 (1,506)

(1,084,995) 762,771

EXPENDITURE

Manager's fee 3 213,534 232,971

Trustee's fee 4 9,965 10,872

Auditor's remuneration 5,619 5,482

Tax agent's fee 1,141 1,731

Administrative expenses 10,112 18,647

240,371 269,703

Net (loss)/ income before tax (1,325,366) 493,068

Income tax expenses 5 (17,348) -Net (loss)/ income for the period (1,342,714) 493,068

Other comprehensive income/(loss)

Net change in fair value of AFS financial assets - -- -

Total comprehensive (loss)/ income for the period (1,342,714) 493,068

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

Net realised income 141,158 225,529

Net unrealised (loss)/ income (1,483,872) 267,539(1,342,714) 493,068

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

26

PAXJ


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

Note 30.06.2013 30.06.2012 30.06.2011

RM RM RM

ASSETS

Investments 6 17,240,928 25,062,204 35,046,582

Deposits with licensed financial institutions 8 8,205,758 3,100,246 3,191,289

Amount due from brokers - 962,207 942,530

Other receivables 449,530 165,873 158,492

Tax recoverable 21,359 21,359 7,082

Cash at bank 721,451 25,453 575,562

TOTAL ASSETS 26,639,026 29,337,342 39,921,537

LIABILITIES

Amount due to brokers - 292,458 1,032,240

Amount due to Manager 9 31,234 43,319 80,856

Amount due to Trustee 1,458 1,607 2,270

Other payables and accruals 9,034 12,119 19,752

TOTAL LIABILITIES 41,726 349,502 1,135,118

EQUITY

Unitholders' capital 33,268,280 36,654,208 42,463,338

Retained earnings/(Accumulated losses) (6,670,980) (7,666,368) (3,678,479)

Available for sale reserve - - 1,560

TOTAL EQUITY 11 26,597,300 28,987,840 38,786,419

TOTAL EQUITY AND LIABILITIES 26,639,026 29,337,342 39,921,537

UNITS IN CIRCULATION 11 (a) 34,523,978 38,779,641 46,226,854

NET ASSET VALUE ("NAV") PER UNIT 12 0.7704 0.7475 0.8390


27

PAXJ


STATEMENT OF CHANGES IN EQUITY (UNAUDITED)



Unitholders' Retained AFS TotalCapital earnings/ reserves Equity

(Accumulatedlosses)

Note 11(a) Note 11(b) Note 11(d)

and (c )RM RM RM RM

At 1 January 2012 38,024,851 (8,159,436) - 29,865,415

Effects of adopting FRS 139 - - - -38,024,851 (8,159,436) - 29,865,415

Total comprehensive income forthe period - 493,068 - 493,068

Creation of units 749,647 - - 749,647Cancellation of units (2,113,242) - - (2,113,242)

Distribution equalisation (7,048) - - (7,048)Balance at 30 June 2012 36,654,208 (7,666,368) - 28,987,840

At 1 January 2013 35,335,187 (5,328,266) - 30,006,921

Effects of adopting FRS 139 - - - -35,335,187 (5,328,266) - 30,006,921

Total comprehensive loss for

the period - (1,342,714) - (1,342,714)Creation of units 464,836 - - 464,836

Cancellations of units (2,544,773) - - (2,544,773)Distribution equalisation 13,030 - - 13,030Balance at 30 June 2013 33,268,280 (6,670,980) - 26,597,300

28

PAXJ


STATEMENT OF CASH FLOWS (UNAUDITED)


01.01.2013 01.01.2012

to to

30.06.2013 30.06.2012

RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sale of investments 20,385,712 16,828,930

Purchase of investments (13,123,059) (16,446,125)

Dividends received 114,197 190,613

Interest received from deposits with licensed 64,366 47,056

financial institutions and other debt securities - -

Tax refund - (237,438)

Management fee paid (219,844) (11,080)

Trustee's fee paid (10,259) (39,597)

Payment for other fees and expenses (23,065) -

Net cash generated/(used in) from operating

and investing activities 7,188,048 332,359

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from creation of units 459,766 752,061

Payment for cancellation of units (2,621,158) (2,139,897)

Net cash used in from financing activities (2,161,392) (1,387,836)

NET (DECREASE)/ INCREASE IN CASH

AND CASH EQUIVALENTS 5,026,656 (1,055,478)

CASH AND CASH EQUIVALENTS AT

BEGINNING OF THE YEAR 3,900,553 4,181,177

CASH AND CASH EQUIVALENTS AT THE END OFTHE PERIOD 8,927,209 3,125,699

Cash and cash equivalents comprise the following:

Deposits with licensed financial institutions

(Note 8) 8,205,758 3,100,246

Cash at bank 721,451 25,4538,927,209 3,125,699


29

PAXJ


NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)


1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

Pheim Asia Ex-Japan Fund ("the Fund") was constituted pursuant to a Deed dated 26 May 2006 asamended by the Supplemental Deed dated 3 December 2008 between the Manager; Pheim Unit TrustsBerhad, the Trustee; Maybank Trustees Berhad and the registered unitholders of the Fund.

The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 of theDeed, which includes investments in equities and fixed income securities traded on the Bursa MalaysiaSecurities Berhad ("Bursa Malaysia") or any other markets considered as an Eligible Market. The Fundcommenced operations on 30 June 2006 and will continue its operations until terminated by Trustee asprovided under Part 12 of the Deed.

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

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

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

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

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

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

30

PAXJ

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.2 New MFRSs and Amendments to MFRSs That Are Effective

Amendments to MFRS 101 Presentation of Financial Statements

-Presentation of Items of Other Comprehensive Income

MFRS 13 Fair Value Measurement


- (Annual improvements 2009-2011 Cycle)

Amendments to MFRS 132 Financial Instruments : Presentation


Amendments to MFRS 134 Interim Financial Reporting


Amendments to MFRS 7 Financial Instruments : Disclosures

- Offsetting Financial Assets and

Financial Liabilities

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

Not Been Early Adopted

Effective for

financial period

beginning

on or after

Amendments to MFRS 132 Financial Instruments : Presentation 1 January 2014

- Offsetting Financial Assets and


MFRS 9 Financial Instruments (IFRS9 issued 1 January 2015

by International Accounting Standard

Board ("IASB") in November 2009)


by IASB in October 2010)

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

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

31

PAXJ


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

Not Been Early Adopted (Contd.)

2.4 Significant Accounting Policies

(a) Financial Assets

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

Financial assets are recognised in the statement of financial position when, and only when, theFund becomes a party to the contractual provisions of the financial instruments. Regular way ofpurchase and sale of investments in financial instruments are recognised on trade dates. Whenfinancial assets are recognised initially, they are measured at fair value, plus attributabletransaction cost, for investment not at fair value through profit or loss.

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

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

Financial assets are classified as financial assets at FVTPL if they are held for trading or aredesignated as such upon initial recognition. Financial assets held for trading includesecurities and fixed income securities and collective investment schemes acquiredprincipally for the purpose of selling them in near term.

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

32

PAXJ


(a) Financial Assets (Contd.)

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

(iii) Loans and receivables

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

After initial recognition, AFS financial assets are measured at fair value. Gains or lossesfrom changes in fair value of the AFS financial assets are recognised in other comprehensiveincome, except that impairment losses, foreign exchange gains and losses on monetaryinstruments, dividend income and interest income calculated using effective interest methodare recognised in profit or loss.

The cumulative gain or loss previously recognised in other comprehensive income isreclassified from equity to profit or loss as a reclassification adjustment when the financialasset is derecognised. Interest income calculated using the effective interest method isrecognised in profit or loss. Dividends on an AFS equity instrument are recognised in profitor loss when the Fund's right to receive payment is established.

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

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

Regular way purchases or sales are purchases or sales of financial assets that requiredelivery of assets within the period generally established by regulation or convention in themarket place concerned. All regular way purchases and sales of financial assets arerecognised or derecognised on trade date, i.e. the date that the Fund commit to purchase orsell the asset.

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

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

33

PAXJ


2.4 Significant Accounting Policies (Contd.)

(b) Impairment of Financial Assets

(i) AFS financial assets

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

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

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

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

Impairment losses on AFS equity investments are not reversed in profit or loss in thesubsequent periods. Increase in fair value, if any, subsequent to impairment loss isrecognised in other comprehensive income. For AFS debt investments, impairment lossesare subsequently reversed in profit or loss, up to the amount previously recognised asimpairment loss, if an increase in the fair value of the investment can be objectively relatedto an event occuring after the recognition of the impairment loss in profit or loss.

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

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

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

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

34

PAXJ



(c) Classification of Realised and Unrealised Gain and Losses

(d) Financial Liabilities

(e) Foreign Currencies

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

Realised gains and losses on disposals of financial instruments classified as part of "at fair valuethrough profit or loss" are calculated using weighted average method. They represent thedifference between an instrument's initial carrying amount and disposal amount, or cashpayments or receipts made of derivative contracts (excluding payments or receipts on collateralmargin accounts for such instruments).

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

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

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

A financial liability is derecognised when the obligation under the liability is extinguished. Gainsand losses are recognised in profit or loss when the liabilities are derecognised, and through theamortisation process.

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

In preparing the financial statements, transactions in currencies other than the Fund's functionalcurrency (foreign currencies) are recorded in the functional currency using the exchange ratesprevailing at the dates of the transactions. At the end of each reporting period, foreign currencymonetary assets and liabilities are translated at exchange rates prevailing at the end of thereporting period. Non-monetary items that are measured at fair value in a foreign currency aretranslated using exchange rates at the date when the fair value was determined.

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

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

35

PAXJ



(f) Unitholders' Capital

(g) Income Distribution

(h) Cash and Cash Equivalents

(i) Income Recognition

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

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

Income is recognised to the extent that is probable that the economic benefits will flow to theFund and the income can be reliably measured. Income is measured at fair value of considerationreceived or receivable.

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

Interest income is recognised using effective interest method.

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

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

36

PAXJ



(j) Income Tax

(k) Segment Reporting

2.5 Significant Accounting Estimates and Judgements

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

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

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

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

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

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

37

PAXJ

3. MANAGER'S FEE

4. TRUSTEE' S FEE

5. TAXATION

30.06.2013 30.06.2012

RM RM

Current year Malaysian tax 17,348 -

Overprovision in prior year's income tax expenses - -

Malaysian tax expenses based onresults for the year 17,348 -

30.06.2013 30.06.2012

RM RM

Net income/(loss) before tax (1,325,366) 493,068

Taxation at Malaysian statutory rate of 25% (331,341) 123,267

(2012: 25%)

Tax effects of:

Income not subject to tax 330,253 (190,693)

Expenses not deductible for tax purposes 5,305 7,813

Restriction on tax deductible expenses for unit trust funds 13,131 59,613Tax expense for the financial period 17,348 -

The Manager is entitled to an annual management fee of 1.5% per annum of the NAV of the Fund(before deducting the Manager's and Trustee's fees for the day) calculated and accrued on a daily basis.

The Trustee is entitled to a fee of 0.07% per annum of the NAV of the Fund (before deducting theManager's and Trustee's fee for the day) calculated and accrued on a daily basis, subject to a minimum ofRM18,000 per annum.

Income tax is calculated at the Malaysian statutory tax rate of 25% (2012:25%) of the estimatedassessable income for the period.

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

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

38

PAXJ

6. INVESTMENTS

Financial assets at fair value through profit or loss 30.06.2013 30.06.2012

(Note 7) RM RM

Quoted equities:

-in Malaysia 1,426,380 1,686,800

-outside Malaysia 15,814,548 23,143,17517,240,928 24,829,975

7. FINANCIAL ASSETS AT FVTPL

30.06.2013 30.06.2012

RM RM

Financial assets at FVTPL:Quoted equities 17,240,928 24,829,975

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

Realised (loss)/gain on disposals (219,892) 338,552

Unrealised (loss)/gain changes in fair values (1,483,872) 267,539(1,703,764) 606,091

The currency exposure profile of financial assets at 30.06.2013 30.06.2012

FVTPL is as follows :

- Ringgit Malaysia 1,426,380 1,686,800

- Hong Kong Dollar 8,124,520 8,974,942

- Indonesian Rupiah 980,885 1,722,389

- South Korean Won 2,083,376 4,520,374

- Thai Baht 769,185 2,263,882- Philippine Peso 335,247 -

- Singapore Dollar 1,205,845 1,496,398

- New Taiwan Dollar 2,315,491 4,165,19017,240,929 24,829,975

39

PAXJ

7. FINANCIAL ASSETS AT FVTPL (CONTD.)

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

Name of Counter Quantity Cost Fair value % of

RM RM NAV

QUOTED EQUITIES

- IN MALAYSIA

Main Market

Properties

Matrix Concepts Holdings Bhd 514,000 1,154,383 1,300,420 4.89

Trading/Services

Engtex Group Bhd 134,000 138,109 125,960 0.47

TOTAL QUOTED

EQUITIES- IN MALAYSIA 648,000 1,292,492 1,426,380 5.36

QUOTED EQUITIES

- OUTSIDE MALAYSIA

Hong Kong Stock Exchange

("HKSE")

Agricultural Bank of China 504,000 703,508 656,926 2.47

Anhui Expressway Co Ltd-H 256,000 465,452 384,771 1.45

Bank of China Ltd 800,000 1,088,261 1,032,963 3.88Bank Of Communication Co-H 154,000 500,066 313,009 1.18

China Citic Bank 530,400 1,140,501 773,432 2.91

China Construction Bank-H 427,250 1,087,788 953,670 3.59

China Merchants Bank-H 208,000 1,320,442 1,096,310 4.12

Chongqing Rural Commercial-H 616,000 1,006,621 817,964 3.08

40

PAXJ



RM RM NAV

QUOTED EQUITIES

-OUTSIDE MALAYSIA (CONTD.)

Hong Kong Stock Exchange

("HKSE") (Contd.)

Fufeng Group Ltd 180,000 345,693 184,027 0.69

K Wah International Holdings 172,000 282,572 249,410 0.94

Real Gold Mining Ltd* 191,000 904,283 117,887 0.44

Standard Chartered PLC 6,188 519,041 429,997 1.62

Tianneng Power International Ltd 140,000 284,505 177,347 0.67

Vodone Ltd 933,200 676,567 205,260 0.77

West China Cement Limited 1,280,000 1,122,201 599,575 2.25

Xiamen International Port - H 360,000 158,007 131,972 0.506,758,038 11,605,508 8,124,520 30.56

Jakarta Stock Exchange

("JSX")

Astra Agro Lestari TBK PT 90,000 705,950 556,719 2.09

Indomobil Sukses Internasional 256,000 442,847 424,166 1.59

346,000 1,148,797 980,885 3.68

41

PAXJ



RM RM NAV

QUOTED EQUITIES- OUTSIDE MALAYSIA (CONTD.)

Korea Stock Exchange

(''KE'')

Hana Financial Group 2,500 294,392 229,907 0.86

Hyundai Motors Co 700 485,562 436,582 1.64

Kia Motors Corporation 2,045 424,969 351,241 1.32

Lg Electronics Inc 1,641 482,761 330,870 1.24

Posco 890 1,283,514 734,776 2.76

7,776 2,971,198 2,083,376 7.82

Philippines Stock Exchange

San Miguel Pure Foods Co. 21,000 468,241 335,247 1.26

Stock Exchange of Thailand

("SET")

Banpu Public Co Ltd- NVDR 16,800 1,225,930 411,506 1.55

Indorama Ventures PCL-NVDR 198,000 622,616 357,679 1.34

214,800 1,848,546 769,185 2.89

Singapore Exchange

("SGX")

Fibrechem Technologies Ltd 522,000 - - -

IndoFood Agri Resources Ltd 244,000 1,127,584 592,090 2.23

Midas Holdings Ltd 564,000 709,254 613,755 2.31

Sino Techfibre Ltd** 834,000 590,100 - -

2,164,000 2,426,938 1,205,845 4.54

42

PAXJ



RM RM NAV

QUOTED EQUITIES- OUTSIDE MALAYSIA (CONTD.)

Taiwan Stock Exchange

("TWSE")

Cathay Financial Holdings Co 112,455 556,480 483,817 1.82

Hon Hai Precision Industry 105,043 1,167,230 817,565 3.07

PowerTech Technolgy Inc 87,000 587,706 515,868 1.94

Siliconware Precision Inds 125,650 611,577 498,240 1.87

430,148 2,922,993 2,315,490 8.70

TOTAL QUOTED

EQUITIES

- OUTSIDE MALAYSIA 9,941,762 23,392,221 15,814,548 59.45

TOTAL QUOTED EQUITIES 24,684,713 17,240,928 64.81

TOTAL FINANCIAL ASSETSAT FVTPL 24,684,713 17,240,928 64.81

EXCESS OF COSTOVER FAIR VALUE (7,443,785)

*

**

This security has been suspended since 27 May 2011 and its fair value has been determined by theManager with the consent of the Trustee.

This security has been suspended since 19 April 2011 and its fair value has been determined by theManager with the consent of the Trustee.

43

PAXJ

8. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

30.06.2013 30.06.2012

RM RM

Licensed investment bank 8,205,758 3,100,246

Averageremaining

maturities

30.06.2013 30.06.2012 30.06.2013 30.06.2012

% % Days Days

Licensed investment bank 2.91 2.91 7 1

9. AMOUNT DUE TO MANAGER

30.06.2013 30.06.2012

RM RM

Amount due from creation/release of units - (8,882)

Management fee (31,234) (34,437)(31,234) (43,319)

10. INCOME DISTRIBUTION

There is no income distribution to unitholders for the financial year ended 31 December 2012.

WAEIR

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

44

PAXJ

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

Note 30.06.2013 30.06.2012

RM RM

Unit holders' capital (a) 33,268,280 36,654,208

Accumulated losses

- Realised earnings (b) (1,156,007) 2,148,331

- Unrealised losses (c) (5,514,973) (9,814,699)

(6,670,980) (7,666,368)Total equity/Net asset value 26,597,300 28,987,840

(a) Unitholders' Capital

Number Numberof units RM of units RM

Balance at beginning

of the year 37,047,399 35,335,187 40,478,066 38,024,851

Add: Creation of units 526,765 464,836 908,026 749,647

Less: Cancellation of units (3,050,186) (2,544,773) (2,606,451) (2,113,242)

Distribution equalisation - 13,030 - (7,048)

Balance at end ofperiod 34,523,978 33,268,280 38,779,641 36,654,208

(b) Realised - Distributable

30.06.2013 30.06.2012

RM RM

Balance at the beginning of the year 1,670,579 1,387,724

Net (loss)/income after taxation (1,342,714) 493,068

Net unrealised (gain)/ loss attributable to

investments held transferred to

unrealised reserve (1,484,432) 269,045

Net unrealised foreign exchange gain/

(loss) attributable to foreign currency

monetary items transferred to unrealised

reserve 560 (1,506)

Distribution out of realised reserve -Balance at the end of period (1,156,007) 2,148,331

01.01.2013 to 30.06.2013 01.01.2012 to 30.06.2012

The Fund has an approved fund size of 200 million units. As at 30 June 2013, the number of units not inissue is 165,476,022 units (30 June 2012: 161,220,359).

45

PAXJ

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

(c) Unrealised - Non-distributable

30.06.2013 30.06.2012

RM RM

Balance at the beginning of the year (6,998,845) (9,547,160)

Net unrealised gain/(loss) attributable to

investment held transferred from

realised reserve 1,484,432 (269,045)

Net unrealised foreign exchange

gain/(loss) attributable to foreign

currency monetary items transferred from

realised reserve (560) 1,506Balance at the end of period (5,514,973) (9,814,699)

12. NET ASSET VALUE PER UNIT

RM RM/Unit RM RM/Unit

Net asset value attributable

to unitholders forissuing/redeeming of units 26,645,682 0.7718 29,038,679 0.7488

Effect from adopting bidprices as fair value (48,382) (0.0014) (50,839) (0.0013)


to unitholders per

financial statements 26,597,300 0.7704 28,987,840 0.7475

13. UNITS HELD BY RELATED PARTIES

30.06.2013 30.06.2012

Number of Valued at Number of Valued at

units NAV units NAV

RM RMDirectors of the Manager # 124,221 95,700 121,154 90,563

#

30 June 2013 30 June 2012

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

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

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

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

46

PAXJ

14. TRANSACTIONS WITH BROKERS

1 January 2013 to 30 June 2013

% of Total

Value of % of Total Brokerage Brokerage

Trade Trade Fees Fees

RM % RM %

MIDF Amanah Investment

Bank Bhd 28,910,000 43.71 - -

CCB International Securities Ltd 7,813,040 11.81 20,571 22.85

DBS Vickers Securites Pte Ltd

- Hong Kong 6,025,748 9.11 15,075 16.74

CIMB-GK Securities Pte Ltd

- Hong Kong 5,686,921 8.60 14,244 15.82

Hwang-DBS Investment Bank Bhd 3,800,000 5.75 - -

Daiwa Securities SMBC Co Ltd

- Korea 1,944,838 2.94 6,841 7.60

Fubon Securities Company Ltd 1,354,847 2.05 3,151 3.50

DBS Vickers Securites Pte Ltd

- Korea 1,251,319 1.89 2,515 2.79

Hong Leong Investment Bank 1,130,800 1.71 - -

Boci Securities Ltd - Hong Kong 1,076,503 1.63 4,661 5.18

Others 7,145,979 10.80 22,984 24.5366,139,996 100.00 90,042 100.00

15. MANAGEMENT EXPENSE RATIO

30.06.2013 30.06.2012

Management expense ratio 0.83% 0.86%

16. PORTFOLIO TURNOVER RATIO

30.06.2013 30.06.2012

Portfolio turnover (times) 0.58 0.53

Details of transactions with stockbroking companies and other investment banks for the period ended30 June 2013 are as follows:

This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other professionalfees) and other administrative expenses of the Fund to the average NAV of the Fund calculated on adaily basis. The average NAV of the Fund for the period ended 30 June 2013 was RM 28,964,482 (30June 2012: RM 31,358,222).

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

47

PAXJ

17. SEGMENT INFORMATION

The Manager, the appointed External Investment Manager and Investment Committee of the Fund areresponsible for allocating resources available to the Fund in accordance with the overall investmentstrategies as set out in the investment Guidelines of the Fund. The Fund is managed by two segments:

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

institutions.

The investment objective of each segment is to achieve consistent returns from the investments in eachsegment while safeguarding capital by investing in diversified portfolios. There have been no changes inreportable segments in the current financial period. The segment information provided is presented to theManager, the appointed External Investment Manager and Investment Committee of the Fund.

01.01.2013 to 30.06.2013 01.01.2012 to 30.06.2012

Fixed Fixed

Equity Income Equity Income

Portfolio Portfolio Total Portfolio Portfolio TotalRM RM RM RM RM RM

Gross Dividend income 553,879 - 553,879 347,564 - 347,564

Interest Income - 64,330 64,330 - 46,641 46,641

Net (loss)/gain on

financial assets at FVTPL (1,703,764) - (1,703,764) 606,091 - 606,091

Net realised gain/ (loss) on

foreign exchange 560 - 560 (1,506) - (1,506)

Total segment operating (loss)/income for the period (1,149,325) 64,330 (1,084,995) 952,149 46,641 998,790

Deposit with financial institutions 8,205,758 8,205,758 3,100,246 3,100,246

Financial assets at FVTPL 17,240,928 - 17,240,928 25,062,204 - 25,062,204

AFS financial assets - - - - - -Other assets 448,208 1,322 449,530 1,127,834 246 1,128,080

Total segment assets 17,689,136 8,207,080 25,896,216 26,190,038 3,100,492 29,290,530

Other liabilities - - - 292,458 - 292,458Total segment liabilities - - - 292,458 - 292,458

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

48

PAXJ

17. SEGMENT INFORMATION (CONTD.)

30.06.2013 30.06.2012

RM RM

Net reportable segment operating (loss)/income (1,084,995) 762,771

Expenses (240,371) (269,703)

Net (loss)/income before tax (1,325,366) 493,068

Tax expense (17,348) -Net (loss)/income tax for the period (1,342,714) 493,068

30.06.2013 30.06.2012

RM RM

Total segment assets 25,896,216 29,290,530

Tax recoverable 21,359 21,359

Cash at bank 721,451 25,453

Total assets of the Fund 26,639,026 29,337,342

Total segment liabilities - 292,458

Other payables and accruals 9,034 12,119

Amount due to Manager 31,234 43,319

Amount due to Trustee 1,458 1,607

Total liabilities of the Fund 41,726 349,502

18. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

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

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

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

49

PAXJ

18. FINANCIAL INSTRUMENTS (CONTD.)

(a) Classification of financial instruments (Contd.)

Financial

liabilities

Financial AFS at

assets at financial Loan and amortised

FVTPL assets receivables cost Total

30.06.2013 RM RM RM RM RM

Assets

Quoted equities 17,240,928 - - 17,240,928

Deposits with licensed

financial institutions - - 8,205,758 - 8,205,758

Other receivables - - 449,530 - 449,530

Cash at bank - - 721,451 - 721,451Total financial assets 17,240,928 - 9,376,739 - 26,617,667

Total non-financial assets 21,359

26,639,026

Liabilities

Amount due to Manager - - - 31,234 31,234

Amount due to Trustee - - - 1,458 1,458

Other payables - - - 9,034 9,034Total financial liabilities - - - 41,726 41,726

30.06.2012

Assets

Quoted equities 25,062,204 - - - 25,062,204

Deposits with licensed

financial institutions - - 3,100,246 - 3,100,246

Other receivables - - 1,128,080 - 1,128,080

Cash at bank - - 25,453 - 25,453

Total financial assets 25,062,204 - 4,253,779 - 29,315,983

Total non-financial assets 21,35929,337,342

Liabilities

Amount due to brokers - - - 292,458 292,458

Amount due to Manager - - - 43,319 43,319Amount due to Trustee - - - 1,607 1,607

Other payables - - - 12,119 12,119Total financial liabilities - - - 349,502 349,502

50

PAXJ


(b) Fair Value

(i) Financial instruments that are carried at fair value

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

financial position as at the end of period:

Level 1 Level 2 Level 3 Total

RM RM RM RM

As at 30 June 2013

Financial asset

at FVTPL- Quoted Securities 17,123,041 - 117,887 17,240,928

As at 30 June 2012

Financial asset

at FVTPL- Quoted Securities 24,829,975 - 232,229 25,062,204

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

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

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

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

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

Quoted equity instrumentsFair value of quoted equity instruments is determined directly by reference to theirpublished market bid prices on the relevant stock exchanges at the reporting date. The fairvalue of quoted equity instruments which have lost active trading market due to suspensionin their trading, is determined by reference to their published net tangible assets.

51

PAXJ


(b) Fair Value (Contd.)

(i) Financial instruments that are carried at fair value (Contd.)

2013 2012

RM RM

Financial assets at FVTPLBalance at 1 January 468,248 468,248

Total loss recognised in profit or loss :

- Net loss on financial assets at FVTPL (350,361) -

Transfer from Level 1

Balance at 30 June 117,887 468,248

(ii) Financial instruments not carried at fair value

19. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES

The following table shows a reconciliation from the beginning balance to the ending balancefor the fair value measurement under Level 3 of the fair value hierarchy :

The transfer of financial assets at FVTPL from Level 1 to Level 3 in the previous financialyear was due to loss of active trading market resulted from the suspension in trading of thosequoted equities.

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

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

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk, equityprice risk and currency risk), credit risk, and liquidity risk Whilst these are the most important types offinancial risks inherent in each type of financial instruments, the Manager and the Trustee would like tohighlight that this list does not purport to constitute an exhaustive list of all the risks inherent in aninvestment in the Fund.

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

52

PAXJ

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

(i) Market Risk

(a) Equity Price Risk

Effect on profit

or loss and equity

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

RM

2013

+6/-6 1,034,456/ (1,034,456)

2012

+6/-6 1,489,799/ (1,489,799)

The Fund's principal exposure to market risk arises primarly due to changes or developments inthe market environment and typically includes changes in regulations, politics and the economy ofthe country. Market risk is also influenced by global economics and geopolitical developments.The Fund seeks to diversify away some of this risk by investing into different sectors to mitigaterisk exposure to any single asset class.

The Fund's market risk arises primarily due to changes in market prices and interest rates andforeign currency exchange rates.

Equity price risk is the adverse changes in the fair value of equities as a result of changes inthe levels of equity indices and the value of individual shares. The equity price risk exposurearises from the Fund’s investments in quoted equity securities.

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

53

PAXJ


(i) Market Risk (Contd.)

(b) Interest Rate Risk

Effect on profit

or loss and equity

Change in basis points* Increase/(Decrease)

RM

2013

+25/-25 6,529/ (6,529)

2012+25/-25 6,718/ (6,718)

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

on the current observable market environment

(c) Currency Risk

This risk refers to the effect of interest rate changes on the market value of fixed incomesecurities and deposits with financial institutions. In the event of rising interest rates, thereturn on deposits with financial institutions will rise while prices of fixed income securitieswill decrease and vice versa, thus affecting the net asset value of the Fund. This risk will beminimized via the management of the duration structure of the portfolio of fixed incomesecurities and deposits with financial institutions.

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

The Fund is exposed to currency risk primarily through its investment in overseas quotedequities that are denominated in foreign currencies. The Fund's foreign currency exposureprofile of its investment in quoted equities has been disclosed under Note 7. The currencyrisk is minimised by proper portfolio allocation and to avoid concentration in a singlecountry.

A 10% strenghtening or weakening of the RM against the following foreign currencies as atthe end of the period would have decreased or increased respectively the profit or loss andequity of the Fund by the amount shown below. This analysis assumes all other variables areheld constant.

54

PAXJ



(c) Currency Risk (Contd.)

2013 2012

RM RM

Hong Kong Dollar 812,452 897,494

Indonesian Rupiah 98,089 172,239

South Korean Won 208,338 452,037Thai Baht 76,919 226,388

Philippine Peso 33,525 -

Singapore Dollar 120,585 149,640

New Taiwan Dollar 231,549 416,519

1,581,457 2,314,317

(ii) Credit Risk

(iii) Liquidity Risk

Effect on profit

or loss and equity

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

The Fund’s principal exposure to credit risk arises primarily due to changes in the financialconditions of companies issuing debt securities and stockbroking companies, which may affecttheir creditworthiness. This in turn may lead to default in the payment. Such events can lead toloss of capital or delayed or reduced income for the Fund resulting in a reduction in the Fund’sasset value and thus unit price. This risk is mitigated by vigorous credit analysis anddiversification of the bond portfolio of the Fund and to engage different stockbroking companieswith good reputation.

55

PAXJ



1 month 3 months

2013 - 3 months -5 years Total

RM RM RM

Financial Assets:

Financial assets held at FVTPL 17,240,928 - 17,240,928

Deposits with financial institutions 8,205,758 8,205,758

Other assets 1,170,981 - 1,170,981

Total undiscounted

financial assets: 26,617,667 - 26,617,667

Non-Financial Assets

Tax recoverable - 21,359 21,359

Total Assets 26,617,667 21,359 26,639,026

Financial liabilitites

Other liablities - 41,726 41,726

Total undiscounted

financial liabilities - 41,726 41,726

Unitholders' NAV 26,597,300 26,597,300

Liquidity gap 20,367 (20,367)

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

56

PAXJ


(iii) Liquidity Risk (Contd.)

1 month 3 months

2012 - 3 months - 5 years Total

RM RM RM

Financial Assets

Financial assets held at FVTPL 25,062,204 - 25,062,204

Deposits with financial institutions 3,100,246 - 3,100,246

Other assets 1,153,534 21,359 1,174,893

Total undiscounted

financial assets 29,315,984 21,359 29,337,343


Tax recoverable

Financial Liabilitites

Other liablities - 349,502 349,502

Total undiscounted

financial liabilities - 349,502 349,502

Unitholders' NAV 28,987,840 - 28,987,840

Liquidity gap 328,144 (328,144)

(iv) Stock Specific Risk

(v) Single Issuer Risk

(vi) Capital Management

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

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

The capital is represented by unitholders’ subscription to the Fund. The amount of capital canchange significantly on a daily basis as the Fund is subject to daily redemption and subscription atthe discretion of unitholders. The Manager manages the Fund’s capital with the objective ofmaximising unitholders' value while maintaining sufficient liquidity to meet unitholders'redemption as explained in Note 19 (iii) above.

57


PAXJI

[email protected]

58Your Need

is our Focus

22 August 2013


PAXJI

[email protected]

59Your Need

is our Focus

22 August 2013


PAXJI

[email protected]

60Your Need

is our Focus

STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM ASIA EX-JAPAN ISLAMIC FUND

In the opinion of the Manager, the accompanying unaudited financial statement ofPheim Asia Ex-Japan Islamic Fund are drawn up in accordance with MalaysianFinancial Reporting Standards, International Financial Reporting Standards andSecurities Commission's Guidelines on Unit Trust Funds in Malaysia so as to give a trueand fair view of the unaudited financial position of Pheim Asia Ex-Japan Islamic Fundas at 30 June 2013 and of its results, changes in net asset value and cash flows for theperiod then ended.

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

AZMI MALEK MERICANDirector

HOI WENG KONGDirector

Kuala Lumpur, Malaysia22 AUG 2013

PAXJI

PHEIM ASIA EX-JAPAN ISLAMIC FUND

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)


Note 30.06.2013 30.06.2012

RM RM

INVESTMENT INCOME/(LOSS)

Gross dividend income 105,961 121,246

Profit from Shariah-compliant deposits with licensed financial

institutions 24,664 16,918

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

- profit or loss ("FVTPL") 7 432,903 442,602

- Available for sale ('AFS') financial assets - (74,143)

Net realised gain on foreign exchange 877 (643)

564,405 505,980

EXPENDITURE

Manager's fee 3 70,894 85,374

Trustee's fee 4 8,827 8,902

Audit fee 5,634 5,482

Tax agent's fee 1,141 1,731

Administrative expenses 17,785 22,448

104,281 123,936

Net income before tax 460,124 382,044

Income tax expenses 5 (7,756) (811)Net income for the period 452,368 381,232

Total comprehensive income for the period 452,368 381,232

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

Net realised loss (412,038) (966,911)

Net unrealised income 864,406 1,348,143452,368 381,232


61

PAXJI


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

Note 30.06.2013 30.06.2012 30.06.2011

RM RM RM

ASSETS

Quoted Shariah-compliant investment s 6 5,129,477 8,960,978 12,533,047

Shariah-compliant deposits with licensed financial institutions8 1,895,961 800,246 910,508

Amount due from brokers - 410,825 1,197,383

Other receivables 41,553 23,691 25,767

Tax recoverable 18,268 43,586 36,873

Cash at bank 714,383 11,268 191,790TOTAL ASSETS 7,799,642 10,250,595 14,895,368

LIABILITIES

Amount due to brokers - - 368,958

Amount due to Manager 9 10,803 13,817 33,731

Amount due to Trustee 1,381 1,426 1,479

Other payables and accruals 8,453 16,083 23,336

TOTAL LIABILITIES 20,637 31,326 427,504

EQUITY

Unitholders' capital 11,443,989 15,213,383 18,846,766

Accumulated losses (3,664,984) (4,994,114) (4,378,902)

TOTAL EQUITY 11 7,779,005 10,219,269 14,467,864

TOTAL EQUITY AND LIABILITIES 7,799,642 10,250,595 14,895,368

UNITS IN CIRCULATION 11 (a) 8,946,438 13,471,602 17,787,907

NET ASSET VALUE ("NAV") PER UNIT 12 0.8695 0.7586 0.8134


62

PAXJI


STATEMENT OF CHANGES IN EQUITY (UNAUDITED)



Unitholders' Retained AFS Total

Capital earnings reserves Equity

Note 11(a) Note 11(b)

and (c )

RM RM RM RM

At 1 January 2012 16,895,689 (5,375,346) - 11,520,343

16,895,689 (5,375,346) - 11,520,343

Total comprehensive loss forthe period 381,232 381,232

Creation of units 18,121 - 18,121

Cancellation of units (2,001,352) - - (2,001,352)

Distribution equalisation 300,925 - - 300,925Balance at 30 June 2012 15,213,383 (4,994,114) - 10,219,269

At 1 January 2013 14,110,426 (4,117,352) - 9,993,07414,110,426 (4,117,352) - 9,993,074

Total comprehensive income for

the period - 452,368 - 452,368

Creation of units 248,677 - - 248,677

Cancellations of units (3,554,397) - - (3,554,397)

Distribution equalisation 639,283 - - 639,283Balance at 30 June 2013 11,443,989 (3,664,984) - 7,779,005

63

PAXJI


STATEMENT OF CASH FLOWS (UNAUDITED)


01.01.2013 01.01.2012

to to

30.06.2013 30.06.2012

RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sale of Shariah-compliant investments 6,317,127 7,190,284

Purchase of Shariah-compliant investments (1,599,796) (5,753,063)

Dividends received 68,589 97,130

Profits received from Shariah-compliant deposits with licensed

financial institutions 24,562 17,025

Management fee paid (72,731) (88,568)

Trustee's fee paid (8,971) (9,004)

Payment for other fees and expenses (45,317) (39,928)

Net cash generated from operating and investing activities 4,683,463 1,413,877

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from creation of units 187,238 14,788

Payment for cancellation of units (2,892,929) (1,754,572)

Net cash used in financing activities (2,705,691) (1,739,784)

NET INCREASE/(DECREASE) IN CASH

AND CASH EQUIVALENTS 1,977,772 (325,907)

CASH AND CASH EQUIVALENTS AT

BEGINNING OF YEAR 632,572 1,137,421

CASH AND CASH EQUIVALENTS AT THE END OFTHE PERIOD 2,610,344 811,514

Cash and cash equivalents comprise the following:

Shariah-compliant deposits with licensed financial institutions

(Note 8) 1,895,961 800,246

Cash at bank 714,383 11,2682,610,344 811,514


64

PAXJI


NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)


1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

Pheim Asia Ex-Japan Islamic Fund ("the Fund") was established pursuant to a Deed dated 12September 2006 as amended by the Supplemental Deed dated 3 December 2008 between theManager; Pheim Unit Trusts Berhad, the Trustee; Maybank Trustees Berhad and the registeredunitholders of the Fund.

The principal activity of the Fund is to invest in "Permitted Investments" in compliance with Shariahrequirements as defined under Part 7 of the Deed, which includes quoted Shariah-compliant stocksand shares of companies quoted on the Bursa Malaysia Securities Berhad ("Bursa Malaysia") or anyother markets considered as an Eligible Market. The activities of the Fund shall be conducted strictlyin compliance with Shariah requirements and as approved by the Shariah Advisory Council of theSecurities Commission of Malaysia and/or the Shariah Adviser of the Fund. The Fund commencedoperations on 1 November 2006 and will continue its operations until terminated by the Trustee asprovided under Part 12 of the Deed.

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

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

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

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

The unaudited financial statements of the Fund have been prepared under the histrorical costconvention unless otherwise indicated in this summary of significant accounting policies. Thefinancial statements comply with Malaysian Financial Reporting Standards ("MFRSs"), InternationalFinancial Reporting Standards ("IFRSs") and the Securities Commission's Guidelines on Unit TrustFunds in Malaysia.

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

65

PAXJI


2.2 New MFRSs and Amendments to MFRSs That Are Effective


-Presentation of Items of Other Comprehensive Income

MFRS 13 Fair Value Measurement


-(Annual improvements 2009-2011 Cycle)

Amendments to MFRS 132 Financial Instruments : Presentation


Amendments to MFRS 134 Interim Financial Reporting


Amendments to MFRS 7 Financial Instruments : Disclosures

-Offsetting Financial Assets and Financial Liabilities

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

Have Not Been Early Adopted

Amendments to MFRS 132 Financial Instruments : Presentation 1 January 2014

- Offsetting Financial Assets and Financial Liabilities



by International Accounting Standard

Board ("IASB") in November 2009)

MFRS 9 Financial Instruments (IFRS 9 issued 1 January 2015

by IASB in October 2010)

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

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

Effective forfinancial

periodsbeginning on

or after

66

PAXJI


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

Have Not Been Early Adopted (contd.)

2.4 Significant Accounting Policies

(a) Financial Assets

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

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

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

Financial assets are recognised in the statement of financial position when, and only when, theFund becomes a party to the contractual provisions of the financial instruments. Regular way ofpurchase and sale of investments in financial instruments are recognised on trade dates. Whenfinancial assets are recognised initially, they are measured at fair value, plus attributabletransaction cost, for investment not at fair value through profit or loss.

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

Financial assets are classified as financial assets at FVTPL if they are held for trading or aredesignated as such upon initial recognition. Financial assets held for trading includeShariah-compliant securities and sukuk acquired principally for the purpose of selling themin near term.

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

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

67

PAXJI



(a) Financial Assets (Contd.)

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

(iii) Loans and receivables

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

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

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

The cumulative gain or loss previously recognised in other comprehensive income isreclassified from equity to profit or loss as a reclassification adjustment when the financialasset is derecognised. Profit income calculated using the effective profit method isrecognised in profit or loss. Dividends on an AFS equity instrument are recognised in profitor loss when the Fund's right to receive payment is established.

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

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

Regular way purchases or sales are purchases or sales of financial assets that requiredelivery of assets within the period generally established by regulation or convention in themarket place concerned. All regular way purchases and sales of financial assets arerecognised or derecognised on trade date, i.e. the date that the Fund commit to purchase orsell the asset.

68

PAXJI



(b) Impairment of Financial Assets

(i) AFS financial assets

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

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

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

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

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

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

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

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

69

PAXJI



(b) Impairment of Financial Assets (Contd.)

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

(c) Classification of Realised and Unrealised Gain and Losses

(d) Financial Liabilities

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

Realised gains and losses on disposals of financial instruments classified as part of "at fair valuethrough profit or loss" are calculated using weighted average method. They represent thedifference between an instrument's initial carrying amount and disposal amount, or cashpayments or receipts made of derivative contracts (excluding payments or receipts on collateralmargin accounts for such instruments).

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

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

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

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

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

70

PAXJI



(e) Foreign Currencies

(f) Unitholders' Capital

(g) Income Distribution

(h) Cash and Cash Equivalents

Cash and cash equivalents comprise cash at bank and Shariah-compliant deposits withfinancial institutions which have insignificant risk of changes in value.

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

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

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

In preparing the financial statements, transactions in currencies other than the Fund's functionalcurrency (foreign currencies) are recorded in the functional currency using the exchange ratesprevailing at the dates of the transactions. At the end of each reporting period, foreign currencymonetary assets and liabilities are translated at exchange rates prevailing at the end of thereporting period. Non-monetary items that are measured at fair value in a foreign currency aretranslated using exchange rates at the date when the fair value was determined.

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

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

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

71

PAXJI



(i) Income Recognition

(j) Income Tax

(k) Segment Reporting

2.5 Significant Accounting Estimates and Judgements

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

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

Profit income is recognised using effective profit method.

For management purposes, the Fund is managed by 2 main portfolios, namely (1) Shariah-compliant equity securities and (2) sukuk and Shariah-compliant deposits. Each segmentengages in separate business activities and the operating results are regularly reviewed by theManager, External Investment Manager and the fund's Investment Committee. The ExternalInvestment Managers and the fund Investment Committee jointly assumes the role of chiefoperation decision maker, for performance assessment purposes and to make decision aboutresources allocated to each investment segment.

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

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

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

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

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

72

PAXJI

3. MANAGER'S FEE

4. TRUSTEE' S FEE

5. TAXATION

30.06.2013 30.06.2012

RM RM

Current year Malaysian tax 7,756 811

(Over)/Under provision in prior years - -

Malaysian tax (income)/expense based onresults for the period 7,756 811

30.06.2013 30.06.2012

RM RM

Income/(Loss) before tax 460,124 382,044

Tax at Malaysian statutory rate of 25% (2012:25%) 115,031 95,511

Tax effects of:

Income not subject to tax (141,101) (145,352)

Expenses not deductible for tax purposes 6,938 8,270

Restriction on tax deductible expenses for unit trust funds 26,888 42,382

(Over)/Underprovision of prior years - -Tax (income)/expense for the period 7,756 811

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

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

Income tax is calculated at the Malaysian statutory tax rate of 25% (2012 : 25%) of the estimatedassessable income for the period.

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

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

73

PAXJI

6. QUOTED SHARIAH-COMPLIANT INVESTMENTS

30.06.2013 30.06.2012

Financial assets at fair value through profit or loss RM RM

(Note 7)

Ouoted Shariah-compliant equities:

- in Malaysia 1,190,030 1,218,845

- outside Malaysia 3,939,447 7,669,1825,129,477 8,888,027

7. FINANCIAL ASSETS AT FVTPL

30.06.2013 30.06.2012

RM RM

Financial assets at FVTPL:Quoted Shariah-compliant equities 5,129,477 8,888,027

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

Realised profit on disposals 864,406 (905,541)

Unrealised loss on changes in fair values (431,503) 1,348,143432,903 442,602

The currency exposure profile of financial assets at

FVTPL is as follows :

- Ringgit Malaysia 1,190,030 1,218,845

- Hong Kong Dollar 1,636,718 2,114,283

- Indonesian Rupiah 624,190 1,111,850

- South Korean Won 173,108 1,056,422

- Thai Baht 302,598 674,926

- Singapore Dollar 346,729 1,201,400

- New Taiwan Dollar 856,104 1,510,3015,129,477 8,888,027

74

PAXJI


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


RM RM NAV

QUOTED SHARIAH-COMPLIANT EQUITIES

- IN MALAYSIA

Main Market

Industrial Products

Box-Pak (Malaysia) Bhd 47,000 99,726 108,100 1.39

Jaya Tiasa Holdings Bhd 120,000 317,580 238,800 3.07

167,000 417,306 346,900 4.46

Properties

KSL Holdings Bhd 90,000 188,082 179,100 2.30

Matrix Concepts Holdings Berhad 195,000 444,364 493,350 6.34

285,000 632,446 672,450 8.64

Trading/ Services

Engtex Group Bhd 32,000 33,077 30,080 0.39

Technology

Notion Vtec Bhd 190,000 147,621 140,600 1.81

TOTAL QUOTED SHARIAH-

COMPLIANT EQUITIES

- IN MALAYSIA 674,000 1,230,450 1,190,030 15.30

75

PAXJI


Name of Counter Quantity Cost Fair value % of NAV

RM RM


- OUTSIDE MALAYSIA (CONTD.)

Hong Kong Stock Exchange("HKSE")

Angang Steel Co Ltd-H 72,000 377,828 111,736 1.44China Mobile Limited 15,000 657,807 495,810 6.37

China National Offshore Oil Corp 60,000 383,163 321,131 4.13

Fufeng Group Ltd 127,200 256,934 130,046 1.67

Le Saunda Holdings 466,000 450,000 540,962 6.95Real Gold Mining Ltd * 60,000 368,936 37,033 0.48

800,200 2,494,668 1,636,718 21.04

Jakarta Stock Exchange

("JSX")

Astra Agro Lestari TBK PT 32,000 251,004 197,944 2.54

Aneka Tambang TBK PT 205,000 124,908 64,698 0.83

Sampoerna Agro TBK PT 111,000 126,512 57,452 0.74

Tambanng Batubara Bukit Asam 19,000 133,281 77,653 1.00

United Tractor TBK PT 41,000 326,811 226,443 2.91

408,000 962,516 624,190 8.02

Korea Stock Exchange

(''KE'')

Kia Motors Corporation 327 61,168 56,164 0.72

LG Electronics Inc 580 170,601 116,944 1.50

907 231,769 173,108 2.22

Thailand Stock Exchange

("SET")

Banpu Public Co Ltd-NVDR 5,200 372,249 127,371 1.64

Indorama Ventures PCL-NVDR 97,000 302,267 175,227 2.25

102,200 674,516 302,598 3.89

76

PAXJI



RM RM NAV


- OUTSIDE MALAYSIA (Contd.)

Singapore Stock Exchange

("SGX")

Ezion Holdings Ltd 30,000 61,047 157,604 2.03

Fibrechem Technologies Ltd 458,000 - - 0.00

Wilmar International Limited 24,000 215,278 189,125 2.43

Sino Techfibre Ltd ** 1,400,000 940,607 - 0.00

1,912,000 1,216,932 346,729 4.46

Taiwan Stock Exchange

("TWSE")

Hon Hai Precision Industry 46,176 523,482 359,394 4.62

PowerTech Technology Inc 40,000 274,032 237,181 3.05

Siliconware Precision Industry 65,450 340,789 259,529 3.34

151,626 1,138,303 856,104 11.01

TOTAL QUOTED SHARIAH-

COMPLIANT EQUITIES

- OUTSIDE MALAYSIA 3,374,933 6,718,704 3,939,447 50.64

TOTAL FINANCIAL ASSETS

AT FVTPL 7,949,154 5,129,477 65.94

EXCESS OF FAIR VALUE

OVER COST (2,819,677)

*

**

This security has been suspended since 27 May 2011 and its fair value has been determined bythe Manager with the consent of the Trustee.

This security has been suspended since 19 April 2011 and its fair value has been determined bythe Manager with the consent of the Trustee.

77

PAXJI

8. SHARIAH-COMPLIANT DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

30.06.2013 30.06.2012

RM RM

Licensed investment banks 1,895,961 800,246

Average

remaining

WAEPR maturities

30.06.2013 30.06.2012 30.06.2013 30.06.2012

% % Days Days

Licensed investment banks 2.81 2.80 7.50 1.00

9. AMOUNT DUE TO MANAGER

30.06.2013 30.06.2012

RM RM

Amount arising from release of units - (1,680)

Management fee (10,803) (12,137)

(10,803) (13,817)

10. INCOME DISTRIBUTION

There is no income distribution to unitholders for the financial year ended 31 December 2012.

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

78

PAXJI

11. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS

Note 30.06.2013 30.06.2012

RM RM

Unit holders' capital (a) 11,443,989 15,213,383

Retained earnings

- Realised (losses)/earnings (b) (831,411) 2,325,060- Unrealised losses (c) (2,833,573) (7,319,174)

(3,664,984) (4,994,114)Total equity / Net asset value 7,779,005 10,219,269

(a) Unitholders' Capital

Number Number

of units RM of units RM

Balance at beginning

of year 12,128,436 14,110,426 15,558,242 16,895,689

Add: Creation of units 210,567 248,677 18,312 18,121

Less: Cancellation of units (3,392,565) (3,554,397) (2,104,952) (2,001,352)

Distribution equalisation - 639,283 - 300,925Balance at end of period 8,946,438 11,443,989 13,471,602 15,213,383

(b) Realised - Distributable

30.06.2013 30.06.2012

RM RM

Balance at the beginning of the year (852,276) 595,685

Net income after tax 452,368 381,232

Net unrealised (loss)/gain attributable to

Shariah-compliant investments held

transferred to unrealised reserve (432,380) 1,347,500

Net unrealised foreign exchange loss

attributable to foreign currency monetary

items transferred to unrealised reserve 877 643Balance at the end of period (831,411) 2,325,060

01.01.2013 to 30.06.2013 01.01.2012 to 30.06.2012

In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 14August 2006, the maximum number of units that can be issued for circulation is 200,000,000 units.As at 30 June 2013, the number not yet issued is 191,053,562 units (30 June 2012: 186,528,398 ).

79

PAXJI

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

(c) Unrealised - Non-distributable

30.06.2013 30.06.2012

RM RM

Balance at the beginning of period (3,265,076) (5,971,031)

Net unrealised (loss) attributable to

Shariah-compliant investment held

transferred from realised reserve 432,380 (1,347,500)

Net unrealised foreign exchange loss/

(gain) attributable to foreign currency

monetary items transferred to unrealised

reserve (877) (643)Balance at the end of period (2,833,573) (7,319,174)

12. NET ASSET VALUE PER UNIT

RM RM/Unit RM RM/Unit


to unitholders for

issuing/redeeming of units 7,805,756 0.8725 10,238,077 0.7600

Effect from adopting bid

prices as fair value (26,751) (0.0030) (18,808) (0.0014)


to unitholders per

financial statements 7,779,005 0.8695 10,219,269 0.7586

30 June 2013 30 June 2012

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

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

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

80

PAXJI

13. UNITS HELD BY RELATED PARTIES

There were no units held by the Manager and other related parties.

14. TRANSACTIONS WITH BROKERS

1 January 2013 to 30 June 2013

Value of % of Total Brokerage % of Total

Trade Trade Fees Brokerage Fees

RM % RM %

MIDF Amanah Investment Bank 11,030,000 53.44 - -

Bhd

KAF Investment Bank Bhd 1,690,000 8.19 - -

CIMB-GK Securities Pte Ltd 1,383,526 6.70 3,470.23 14.54

- Hong Kong

CIMB Investment Bank Bhd 956,398 4.63 2,153.15 9.02

CCB International Securities Ltd 856,245 4.15 2,637.08 11.05

DBS Vickers Securites Pte Ltd 579,350 2.81 1,164.51 4.88

- Korea

CIMB-GK Securities Pte Ltd 546,386 2.65 1,370.05 5.74

- Singapore

Hong Leong Investment Bank 476,736 2.31 281.66 1.18

CLSA Ltd - Thailand 425,537 2.06 1,704.22 7.14

Kenanga Investment Bank Bhd 324,137 1.57 726.73 3.05

Others brokers 2,372,604 11.49 10,358.88 43.4020,640,919 100.00 23,866.51 100.00

15. MANAGEMENT EXPENSE RATIO

30.06.2013 30.06.2012

Management expense ratio 1.08% 1.08%

16. PORTFOLIO TURNOVER RATIO

30.06.2013 30.06.2012

Portfolio turnover (times) 0.41 0.56

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

This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and otherprofessional fees) and other administrative expenses of the Fund to the average NAV of the Fundcalculated on a daily basis. The average NAV of the Fund for the period ended 30 June 2013 wasRM9,613,333 (30 June 2012: RM11,462,860).

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

81

PAXJI

17. SEGMENT INFORMATION

01.01.2013 to 30.06.2013 01.01.2012 to 30.06.2012Shariah- Shariah-

compliant compliantDeposits Deposits

Equity and sukuk Total Equity and sukuk Total

Portfolio Portfolio Portfolio PortfolioRM RM RM RM RM RM

Gross dividend income 105,961 - 105,961 121,246 - 121,246

Profit from Shariah-compliantdeposits with licensed financial

institution - 24,664 24,664 - 16,918 16,918Net (loss)/gain from Shariah-

compliant investments:

- financial assets at FVTPL 432,903 - 432,903 442,602 - 442,602Net realised gain/(loss) on

foreign exchange 877 - 877 (643) - (643)

Total segment operatingincome for the period 539,741 24,664 564,405 563,205 16,918 580,123

Shariah-compliant deposits withfinancial institution - 1,895,961 1,895,961 - 800,246 800,246

Financial assets at FVTPL 5,129,477 - 5,129,477 8,960,978 - 8,960,978Other assets 41,406 147 41,553 434,455 61 434,516

Total segment assets 5,170,883 1,896,108 7,066,991 9,395,433 61 10,195,740

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

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

A portfolio of Shariah-compliant equity instruments. A portfolio of Shariah-compliant financial instruments, i.e.Shariah-compliant deposits with

financial institutions.

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

82

PAXJI

17. SEGMENT INFORMATION (CONTD.)

30.06.2013 30.06.2012

RM RM

Net reportable segment operating (loss) 564,405 505,980

Expenses (104,281) (123,936)

Net (loss) before tax 460,124 382,044

Tax Income / (expense) (7,756) (811)Net (loss) for the year 452,368 381,232

30.06.2013 30.06.2012

RM RM

Total segment assets 7,066,991 10,195,740

Tax recoverable 18,268 43,586

Cash at bank 714,383 11,268

Total assets of the Fund 7,799,642 10,250,595

Total segment liabilities - -

Other payables and accruals 8,453 16,083

Amount due to Manager 10,803 13,817

Amount due to Trustee 1,381 1,426

Total liabilities of the Fund 20,637 31,326

18. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

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

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

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

83

PAXJI


(a) Classification of financial instruments (Contd.)

Financial

liabilities

Financial at

assets at Loans and amortisedFVTPL receivables cost Total

RM RM RM RM

30 June 2013

Assets

Quoted Shariah-compliant

equities 5,129,477 - - 5,129,477

Shariah-compliant deposits with

licensed financial institutions - 1,895,961 - 1,895,961Other receivables - 41,553 - 41,553

Cash at bank - 714,383 - 714,383Total financial assets 5,129,477 2,651,897 - 7,781,374


Liabilities

Amount due to Manager - - 10,803 10,803Amount due to Trustee - - 1,381 1,381

Other payables - - 8,453 8,453Total financial liabilities - - 20,637 20,637

30 June 2012

Assets

Quoted Shariah-compliant

equities 8,960,978 - - 8,960,978

Shariah-compliant deposits with

licensed financial institutions - 800,246 - 800,246

Amount due from brokers - 410,825 - 410,825Other receivables - 23,691 - 23,691

Cash at bank - 11,268 - 11,268Total financial assets 8,960,978 1,246,031 - 10,207,009


Liabilities

Amount due to Manager - - 13,817 13,817Amount due to Trustee - - 1,426 1,426

Other payables - - 16,083 16,083Total financial liabilities - - 31,326 31,326

84

PAXJI


(b) Fair Value

(i) Financial instruments that are carried at fair value

Level 1 Level 2 Level 3 Total

RM RM RM RM

As at 30 June 2013

Financial asset at FVTPL- Quoted Securities 5,092,444 - 37,033 5,129,477

As at 30 June 2012

Financial asset at FVTPL- Quoted Securities 8,813,448 74,579 72,951 8,960,978

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

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

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

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

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

Quoted equity instrumentsFair value of quoted equity instruments is determined directly by reference to their publishedmarket bid prices on the relevant stock exchanges at the reporting date. The fair value of quotedequity instruments which have lost active trading market due to suspension in their trading, isdetermined by reference to their published net tangible assets.

The Fund held the following financial instruments carried at fair value on the statement offinancial position as at the period ended 30 June 2013:

85

PAXJI


(b) Fair Value (Contd.)

(i) Financial instruments that are carried at fair value (Contd.)

2012 2011

RM RM

Financial assets at FVTPLBalance at 1 January 147,094 -

Total loss recognised in profit or loss :

- Net loss on financial assets at FVTPL (110,061) -

Transfer from Level 1 - 147,094

Balance at 30 June 37,033 147,094

(ii) Financial instruments not carried at fair value

19. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES

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

The following table shows a reconciliation from the beginning balance to the endingbalance for the fair value measurement under Level 3 of the fair value hierarchy :

The transfer of financial assets at FVTPL from Level 1 to Level 3 in the previous financialyear was due to loss of active trading market resulted from the suspension in trading ofthose quoted equities.

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

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

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

86

PAXJI


(i) Market Risk

(a) Equity Price Risk

Effect on profit

Change in Shariah-compliant or loss and equity

equity price (%) Increase/(Decrease)

RM

30 June 2013

+6/-6 305,547 /(305,547)

30 June 2012

+6/-6 533,282 /(533,282)

(b) Interest Rate Risk

The Fund's principal exposure to market risk arises primarily due to changes or developmentsin the market environment and typically includes changes in regulations, politics and theeconomy of the country. Market risk is also influenced by global economics and geopoliticaldevelopments. The Fund seeks to diversify away some of this risk by investing into differentsectors to mitigate risk exposure to any single asset class.

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

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

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

This risk refers to the effect of interest rate changes on the demand for sukuk and Shariah-compliant deposits with financial institutions. In the event of rising interest rates, thereturn on Shariah-compliant deposits with financial institutions will rise while demand forsukuk will decrease and vice versa, thus affecting the net asset value of the Fund. This riskwill be minimized via the management of the duration structure of the portfolio of sukukand Shariah-compliant deposits with financial institutions.

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

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

87

PAXJI



(b) Interest Rate Risk (Contd.)

Effect on profit

or loss and equity

Change in basis point * Increase/(Decrease)

RM

30 June 2013+25/-25 3,192/(3,192)

30 June 2012+25/-25 2,855/(2,855)

*

(c) Currency Risk

30.06.2013 30.06.2012

RM RM

Hong Kong Dollar 163,672 211,428

Indonesian Rupiah 62,419 111,185

South Korean Won 17,311 105,642

Thai Baht 30,260 67,493

Singapore Dollar 34,673 120,140

New Taiwan Dollar 85,610 151,030393,945 766,918

Effect on profit

or loss and equity

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

The Fund is exposed to currency risk primarily through its investment in overseasShariah-compliant quoted equities that are denominated in foreign currencies. The Fund'sforeign currency exposure profile of its investment in Shariah-compliant quoted equitieshas been disclosed under Note 7. The currency risk is minimised by proper portfolioallocation and to avoid concentration in a single country.

A 10% strenghtening or weakening of the RM against the following foreign currencies asat the end of the financial year would have decreased or increased respectively the profitor loss and equity of the Fund by the amount shown below. This analysis assumes allother variables are held constant.

88

PAXJI


(ii) Credit Risk


1 month - 3 Above

30.06.2013 months 3 months Total

RM RM RM

Financial Assets

Financial assets at FVTPL 5,129,477 - 5,129,477

Deposits with financial institutions 1,895,961 - 1,895,961

Other assets 755,936 - 755,936

Total undiscounted




Total Assets 7,781,374 18,268 7,799,642


Other liablities 12,184 8,453 20,637

Total undiscounted

financial liabilities 12,184 8,453 20,637

Unitholders' NAV 7,779,005 - 7,779,005

Liquidity gap (9,815) 9,815

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

As at the end of period, the Fund do not have any investment in sukuk.

This risk occurs in thinly traded or illiquid Shariah-compliant securities. Should the Fund needto sell a relatively large amount of such securities, the act itself may significantly depress theselling price. As the Fund is exposed to daily redemption of units, the risk is minimized byplacing a prudent level of funds in short-term Shariah-compliant deposits and by investing inShariah-compliant stocks whose liquidity is adjudged to be commensurate with the expectedexposure level of the Funds.

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

89

PAXJI


(iii) Liquidity Risk (Contd.)

1 month - 3 Above

30.06.2012 months 3 months Total

RM RM RM

Financial Assets

Financial assets at FVTPL 8,960,978 - 8,960,978

Deposits with financial institutions 800,246 - 800,246

Other assets 445,785 - 445,785

Total undiscounted




Total Assets 10,207,009 43,586 10,250,595


Other liablities 15,243 16,083 31,326

Total undiscounted

financial liabilities 15,243 16,083 31,326

Unitholders' NAV 10,219,269 - 10,219,269

Liquidity gap (27,503) 27,503 -

(iv) Stock Specific Risk

(v) Single Issuer Risk

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

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

90

PAXJI


(vi) Reclassification of Shariah Status Risk

(vii) Capital Management

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

The capital is represented by unitholders’ subscription to the Fund. The amount of capital canchange significantly on a daily basis as the Fund is subject to daily redemption andsubscription at the discretion of unitholders. The Manager manages the Fund’s capital withthe objective of maximising unitholders' value, while maintaining sufficient liquidity to meetunitholders' redemption as explained in Note 19 (iii) above.

91

30 june 2013 pheim - pheim unit trusts berhad...pheim asia ex-japan fund & pheim asia ex-japan...

Documents