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PHEIM

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

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A N N U A L R E P O R T31 DECEMBER 2014

Pheim Emerging Companies Balanced Fund

Dana Makmur Pheim

Pheim Income Fund

Pheim Asia Ex-Japan Fund

Pheim Asia Ex-Japan Islamic Fund

PHEIM Annual Report 31.12.2014

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)

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

Mark Wing Kong (Independent)

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

SHARIAH ADVISERIBFIM (763075-W)

Amanie 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 Audited FinancialStatements:

Pheim Emerging Companies Balanced Fund

Dana Makmur Pheim

Pheim Income Fund

Pheim Asia Ex-Japan Fund

Pheim Asia Ex-Japan Islamic Fund

1 – 6

7 – 21

22 – 40

41 – 77

78 – 113

114 – 150

151 – 185

186 – 223


Fund Information

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Dear Valued Unit Holders

We are pleased to present the Manager’s Report and the audited financial statements for thefinancial period from 1 January 2014 to 31 December 2014 for the following funds:

i. Pheim Emerging Companies Balanced Fund (PECBF)

ii. Dana Makmur Pheim (DMP)

iii. Pheim Income Fund (PIF)

iv. Pheim Asia Ex-Japan Fund (PAXJ)

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

1 FUND INFORMATION

1.1 Fund Category and Type

Fund Category and type

PECBF PECBF is a balanced fund that aims to provide income and some capitalgrowth.

DMP DMP is an Islamic balanced fund that aims to provide Shariah permissibleincome and some capital growth.

PIF PIF is a bond fund that aims to provide steady income.

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

PAXJI PAXJI is an equity growth fund that aims to achieve capital appreciation inthe long term by investing primarily in Asian markets excluding Japanthrough investments that comply with Shariah requirements.

1.2 Funds’ Investment Objective and Strategy

Fund Investment objective and strategy

PECBF PECBF aims to provide Unit Holders with steady income and someprospects for capital appreciation (income and growth) in the longer term.PECBF will invest in a balanced portfolio of equities and fixed incomeinstruments subject to a maximum of 60% in equities and a minimum of40% in fixed income instruments and liquid assets.

DMP DMP aims to provide Unit Holders with steady income and someprospects for capital appreciation (income and growth) in the longer term.DMP will invest in a balanced portfolio of Shariah-compliant equities andsukuk subject to a maximum of 60% in Shariah-compliant equities and aminimum of 40% in sukuk and Islamic liquid assets. All investment will bemade in accordance to Shariah requirements.


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PIF PIF aims to provide unit holders with consistent income returns in themedium to longer term. PIF will invest primarily in medium to long-termfixed income instruments subject to a minimum of 80% in fixed incomeinstruments and liquid assets and a maximum of 20% in equities.

PAXJ PAXJ aims to achieve capital appreciation in the long term by investingprimarily in Asian markets excluding Japan. PAXJ will invest, withoutrestraint, in securities listed on the stock exchanges of the Asia Pacificregion excluding Japan with initial focus in ASEAN countries, Hong KongSAR, 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.

1.3 Duration of the Funds

Fund Duration of the Fund

PECBF PECBF was launched on 28 January 2002 and its offer period endedon 15 February 2002. It shall exist for as long as it appears to theManager and the Trustee that it is in the interest of the Unit Holders forit to continue.

DMP DMP was launched on 28 January 2002 and its offer period ended on15 February 2002. It shall exist for as long as it appears to the Managerand the Trustee that it is in the interest of the Unit Holders for it tocontinue.

PIF PIF was launched on 28 January 2002 and its offer period ended on 15February 2002. It shall exist for as long as it appears to the Managerand the Trustee that it is in the interest of the Unit Holders for it tocontinue.

PAXJ PAXJ was launched on 30 June 2006 and its offer period ended on 20July 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.

PAXJI PAXJI was launched on 1 November 2006 and its offer period ended on21 November 2006. It shall exist for as long as it appears to the Managerand the Trustee that it is in the interest of the Unit Holders for it tocontinue.


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1.4 Funds’ Performance Benchmark

The performance benchmarks deemed relevant to access the performance of the respectiveFunds are shown in the following table:

Fund Performance Benchmark Source

PECBFWeighted average of:1. 60% of FTSE Bursa Malaysia EMAS Index return, and2. 40% of Maybank 1-year fixed deposit rate at the

beginning of the financial year.

BursaMalaysia&Maybank

DMPWeighted average of:1. 60% of FTSE Bursa Malaysia EMAS Shariah Index*, and2. 40% of Maybank 1-year General Investment Account

(GIA) rate obtained at the beginning of the financial year.

BursaMalaysia&Maybank

PIFMaybank 1-year fixed deposit rate at the beginning of thefinancial year.

Maybank

The performance benchmark for both the PAXJ and PAXJI is 7% growth in NAV per annumover the long term.

This is not a guaranteed return and is only a measurement of the respective Fund’sperformance. The Funds may or may not achieve the 7% per annum growth rate in anyparticular financial year but the manager targets to achieve this growth over the long term.

* KL Syariah Index was discontinued from 1 November 2007 by Bursa Malaysia. The new index that issubstituting KL Syariah Index is FTSE Bursa Malaysia EMAS Shariah Index (FBMS).

1.5 Funds’ Distribution Policy

Fund Distribution Policy

PECBF,DMP& PIF

The Funds intend to distribute income, if any, on an annual basis. Theincome distribution may be declared at the end of each financial year orany specified period as maybe approved by the Trustee.

PAXJ &PAXJI Distribution by the Funds is incidental.


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1.6 Breakdown Of Unit Holdings By Size As At 31.12.2014

1.6.1 PECBFNo. of units held Unitholders

Sizeof holding (‘000) %

No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

115.46 0.67 42 21.88 35 20.00

5,001 - 10,000 334.19 1.93 46 23.96 44 25.14

10,001 -50,000

1,315.94 7.58 61 31.77 57 32.57

50,001 -500,000

5,010.55 28.88 36 18.75 32 18.29

500,001 andabove

10,571.77 60.94 7 3.64 7 4.00

Total 17,347.91 100.00 192 100.00 175 100.00

1.6.2 DMP

No. of units held Unitholders


No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

150.03 2.15 55 27.36 51 26.98

5,001 - 10,000 357.14 5.12 50 24.87 49 25.92

10,001 -50,000

1,491.82 21.38 77 38.31 71 37.57

50,001 -500,000

2,244.12 32.17 17 8.46 16 8.47

500,001 andabove

2,733.24 39.18 2 1.00 2 1.06

Total 6,976.35 100.00 201 100.00 189 100.00


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1.6.3 PIF



No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

74.55 0.48 26 22.61 25 24.27

5,001 - 10,000 119.59 0.76 17 14.78 12 11.65

10,001 -50,000

876.55 5.60 39 33.91 36 34.95

50,001 -500,000

4,643.19 29.68 26 22.61 24 23.30

500,001 andabove

9,931.85 63.48 7 6.09 6 5.83

Total 15,645.73 100.00 115 100.00 103 100.00

1.6.4 PAXJ



No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

144.18 0.47 47 23.98 47 24.48

5,001 -10,000

266.27 0.87 38 19.39 37 19.27

10,001 -50,000

1,311.41 4.27 66 33.67 63 32.81

50,001 -500,000

6,487.45 21.10 35 17.86 35 18.23

500,001 andabove

22,527.92 73.29 10 5.10 10 5.21

Total 30,737.23 100.00 196 100.00 192 100.00


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1.6.5 PAXJI



No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

233.52 2.39 73 26.64 72 26.57

5,001 -10,000

503.51 5.14 71 25.91 70 25.83

10,001 -50,000

2,000.93 20.45 106 38.69 106 39.11

50,001 -500,000

4,029.28 41.17 22 8.03 21 7.75

500,001 andabove

3,019.07 30.85 2 0.73 2 0.74

Total 9,786.31 100.00 274 100.00 271 100.00


Funds’ Performances

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2 FUND PERFORMANCE

2.1 Pheim Emerging Companies Balanced Fund

2.1.1 Portfolio composition

FYE31.12.2014

(%)

FYE31.12.2013

(%)

FYE31.12.2012

(%)

(Percentage of Net Asset Value)

Biochemical & Biotechnology - 2.60 2.30

Construction 1.62 2.56 5.64

Consumer Products 7.54 5.05 4.61

Energy & Water Supply 2.54 - -

Finance - 10.16 16.84

Home Furniture - - 0.27

Infrastructure - - 3.85

Industrial Products 7.83 11.16 4.36

Manufacturing - 1.09 -

Mining - - 1.34

Oil and Gas 1.21 1.03 -

Plantations 2.85 2.99 1.59

Pharmacy & Cosmetic 1.04 0.23 1.53

Properties 8.23 10.21 1.16

Technology 2.58 1.64 -

Telecommunications 2.11 1.05 1.05

Trading / Services 1.64 6.56 7.79

Utilities - - 1.78

Unquoted/Quoted Corporate Bonds 27.35 18.40 33.71

Cash and cash equivalents 33.46 25.27 12.18

Total 100.00 100.00 100.00



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PECBF

2.1.2 Other financial and performance data

FYE31.12.2014

FYE31.12.2013

FYE31.12.2012

Net asset value (RM‘000) 20,827.89 18,497.14 17,512.03

Units in circulation (‘000) 17,347.92 15,334.87 15,237.39

Net asset value per unit (RM) 1.2006 1.2062 1.1493

NAV/ unit (RM) – ex-distribution

NAV/ unit 1.2006 1.2062 1.1493

Highest NAV/ unit for the period

NAV/ unit 1.2691 1.2158 1.2123

Lowest NAV/ unit for the period

NAV/ unit 1.1810 1.1043 1.0864

Total returns for the period(RM’000)

Capital growth (1,181.27) 534.11 (582.00)

Income distribution 1,828.76 1,141.45 2,019.31

Income Distribution (Final)On

29.04.2014On

26.04.2013On

27.04.2012

Gross distribution per unit (sen) 6.50 6.00 6.00

Net distribution per unit (sen) 6.50 6.00 6.00

Management expense ratio (MER)(%)

1.78 1.85 1.82

Portfolio turnover ratio (PTR)(time)

0.65 0.56 0.64

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

average value of the fund calculated on a daily basis. The MER for the year decreasedcompare with the previous year due to the increase in averaged NAV for the year.

ii) PTR is calculated based on the average of the acquisitions and disposals ofinvestments of the fund to the average value of the fund calculated on a daily basis.The increase in PTR for the year was mainly due to higher investment trading.



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PECBF

2.1.3 Average total return ended 31 December 2014

(%)

One Year +5.01

Three Years +8.41

Five Years +6.74

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

Financial year ended 31 December : (%)

2014 +5.01

2013 +10.44

2012 +9.86

2011 -1.82

2010 +10.7

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

Data source : Bloomberg

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



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2.2 Dana Makmur Pheim


FYE31.12.2014

(%)

FYE31.12.2013

(%)

FYE31.12.2012

(%)




Finance - 3.73 1.63



Plantations 5.51 3.45 -

Properties 8.79 8.88 3.99

Technology 2.38 2.50 -


Sukuk 26.61 3.74 5.85

Cash and Other Assets 36.02 52.35 36.31

Total 100.00 100.00 100.00


FYE31.12.2014

FYE31.12.2013

FYE31.12.2012






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DMP

2.2.2 Other financial and performance data (continued)

FYE31.12.2014

FYE31.12.2013

FYE31.12.2012


NAV/ unit 1.9385 1.9053 1.5537


NAV/ unit 2.0860 1.9229 1.6554


NAV/ unit 1.8912 1.5398 1.5208


Capital growth (1,422.09) 845.15 (517.93)

Income distribution 2,449.17 2,369.85 772.33

Income Distribution (Final)

On29.04.2014

On26.04.2013

On27.04.2012




1.86 2.05 2.09

Portfolio turnover ratio (PTR)time)

0.47 0.51 0.72


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

ii) PTR is calculated based on the average of the acquisitions and disposals of Shariah-compliant investments of the fund to the average value of the fund calculated on adaily basis. The decrease in PTR for the year was mainly due to lower investmentactivity.



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DMP


(%)

One Year +5.28

Three Years +12.13

Five Years +9.69



2014 +5.28

2013 +26.49

2012 +5.87

2011 +1.7

2010 +10.7






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2.3 Pheim Income Fund


FYE31.12.2014

(%)

FYE31.12.2013

(%)

FYE31.12.2012

(%)



Consumer Product 3.15 3.06 2.14

Finance 0.79 3.79 7.65




Manufacturing 1.00 0.71 -

Mining 0.81 - -

Oil and Gas 1.12 - -

Pharmacy and Cosmetic - 0.23 -

Plantation 0.58 2.30 0.90

Properties 1.20 0.95 -

Trading/ Services 1.50 1.92 3.02

Technology - 0.98 -

Unquoted Corporate Bonds 51.88 28.35 46.27

Cash and Other Assets 32.37 53.03 34.77

Total 100.00 100.00 100.00


FYE31.12.2014

FYE31.12.2013

FYE31.12.2012




NAV/ unit (RM) – ex-distributionNAV/ unit 1.0702 1.1144 1.1292

Highest NAV/ unit for the periodNAV/ unit 1.1394 1.1541 1.1318

Lowest NAV/ unit for the periodNAV/ unit 1.0644 1.0874 1.0804


Capital growth (285.23) (423.06) 88.35

Income distribution 544.67 901.61 748.77



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PIF2.3.2 Other financial and performance data (continued)

FYE31.12.2014

FYE31.12.2013

FYE31.12.2012

Income Distribution (Final)On

29.04.2014On

27.04.2013On

28.04.2012




1.35 1.35 1.31

Portfolio turnover ratio (PTR)(time)

0.50 0.41 0.42


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

ii) PTR is calculated based on the average of the acquisitions and disposals of investmentsof the fund to the average value of the fund calculated on a daily basis. The increase inPTR for the year was mainly due to the increase in investment activity.


(%)

One Year +2.29

Three Years +3.86

Five Years +3.86



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PIF



2014 +2.29

2013 +3.29

2012 +6.02

2011 +4.36

2010 +3.40






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2.4 Pheim Asia Ex-Japan Fund


FYE31.12.2014

(%)

FYE31.12.2013

(%)

FYE31.12.2012

(%)

Industry Sector (Percentageof NAV)

(Percentageof NAV)

(Percentage of NAV)

Biochemical and Biotechnology - 0.86 0.67

Computer - - 1.42



Diversified - - 1.70

Energy and Water Supply 3.50 - 1.63

Finance 5.39 22.67 20.50



Infrastructure - 1.65 3.73

Manufacturing 1.08 1.93 -

Mining 0.49 2.25 4.16

Oil & Gas related 2.54 1.05 -

Pharmaceutical and Cosmetic 1.68 0.24 1.05


Properties 10.39 11.14 1.02

Technology 3.51 3.05 8.65



Utilities - - 1.55


Total 100.00 100.00 100.00



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PAXJ


FYE31.12.2014

FYE31.12.2013

FYE31.12.2012





NAV/ unit 0.8616 0.8475 0.8100


NAV/ unit 0.9239 0.8559 0.8492


NAV/ unit 0.8134 0.7571 0.7300

Total returns for the period (RM’000)

Capital growth (559.36) 2,098.66 2,548.32

Income distribution 982.51 (821.41) (1,062.61)

Income Distribution (Final)n.a. n.a. n.a.

Gross distribution per unit (sen) - - -

Net distribution per unit (sen) - - -

Management expense ratio (MER) (%) 2.07 1.71 1.74

Portfolio turnover ratio (PTR) (time) 0.96 0.95 0.83


average value of the fund calculated on a daily basis. The MER for the yearincreased mainly due to the higher expenses incurred for the year.

ii) PTR is calculated based on the average of the acquisitions and disposals ofinvestments of the fund to the average value of the fund calculated on a daily basis.The higher PTR for the year was mainly due to the increased investment trading forthe year.



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PAXJ


(%)

One Year +1.80

Three Years +4.85

Five Years +0.25


Financial year ended 31 December :(%)

2014 +1.80

2013 +4.78

2012 +8.08

2011 -17.39

2010 +6.0

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





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2.5 Pheim Asia Ex-Japan Islamic Fund


FYE31.12.2014

(%)

FYE31.12.2013

(%)

FYE31.12.2012

(%)

Industry Sector (Percentageof NAV)

(Percentageof NAV)

(Percentageof NAV)

Biochemical and Biotechnology - 2.08 1.42

Computer - - 0.70

Construction 4.06 - 2.14


Energy and Water Supply 1.46 4.47 3.97


Manufacturing - - 2.40

Mining 4.19 6.27 9.51

Oil & Gas related 0.88 2.28 -

Pharmacy and Cosmetics - - 4.86


Properties 7.57 9.58 2.06

Technology 9.04 6.71 8.27




Total 100.00 100.00 100.00



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PAXJI


FYE31.12.2014

FYE31.12.2013

FYE31.12.2012





NAV/ unit 0.9860 0.9512 0.8239


NAV/ unit 1.0755 0.9615 0.8514


NAV/ unit 0.9344 0.8185 0.7389

Total returns for the period (RM’000)

Capital growth (87.37) 40.65 2,705.96

Income distribution 569.26 1,849.39 (2,453.06)

Income Distribution (Final)n.a. n.a. n.a.

Gross distribution per unit (sen) - - -

Net distribution per unit (sen) - - -

Management expense ratio (MER) (%) 2.21 2.27 2.18

Portfolio turnover ratio (PTR) (time) 0.80 0.70 0.93


average value of the fund calculated on a daily basis. The MER for the yeardecreased mainly due to the higher averaged NAV for the year.

ii) PTR is calculated based on the average of the acquisitions and disposals ofinvestments of the fund to the average value of the fund calculated on a daily basis.The increase in PTR for the year was mainly due to the higher investment trading forthe year.



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PAXJI


(%)

One Year +3.80

Three Years +8.77

Five Years +4.92



2014 +3.80

2013 +15.42

2012 +7.41

2011 -7.59

2010 +6.5

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




Manager’s Report

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3 MANAGER’S REPORT

3.1 Performance Review

3.1.1 PECBF

The Fund has successfully met its investment objective of providing investors with capitalappreciation in longer term by investing in a balanced portfolio of equities and fixedincome instruments.

For the year ended 31 December 2014, the net asset value (NAV) per unit of the funddeclined by 0.46%, which has outperformed the benchmark by 4.67%. However, in thesecond half of 2014, the fund has outperformed the benchmark by 10.02%. The totalNAV increased to approximately RM20.8million from RM18.5million

The Fund had made an income distribution of 6.50 sen per unit (net of tax) on the 29April 2014 for the period ended 31 December 2013. After the income distribution, theNAV per unit declined to RM1.1867 from RM1.2517.

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

Benchmark/ FundAs at

31.12.2014As at

30.06.2014Change

%

Benchmark of PECBF 106.68% 115.12% -8.44

PECBF – NAV per unit (RM) 1.2006^ 1.1819 +1.58

Performance table for financial year 2014 (1 year):


31.12.2014As at

31.12.2013Change

%

Benchmark of PECBF 106.68% 111.81% -5.13

PECBF – NAV per unit (RM) 1.2006^ 1.2062 -0.46

^adjusted for income distribution on 29.04.2014


Manager’s Report

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3.1.2 DMP

The Fund has successfully met its investment objective of providing investors with capitalappreciation in longer term by investing in a balanced portfolio of equities and fixedincome instruments which strictly comply with the principles of the Shariah.

For the year ended 31 December 2014, the net asset value (NAV) per unit of the fundincreased by 1.74%, which has outperformed the benchmark by 4.18%. However, in thesecond half of 2014, the fund has outperformed the benchmark by 5.04%. The total NAVincreased to approximately RM13.5 million from RM RM13.4 million.




31.12.2014As at

30.06.2014Change

%

Benchmark of DMP 105.78% 112.82% -7.04

DMP – NAV per unit (RM) 1.9385^ 1.9780 -2.00



31.12.2014As at

31.12.2013Change

%

Benchmark of DMP 105.78% 108.22% -2.44

DMP – NAV per unit (RM) 1.9385^ 1.9053 +1.74


3.1.3 PIF

The Fund has successfully met its investment objective of providing investors withconsistent income returns in the medium to longer term by investing primarily in mediumto long term fixed income instruments and also equities and other high yieldinginstruments.

For the year ended 31 December 2014, the net asset value (NAV) per unit of the funddeclined by 3.97%, which has underperformed the benchmark by 7.12%.However, in thesecond half of 2014, the fund has underperformed the benchmark by 1.36%. The totalNAV increased to approximately RM16.7 million from RM14.5 million.


Manager’s Report

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3.1.3 PIF (contd.)




31.12.2014As at

30.06.2014Change

%

1-year fixed deposit rate (pro-rated) 44.58% 43.00% +1.58

PIF – NAV per unit (RM) 1.0702^ 1.0679 +0.22



31.12.2014As at

31.12.2013Change

%

1-year fixed deposit rate (pro-rated) 44.58% 41.43% +3.15

PIF – NAV per unit (RM) 1.0702^ 1.1144 -3.97


3.1.4 PAXJ

The Fund has successfully met its investment objective of providing investors withcapital appreciation in long term by investing primarily in Asian markets excludingJapan.

For the year ended 31 December 2014, the net asset value (NAV) per unit of the fundincreased by 1.66%, which has underperformed the benchmark marginally by 5.34%.However, in the second half of 2014, the fund has underperformed the benchmark by4.50%. The total NAV declined to approximately RM26million from RM28million.



31.12.2014As at

30.06.2014Change

%

7% per annum (pro-rated) 59.20% 55.67% +3.53

NAV per unit (RM) 0.8616 0.8700 -0.97



31.12.2014As at

31.12.2013Change

%


NAV per unit (RM) 0.8616 0.8475 +1.66


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3.1.5 PAXJI

The Fund has successfully met its investment objective of providing investors with capitalappreciation in long term by investing primarily in Asian markets excluding Japan throughinvestments that comply with Shariah requirements.

For the year ended 31 December 2014, the net asset value (NAV) per unit of the fundincreased by 3.66%, which has underperformed the benchmark by 3.34%. However, inthe second half of 2014, the fund has underperformed the benchmark by 6.10%. Thetotal NAV increased to approximately RM9.6 million from RM8.2 million.



31.12.2014As at

30.06.2014Change

%


NAV per unit (RM) 0.9860 1.0121 -2.58



31.12.2014As at

31.12.2013Change

%


NAV per unit (RM) 0.9860 0.9512 +3.66

3.2 Performance Chart Since Inception

3.2.1 PECBF


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3.2.2 DMP

3.2.3 PIF


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3.2.4 PAXJ

3.2.5 PAXJI

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


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

3.3.1 PECBF

Asset ClassAs at

31.12.2014As at

31.12.2013 Change

Equity Securities – in Malaysia 15.43 28.06 -12.63

Equity Securities – outside Malaysia 23.75 28.27 -4.52

Corporate Bonds 27.35 18.40 +8.95

Cash and cash equivalent 33.47 25.27 +8.20

Total 100.00 100.00

3.3.2 DMP

Asset ClassAs at

31.12.2014As at

31.12.2013 Change

Shariah-compliant equity securities– in Malaysia

37.37 43.91 -6.54

Sukuk 26.61 3.74 +22.87

Cash and cash equivalent 36.02 52.35 -16.33

Total 100.00 100.00

3.3.3 PIF

Asset ClassAs at

31.12.2014As at

31.12.2013 Change

Corporate Bonds – in Malaysia 51.91 28.35 +23.56

Money market & cash 32.34 53.03 -20.69

Equity Securities – in Malaysia 9.02 7.11 +1.91


Total 100.00 100.00


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3.3.4 PAXJ

Asset ClassAs at

31.12.2014As at

31.12.2013 Change


Equity Securities – in Malaysia 20.14 21.04 -0.90


Total 100.00 100.00

3.3.5 PAXJI

Asset ClassAs at

31.12.2014As at

31.12.2013 ChangeShariah-compliant equity securities –outside Malaysia

34.75 53.15 -18.40

Shariah-compliant equity securities –in Malaysia

27.75 24.90 +2.85


Total 100.00 100.00

3.4 Funds’ Strategies and Policies Employed

3.4.1 PECBF

As at end-December 2014, Pheim Emerging Companies Balanced Fund’s assetallocation was 39.18% in equities, 27.35% in fixed income securities and 33.47% incash. We reduced our equity exposure to 39.18% from 56.33% as we took profits fromselected stocks. During the year, the fund had invested in foreign equities listed in HongKong/China, Singapore, Indonesia, Thailand and South Korea as part of thediversification strategy.

Going forward, we may increase our exposure in fixed income securities that offer goodyield for the risks undertaken. We prefer to invest in fixed income securities which have amaturity of less than 5 years in order to mitigate interest rate risk.

For the year ended 31 December 2014, PECBF recorded the following gains or lossesin the various markets invested.

Market

Net realised andunrealised gain/ (loss)

RM’000

Malaysia 1,103Indonesia 348Thailand (109)Korea 87Philippines 46Singapore (133)Hong Kong/China (421)


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3.4.2 DMP

As at end-December 2014, Dana Makmur Pheim’s asset allocation was 37.37% inShariah-compliant equities, 26.61% in sukuk and 36.02% in cash. We have reduced theShariah-compliant equity exposure to 37.37% from 43.91% as we took profits fromselective Shariah-compliant stocks.

During the year 2014, the sukuk exposure increased to 26.61% from 3.74% in thepreceding year as we increased our exposure on sukuk that offer good yield for the risksundertaken.

For the year ended 31 December 2014, DMP recorded a net realised and unrealised gainof RM1,363,182 due to investments in domestic Shariah-compliant equities.

3.4.3 PIF

As at end-December 2014, Pheim Income Fund’s asset allocation was 51.91% incorporate bonds, 32.34% in money market/cash and 15.75% in equities. Although wewere cautiously optimistic on the Asia ex-Japan equity market in the year 2014, theequity exposure of 15.75% was relatively unchanged (2013: 18.62%) as the maximumequity exposure allowable was 20%. As part of our diversification strategy, the fund hadinvested in foreign equities listed in Hong Kong/China, Singapore and Indonesia.

Going forward, we may increase our exposure in fixed income securities that offer goodyield for the risks undertaken. We are maintaining our stance of investing in fixed incomesecurities which have a maturity of less than 5 years in order to mitigate interest rate risk.

For the year ended 31 December 2014, PIF recorded the following gains or losses inthe various markets invested.

Market


RM’000

Malaysia 1Indonesia 17Philippines 42Singapore (145)Hong Kong/China (43)Thailand 15


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3.4.4 PAXJ

During the year, the Fund’s total equity exposure decreased by 20.73% as the Funddecreased exposure in foreign equities as some foreign stocks have outrun thefundamental. As at 31st December 2014, PAXJ’s total equity exposure was 67.96%whereby 47.82% was invested in foreign equities and the remaining is in domesticequities.

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

For the year ended 31 December 2014, PAXJ recorded the following gains or losses inthe various markets invested.

Market


RM’000

Malaysia 596Indonesia 743Korea (155)Thailand (957)Singapore (868)Hong Kong (1,547)Philippines 132Taiwan (189)

3.4.5 PAXJI

During the year, the Fund’s total equity exposure decreased by 15.55% as the Funddecreased exposure in foreign equities as some foreign stocks have outrun thefundamental. As at 31st December 2014, PAXJI’s total equity exposure was 62.50%whereby 34.75% was invested in Shariah-compliant foreign equities and the remainingin domestic Shariah-compliant equities.

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

For the year ended 31 December 2014, PAXJI recorded the following gains or losses inthe various markets invested.

Market


RM’000

Malaysia 423Indonesia (30)Korea (85)Thailand (240)Singapore 109Philippines 10Hong Kong (721)Taiwan (262)


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3.5 Market Review, Outlook and Strategy

3.5.1 Malaysian Bond/Sukuk Market

3.5.1.1 Bond/Sukuk Market Review

On the local front, Bank Negara Malaysia increased the overnight policy rate (OPR) by25 basis points on the 10th of July. The floor and ceiling rates of the corridor of the OPRrate were also similarly raised bringing these to 3.00% and 3.50% respectively.According to the monetary policy statement, the normalization of the monetary conditionswere to mitigate the risk of broader economic and financial imbalances that couldundermine the growth prospects of the Malaysian economy. Given the developments inmonetary and financial conditions, the current monetary policy stance is consideredaccommodative and is assessed to be appropriate by Bank Negara Malaysia.

As a result of sharply weaker oil prices (WTI is now down more than 50% from its peakof around USD100), there has been increasing concern that Malaysia would have its own“twin deficit”. The national oil company Petronas warned that its capital expenditure in2015 might be cut by 15% to 20%. As revenue from oil accounts for more than 30% ofthe country’s revenue collection, it is clear that there is a real risk that the governmentmay not be able to achieve the fiscal deficit target of 3.0% of gross domestic product(GDP) for 2015 without trimming its outlays.

On the external front, the US remains committed to keeping interest rates atexceptionally low levels. However, this could change anytime as the US economicrecovery continues to be promising. That being said, we believe the hike in interest rateswould be done on a gradual basis to avoid disrupting US economic recovery. In fact, theUS Federal Reserve has reiterated that the interest rates would be kept low for aconsiderable time and signalled that it would be patient in deciding on the timing to raisethe interest rates.

3.5.1.2 Bond/Sukuk Market Outlook and Strategy

In its 2013 annual report, Bank Negara Malaysia mentioned that inflation in 2014 and2015 is expected to be above the historical average of between 3% to 4%. We believe thehigher inflationary pressure comes from higher domestic costs such as wages, electricitytariff increase and the gradual removal of subsidies coupled with the depreciation of theringgit against the USD. Besides, the introduction of goods and services tax (GST) in April2015 can be expected to result in a price spike, though this GST effect may only be one-off.

Due to higher inflationary pressures, we do not discount the possibility of another 25 basispoints hike in the Malaysia’s OPR rate in the year 2015 and therefore, we expect the yieldon Malaysian government securities to steepen especially for the longer dated securities.We remain conservative and would prefer maturities of less than 5 years of maturity tomitigate interest rate risks.


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We would continue to adopt a prudent approach with key assessment criteria that includethe issuers’ credit profile, management, financial performance, asset quality, riskmanagement and industry outlook. We would continue to focus on investment gradebonds/sukuks.

3.5.2 Stock Markets Review

3.5.2.1 Malaysian Stock Market – (Bursa Malaysia)

The FBM KLCI registered a decline of 5.7% y.o.y in 2014 to close the year at 1,761.25points. It was the worst performing market among the key Asian markets as oil pricestumbled and the ringgit weakened, aggravated by foreign outflows. The ringgit hasweakened against the USD to RM3.4973/USD as at end of December 2014 compared toRM3.2757/USD from a year earlier. It is set to weaken further.

GDP growth in the third quarter of 2014 expanded 5.6% y.o.y, decelerating from arevised 6.5% growth in the previous quarter as all sectors in the economy rose at aslower pace. The trade surplus in November expanded to RM11.1 bil, the highest sinceNovember 2011, mainly driven by the surprising growth in exports and flattish imports.

Budget 2015, tabled in October, sees a Gross Domestic Product (GDP) growth of 5-6%,with total federal government expenditure rising to RM273.9 bil. It also highlighted thegovernment’s commitment to roll out RM160 bil in railway-related infrastructure over thenext few years and leverage on the public-private partnership (PPP) model to developfurther highway infrastructure. However, there are concerns that the government mayhave to revise Budget 2015 due to changing macro environment amid the plunge in theoil prices and weaker ringgit which may derail the government’s 3% fiscal deficit target for2015.

The inflation rate, inched up to 3.0% y.o.y in November, from +2.8% in the previousmonth and compared with +2.6% in September. The higher inflation in November wasreflected in a faster increase in the core inflation rate, largely due to a sharp increase inthe prices of alcoholic beverages & tobacco. Bank Negara Malaysia maintained theOvernight Policy Rate after raising it by 25bps to 3.25% in July. With the implementationof the GST as well as subsidy reductions, the inflation is expected to trend higher goingforward.

We maintain our neutral view given that Malaysia runs the risk of a trade deficit andcurrent account deficit with weaker oil and CPO prices, which may put pressure on thecountry’s credit ratings. In addition, the government’s fiscal reforms continue to be a dragon consumption with subsidy rationalization and the rollout of GST. Market valuation alsoremains relatively high compared to its regional peers. Although we do not see a quickreturn to bullish outlook, we believe there are companies that may benefit from weakerringgit and lower commodity prices. We remain selective in our search for undervaluedstocks in this challenging market environment.


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3.5.3 Foreign Securities Investment - Market Review

3.5.3.1 Singapore Market

The FSSTI was up modestly in 2014 with a gain of 6.24% y.o.y. The top performers in2014 included banks, land transport, S-REIT and telecommunications. S-REITs made acomeback after a poor performance in 2013, as interest rates remained low. The bankingsector performed well in the 2nd half of 2014 as the market expected that the US FederalReserve will increase interest rates due to strengthening in economy. In 2014, the SGDdepreciated by 4.95% y.o.y against the USD to close at 1.3255/USD.

The Singapore economy grew a less-than-expected 1.5% in the last three months of2014 compared to 2.8% in the previous quarter. On the quarter-on-quarter seasonallyadjusted annualized basis, the economy expanded by 1.6%, slower than the 3.1%expansion in the previous quarter. The lackluster fourth quarter growth figure wasdragged down mainly by the manufacturing and construction sectors. The manufacturingsector contracted 2% over same period in 2013, while the construction industry expandedby merely 0.8%. The services sector which makes up 70% of the Singapore economy,grew 2.6%.

Singapore was hit by deflation for the first time in five years on the back of plummetingglobal crude oil prices. Consumer prices across the economy fell by 0.3% in Novemberover the same month last year. This was mainly caused by declining private roadtransport costs, which includes car and petrol pump prices. Core inflation came in at1.5% versus the previous month's 1.7%.

Non-oil exports grew 2.3% in December over the same month in 2013, after the 0.8%growth in previous month, driven by higher shipments of both electronics and non-electronics products. The top three contributors to non-oil export growth were SouthKorea, Malaysia and European Union.

Corporate earnings in 2014 were generally below market expectations resulting in marketconsensus earnings downgraded throughout the year. Singapore market is expect to bevolatile in the first half of 2015 given the rising concerns on external issues such asweaker growth in China, interest rate hike by US Federal Reserve and Greece possiblyleaving the European Union. In addition, the domestic challenges of economicrestructuring, tight labour market and elevated cost will remain key challenges forSingapore’s economy growth.

3.5.3.2 Hong Kong/ China Market

The Hang Seng Index rose 1.28% in 2014 to close at 23,605.04 points. Sector wise,telecom, REITs and utilities performed well while gaming sector was hit by negativenews flows, driven by the junket default, tighter liquidity, corruption crackdown andeconomic slowdown in China.

Total retail sales volume in Hong Kong increased 7.5% in November 2014 over thesame month in the previous year, driven by the sales of food-related category, clothingand foodwear, jewellery, watches as well as the sales at department stores. However,some of the headwinds in Hong Kong’s retail industry should not be neglected. Despite


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the improvement in retail sales during a 79 day-long street occupation by pro-democracydemonstrators, the market remained concerned about the change in tourism spendingamid economic slowdown in China. The Hong Kong stock market is becoming morechallenging as it is now facing both economic and political risks.

China economy grew by 7.4% in 2014, in line with market expectations and was theweakest expansion in 24 years. The GDP growth was slightly below the governmenttarget of 7.5% for the year. The China government is focusing on a more sustainablepath while tackling a housing slowdown, softening domestic demand and weak globalrecovery. Main contribution to GDP was spending on consumption, which up from 48.2%in 2013 to 51.2% in 2014. Industrial production grew 8.3% in 2014 versus 9.7% in 2013,while fixed-asset investment rose by 15.7% y.o.y, down from 19.6%, the slowest rate in13 years. China’s slowdown provided a huge impact on global commodity prices andexporters around the world. IMF lowered its forecast for China’s economy in 2015 from7.1% growth to 6.8% growth, due to the slowdown in property and investment.

In November 2014, China cut benchmark interest rates for the first time since July 2012with the one-year lending rate reduced by 0.4 percentage point to 5.6%, while the one-year deposit rate was lowered by 0.25 percentage point to 2.75%. The policymakers alsodecided to increase ceiling for deposit rates to 1.2 times the benchmark rate from theprevious 1.1 times. This was another move by its central bank to bolster flaggingeconomic growth after the injection of more than USD 126 billion into the bankingsystem in September and October. The rate cut boosted investors’ sentiments anddrove strong gains in the stock market in the last quarter of 2014.

The China economy is still facing downside risks as traditional industries continue toundergo capacity elimination process while the housing market down-cycle persists.With the recent macro data staying weak, the market is expecting further monetaryeasing in the first half of 2015. The China/Hong Kong market is expected to be liquidity-driven given a lack of fundamental support.

3.5.3.3 Indonesia Market

The Indonesian stock market was among the best performers in 2014. The JCI closedthe year at 5,226.95 points, up 22.3% y.o.y. Despite a hiccup in Sep-Oct period amidglobal jitters, the Index managed to recoup nearly all it had lost from the year’s peak of5,246.48 points. The rupiah depreciated by 1.8% y.o.y against the USD to close 2014 atIDR12,388/USD. The dollar gain on the JCI was 20.5% y.o.y.

Bank Indonesia has maintained the policy rate at 7.75% in December after raising it by25bps in an extraordinary meeting in November in an effort to tame the inflation followingthe hike of subsidized petrol and diesel prices in same month.

The 2014 third quarter GDP growth slowed to 5.01% y.o.y, the weakest in 5 years, from5.12% in previous quarter. Bank Indonesia in its December Monetary Policy Reviewprojected economic growth to continue decelerating in the 2014 fourth quarter but willrebound in 2015 first quarter. The Central Bank projected the GDP growth in 2014towards the lower end of the 5.1-5.5% range before rebounding to 5.4-5.8% in 2015.According to information from the Central Bank, the current account deficit narrowed to3.1% of GDP in the third quarter from 4.3% of GDP in the previous quarter mainly due to


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resumed mineral exports after the government and several miners managed to finalizerenegotiations.

Inflation in December was recorded at 8.36% y.o.y higher than 6.23% in Novembermainly due to the fuel price hike in a month earlier. Thanks to the currently lower crude oilprices, the Government announced full removal of the subsidy for RON88 gasoline, anda fixed IDR1,000/litre subsidy for diesel fuel from January 1st, 2015. The Governmentestimates that 2015 oil and gas subsidy expenditure will fall from IDR276 tril to only aboutIDR60 tril.

Joko Widodo was sworn in as Indonesia’s 7th President on October 20th after winning atight race against rival candidate Prabowo Subianto in the July’s Presidential Election. Heformed a cabinet of which professionals constitute 59% of his 34 ministries. Infrastructuredevelopment is going to be the main focus of the Government where the fuel subsidyreform is expected to provide more room for more productive sectors such as the muchneeded infrastructure which will ultimately benefit the country. The challenge, however,would be efficient implementation.

We maintain our cautiously optimistic view on Indonesia and we are hopeful that thelargest economy with the biggest population in the Asean region will see a better futureahead under the strong leadership of Joko Widodo. Our investment strategy is to look forcompanies well positioned to benefit from the country’s development and growth.

3.5.3.4 Thailand Market

The SET index wrapped up 2014 with a strong gain of 15.32% to end at 1497.67 points.As at end FY14, headline inflation stood at 0.60% and policy rate remained benign at2.00%. Inflation tumbled 64% and policy rate fell 11% respectively for the year. The ThaiBhat depreciated marginally 0.63% against US Dollar as the currency closed atBaht32.91 compared to US Dollar to Baht32.71 in 2013. Local institutions recorded theirhighest net buy (THB24 bil) since June 2013, driven by year-end LTF purchases whilelocal retail investors showed another THB16 bil net buy at end December. Foreigninvestors on the flipside recorded another USD1 bil outflow, after the already-largeoutflow of USD6.2 bil in 2013.

The economy showed some stability in recent months following events including theBangkok shut down beginning 2014 which led to the declaration of martial law in May andeventually a coup. The political stalemate then settled with the formation of a militarygovernment where Military junta Chief Prayuth Chan-ocha became Thailand’s 29th PrimeMinister on August 25, 2014.

The Monetary Policy Committee decided to bring down the policy rate by another 25bp to2.00% in March as the prolonged political unrest curbed local demand, hurt tourism.These and other problems raised downside risks on the country’s economic outlook. TheBank of Thailand has also revised its GDP forecast for 2014 from 1.5% to 0.8% becauseof lower-than-expected government spending, slow recovery of private investment,tourism income and export expansion.

After strong rallies throughout the year, Thailand’s SET underperformed significantly inDecember. However as a whole, Thailand has rebounded drastically from the low as the


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political stalemate ended with a military government. We are looking for opportunities tosecure a better position stepping into 2015 while mitigating downside earnings risks froma moderating growth outlook. We remain cautiously optimistic on Thailand.

3.5.3.5 Philippines Market

In 2014, the Philippines equity market surged 22.8% y.o.y to settle at 7230.57 points inDecember, buoyed by positive economic data and healthy corporate earnings. The Pesodepreciated 0.73% y.o.y in 2014 with PHP44.72 /USD recorded at the end of December.

The Philippines registered slower GDP growth of 5.6%, 6.4% and 5.3% respectively in1Q14, 2Q14 and 3Q14 mainly due to slowdown in government spending.

In 2014, the Bangko Sentral ng Pilipinas (BSP) increased the benchmark borrowing,lending rates and Special Deposit Account (SDA) rate twice to 4%, 6% and 2.5%respectively. Also, the reserve requirement of banks was raised twice in the year of 2014.

Philippines inflation eased to 3.7% in November from the 4.3% in October due to lowerfood prices and utility prices. YTD inflation reported at 4.3%. Lower inflationary pressurewould allow the central bank to have more room to maintain the loose monetary policy.

On the Philippines sovereign credit rating in 2014, Standard and Poor’s upgraded thePhilippine’s sovereign credit rating to BBB from BBB- with a stable outlook, one notchabove the investment grade. S&P cited the country’s strong external liquidity andinvestment position, and effective monetary policy framework will likely be sustainable.Moody’s Investors Service followed suit and raised the Philippine’s credit caring to Baa2with a stable outlook.

The Philippines market was one of the best-performing markets in the region this year,but the most expensive market trading at 2014PE of 20.8x. We expect the Philippineseconomy to remain robust in 2015 driven by healthy domestic consumption, mainly dueto lower oil prices, higher cash remittances in Peso terms and election spending. We arewatchful of potential risks from correction in market valuation and remain selective on thePhilippines market for undervalued high growth companies.

3.5.3.6 Taiwan Stock Market

The TWSE Index surged 8.08% y.o.y to close the year at 9307.26 index points. Theindex was volatile during the year, with robust performance in 1H14 driven by interest intechnology stocks on Apple new products. However, this was followed by a sell down andprofit-taking on stocks related to the Apple supply chain. Investors’ confidence was onceagain boosted in 4Q14 by healthy exports data and Legislative Yuan passing the bill toplace on hold the capital gains tax rule for three years. The Taiwan Dollar (TWD)depreciated 6.2% y.o.y against the USD in 2014 to close at TWD31.656/USD at the endof December.

Directorate-General of Budget, Accounting, and Statistics reported that Taiwan's GDPgrowth rate was 3.41% y.o.y, 3.87% y.o.y and 3.63% y.o.y in 1Q14, 2Q14 and 3Q14respectively, mainly bolstered by strong demand for Taiwan’s exports of electronicproduct and domestic consumption.


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Taiwan official manufacturing Purchasing Managers’ Index (PMI) recorded at 50.1 inDecember, against the 49.2 recorded in November, supported by a recovery in the US.Another set of data published by Markit Economics shows that the HSBC Taiwan PMIstagnated in December at 50.0, down from 51.4 in November.

November’s exports grew 3.7% y.o.y buoyed by consumer electronic componentshipments, bringing 11-month exports to USD288.2 bil, up 3.3% y.o.y.

The general elections of all local governments in Taiwan on November 29 turned out tobe a landslide victory for the opposition party, Democratic Progressive Party (DPP),which won 13 seats in Taiwan's 22 counties and cities, versus only 6 seats won by theruling party – Kuomintang (KMT). After the mayoral election, the Taiwanese President MaYing-Jeou resigned as chairman of Kuomintang (KMT) for the defeat in the election.

In 2014, Taiwan's central bank left its key interest rates unchanged. Discount rateremained unchanged at 1.875%, the secured loan rate at 2.25% and the unsecured loanrate at 4.125%.

US economic recovery and lower TWD are expected to cushion the slower growth inother major export partners namely China, Europe and Japan. In the domestic market,lower oil prices would lift household purchasing power and support domesticconsumption. We will continue to invest in undervalued high growth companies in Taiwanespecially on cloud computing, Internet of Things, mid- to low-end smartphone playersand consumer names with strong growth.

3.5.3.7 South Korean Stock Market

During the year ended 2014, the KOSPI index declined by 4.76% to close at 1,915.59points due to concern over economic uncertainty and a continued depreciation of theJapanese yen against the Korean Won. Meanwhile, the KRW depreciated by 3.92%against the USD following the ending of the quantitative easing measure by the USFederal Reserve.

The South Korea’s GDP grew by 3.2% y.o.y in the 3Q14. On a q.o.q basis, the economyincreased marginally by 0.9%. According to the International Monetary Fund (IMF), SouthKorea is expected to grow by 4% in the year 2015.

In line with the slow pace of economic growth, South Korea’s inflation eased to 0.8% inDecember from 1% in the previous month. It was the lowest inflation in more than 15years which may reinforce the case for loose monetary policies to boost the economicgrowth.

The South Korean unemployment rate declined to 3.40% in November 2014 from 3.50%in October as more jobs were created in the health services, internal trade andconstruction sectors.

Despite the challenging economic outlook, we expect further upside potential on theKOSPI index on the back of foreign buying interest, low valuation and supportive fiscaland monetary policies. Nevertheless, South Korea may continue to face key issues suchas ageing population, slow economic growth and the continued depreciation of the


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Japanese yen against the Korean Won. Moreover, the KOSPI index may continue to seehuge redemption at key resistance of 2,000 levels as most retail investors in Korea adopta short-term investment culture.

3.5.3.8 Australian Stock Market

The ASX 200 index recorded a marginal gain of 1.10% y.o.y to close the year of 2014 at5,411 points. The Aussie Dollar weakened by 8.32% against the US Dollar fromAUD1.1217/USD by the end of 2013 to close 2014 at AUD1.2239/USD.

Australia’s GDP grew 2.7% y.o.y in 3Q 2014 after expanding by 2.3% y.o.y in 3Q 2013.In its November Statement of Monetary Policy, The Reserve Bank of Australia (RBA)maintained its GDP growth estimate for 2014 at 2.25-3.25% and for 2015 at 2.0-3.0% inthe view to the low level of interest rates and the strong population growth which isexpected to continue to underpin rising housing activity and housing prices. Exports,especially of resources, are expected to continue to contribute to growth, while decliningmining investment and, to a lesser extent, fiscal consolidation at both the state andfederal levels are likely to weigh on growth over the forecast period.

The RBA has left the cash rate unchanged throughout 2014 at a record low of 2.50%.The RBA cited that the Aussie Dollar is still too high and needs to fall further to aideconomic growth, especially considering recent significant falls in commodity prices.Australia’s CPI inflation rate increased marginally to 2.3% y.o.y in 3Q 2014, comparedwith a rate of 2.2% in 2Q 2013.

The unemployment rate edged higher over the year to 11-year high at 6.3% in November2014 from 5.8% in November 2013.

3.5.4 Foreign Securities Investment - Market Outlook and Strategy

For the year ended 2014, the MSCI Far East ex-Japan (USD) closed marginally higher by0.54%, underperforming the MSCI World index which increased by 2.93%. During theyear, institutional funds were seen reducing their exposures in emerging markets infavour of developed markets.

The US equity market was unperturbed when the quantitative easing (QE) programmecame to an end in October 2014 as it continued to rally reaching a historical high of18,103.45 points in December and closing with a gain of 7.52% for the year. It seemedlike the baton of quantitative easing measures has been passed on to Japan, Europe andChina. During the year, the Bank of Japan announced that it will expand its monetarybase to 80 trillion yen from 50 trillion yen. The European Central Bank (ECB) alsoconfirmed plans to pump in 1 trillion Euro of fresh stimulus to stimulate growth. Within theAsia ex-Japan equity markets, the top three performing markets, in local currenciesterms were India (+29.89%), Philippines (+22.76%) and Indonesia (+22.29%).Meanwhile, the worst performing markets were Malaysia (-5.66%), South Korea (-4.76%)and Hong Kong (+1.28%).

Emerging markets were hit at the start of the year by a combination of negative eventsincluding an expected slowdown in China and the tapering of the bond purchases by the


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US Federal Reserve. After a bumpy ride in the January 2014, equities market roaredback to life towards the end of June due the expectations that the Federal Reservechairperson, Janet Yellen would be able to orderly manage the end of the quantitativeeasing without damage to the economic recovery.

Towards the 2nd half of the year, falling oil prices became the main theme. Oil and gasstocks came off the boil with oil prices falling to a near 6-year low (Brent falling belowUSD55 per barrel). Higher US shale oil production as well as weaker demand saw asupply overhang in world oil markets. This was worsened by the Organization ofPetroleum Exporting Countries (OPEC)’s decision, that there would be no cuts inproduction. The slide in oil prices also dragged down other commodity stocks such as thepalm oil.

Overtime, lower oil prices are expected to benefit most economies through lower pricesand therefore, arguably, conferring more spending power on consumers. For oil exportingcountries like Malaysia which is trying to manage its fiscal deficit to 3% of its GDP, theeffects are net negative and for this reason, we see a likelihood that certain plannedcapital expenditure under the “2015 Budget” could be trimmed or deferred which maylead to weaker earnings outlook for the country’s construction sector.On balance, we believe the fundamentals of the Asia ex-Japan region remain relativelygood backed by sufficient headrooms for favourable fiscal and monetary policies shouldthese be required. We expect liquidity conditions to remain positive for the equitiesmarket and that interest rates will continue to stay low and accommodative.

The challenging global economic outlook will keep cautious investors on the side-lines.We will continue to invest in defensive stocks with solid fundamentals. Within the Asiaex-Japan region, we are overweighting our equity exposure on China/Hong Kong as webelieve the undemanding valuation may provide more upside potential for the equityfunds. Although there are signs that China is facing an economic slowdown, we believeChina would avoid a hard landing. In fact, China’s projected GDP growth is still one of thehighest in the world and it seems unjustifiable that the Hong Kong/China equity marketsare trading at or near their historical lows.

3.6 Policy On Rebates And Soft Commission

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

During the year, the Manager has not received any soft commissions from stockbrokers.


PECBF

[email protected]

41Your Need

is our Focus

23 February 2015


PECBF

[email protected]

42Your Need

is our Focus

STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM EMERGING COMPANIES BALANCED FUND

We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Pheim Emerging Companies Balanced Fund aredrawn up in accordance with the Deed, Malaysian Financial Reporting Standards,International Financial Reporting Standards and Securities Commission's Guidelines onUnit Trust Funds in Malaysia so as to give a true and fair view of the financial positionof Pheim Emerging Companies Balanced Fund as at 31 December 2014 and of itsfinancial performance and cash flows for the financial year then ended.

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

AZMI MALEK MERICANDirector

HOI WENG KONGDirector

Kuala Lumpur, Malaysia23 FEB 2015

PECBF

INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF

PHEIM EMERGING COMPANIES BALANCED FUND

Report on the financial statements

We have audited the financial statements of Pheim Emerging Companies Balanced Fund ("theFund"), which comprise statement of financial position as at 31 December 2014, and statement ofcomprehensive income, statement of changes in equity and statement of cash flows for the yearthen ended, and a summary of significant accounting policies and other explanatory information, asset out on pages 45 to 58.

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

The Manager of the Fund, Pheim Unit Trusts Berhad, is responsible for the preparation of financialstatements so as to give a true and fair view in accordance with Malaysian Financial ReportingStandards, International Financial Reporting Standards and the requirements of the SecuritiesCommission's Guidelines on Unit Trust Funds in Malaysia. The Manager is also responsible forsuch internal control as the Manager determines is necessary to enable the preparation of financialstatements that are free from material misstatement, whether due to fraud or error. The Trustee isresponsible for ensuring that the Manager maintains proper accounting and other records as arenecessary to enable fair presentation of these financial statements.

Auditors’ responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on our judgment, includingthe assessment of risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, we consider internal control relevant to the entity’spreparation of financial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriatenessof the accounting policies used and the reasonableness of accounting estimates made by theManager, as well as evaluating the overall presentation of the financial statements.

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

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Opinion

Other Matters

FOLKS DFK & CO. KHOO PEK LING

AF: 0502 No. 900/03/16(J/PH)

CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT

Kuala Lumpur

Date: 23 February 2015

In our opinion, the financial statements give a true and fair view of the financial position of theFund as at 31 December 2014 and of its financial performance and cash flows for the year thenended in accordance with Malaysian Financial Reporting Standards, International FinancialReporting Standards and the requirements of the Securities Commission's Guidelines on Unit TrustFunds in Malaysia.

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

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STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

Note 2014 2013

RM RM

INVESTMENT INCOME/(LOSS)

Gross dividend income 260,848 343,723

Interest income

- loans and receivables 195,835 37,531

- available-for-sale ("AFS") financial assets 99,798 188,624

Net gain on financial assets at fair value through

profit or loss ("FVTPL") 8 644,137 1,522,826

Accretion of discounts, net of amortisation of

premiums on AFS financial assets 9 (4,316) 33,613

Net realised loss on foreign exchange (1,428) (20,072)

1,194,874 2,106,245

EXPENSES

Manager's fee 4 298,471 260,812

Trustee's fee 5 18,000 18,000

Auditor's remuneration 9,085 11,660

Tax agent's fee 3,000 3,064

Administrative expenses 26,647 27,352

355,203 320,888

Net income before tax 839,671 1,785,357

Tax income/(expense) 6 39,808 (17,383)

Net income for the year 879,479 1,767,974

Other comprehensive loss

Net loss on change in fair value of AFS financial assets (2,424) (33,873)

Total comprehensive income for the year 877,055 1,734,101

Net income after tax is made up of the following:

Net realised income 2,060,750 1,233,864

Net unrealised (loss)/income (1,181,271) 534,110879,479 1,767,974

Distribution for the year:

Net distribution 11 1,004,289 858,410

Net distribution per unit (sen) 11 6.5 6

Gross distribution per unit (sen) 11 6.5 6

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

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STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2014

Note 2014 2013

RM RM

ASSETS

Investments 7 13,860,468 13,813,768

Deposits with licensed financial institutions 10 6,842,964 3,947,113

Other receivable 55,289 91,492

Amount due from Brokers - 289,788

Cash at bank 115,244 420,940TOTAL ASSETS 20,873,965 18,563,101

LIABILITIES

Tax payable - 26,068

Amount due to Manager 28,450 22,720

Amount due to Trustee 1,627 1,578

Other payables and accruals 16,000 15,600

TOTAL LIABILITIES 46,077 65,966

UNITHOLDERS' EQUITY

Unitholders' capital 11,267,447 8,809,460

Retained earnings 9,566,737 9,691,547

Available-for-sale reserve (6,296) (3,872)

TOTAL EQUITY 12 20,827,888 18,497,135

TOTAL EQUITY AND LIABILITIES 20,873,965 18,563,101

UNITS IN CIRCULATION 12 (a) 17,347,920 15,334,865

NET ASSET VALUE ("NAV") PER UNIT 13 1.2006 1.2062


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STATEMENT OF CHANGES IN EQUITY


Unitholders' Retained AFS Total

capital earnings reserve Equity

RM RM RM RM

At 1 January 2013 8,700,042 8,781,983 30,001 17,512,026

Total comprehensive income for

the year - 1,767,974 (33,873) 1,734,101

Creation of units 2,409,920 - - 2,409,920

Cancellation of units (2,208,083) - - (2,208,083)

Distribution equalisation (92,419) - - (92,419)

Income distribution (Note 11) - (858,410) - (858,410)

Balance at 31 December 2013 8,809,460 9,691,547 (3,872) 18,497,135


the year - 879,479 (2,424) 877,055


Cancellation of units (680,664) - - (680,664)

Distribution equalisation 231,993 - - 231,993

Income distribution (Note 11) - (1,004,289) - (1,004,289)Balance at 31 December 2014 11,267,447 9,566,737 (6,296) 20,827,888


47

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STATEMENT OF CASH FLOWS


2014 2013

RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sale of investments 12,523,770 9,804,305

Purchase of investments (13,347,157) (9,633,486)

Dividends received 290,880 301,558

Interest received 300,376 226,257

Proceeds received from bonds on maturity 1,700,000 2,500,000

Tax paid (520) -

Tax refunded 18,131 46,258

Management fee paid (294,546) (256,789)

Trustee's fee paid (17,951) (17,947)

Payment for other fees and expenses (38,330) 39,076

Income distribution paid (20,800) (19,586)

Net cash generated from operating

and investing activities 1,113,853 2,989,646

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from creation of units 2,286,342 1,925,729

Payment for cancellation of units (810,040) (2,653,636)

Net cash generated from/(used in) financing activities 1,476,302 (727,907)

NET INCREASE IN CASH

AND CASH EQUIVALENTS 2,590,155 2,261,739

CASH AND CASH EQUIVALENTS AT THE

BEGINNING OF THE YEAR 4,368,053 2,106,314

CASH AND CASH EQUIVALENTS AT THE END OFTHE YEAR 6,958,208 4,368,053

Cash and cash equivalents comprise the following:

Deposits with licensed financial institutions (Note 10) 6,842,964 3,947,113

Cash at bank 115,244 420,9406,958,208 4,368,053


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NOTES TO THE FINANCIAL STATEMENTS


1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

2. BASIS OF PREPARATION

2.1 Statement of Compliance

2.2 Basis of Measurement

The accounting policies applied by the Fund is consistent with those applied in the previous

financial year other than the application of the new and revised MFRSs, Issues Committee ("IC")

Interpretations and amendments to MFRSs and IC Interpretations as disclosed in Note 2.3 below.

Pheim Emerging Companies Balanced Fund ("the Fund") was established pursuant to a Master Deeddated 11 January 2002 as amended by a Second Supplemental Master Deed dated 29 April 2013between the Manager; Pheim Unit Trusts Berhad, the Trustee; Maybank Trustees Berhad and theregistered unitholders of the Fund.

The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 of theMaster Deed, which includes investments in equities and fixed income securities traded on BursaMalaysia Securities Berhad ("Bursa Malaysia") or any other markets considered as Eligible Market. TheFund commenced operations on 28 January 2002 and will continue its operations until terminated by theTrustee as provided under Part 12 of the Master Deed.

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

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

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

The financial statements were authorised for issue by the Board of Directors of the Manager inaccordance with the resolution of the directors on 23 February 2015.

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

The financial statements of the Fund have been prepared on the historical cost convention unlessotherwise indicated in the summary of significant accounting policies.

49

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2. BASIS OF PREPARATION (CONTD.)

2.3

Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities

Amendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge Accounting

(a) Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities

(b)

2.4

Effective for annual periods beginning on or after 1 July 2014

Amendments to MFRS 119, Defined Benefit Plans: Employee ContributionsAmendments to MFRSs Classified as "Annual Improvements to MFRSs 2010 - 2012 Cycle"Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2011 - 2013 Cycle"

The Amendments have been applied retrospectively and the application has no impact on

the disclosures or the amounts recognised in the Fund's financial statements.

The Amendments introduce a narrow-scope exception to the requirement for the

discontinuation of hedge accounting in MFRS 139, Financial Instruments : Recognition and

Measurement. Specifically, the Amendments provide relief from discontinuing hedge

accounting when a novation of a derivative as a hedging instrument meets certain criteria.

The Amendments clarify the requirements relating to the offset of financial assets and

financial liabilities. Specifically, the Amendments clarify the meaning of 'currently has a

legally enforceable right of set-off' and 'simultaneous realisation and settlement'.



Application of Amendments to MFRSs and new IC Interpretation

During the financial year, the Fund has applied the following amendments to MFRSs issued by

the Malaysian Accounting Standards Board ("MASB") which are effective for accounting period

beginning on or after 1 January 2014 :-

The Fund has not early adopted the following new MFRSs and amendments to MFRSs that have

been issued by the MASB but are not yet effective :-

Amendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge

Accounting

New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective

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2. BASIS OF PREPARATION (CONTD.)

2.4

Effective for annual periods beginning on or after 1 January 2016

MFRS 14, Regulatory Deferral AccountsAmendments to MFRS 10, MFRS 12 and MFRS 128 - Investment Entities: Applying the

Consideration ExceptionAmendments to MFRS 10 and MFRS 128 - Sale or Contribution of Assets between an Investor

and its Associate or Joint VentureAmendments to MFRS 11 - Accounting for Acquisitions of Interests in Joint OperationsAmendments to MFRS 101 - Disclosure InitiativeAmendments to MFRS 116 and MFRS 138 - Clarification of Acceptable Methods of

Depreciation and AmortisationAmendments to MFRS 116 and MFRS 141 - Agriculture : Bearer PlantsAmendments to MFRS 127 - Equity Method in Separate Financial StatementsAmendments to MFRSs Classified as "Annual Improvements to MFRSs 2012 - 2014 Cycle"



MFRS 9 - Financial Instruments (IFRS 9 issued in July 2014)

The Standard replaces earlier versions of MFRS 9 and introduces a package of improvements

which includes a classification and measurement model, a single forward-looking ‘expected loss’

impairment model and a substantially-reformed approach to hedge accounting.

The Fund will apply the above new MFRSs and amendments to MFRSs that are applicable once

they become effective. The main features of the new applicable standards and amendments to

standards are summarised below :-

MFRS 15 -Revenue from Contracts with Customers

MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)

New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective (Cont'd)

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2. BASIS OF PREPARATION (CONT'D.)

2.4

The key enhancements of MFRS 9 are :

MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)(Cont'd)

• Under MFRS 9, all recognised financial assets are required to be subsequently measured at

either amortised cost, fair value through other comprehensive income ("FVTOCI") or fair value

through profit or loss ("FVTPL") on the basis of both an entity's business model for managing the

financial assets and the contractual cash flow characteristics of the financial assets. These

requirements improve and simplify the approach for classification and measurement of financial

assets as the numerous categories of financial assets under MFRS 139 had been replaced.

• Most of the requirements in MFRS 139 for classification and measurement of financial

liabilities were carried forward unchanged to MFRS 9, except for the measurement of financial

liabilities designated as at FVTPL. Under MFRS 139, the entire amount of the change in the fair

value of the financial liability designated as FVTPL is presented in profit or loss. However,

MFRS 9 requires that the amount of change in the fair value of the financial liability that is

attributable to changes in the credit risk of that liability is presented in other comprehensive

income, unless the recognition of the effects of changes in the liability's own credit risk in other

comprehensive income would create or enlarge an accounting mismatch in profit or loss.

Changes in fair value attributable to a financial liability's credit risk are not subsequently

reclassified to profit or loss.


• In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss

model, as opposed to an incurred credit loss model under MFRS 139. Under MFRS 9, it is no

longer necessary for a credit event to have occurred before credit losses are recognised. Instead,

an entity always accounts for expected credit losses and changes in those expected credit losses

at each reporting date to reflect changes in credit risk since initial recognition.

• The new general hedge accounting requirements retain the three types of hedge accounting

mechanisms currently available in MFRS 139 i.e. fair value hedges, cash flow hedges and hedges

of a net investment in a foreign operation. MFRS 9 incorporates a new hedge accounting model

that aligns the hedge accounting more closely with an entity's risk management activities. The

new hedge accounting model has also expanded the scope of eligibility of hedge items and

hedging instruments respectively.

The initial application of MFRS 9 in the future may have an impact on the financial statements of

the Fund. However, it is not practicable to provide a reasonable estimate of the effect until a

detailed review has been completed. The initial application of other new MFRSs and

amendments to MFRSs is not expected to have any significant impact on the financial statements

of the Fund.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Financial Assets

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

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

Financial assets are recognised in the statement of financial position when, and only when, theFund becomes a party to the contractual provisions of the financial instruments. Regular way ofpurchase and sale of investments in financial instruments are recognised on trade dates. Whenfinancial assets are recognised initially, they are measured at fair value, plus 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.

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

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

After initial recognition, AFS financial assets are measured at fair value. Gains or 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 interest calculated using effective interestmethod 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. 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.

The accounting policies set out below have been applied consistently to the periods, presented in thesefinancial statements and have been applied consistently by the Fund, unless otherwise stated.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

3.1 Financial Assets (Contd.)

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

(c) Loan and receivables

3.2 Impairment of Financial Assets

(a) AFS financial assets

Significant or prolonged decline in fair value below cost, weaken fundamental, significant

financial difficulties of the issuer or obligor, and the disappearance of an active trading

market are considerations to determine whether there is objective evidence that investment

securities classified as AFS financial assets are impaired. At end of each financial year, the

Manager would receive impairment proposal from the Fund's external investment manager,

if any financial assets of the Fund, in their professional opinion, warrant an impairment

exercise.

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.

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

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

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

Subsequent to initial recognition, loans and receivables are measured at amortised 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.

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

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3.2 Impairment of Financial Assets (Cont'd)

(a) AFS financial assets (Cont'd)

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

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 reducedthrough the use of an allowance account. When a trade receivable becomes uncollectible, itis written off against the allowance account.

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

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.

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3.3 Classification of Realised and Unrealised Gain and Losses

3.4 Financial Liabilities

3.5 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 cash paymentor receipts made of derivative contracts (excluding payments or receipts on collateral marginaccounts for such investments).

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

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

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

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

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

In preparing the financial statements, transactions in currencies other than the Fund's functionalcurrency (foreign currencies) are recorded in the functional currency using the exchange ratesprevailing at the dates of the transactions. At the end of each reporting period, foreign currencymonetary assets and liabilities are translated at exchange rates prevailing at the end of 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.

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3.5 Foreign Currencies (Contd.)

3.6 Unitholders' Capital

3.7 Income Distribution

3.8 Cash and Cash Equivalents

3.9 Income Recognition

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

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

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

Income is recognised to the extent that is probable that the economic benefits will flow to 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, which includes the accretion of discount and amortisation of premium on fixedincome securities, is recognised using effective interest method.

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

Exchange differences arising from the translation of non-monetary items carried at fair value areincluded in profit or loss for the period except for the differences arising on the translation 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.

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3.10 Income Tax

3.11 Segment Reporting

3.12 Significant Accounting Estimates and Judgements

4. MANAGER'S FEE

5. TRUSTEE' S FEE

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

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

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

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.

For management purposes, the Fund is managed by 2 main portfolios, namely (1) equitysecurities and (2) fixed income instruments. Each segment engages in separate business activitiesand the operating results are regularly reviewed by the Manager, External Investment Managerand the Fund's Investment Committee. The External Investment Manager and the FundInvestment Committee jointly assumes the role of chief operation decision maker, forperformance assessment purposes and to make decision about resources allocated to eachinvestment segment.

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 of estimationuncertainty at the reporting date, that have a significant risk of causing a material adjustment tothe carrying amounts of assets and liabilities within next year.

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6. TAXATION

2014 2013

RM RM

Current year Malaysian tax - 19,547

Overprovision in prior year (39,808) (2,164)

Malaysian tax (income)/expense based onresults for the year (39,808) 17,383

2014 2013

RM RM


Taxation at Malaysian statutory rate of 25% (2013: 25%) 209,918 446,339

Tax effects of:

Income not subject to tax (298,719) (507,015)

Expenses not deductible for tax purposes 11,064 11,430

Restriction on tax deductible expenses for unit trust

funds 77,737 68,793

Overprovision in prior year (39,808) (2,164)Tax (income)/expense for the financial year (39,808) 17,383

7. INVESTMENTS

2014 2013

RM RM

Financial assets at fair value through

profit or loss (Note 8)

Quoted equities

- in Malaysia 3,218,150 5,189,385

- outside Malaysia 4,946,168 5,221,493

8,164,318 10,410,878

Available-for-sale financial assets

(Note 9)

- Unquoted fixed income securities

in Malaysia 5,696,150 3,402,890Total investments 13,860,468 13,813,768

Income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimatedassessable income for the financial year.

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

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

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8. FINANCIAL ASSETS AT FVTPL

2014 2013RM RM

Financial assets at FVTPL:Quoted equities 8,164,318 10,410,878

Net gain on financial assets at FVTPL comprised:

Realised gain on disposals 1,825,408 995,148

Unrealised (loss)/gain on changes in fair values (1,181,271) 527,678644,137 1,522,826

The currency exposure profile of financial assets at

FVTPL is as follows :

- Ringgit Malaysia 3,218,150 5,189,385

- Hong Kong Dollar 1,238,735 3,127,987

- Indonesian Rupiah 1,827,824 266,228

- Singapore Dollar 864,926 670,250

- Thai Baht 286,763 320,087

- Philippines Peso 282,386 258,411

- South Korean Won 445,534 578,5308,164,318 10,410,878

Financial assets at FVTPL as at 31 December 2014 are as detailed below:

Name of Counter Quantity Cost Fair value % of

RM RM NAV

QUOTED EQUITIES

- IN MALAYSIA

Main Market

Construction

Ho Hup Construction Co. Berhad 145,000 178,984 181,250 0.87

Muhibbah Engineering (M) Berhad 37,000 55,033 68,820 0.33

182,000 234,017 250,070 1.20

Consumer

Padini Holdings Berhad 100,000 198,553 146,000 0.70

Yee Lee Corporation Berhad 108,500 142,163 151,900 0.73

208,500 340,716 297,900 1.43

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8. FINANCIAL ASSETS AT FVTPL (CONTD.)

QUOTED EQUITIES

- IN MALAYSIA (Contd.)


RM RM NAV

Industrial Products

Can-One Berhad 110,000 372,197 234,300 1.12

Jaya Tiasa Holdings Berhad 144,000 318,856 280,800 1.35

Kian Joo Can Factory Berhad 90,000 238,478 262,800 1.26

Malaysia Steel Works KL Berhad 40,000 40,914 34,600 0.17

Scientex Berhad 6,000 32,010 42,120 0.20

Ta Ann Holdings Berhad 75,000 348,952 283,500 1.36

465,000 1,351,407 1,138,120 5.46

Plantations

Hap Seng Plantations Holdings Berhad 17,000 47,596 42,670 0.20

Sarawak Oil Palms Berhad 30,000 168,560 154,500 0.74

TH Plantations Berhad 168,000 351,022 265,440 1.27

215,000 567,178 462,610 2.21

Properties

Land & General Berhad 164,000 106,998 82,820 0.40

Matrix Concepts Holdings Berhad 171,500 251,533 463,050 2.22

Metro Kajang Holdings Berhad 50,000 201,307 130,000 0.62

385,500 559,838 675,870 3.24

Technology

Malaysian Pacific Industries 68,000 261,831 308,040 1.48

Trading/Services

Berjaya Auto Berhad 26,000 83,725 85,540 0.41

TOTAL QUOTED

EQUITIES

- IN MALAYSIA 1,550,000 3,398,712 3,218,150 15.43

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QUOTED EQUITIES

- OUTSIDE MALAYSIA


RM RM NAV

Hong Kong Stock Exchange

("HKSE")

China Fiber Optic Network SY 252,000 215,088 237,375 1.14

China Gas Holdings Ltd 26,000 155,539 143,196 0.70

China Huishan Dairy Holdings Co. Ltd 232,000 238,911 140,113 0.68

China Meidong Auto Holdings Ltd 248,000 195,011 178,838 0.86

Goldpac Group Ltd 68,000 226,044 164,271 0.79

Tianneng Power International Ltd 124,000 167,536 115,127 0.55

TCL Communication Tech Holdings Ltd 47,000 166,460 152,729 0.73

Termbray Petro King Oilfield 220,000 372,156 107,086 0.51

1,217,000 1,736,745 1,238,735 5.96

Jakarta Stock Exchange

("JSX")

Alam Sutera Realty TBK PT 2,270,000 322,038 358,479 1.72

Charoen Pokphand Indonesia PT 180,000 208,275 191,365 0.92

Hexindo Adiperkasa TBK PT 259,000 382,688 255,998 1.23

Metropolitan Land TBK PT 1,000,000 118,367 122,670 0.59

Modernland Realty TBK PT 3,840,000 488,501 557,683 2.68

Tempo Scan Pacific TBK PT 260,000 212,240 207,496 1.00

Tunas Baru Lampung TBK PT 630,000 105,825 134,133 0.64

8,439,000 1,837,934 1,827,824 8.78

Korea Exchange("KE")

SK Hynix Inc 1,500 221,775 229,207 1.10Yuhan Corp 400 206,352 216,327 1.04

1,900 428,127 445,534 2.14

Philippines Stock Exchange Stock Exchange("PSE")

8990 Holdings Inc 160,000 88,406 88,187 0.42San Miguel pure Food. Co 12,000 262,256 194,199 0.93

172,000 350,662 282,386 1.35

Stock Exchange Thailand Stock Exchange("SET")

Total Access Communication-NVDR 28,000 303,741 286,763 1.38

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QUOTED EQUITIES- OUTSIDE MALAYSIA(Contd.)

Name of Counter Quantity Cost Fair value % ofRM RM NAV

Singapore Exchange

("SGX")Centurion Corp Ltd 76,000 112,577 100,536 0.48

Indofood Agri Resources Ltd 136,000 546,939 259,065 1.24

Midas Holdings Ltd 137,000 176,755 90,615 0.43

SBI Offshore Limited 550,000 177,375 414,710 1.99

899,000 1,013,646 864,926 4.14

TOTAL QUOTED

EQUITIES

- OUTSIDE MALAYSIA 10,756,900 5,670,855 4,946,168 23.75

TOTAL FINANCIAL ASSETSAT FVTPL 9,069,567 8,164,318 39.18

EXCESS OF COST OVERFAIR VALUE (905,249)

9. AFS FINANCIAL ASSETS

2014 2013

RM RM

Unquoted fixed income securities 5,696,150 3,402,890

Accretion of discounts, net ofamortisation of premiums on AFS financial assets -4,316 33,613

AFS financial assets as at 31 December 2014 are as detailed below:

Nominal

Name of Counter Amount Cost * Fair value % of

RM RM NAV

UNQUOTED FIXED INCOME SECURITIES

SME Bank IMTN 3.7% 1,000,000 1,000,000 997,500 4.79

Malaysian Government Securities 1,700,000 1,702,446 1,697,450 8.15

-10/15

SABH 4.275% 3,000,000 3,000,000 3,001,200 14.41

-12/195,700,000 5,702,446 5,696,150 27.35


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

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10. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

2014 2013

RM RM

Licensed investment bank 6,842,964 3,947,113

2014 2013 2014 2013% % Days Days

Licensed investment bank 3.05 2.91 3 6

11. INCOME DISTRIBUTION

Distributions to unitholders are from the following sources:

2014 2013

RM RM

Dividend income 18,973 6,563

Interest income 14,279 20,051

Net realised gain from sale of investments 130,266 66,386

Net accretion of discount on corporate bond 8,070 3,212

Other income - 123

171,588 96,335

Less:

Expenses 30,888 30,697

Taxation - -

Current year's realised income 140,700 65,638

Distribution out of previous year's realised reserves 863,589 792,772Distribution for the year 1,004,289 858,410

Units in circulation at book closing date 15,450,593 14,306,838

Gross distribution per unit (sen) 6.5 6

Net distribution per unit (sen) 6.5 6Date of distribution 29.4.2014 26.4.2013

WAEIR

Average

remaining

maturities

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

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

Note 2014 2013

RM RM

Unitholders' capital (a) 11,267,447 8,809,460

Retained earnings

- Realised earnings (b) 10,868,343 9,811,882

- Unrealised losses (c) (1,301,606) (120,335)

9,566,737 9,691,547

AFS reserve (6,296) (3,872)Total equity/ Net asset value 20,827,888 18,497,135

(a) Unitholders' Capital

Number Number

of units RM of units RM

Balance at beginning

of the year 15,334,865 8,809,460 15,237,393 8,700,042

Add: Creation of units 2,681,987 2,906,659 2,367,288 2,409,920

Less: Cancellation of units (668,932) (680,664) (2,269,816) (2,208,083)

Distribution equalisation - 231,993 - (92,419)

Balance at endof the year 17,347,920 11,267,447 15,334,865 8,809,460

2014 2013

In accordance with Article 6.1.1 of the Deed and Securities Commision's approval letter dated 19

December 2001, the maximum number of units that can be issued for circulation is 100 million units.

As at 31 December 2014, the number of units not in issue is 82,652,080 (2013: 84,665,135 ) units.

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

(b) Realised - Distributable2014 2013RM RM

Balance at the beginning of the year 9,811,882 9,436,428Net income after tax 879,479 1,767,974

Net unrealised loss/(gain) attributable toinvestments held transferred to

unrealised reserve 1,181,271 (527,679)

Net unrealised foreign exchange

(gain)/loss attributable to foreign currency

monetary items transferred to unrealised reserve - (6,431)

Distribution out of realised reserve (1,004,289) (858,410)Balance at the end of the year 10,868,343 9,811,882

(c) Unrealised - Non-distributable

2014 2013

RM RM

Balance at the beginning of year (120,335) (654,445)

Net unrealised (loss)/gain attributable to

investment held transferred from

realised reserve (1,181,271) 527,679

Net unrealised foreign exchange

gain/(loss) attributable to foreign

currency monetary items transferred from

realised reserve - 6,431Balance at the end of the year (1,301,606) (120,335)

13. NET ASSET VALUE PER UNIT

RM RM/Unit RM RM/Unit

NAV attributable to unitholders

for issuing/redeeming units 20,918,607 1.2058 18,536,711 1.2088

Effect from adopting bid prices

as fair value (90,719) (0.0052) (39,576) (0.0026)

NAV attributable to unitholdersper financial statements 20,827,888 1.2006 18,497,135 1.2062

2014 2013

Quoted financial assets have been valued at the bid prices at the close of business in accordance with

the provisions of MFRS 139. For the purpose of calculation of net asset value attributable to unitholders

per unit for the issuance and redemption of units in accordance with the Deed, quoted financial assets

are stated at the last done market price.

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

A reconciliation of net asset value attributable to unitholders for issuing/redeeming units and the net

asset value attributable to unitholders per the financial statements is as follows:-

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14. UNITS HELD BY RELATED PARTIES

2014 2013

Number of Valued at Number of Valued at

units NAV units NAV

RM RM

Directors of the Manager 415,315 498,627 69,050 83,289

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

15. TRANSACTIONS WITH BROKERS

% of Total

Value of % of Total Brokerage Brokerage

Trade Trade Fees Fees

RM % RM %

MIDF Amanah Investment Bank Bhd 7,457,869 22.10 - -Hwang-DBS Investment Bank Bhd 3,101,004 9.20 445 0.73KAF Investment Bank Bhd 2,500,000 7.41 - -

DBS Vickers Securities Pte Ltd- Hong Kong 1,718,325 5.10 4,323 7.05

PT Danareksa Sekuritas - Indonesia 1,515,846 4.49 8,281 13.52

PT Mandiri Sekuritas 1,374,809 4.08 4,118 6.72

Kenanga Investment Bank Bhd 1,314,861 3.90 2,780 4.54

Daiwa Securities SMBC Co Ltd - Seoul 1,290,326 3.83 4,526 7.39

CIMB-GK Securities Ltd

- Hong Kong 1,255,279 3.72 3,144 5.13DBS Vickers Securities Ltd - Korea 1,158,625 3.44 3,026 4.94

Others 11,037,441 32.73 30,620 49.9833,724,386 100.00 61,263 100.00

16. MANAGEMENT EXPENSE RATIO

2014 2013

Management expense ratio 1.78% 1.85%

This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other professional

fees) and other administrative expenses of the Fund to the average NAV of the Fund calculated on a

daily basis. The average NAV of the Fund for the year ended 31 December 2014 was RM 19,908,620

(2013: RM17,381,207).

Details of transactions with stockbroking companies and other investment banks for the financial yearended 31 December 2014 are as follows:

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17. PORTFOLIO TURNOVER RATIO

2014 2013

Portfolio turnover (times) 0.65 0.56

18. SEGMENT INFORMATION

This is the ratio of average acquisitions and disposals of the Fund for the financial year

to the average NAV of the Fund calculated on a daily basis.

The Manager and Investment Committee of the Fund are responsible for allocating resources availableto the Fund in accordance with the overall investment strategies as set out in the Investment Guidelinesof 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 financialinstitutions.

The investment objective of each segment is to achieve consistent returns from the investments in eachsegment while safeguarding capital by investing in diversified portfolios. There have been no changes inreportable segments in the current financial year. The segment information provided is presented to the

2014 2013

Fixed Fixed

Equity Income Equity Income

Portfolio Portfolio Total Portfolio Portfolio TotalRM RM RM RM RM RM

Gross dividend income 260,848 - 260,848 343,723 - 343,723

Interest income - 295,633 295,633 - 226,155 226,155

Net gain on financial

assets at FVTPL 644,137 - 644,137 1,522,826 - 1,522,826

Accretion of discounts, net of

amortisation of premiums

on AFS financial assets - (4,316) (4,316) - 33,613 33,613

Net realised loss on

foreign exchange (1,428) - (1,428) (20,072) - (20,072)

Total segment operatingincome for the year 903,557 291,317 1,194,874 1,846,477 259,768 2,106,245

Deposits with financial

institutions - 6,842,964 6,842,964 - 3,947,113 3,947,113

Financial assets at FVTPL 8,164,318 - 8,164,318 10,410,878 - 10,410,878

AFS financial assets - 5,696,150 5,696,150 - 3,402,890 3,402,890Other assets 19,581 35,708 55,289 340,829 40,451 381,280

Total segment assets 8,183,899 12,574,822 20,758,721 10,751,707 7,390,454 18,142,161

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

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18. SEGMENT INFORMATION (CONTD.)

2014 2013

RM RM

Net reportable segment operating income 1,194,874 2,106,245

Expenses (355,203) (320,888)


Tax income/(expense) 39,808 (17,383)Net income for the year 879,479 1,767,974

2014 2013

RM RM

Total segment assets 20,758,721 18,142,161

Cash at bank 115,244 420,940

Total assets of the Fund 20,873,965 18,563,101

Total segment liabilities - -

Tax payable - 26,068




Total liabilities of the Fund 46,077 65,966

19. 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 and operating profits:

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 significant accountingpolicies in Note 3 describe how the classes of financial instruments are measured, and howincome and expenses, including fair value gains and losses are recognised. The following tableanalyses the financial assets and liabilities of the Fund in the statement of financial position bythe class of financial instrument to which they are assigned, and therefore by the measurementbasis.

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19. FINANCIAL INSTRUMENTS (CONTD.)

(a) Classification of financial instruments (Contd.)Financial

liabilities

Financial AFS at

assets at financial Loans and amortised

FVTPL assets receivables cost Total

RM RM RM RM RM

2014

Assets

Investments 8,164,318 5,696,150 - - 13,860,468

Deposits with licensed

financial institutions - - 6,842,964 - 6,842,964

Other receivables - - 55,289 - 55,289

Cash at bank - - 115,244 - 115,244

Total financial assets 8,164,318 5,696,150 7,013,497 - 20,873,965

Total non-financial assets -

20,873,965

Liabilities

Amount due to Manager - - - 28,450 28,450

Amount due to Trustee - - - 1,627 1,627

Other payables - - - 16,000 16,000

Total financial liabilities - - - 46,077 46,077

Total non-financial liabilities -

46,077

2013

Assets

Investments 10,410,878 3,402,890 - - 13,813,768




Amount due from Brokers - - 289,788 - 289,788

Cash at bank - - 420,940 - 420,940

Total financial assets 10,410,878 3,402,890 4,749,333 - 18,563,101

Total non-financial assets -

18,563,101

Liabilities



Other payables - - - 15,600 15,600


Total non-financial liabilities 26,068

65,966

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(b) Fair Value

(i) Financial instruments that are carried at fair value

Level 1 Level 2 TotalRM RM RM

2014

Financial assets at FVTPL- Quoted equities 8,164,318 - 8,164,318

AFS financial assets- Fixed income securities - 5,696,150 5,696,150

8,164,318 5,696,150 13,860,468

2013

Financial assets at FVTPL- Quoted equities 10,410,878 - 10,410,878

AFS financial assets- Fixed income securities - 3,402,890 3,402,890

10,410,878 3,402,890 13,813,768

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

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

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

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

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

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

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

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

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(b) Fair Value (Contd.)

(i) Financial instruments not carried at fair value

20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES

(i) Market Risk

(a) Equity Price Risk

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

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

The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk 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.

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

The Fund's principal exposure to market risk arises primarily due to changes or developments inthe market environment and typically includes changes in regulations, politics and the economyof the 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 is affected primarily due to changes in market prices, interest rates andforeign curency exchange rates.

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

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

(i) Market Risk (Contd.)

(a) Equity Price Risk (Contd.)

Effect on profit

or loss and equity

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

RM

2014

+6/-6 489,859 /(489,859)

2013

+6/-6 624,653 /(624,653)

(b) Interest Rate Risk

Effect on profit

or loss and equity

Change in basis points * Increase/ (Decrease)

RM

2014+25/-25 6,784/(6,784)

2013+25/-25 3,215/(3,215)

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

currently observable market environment.

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

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

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

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(c) Currency risk

2014 2013

RM RM

Singapore Dollar 86,493 67,025

South Korean Won 44,553 57,853

Thai Baht 28,676 32,009

Philippines Peso 28,239 25,841

Indonesian Rupiah 182,782 26,623

Hong Kong Dollar 123,874 312,799494,617 522,150

(ii) Credit Risk

or loss and equity

Effect on profit

The Fund’s principal exposure to credit risk arises primarily due to changes in the financial

conditions of companies issuing debt securities and stockbroking companies, which may affect

their creditworthiness. This in turn may lead to default in the payment. Such events can lead to

loss of capital or delayed or reduced income for the Fund resulting in a reduction in the Fund’s

asset value and thus unit price. This risk is mitigated by vigorous credit analysis and

diversification of the bond portfolio of the Fund and to engage different stockbroking companies

with good reputation.

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 8.

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

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(iii) Liquidity Risk

1 month - 3 Above 3

months months Total

RM RM RM

Financial Assets

Financial assets at FVTPL 8,164,318 - 8,164,318

AFS financial assets - 5,696,150 5,696,150

Deposits with financial institutions 6,842,964 - 6,842,964

Other assets 170,533 - 170,533

Total undiscounted

financial assets 15,177,815 5,696,150 20,873,965

Non-Financial Assets - - -

Total Assets 15,177,815 5,696,150 20,873,965

Financial Liabilitites

Other liablities 46,077 - 46,077

Total undiscounted

financial liabilities 46,077 - 46,077

Unitholders' NAV 20,827,888 - 20,827,888

Liquidity gap (5,696,150) 5,696,150 -

2014

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

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(iii) Liquidity Risk (Contd.)

1 month - 3 Above 3

months months TotalRM RM RM

Financial Assets:


AFS financial assets - 3,402,890 3,402,890Deposits with financial institutions 3,947,113 - 3,947,113

Other assets 802,220 - 802,220Total undiscounted


Financial LiabilitiesOther liabilities 39,898 - 39,898

Total undiscounted


Non-Financial LiabilitiesTax Payable - 26,068 26,068

Total Assets 39,898 26,068 65,966

Unitholders' NAV 18,497,135 - 18,497,135

Liquidity gap (3,376,822) 3,376,822 -

(iv) Stock Specific Risk

(v) Single Issuer Risk

2013

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

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

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(vi) Capital Management

The capital is represented by unitholders’ subscription to the Fund. The amount of capital canchange significantly on a daily basis as the Fund is subject to daily redemption and subscriptionat the 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 20 (iii) above.

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[email protected]

78Your Need

is our Focus

23 February 2015


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79Your Need

is our Focus

23 February 2015


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80Your Need

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STATEMENT BY MANAGER TO THE UNITHOLDERS OFDANA MAKMUR PHEIM

We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Dana Makmur Pheim are drawn up in accordancewith the Deed, Malaysian Financial Reporting Standards, International FinancialReporting Standards and Securities Commission's Guidelines on Unit Trust Funds inMalaysia so as to give a true and fair view of the financial position of Dana MakmurPheim as at 31 December 2014 and of its financial performance and cash flows for thefinancial year then ended.





DMP


DANA MAKMUR PHEIM


We have audited the financial statements of Dana Makmur Pheim ("the Fund"), which comprisestatement of financial position as at 31 December 2014, and statement of comprehensive income,statement of changes in equity and statement of cash flows for the year then ended, and asummary of significant accounting policies and other explanatory information, as set out on pages83 to 96.


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


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

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on our judgment,including the assessment of risks of material misstatement of the financial statements, whetherdue to fraud or error. In making those risk assessments, we consider internal control relevant tothe entity’s preparation of financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the entity’s internal control. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of accountingestimates made by the Manager, as well as evaluating the overall presentation of the financialstatements.

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

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DANA MAKMUR PHEIM (CONTD.)

Opinion

Other Matters


AF: 0502 No. 900/03/16(J/PH)


Kuala Lumpur


In our opinion, the financial statements give a true and fair view of the financial position of theFund as at 31 December 2014 and of its financial performance and cash flows for the year thenended in accordance with Malaysian Financial Reporting Standards, International FinancialReporting Standards and the requirements of the Securities Commission's Guidelines on UnitTrust Funds in Malaysia.

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

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DANA MAKMUR PHEIM



Note 2014 2013

RM RM

INVESTMENT INCOME


Profit from Shariah compliant investments :

- receivables 153,224 135,572



profit or loss("FVTPL") 8 461,818 2,333,783

Amortisation of premiums, net of accretion of

discounts on AFS financial assets 9 (2,530) (2,764)

892,559 2,653,244

EXPENSES

Manager's fee 4 232,592 156,175

Trustee's fee 5 18,000 18,000




288,631 213,618



Net income for the year 628,724 2,432,907


Net loss on change in fair value of AFS financial assets 9 (11,181) (3,535)



Net realised income 2,050,815 1,587,755

Net unrealised (loss)/income (1,422,091) 845,152628,724 2,432,907


Net distribution (RM) 13 493,000 324,295

Net distribution per unit (sen) 13 6.5 6

Gross distribution per unit (sen) 13 6.5 6


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DANA MAKMUR PHEIM



Note 2014 2013

RM RM

ASSETS

Shariah-compliant investments 7 8,650,588 6,381,943

Islamic deposit with licensed

financial institutions 10 5,319,912 6,517,041

Tax recoverable - 7,435

Amount due from Brokers - 344,224

Other receivables 72,012 75,784


LIABILITIES

Amount due to Broker 543,143 -


Amount due to Manager 12 4,194 16,517



EQUITY


Retained earnings 5,038,347 4,902,623

Available-for-sale reserve (10,714) 467

TOTAL EQUITY 14 13,523,503 13,399,074





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DANA MAKMUR PHEIM




capital earnings reserve Equity

RM RM RM RM

At 1 January 2013 5,863,028 2,794,011 4,002 8,661,041


the year - 2,432,907 (3,535) 2,429,372


Cancellation of units (704,009) - - (704,009)



Balance at 31 December 2013 8,495,984 4,902,623 467 13,399,074


the year - 628,724 (11,181) 617,543




Income distribution (Note 13) - (493,000) - (493,000)Balance at 31 December 2014 8,495,870 5,038,347 (10,714) 13,523,503


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DANA MAKMUR PHEIM



2014 2013

RM RM



Proceeds from sale of Shariah-compliant investments 6,876,795 5,828,298

Purchase of Shariah-compliant investments (7,790,612) (4,722,039)


Proceeds received from sukuk on maturity - -

Profit received from Islamic deposits with licensed

financial institutions and sukuk 240,389 156,178

Tax refunded 32,231 2,821.00



Payments for other fees and expenses (37,239) (55,523)

Payment to baitumal (19,354) -

Income distribution paid (55) (50)

Net cash (used in)/generated from operating

and investing activities (749,661) 1,176,614



Payment for cancellation of units (6,892,898) (1,119,094)

Net cash (used in)/generated from financing activities (507,456) 2,257,419

NET (DECREASE)/INCREASE IN CASH

AND CASH EQUIVALENTS (1,257,117) 3,434,033





Islamic deposits with licensed financial institutions (Note 10) 5,319,912 6,517,041

Cash at bank 47,455 107,4425,367,367 6,624,483


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DANA MAKMUR PHEIM







The financial statements of the Fund are prepared under the historical cost convention unless

otherwise indicated in the summary of significant accounting policies.

The accounting policies applied by the Fund are consistent with those applied in the previous

financial year other than the application of the new and revised MFRSs, Issues Committee

("IC") Interpretations and amendments to MFRSs and IC Interpretations as disclosed in Note 2.3

below.

Dana Makmur Pheim ("the Fund") was established pursuant to a Master Deed dated 11 January 2002as amended by a Second Supplemental Master Deed dated 29 April 2013 between the Manager;Pheim Unit Trusts Berhad, the Trustee; Maybank Trustees Berhad and the registered unitholders ofthe Fund.

The principal activity of the Fund is to invest in "Permitted Investments" in compliance with Shariahrequirements as defined under Article 7 of the Master Deed, which includes quoted Shariah-compliant securities on the Bursa Malaysia Securities Berhad ("Bursa Malaysia") or any othermarkets, Shariah compliant collective investment schemes, sukuk, and other Shariah-compliantinvestments. The activities of the Fund shall be conducted strictly in compliance with Shariahrequirements and as approved by the Shariah Advisory Council of the Securities Commission and/orthe Shariah Adviser of Dana Makmur Pheim. The Fund commenced operations on 28 January 2002and will continue its operations until terminated according to the conditions in the Master Deed.

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

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


The financial statements were authorised for issue by the Board of Directors of the Manager inaccordance with the resolution of the directors on 23 February 2015.

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

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2.3

Amendments to MFRS 132 - Offsetting Financial Assets and Financial LiabilitiesAmendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge Accounting


(b)




discontinuation of hedge accounting in MFRS 139, Financial Instruments : Recognition

and Measurement. Specifically, the Amendments provide relief from discontinuing hedge








legally enforceable right of set-off' and 'simultaneous realisation and settlement.


Accounting



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2.4


Amendments to MFRS 119, Defined Benefit Plans: Employee ContributionsAmendments to MFRSs Classified as "Annual Improvements to MFRSs 2010 - 2012 Cycle"Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2011 - 2013 Cycle"


MFRS 14, Regulatory Deferral AccountsAmendments to MFRS 10 and MFRS 128 - Sale or Contribution of Assets between an Investor and

its Associate or Joint VentureAmendments to MFRS 10, MFRS 12 and MFRS 128 - Investment Entities: Applying the

Consideration ExceptionAmendments to MFRS 11 - Accounting for Acquisitions of Interests in Joint OperationsAmendments to MFRS 101 - Disclosure Initiative

Amendments to MFRS 116 and MFRS 138 - Clarification of Acceptable Methods ofDepreciation and Amortisation

Amendments to MFRS 116 and MFRS 141 - Agriculture : Bearer PlantsAmendments to MFRS 127 - Equity Method in Separate Financial StatementsAmendments to MFRSs Classified as "Annual Improvements to MFRSs 2012 - 2014 Cycle"












which includes a classification and measurement model, a single forward-looking ‘expected

loss’ impairment model and a substantially-reformed approach to hedge accounting.

MFRS 15 -Revenue from Contracts with Customers

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2.4




mechanisms currently available in MFRS 139 i.e. fair value hedges, cash flow hedges and

hedges of a net investment in a foreign operation. MFRS 9 incorporates a new hedge accounting

model that aligns the hedge accounting more closely with an entity's risk management activities.

The new hedge accounting model has also expanded the scope of eligibility of hedge items and









through profit or loss ("FVTPL") on the basis of both an entity's business model for managing

the financial assets and the contractual cash flow characteristics of the financial assets. These



MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)(Cont'd.)











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2.4




MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)(Cont'd.)

The initial application of MFRS 9 in the future may have an impact on the financial statements

of the Fund. However, it is not practicable to provide a reasonable estimate of the effect until a


amendments to MFRSs is not expected to have any significant impact on the financial

statements of the Fund.


Financial assets are classified as financial assets at FVTPL if they are held for trading orare designated as such by the Manager upon initial recognition. Financial assets held fortrading include Shariah-compliant securities and sukuk acquired principally for thepurpose of selling them in near term.

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

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-salefinancial assets and receivables.

The accounting policies set out below have been applied consistently to the periods, presented inthese financial statements and have been applied consistently by the Fund, unless otherwise stated.

91

DMP




(c) Receivables

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

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

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

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

Fair value is the amount for which an asset could be exchanged, or liability settled,between knowledgeable, willing parties in an arm's length transaction. The fair value forfinancial instruments traded in active markets at the reporting date is based on theirquoted price or binding dealer price quotations, without deduction for transaction costs.

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

After initial recognition, AFS financial assets are measured at fair value. Gains or losseson 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 thefinancial asset is derecognised. Profit income calculated using the effective profit methodis recognised in profit or loss. Dividends on an AFS Shariah-compliant equity instrumentare recognised in profit or loss when the Fund's right to receive payment is established.

92

DMP





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 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 itscost (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 toprofit or 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 sukuk investments, impairmentlosses are subsequently reversed in profit or loss, up to the amount previously recognisedas impairment loss, if an increase in the fair value of the investment can be objectivelyrelated to 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.

93

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(b) Trade and other receivables and other financial assets carried at amortised cost (Cont'd)



If in a subsequent period, the amount of the impairment loss decreases and the decrease

can be related objectively to an event occurring after the impairment was recognised, the

previously recognised impairment loss is reversed to the extent that the carrying amount

of the asset does not exceed its amortised cost at the reversal date. The amount of reversal

is recognised in 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.

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

Realised gains and losses on disposals of financial instruments classified as part of "at 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 cashpayment or receipts made of Shariah-compliant derivative contracts (excluding payments orreceipts on collateral margin accounts for such investments).

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3.5 Functional and Presentation Currency





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 ofconsideration received or receivable.


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

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

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

The unitholders' contributions to the Fund meet the definition of puttable instruments classifiedas 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.

95

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3.10 Income Tax



4. MANAGER'S FEE

5. TRUSTEE'S FEE

The preparation of financial statements in accordance with MFRS and IFRS requires the use ofcertain 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.

The Manager is entitled to an annual management fee of 1.5% p.a. of net asset value 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% p.a. based on net asset value of the Fund (before deductingthe Manager's and Trustee's fees for the day) calculated and accrued on a daily basis, subject to aminimum of RM18,000 p.a.

For management purposes, the Fund is managed by 2 main portfolios, namely (1) Shariah-compliant equity securities and (2) sukuk and Islamic deposits. Each segment engages inseparate business activities and the operating results are regularly reviewed by the Manager,External Investment Manager and the Fund's Investment Committee. The External InvestmentManager and the Fund Investment Committee jointly assumes the role of chief operationdecision maker, for performance assessment purposes and to make decision about resourcesallocated to each investment segment.

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.


96

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6. TAXATION

2014 2013

RM RM


Overprovision in prior year (24,796) (3,472)Malaysian tax (income)/expense based on results for the year (24,796) 6,719

2014 2013

RM RM


Tax at Malaysian statutory rate of 25% (2013: 25%) 150,982 609,906

Tax effects of:



Restriction on tax deductible expenses for unit trust funds 61,198 42,328


7. SHARIAH-COMPLIANT INVESTMENTS2014 2013

Financial assets at fair value through RM RMprofit or loss (Note 8)

Quoted Shariah-compliant equities

in Malaysia 5,052,458 5,881,143


(Note 9)

Unquoted sukuk 3,598,130 500,800Total Shariah-compliant investments 8,650,588 6,381,943

Income tax is calculated at Malaysian statutory tax rate of 25% of the estimated assessable netincome for the financial year.

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

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

97

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2014 2013

RM RM

Financial assets at FVTPL:Quoted Shariah-compliant equities 5,052,458 5,881,143


Realised gain on disposals 1,883,909 1,488,631

Unrealised (loss)/gain on changes in fair values (1,422,091) 845,152461,818 2,333,783


QUOTED SHARIAH-COMPLIANT EQUITIES

- IN MALAYSIA


RM RM NAV

Main Market

Construction

Ho Hup Construction Co.Berhad 296,000 399,601 370,000 2.74


432,000 703,315 622,960 4.61

Consumer Product


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- IN MALAYSIA (CONTD.)


RM RM NAV

Industrial Products

Can-One Berhad 142,000 478,223 302,460 2.24


Inari Amertron Berhad 73,000 129,257 185,420 1.37



Scientex Berhad 14,200 77,155 99,684 0.74

Supermax Corp Bhd 50,000 137,010 84,000 0.62


Thong Guan Industries Berhad 55,000 163,102 102,300 0.76

752,250 2,009,822 1,690,542 12.50

Plantation

Hap Seng Plantations Holdings Bhd 104,000 286,571 261,040 1.93


198,000 829,037 745,140 5.51

Properties

Hua Yang Berhad 180,333 404,307 360,666 2.67




686,333 1,238,297 1,187,216 8.79

Technology


Notion Vtec Berhad 120,000 102,555 50,400 0.37

180,000 315,080 322,200 2.38

Trading/ Services


TOTAL FINANCIAL ASSETSAT FVTPL 2,513,583 5,573,185 5,052,458 37.37


99

DMP


2014 2013

RM RM

Unquoted sukuk 3,598,130 500,800

Amortisation of premiums, net of accretionof discounts on AFS financial assets (2,530) (2,764)

Unrealised loss on changes in fair values (11,181) (3,535)

AFS financial assets as at 31 December 2014 are as detailed below :

Nominal

Name of Counter Amount Cost* Fair value % of

RM RM RM NAV

UNQUOTED SUKUK

SME Bank IMTN 3.7% 1,300,000 1,300,000 1,296,750 9.59

- 03/17

Poh Kong IMTN 2,300,000 2,308,844 2,301,380 17.02

-10/17

3,600,000 3,608,844 3,598,130 26.61


* Cost of sukuk includes amortisation of premium.

10. ISLAMIC DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

2014 2013

RM RM

Licensed investment banks 5,319,912 6,517,041

2014 2013 2014 2013

% % Days Days

Licensed investment banks 2.91 4.16 8 12

Average

remaining

maturitiesWAERR

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

100

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11. SHARIAH INFORMATION OF THE FUND

(a)

(i)

(ii)

(iii)

(b)

12. AMOUNT DUE TO MANAGER2014 2013

RM RM

Amount arising from (creation)/release of units (15,631) (1,235)

Management fee 19,825 17,7524,194 16,517


Distribution declared and paid on 29 April 2014 was 6.50 sen net per unit.

Distribution to unitholders are from the following sources:

2014 2013

RM RM

Dividend from local quoted Shariah-compliant securitites 2,029 4,161

Profit from corporate sukuk 950 804

Profit from Islamic deposit 5,152 3,724

Amortisation of premium on corporate sukuk (38) (106)

Net realised gain from sale of Shariah-compliant investment 52,945 7,862

61,038 16,445

Less:

Expenses 8,317 7,427

Taxation - -


Distribution out of previous year's realised reserves 440,278 315,277Distribution for the year 493,000 324,295


Gross distribution per unit (sen) 6.5 6

Net distribution per unit (sen) 6.5 6Date of distribution 29.04.2014 26.4.2013

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

Sukuk as per the list of sukuk available at Bond Info Hub and Fully Automated System ForIssuing/Tendering of Bank Negara Malaysia; and

Liquid assets in local market, which are placed in Shariah-compliant investments and/orinstruments.

Equity securities listed on Bursa Malaysia which have been classified as Shariah-compliant bythe Shariah Advisory Council of the Securities Commission ("SACSC");

Payment to baitumal comprises the net gain amounting to RM19,354.34 from the disposal of theIrredeemable Convertible Unsecured Loan Stock of Thong Guan Industries Berhad, a Shariah non-compliant instrument.

101

DMP


Note 2014 2013

RM RM


Retained earnings

- Realised (b) 5,566,623 4,008,808

- Unrealised (c ) (528,276) 893,815

5,038,347 4,902,623

AFS reserve (10,714) 467Total equity / Net asset value 13,523,503 13,399,074


Number Number



of the year 7,032,637 8,495,984 5,574,487 5,863,028


Less: Cancellation of units (3,526,393) (4,160,371) (603,627) (704,009)

Distribution equalisation - (398,355) - 782,090

Balance at end

of the year 6,976,355 8,495,870 7,032,637 8,495,983

(b) Realised - Distributable

2014 2013

RM RM

Balance at the beginning of the year 4,008,808 2,745,348

Net income after taxation 628,724 2,432,907

Net unrealised loss/(gain) attributable to

Shariah-compliant investments held

transferred to unrealised reserve 1,422,091 (845,152)

Distribution out of realised reserve (493,000) (324,295)Balance at the end of the year 5,566,623 4,008,808

20132014

In accordance with Article 6.1.1 of the Deed and Securities Commision's approval letter dated 19December 2001, the maximum number of units that can issued for circulation is 100 million units.As at 31 December 2014, the number of units not in issue is 93,023,645 (2013: 92,967,363) units.

102

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


2014 2013

RM RM

Balance at the beginning of the year 893,815 48,663


Shariah-compliant investment held

transferred from realised reserve (1,422,091) 845,152Balance at the end of year (528,276) 893,815



Net asset value attributable

to unitholders for

issuing/redeeming units 13,579,513 1.9465 13,410,320 1.9069

Effect from adopting bid

prices as fair value (56,010) (0.0080) (11,246) (0.0016)


to unitholders perfinancial statements 13,523,503 1.9385 13,399,074 1.9053


2014 2013


units NAV units NAV

RM RM


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

2014 2013

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

Quoted financial assets in the financial statements have been valued at the bid prices at the close ofbusiness in accordance with the provisions of MFRS 139. For the purpose of calculation of 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.

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:-

103

DMP


% of Total



RM % RM %

MIDF Amanah Investment

Bank Bhd 5,855,856 23.10 - -

RHB Investment Bank Bhd 3,785,679 14.93 2,141 7.99

Maybank Investment Bank

Bhd 3,609,760 14.24 3,087 11.52

Kenanga Investment Bank

Bhd 2,879,952 11.36 6,375 23.78

KAF Investment Bank Bhd 2,764,489 10.91 - -

CIMB Investment Bank

Bank 1,328,767 5.24 3,182 11.87

TA Securities Bhd 1,105,875 4.36 2,489 9.28

Hong Leong Investment

Bank Bhd 926,645 3.66 2,091 7.80

Affin Investment Bank Bhd 672,991 2.65 1,993 7.43

JP Morgan Securities (M)

Bhd 578,192 2.28 1,301 4.85

Other brokers 1,843,196 7.27 4,150 15.4825,351,402 100.00 26,809 100.00


2014 2013



2014 2013


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.

This is the ratio of the sum of the fees (inclusive of manager's, trustee's, audit and other professionalfees) and other administrative expenses of the Fund to the average NAV of the Fund calculated on adaily basis. The average NAV of the Fund for the year ended 31 December 2014 was RM15,539,000(2013: RM10,434,847).

Details of transactions with stockbroking companies and other investment banks for the financialyear ended 31 December 2014 are as follows:

104

DMP


The Manager, the appointed External Investment Manager and Investment Committee of the Fundare responsible for allocating resources available to the Fund in accordance with the overallinvestment strategies as set out in the investment Guidelines of the Fund. The Fund is managed bytwo segments:

A portfolio of Shariah-compliant equity instruments A portfolio of sukuk and Islamic deposits with financial institutions.

The investment objective of each segment is to achieve consistent returns from the investments 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.

2014 2013

Shariah- Islamic Shariah- Islamiccompliant Deposit Total compliant Deposit Total

Equity and Sukuk Equity and Sukuk

Portfolio Portfolio Portfolio PortfolioRM RM RM RM RM RM


Profit from Islamic

deposits with licensed

fiancial institutions and

sukuk - 264,674 264,674 - 156,932 156,932

Net gain on financial assets

at FVTPL 461,818 - 461,818 2,333,783 - 2,333,783

Amortisation of premium,net of accretion of

discount on AFS

financial assets - (2,530) (2,530) - (2,764) (2,764)

Total segment operatingincome for the year 630,415 262,144 892,559 2,499,076 154,168 2,653,244

Islamic deposits with

financial institutions - 5,319,912 5,319,912 - 6,517,041 6,517,041


AFS financial assets - 3,598,130 3,598,130 - 500,800 500,800Other assets 19,526 33,904 53,430 391,807 9,619 401,426


Other liabilities 543,143 - 543,143Total segment liabilities 543,143 - 543,143


105

DMP


2014 2013

RM RM

Net reportable segment operating income 892,559 2,653,244

Expenses (288,631) (213,618)



2014 2013

RM RM



Other receivable 18,582 18,582

Cash at bank 47,455 107,442Total assets of the Fund 14,089,967 13,433,869



Amount due to Manager 4,194 -

Amount due to Trustee 1,627 1,578Total liabilities of the Fund 23,321 18,278



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

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

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 3 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.

106

DMP


(a) Classification of financial instruments (Contd.)

Financial

liabilities

Financial AFS at

assets at financial amortised

FVTPL assets Receivables cost Total

RM RM RM RM RM

2014

AssetsQuoted Shariah-compliant

investments 5,052,458 3,598,130 - - 8,650,588

Islamic deposits with

licensed financial institutions - - 5,319,912 - 5,319,912


Cash at bank - - 47,455 - 47,455Total financial assets 5,052,458 3,598,130 5,439,379 - 14,089,967

Total non-financial assets -14,089,967

Liabilities

Other payables and accruals - - - 17,500 17,500

Amount due to Brokers - - - 543,143 543,143

Amount due to Manager - - - 4,194 4,194Amount due to Trustee - - - 1,627 1,627


2013

Assets

Quoted Shariah-compliant

investments 5,881,143 500,800 - - 6,381,943

Islamic deposits with -

licensed financial institutions - - 6,517,041 - 6,517,041



Cash at bank - - 107,442 - 107,442Total financial assets 5,881,143 500,800 7,044,491 - 13,426,434

Total non-financial assets 7,43513,433,869

Liabilities




107

DMP


(b) Fair Value


Level 1 Level 2 Total

RM RM RM

2014

Financial assets at FVTPL

- Quoted Shariah-compliant

equities 5,052,458 - 5,052,458

AFS financial assets

- Sukuk - 3,598,130 3,598,1305,052,458 3,598,130 8,650,588

2013


- Quoted Shariah-compliant

equities 5,881,143 - 5,881,143


- Sukuk - 500,800 500,8005,881,143 500,800 6,381,943

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


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


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

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

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

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

108

DMP



(ii) Financial instruments not carried at fair value


(i) Market Risk


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

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk andequity price risk), credit risk, stock specific 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.

Equity price risk is the adverse changes in the fair value of Shariah-compliant equities asa result of changes in the levels of Shariah-compliant equity indices and the value ofindividual Shariah-compliant shares. The equity price risk exposure arises from theFund’s investments in quoted Shariah-compliant equity securities.

The Fund's principal exposure to market risk arises primarily due to changes or developments inthe market environment and typically includes changes in regulations, politics and the economyof 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 and interest rates.

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

109

DMP



(a) Equity Price Risk (Contd.)

Effect on profit

or loss and equity

Change in Shariah-compliant Increase/(Decrease)

equity price (%) RM

2014+6/-6 303,147 /(303,147)

2013+6/-6 352,869 /(352,869)


Effect on profit

or loss and equity

Increase/(Decrease)

Change in basis points * RM

2014+25/-25 5,138/ (5,138)

2013+25/-25 3,755 / (3,755)

*

This risk refers to the effect of interest rate changes on the valuation for sukuk andIslamic deposits with financial institutions. In the event of rising interest rates, the returnon Islamic deposits with financial institutions will rise while valuation for sukuk willdecrease 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 sukuk andIslamic deposits with financial institutions.

Interest rate is a general economic indicator that will have an impact on the managementof fund regardless of whether it is a Shariah-compliant fund or otherwise. It does not inany way 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 theFund to a reasonably possible change in interest rates, with all other variables heldconstant:

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

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:

110

DMP


(ii) Credit Risk


1 month - 32014 months Total

RM RM RMFinancial Assets

Financial assets at FVTPL 5,052,458 - 5,052,458AFS financial assets - 3,598,130 3,598,130Islamic deposits

with financial institutions 5,319,912 - 5,319,912Other assets 119,467 - 119,467Total undiscounted



Total Assets 10,491,837 3,598,130 14,089,967

Financial LiabilititesOther liablities 566,464 - 566,464Total undiscounted


Unitholders' NAV 13,523,503 - 13,523,503

Liquidity gap (3,598,130) 3,598,130 -

Above 3

months

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 diversification ofthe sukuk portfolio of the Fund.

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

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 Islamic deposits and by investing in Shariah-compliant stocks whose liquidity is adjudged to be commensurate with the expected exposurelevel of the Fund.

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

the currently observable market environment.

111

DMP



1 month - 3

2013 months Total

RM RM RM

Financial assets:


AFS financial assets - 500,800 500,800

Islamic deposits

with financial institutions 6,517,041 - 6,517,041

Other assets 527,450 - 527,450

Total undiscounted

financial assets 12,925,634 500,800 13,426,434

Non-Financial Assets - 7,435 7,435

Total Assets 12,925,634 508,235 13,433,869



Total undiscounted


Unitholders' NAV 13,399,074 - 13,399,074

Liquidity gap (508,235) 508,235 -



Above 3

months

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

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.

112

DMP


(vi) Reclassification of Shariah Status Risk

(vii) Capital Management

This risk refers to the risk that the currently held Shariah-compliant securities in the portfolio ofShariah-compliant funds may be reclassified to be Shariah non-compliant upon review of thesecurities by the Shariah Advisory Council of the Securities Commission ("SACSC") performedtwice yearly. If this occurs, the Manager will take the necessary steps to dispose of suchsecurities.

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 subscriptionat the 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 22 (iii) above.

113


PIF

[email protected]

114Your Need

is our Focus

23 February 2015


PIF

[email protected]

115Your Need

is our Focus

STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM INCOME FUND

We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Pheim Income Fund are drawn up in accordancewith the Deed, Malaysian Financial Reporting Standards, International FinancialReporting Standards and Securities Commission's Guidelines on Unit Trust Funds inMalaysia so as to give a true and fair view of the financial position of Pheim IncomeFund as at 31 December 2014 and of its financial performance and cash flows for thefinancial year then ended.





PIF


PHEIM INCOME FUND




We have audited the financial statements of Pheim Income Fund ("the Fund"), which comprise

statement of financial position as at 31 December 2014, and statement of comprehensive income,

statement of changes in equity and statement of cash flows for the year then ended, and a summary

of significant accounting policies and other explanatory information, as set out on pages 118 to 131.

The Manager of the Fund, Pheim Unit Trusts Berhad, is responsible for the preparation of financial

statements so as to give a true and fair view in accordance with Malaysian Financial Reporting

Standards, International Financial Reporting Standards and the requirements of the Securities

Commission's Guidelines on Unit Trust Funds in Malaysia. The Manager is also responsible for such

internal control as the Manager determines is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error. The Trustee is

responsible for ensuring that the Manager maintains proper accounting and other records as are

necessary to enable fair presentation of these financial statements.

Our responsibility is to express an opinion on these financial statements based on our audit. We

conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards

require that we comply with ethical requirements and plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures

in the financial statements. The procedures selected depend on our judgment, including the

assessment of risks of material misstatement of the financial statements, whether due to fraud or

error. In making those risk assessments, we consider internal control relevant to the entity’s

preparation of financial statements that give a true and fair view in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of

the accounting policies used and the reasonableness of accounting estimates made by the Manager,

as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our audit opinion.

116

PIF


PHEIM INCOME FUND (CONTD.)

Opinion

Other Matters


AF: 0502 No. 900/03/16(J/PH)


Kuala Lumpur

This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We do

not assume responsibility to any other person for the content of this report.


In our opinion, the financial statements give a true and fair view of the financial position of the Fund

as at 31 December 2014 and of its financial performance and cash flows for the year then ended in

accordance with Malaysian Financial Reporting Standards, International Financial Reporting

Standards and the requirements of the Securities Commission's Guidelines on Unit Trust Funds in

Malaysia.

117

PIF

PHEIM INCOME FUND



Note 2014 2013

RM RM

INVESTMENT INCOME


Interest income :




profit or loss ("FVTPL") 8 89,838 202,228

Accretion of discounts, net of amortisation of

premiums on AFS financial assets 9 (6,931) 27,971

Net realised (loss)/gain on foreign exchange (568) 1,060

545,389 684,080

EXPENSES

Manager's fee 4 141,511 144,815

Trustee's fee 5 18,000 18,000




191,562 195,336

Net income before tax 353,827 488,744


Net income for the year 364,184 484,381


Net loss on change in fair value of AFS financial assets 9 (16,919) (40,011)

Total comprehensive income for the year 347,265 444,370


Net realised income 649,411 907,441

Net unrealised loss (285,227) (423,060)364,184 484,381


Net distribution 12 879,526 649,280

Net distribution per unit (sen) 12 7.0 5.0

Gross distribution per unit (sen) 12 7.0 5.0


118

PIF

PHEIM INCOME FUND



Note 2014 2013

RM RM

ASSETS

Investments 7 11,331,307 6,797,329


Tax recoverable 3,969 9,778



LIABILITIES

Amount due to Broker 390,764 -





EQUITY


(Accumulated losses)/retained earnings (16,388) 498,954

Available-for-sale reserve (18,533) (1,614)

TOTAL EQUITY 13 16,744,487 14,475,538





119

PIF

PHEIM INCOME FUND




capital earnings/ reserve Equity

(Accumulated

losses)

RM RM RM RM

At 1 January 2013 13,599,529 663,853 38,397 14,301,779


the year - 484,381 (40,011) 444,370





Balance at 31 December 2013 13,978,198 498,954 (1,614) 14,475,538

-


the year - 364,184 (16,919) 347,265




Income distribution (Note 12) - (879,526) - (879,526)Balance at 31 December 2014 16,779,408 (16,388) (18,533) 16,744,487


120

PIF

PHEIM INCOME FUND



2014 2013

RM RM





Proceeds received from bonds on maturity 2,800,000 2,500,000





Tax refunded 23,151 -

Tax paid (6,985) -

Payment for other fees and expenses (32,050) (29,521)

Income distribution paid (3,328) (18,247)

Net cash (used in) / generated from operating

and investing activities (3,786,749) 2,951,254




Net cash used in financing activities 1,930,836 (270,196)

NET (DECREASE)/INCREASE IN CASH

AND CASH EQUIVALENTS (1,855,913) 2,681,058





Deposits with licensed financial institutions (Note 10) 5,563,949 7,483,917Cash at bank 198,079 134,024

5,762,028 7,617,941


121

PIF

PHEIM INCOME FUND







Pheim Income Fund ("the Fund") was constituted pursuant to a Master Deed dated 11 January 2002 as

amended by a Second Supplemental Master Deed dated 29 April 2013 between the Manager; Pheim

Unit Trusts Berhad, 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

the Master Deed, which includes investments in equities and fixed income securities traded on Bursa

Malaysia Securities Berhad ("Bursa Malaysia") or any other market considered as an Eligible Market.

The Fund commenced operations on 28 January 2002 and will continue its operations until terminated

by the Trustee as provided under Part 12 of the Master Deed.

The Manager, Pheim Unit Trusts Berhad, is a public company incorporated in Malaysia. It is a wholly

owned subsidiary of Pheim Asset Management Sdn Bhd, a private company incorporated in Malaysia.

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 with responsibility

for the provision of investment management services to the Fund.

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

Ramlee, 50250 Kuala Lumpur.


The financial statements were authorised for issue by the Board of Directors of the Manager in

accordance with the resolution of the directors on 23 February 2015.

The financial statements of the Fund have been prepared in accordance with Malaysian Financial

Reporting Standards ("MFRSs"), International Financial Reporting Standards ("IFRSs") and the

Securities Commission's Guidelines on Unit Trust Funds in Malaysia.

The financial statements of the Fund is prepared under the historical cost convention unless





122

PIF


2.3




(b)











Accounting

Application of Amendments to MFRSs and a new IC Interpretation






123

PIF


2.4


Amendments to MFRS 119, Defined Benefit Plans : Employee Contributions

Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2010 - 2012 Cycle"



MFRS 14, Regulatory Deferral Accounts

Amendments to MFRS 10 and MFRS 128 - Sale or Contribution of Assets between an Investor

and its Associate or Joint Venture

Amendments to MFRS 10, MFRS 12 and MFRS 128 - Investment Entities: Applying the

Consideration Exception

Amendments to MFRS 11 - Accounting for Acquisitions of Interests in Joint Operations

Amendments to MFRS 101 - Disclosure Initiative

Amendments to MFRS 116 and MFRS 138 - Clarification of Acceptable Methods of

Depreciation and Amortisation

Amendments to MFRS 116 and MFRS 141 - Agriculture : Bearer Plants

Amendments to MFRS 127 - Equity Method in Separate Financial Statements



MFRS 15 - Revenue from Contracts with Customers








which includes a classification and measurement model, a single forward-looking ‘expected

loss’ impairment model and a substantially-reformed approach to hedge accounting.


they become effective. The main features of the new applicable standard is summaried below :-

124

PIF


2.4


The initial application of MFRS 9 in the future may have an impact on the financial statements

of the Fund. However, it is not practicable to provide a reasonable estimate of the effect until a



of the Fund.


MFRS 9, Financial Instruments (IFRS 9 issued in July 2014) [cont'd.]




























125

PIF





Financial assets are recognised in the statement of financial position when, and only when, the

Fund becomes a party to the contractual provisions of the financial instruments. Regular way of

purchase and sale of investments in financial instruments are recognised on trade dates. When

financial assets are recognised initially, they are measured at fair value, plus attributable

transaction 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 the

categories include financial assets at fair value through profit or loss, available-for-sale financial

assets and loans and receivables.

Financial assets are classified as financial assets at FVTPL if they are held for trading or are

designated as such by the Manager upon initial recognition. Financial assets held for

trading include securities and fixed income securities acquired principally for the purpose

of selling them in near term.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value at

the date of the statement of financial position. Changes in the fair value of those financial

instruments are recorded in "Net gain or loss on financial assets at FVTPL". Interest earned

and dividend revenue elements of such instruments are recorded separately in "Interest

income" and "Dividend income", respectively. Foreign exchange differences on financial

assets at FVTPL are not recognised separately in profit or loss but included in net gains or

net losses on changes in fair value of financial assets at FVTPL.

The accounting policies set out below have been applied consistently to the periods, presented in

these financial statements and have been applied consistently by the Fund, unless otherwise stated.

After initial recognition, AFS financial assets are measured at fair value. Gains or losses

from changes in fair value of the AFS financial assets are recognised in other

comprehensive income, except that impairment losses, foreign exchange gains and losses

on monetary instruments, dividend income and interest calculated using effective interest

method are recognised in profit or loss.

The cumulative gain or loss previously recognised in other comprehensive income is

reclassified from equity to profit or loss as a reclassification adjustment when the financial

asset is derecognised. Interest income calculated using the effective interest method is

recognised in profit or loss. Dividends on an AFS equity instrument are recognised in profit

or loss when the Fund's right to receive payment is established.

AFS financial assets are financial assets that are designated as available for sale or are not

classified as financial assets at FVTPL or loans and receivables.

126

PIF

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

3.1 Financial Assets (Cont'd.)

(b) Available-for-sale ("AFS") financial assets (Cont'd.)

(c) Loans and receivables



Financial assets with fixed or determinable payments that are not quoted in an active

market are classified as loans and receivables. The Fund includes short term receivables

such 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 cost

using effective interest method. Gains and losses are recognised in profit or loss when the

loans and receivables are derecognised or impaired, and through the amortisation process.

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

asset is impaired.





Manager would receive impairment proposal from the Fund's external investment manager,

if any financial assets of the Fund, in their professional opinion, warrant an impairment

exercise.

Fair value is the amount for which an asset could be exchanged, or liability settled, between

knowledgeable, willing parties in an arm's length transaction. The fair value for financial

instruments traded in active markets at the reporting date is based on their quoted price or

binding dealer price quotations, without deduction for transaction costs.

A financial asset is derecognised when the asset is disposed and the contractual right to

receive cash flows from the asset has expired. On derecognition of a financial asset in its

entirety, the difference between the carrying amount and the sum of the consideration

received and any cumulative gain or loss that had been recognised in other comprehensive

income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require

delivery of assets within the period generally established by regulation or convention in the

market place concerned. All regular way purchases and sales of financial assets are

recognised or derecognised on trade date, i.e. the date that the Fund commits to purchase or

sell the asset.

127

PIF


3.2 Impairment of Financial Assets (Cont'd)



The carrying amount of the financial asset is reduced by the impairment loss directly for all

financial assets with the exception of trade receivables, where the amount is reduced

through the use of an allowance account. When a trade receivable becomes uncollectible, it

is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease

can be related objectively to an event occurring after the impairment was recognised, the

previously recognised impairment loss is reversed to the extent that the carrying amount of

the asset does not exceed its amortised cost at the reversal date. The amount of reversal is

recognised in profit or loss.

If an AFS asset is impaired, an amount comprising the difference between its cost (net of

any principal payment and amortisation) and its current fair value, less any impairment loss

previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on AFS equity investments are not reversed in profit or loss in the

subsequent period. Increase in fair value, if any, subsequent to impairment loss is

recognised in other comprehensive income. For AFS debt investments, impairment losses

are subsequently reversed in profit or loss, up to the amount previously recognised as

impairment loss, if an increase in the fair value of the investment can be objectively

related to 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 financial

assets has been incurred, the Fund considers factors such as the probability of insolvency or

significant 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 difference

between the asset's carrying amount and the present value of estimated future cash flows

discounted at the financial asset's original effective interest rate. The impairment loss is


Unrealised gain and losses comprise changes in fair value of financial instruments for the period

from reversal of prior period's unrealised gain and losses for financial instruments which were

realised (i.e. sold, redeemed or matured) during the reporting period.

Realised gains and losses on disposals of financial instruments classified as part of "at fair value

through profit or loss" are calculated using weighted average method. They represent the

difference between an instrument's initial carrying amount and disposal amount, or cash

payment or receipts made of derivative contracts (excluding payments or receipts on collateral

margin accounts for such investments).

128

PIF





Exchange differences arising from the translation of non-monetary items carried at fair value are

included in profit or loss for the period except for the differences arising on the translation of

non-monetary items in respect of which gains or losses are recognised directly in equity.

Exchange differences arising from such non-monetary items are recognised directly to equity.

In preparing the financial statements, transactions in currencies other than the Fund's functional

currency (foreign currencies) are recorded in the functional currency using the exchange rates

prevailing at the dates of the transactions. At the end of each reporting period, foreign currency

monetary assets and liabilities are translated at exchange rates prevailing at the end of the

reporting period. Non-monetary items that are measured at fair value in a foreign currency are

translated using exchange rates at the date when the fair value was determined.

Exchange differences arising from the settlement of foreign currency transactions and from the

translation of foreign currency monetary assets and liabilities are recognised in profit or loss.

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, and through the

amortisation process.

The financial statements of the Fund are measured using the currency of the primary economic

environment in which the Fund operates ("the functional currency"). The financial statements are

presented in Ringgit Malaysia (RM), which is also the Fund's functional currency.

The unitholders' contributions to the Fund meet the definition of puttable instruments classified

as equity instruments under MFRS 132.

Distribution equalisation represents the average distributable amount included in the creation

and cancellation prices of units. This amount is either refunded to unitholders by way of

distribution and/or adjusted accordingly when units are cancelled.

Financial liabilities are classified according to the substance of the contractual arrangements

entered into and the definition of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial

position when, only when, the Fund becomes a party to the contractual provisions of the

financial instrument. Financial liabilities are classified as other financial liabilities.

The Fund's financial liabilities which include trade and other payables are recognised initially at

fair value plus directly attributable transaction costs and subsequently measured at the amortised

cost using effective interest method.

129

PIF





3.10 Income Tax



For management purposes, the Fund is managed by 2 main portfolios, namely (1) equity

securities and (2) fixed income instruments. Each segment engages in separate business activities

and the operating results are regularly reviewed by the Manager, External Investment Manager

and the Fund's Investment Committee. The External Investment Manager and the Fund

Investment Committee jointly assumes the role of chief operation decision maker, for

performance assessment purposes and to make decision about resources allocated to each

investment segment.

Cash and cash equivalents comprise cash at bank and deposits with financial institutions which

have insignificant risk of changes in value.

Income is recognised to the extent that is probable that the economic benefits will flow to the

Fund and the income can be reliably measured. Income is measured at fair value of consideration

received or receivable.


Interest income, which includes the accretion of discount and amortisation of premium on fixed

income securities, is recognised using effective interest method.

Current tax assets and liabilities are measured at the amount expected to be recovered from or

paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that

are enacted or substantively enacted by the reporting date.

Income distributions are at the discretion of the Manager. Income distribution to the Fund's

unitholders is accounted for as a deduction from realised reserves except where distribution is

sourced out of distribution equalisation which is accounted for as deduction from unitholders'

capital.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items

recognised outside profit or loss, either in other comprehensive income or directly in equity.

130

PIF



4. MANAGER'S FEE

5. TRUSTEE' S FEE

6. TAXATION

2014 2013

RM RM


Overprovision in prior year (10,357) (700)


The preparation of financial statements in accordance with MFRS and IFRS requires the use of

certain accounting estimates and exercise of judgements. Estimates and judgements are

continually evaluated and are based on past experience, reasonable expectations of future events

and other factors.

The tax charge for the period is in relation to the taxable income earned by the Fund after deducting

allowable expenses. In accordance with Schedule 6 of Income Tax Act 1967, interest income earned

by the Fund is exempted from tax.

Income tax is calculated at Malaysian statutory tax rate of 25% (2013: 25%) of the estimated

assessable net income for the year.

The Manager is entitled to an annual management fee of 1.0% p.a. of net asset value of the Fund

(before deducting Manager's and Trustee's fees for the day) calculated and accrued on a daily basis.

The Trustee is entitled to a fee of 0.07% p.a. based on net asset value of the Fund (before deducting

Manager's and Trustee's fees for the day) calculated and accrued on a daily basis subject to a

minimum of RM18,000 p.a.

No major judgements have been made by the Manager in applying the Fund's accounting

policies. There are no key assumptions concerning the future and other key sources of estimation

uncertainty at the reporting date, that have significant risk of causing material adjustment to the

carrying amounts of assets and liabilities within next year.

131

PIF

6. TAXATION (CONT'D)

2014 2013

RM RM


Taxation at Malaysian statutory rate of 25 % (2013: 25%) 88,457 122,186

Tax effects of:



Restriction on tax deductible expenses

for unit trust funds 38,212 39,686

Overprovision in prior year (10,357) (700)Tax (income)/expense for the financial year (10,357) 4,363

7. INVESTMENTS

2014 2013

RM RM



Quoted equities

- in Malaysia 1,510,210 1,027,490

- outside Malaysia 1,127,377 1,665,229

2,637,587 2,692,719


(Note 9)

Unquoted fixed income

securities in Malaysia 8,693,720 4,104,610Total investments 11,331,307 6,797,329

8. FINANCIAL ASSETS AT FVTPL2014 2013

RM RM

Financial assets at FVTPL:Quoted equity investments 2,637,587 2,692,719

A reconciliation of income tax expense applicable to income before tax at the statutory income tax

rate to tax (income)/expense at the effective income tax rate of the Fund is as follows:

132

PIF

8. FINANCIAL ASSETS AT FVTPL (CONT'D)2014 2013

RM RM


Realised gain on disposals 375,065 618,440Unrealised loss on changes in fair values (285,227) (416,212)

89,838 202,228




- Hong Kong Dollar 669,343 1,045,403


- Indonesian Rupiah 135,783 219,232

- Phillipines Peso 71,652 102,2312,637,587 2,692,719

Financial assets at FVTPL as at 31 December 2014 are as detailed below :

QUOTED EQUITY INVESTMENTS

- IN MALAYSIA


RM RM NAV

Main Market

Construction


Consumer



190,000 307,684 270,200 1.61

Industrial Products

Can-One Berhad 30,000 101,056 63,900 0.38




261,000 684,425 592,200 3.54

133

PIF

8. FINANCIAL ASSETS AT FVTPL (CONT'D.)

Financial assets at FVTPL as at 31 December 2014 are as detailed below : (cont'd)


- IN MALAYSIA


RM RM NAV

Properties



159,500 237,725 201,010 1.20

Trading & Services

Berjaya Corp Berhad 148,000 73,743 60,680 0.36Berjaya Auto Berhad 58,000 192,158 190,820 1.14

206,000 265,901 251,500 1.50

TOTAL QUOTED

EQUITY INVESTMENTS

- IN MALAYSIA 921,500 1,701,400 1,510,210 9.02


- OUTSIDE MALAYSIA


RM RM NAV


("HKSE")


China Huishan Dairy

Holdings Co. Limited 172,000 177,448 103,877 0.62

Ind & Comm Bank of China-H 52,000 122,208 132,650 0.79

Dongfeng Motor Group Co.Ltd 34,000 168,382 168,255 1.00


324,000 770,624 669,343 3.99

134

PIF

8. FINANCIAL ASSETS AT FVTPL (CONT'D.)


- OUTSIDE MALAYSIA


RM RM NAV

Jakarta Stock Exchange ("JSX")

J Resources Asia Pacific TBK PT 900,000 177,645 135,783 0.81

Philippines Stock Exchange

("PSE")

8990 Holdings Inc 130,000 70,856 71,652 0.43

Singapore Exchange("SGX")

Golden Agri Resources Ltd 80,000 140,575 96,303 0.58

Indofood Agri Resources Ltd 81,000 265,488 154,296 0.92

161,000 406,063 250,599 1.50

TOTAL QUOTED

EQUITY INVESTMENTS





2014 2013

RM RM

Unquoted fixed income securities 8,693,720 4,104,610

Accretion of discounts, net of amortisationof premiums on AFS financial assets (6,931) 27,971

Unrealised loss on changes in fair values (16,919) (40,011)

135

PIF

9. AFS FINANCIAL ASSETS (CONT'D)

AFS financial assets as at 31 December 2014 are as detailed below :

Nominal

Name of Counter Amount Cost * Fair value % of

RM RM NAV

UNQUOTED FIXED INCOME SECURITIES

SME Bank IMTN 3.7%

- 03/17 2,700,000 2,700,000 2,693,250 16.08

Malaysian Government Securities

- 10/15 1,300,000 1,301,871 1,298,050 7.75

Poh Kong IMTN

-10/17 2,700,000 2,710,382 2,701,620 16.13

SABH 4.275%

-12/19 2,000,000 2,000,000 2,000,800 11.95

8,700,000 8,712,253 8,693,720 51.91

EXCESS OF OVER COSTFAIR VALUE (18,533)

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


2014 2013

RM RM


2014 2013 2014 2013

% % Days DaysLicensed investment banks 3.04 2.94 8 8

The weighted average effective interest rate ("WAEIR") per annum and the average remaining

maturities of deposits and placement are as follows:

Average

remaining

WAEIR maturities

136

PIF

11. AMOUNT DUE TO MANAGER

2014 2013

RM RM

Amount arising from creation of units 1,176 (4,648)

Management fee 13,802 12,78414,978 8,136


Distribution to unitholders are from the following sources:

2014 2013

RM RM

Dividend income 8,145 867

Interest income 103,605 64,515

Net realised (loss)/gain from sale of investment (1,116) 182,205

Net accretion of discount on corporate bond (2,453) 5,631

Other income - 133

108,181 253,351

Less:

Expenses 54,624 39,764


Distribution out of previous year's realised reserves 825,969 435,693Distribution for the year 879,526 649,280


Gross distribution per unit (sen) 7.0 5.0

Net distribution per unit (sen) 7.0 5.0Date of distribution 29.04.2014 26.4.2013


Note 2014 2013

RM RM


Retained earnings

- Realised earnings (b) 420,328 650,443

- Unrealised losses (c) (436,716) (151,489)

(16,388) 498,954

AFS reserve (18,533) (1,614)Total equity / Net asset value 16,744,487 14,475,538

137

PIF

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


Number Number



of the year 12,989,978 13,978,198 12,665,752 13,599,529


Less: Cancellation of units (2,017,770) (2,124,897) (1,860,772) (1,966,598)

Distribution equalisation - 104,738 - (5,831)

Balance at endof year 15,645,726 16,779,408 12,989,978 13,978,198


2014 2013

RM RM

Balance at the beginning of the year 650,443 392,282

Net income after taxation 364,184 484,381

Net unrealised loss attributable to

investments held transferred to

unrealised reserve 285,227 416,213

Net unrealised foreign exchange loss

attributable to foreign currency monetary

items transferred to unrealised reserve - 6,847

Distribution out of realised reserve (879,526) (649,280)Balance at the end of the year 420,328 650,443


2014 2013

RM RM

Balance at the beginning of the year (151,489) 271,571

Net unrealised loss attributable to

investments held transferred from

realised reserve (285,227) (416,213)

Net unrealised foreign exchange loss

attributable to foreign currency monetary

items transferred from realised reserve - (6,847)Balance at the end of the year (436,716) (151,489)

In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 19

December 2001, the maximum number of units that can be issued for circulation is 100,000,000

units. As at 31 December 2014, the number of units not in issue is 84,354,274 (31 December 2013:

87,010,022) units.

2014 2013

138

PIF





to unitholders for







2014 2013


units NAV units NAV

RM RM

Directors of the Manager 4,419,604 4,729,982 465,338 518,555

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

Quoted financial assets in the financial statements have been valued at the bid prices at the close of

business in accordance with the provisions of MFRS 139. For the purpose of calculation of net asset

value attributable to unitholders per unit for the issuance and redemption of units in accordance with

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

2013



2014

139

PIF


Trading % of total Brokerage % of total

value trading fees brokerage

RM value RM fees

5,371,139 26.77 818 3.43

CIMB Investment Bank Bhd 2,764,264 13.78 974 4.09

Hwang-DBS Investment Bank Bhd 2,732,896 13.62 566 2.37

KAF Investment Bank Berhad 2,700,000 13.45 1,274 5.35

RHB OSK Securities Hong Kong 654,354 3.26 818 3.43

Limited

CIMB-GK Securities Ltd - 508,259 2.53 1,274 5.35

Hong Kong

PT Bahana Securities 505,526 2.52 2,799 11.74

DBS Vicker Securities Pte Ltd - 501,909 2.50 1,253 5.26

Hong Kong

RHB Investment Bank Bhd 476,437 2.37 1,457 6.11

Affin Investment Bank 378,646 1.89 1,300 5.45

Others 3,474,013 17.31 11,304 47.4220,067,443 100.00 23,837 100.00


2014 2013



2014 2013


Details of transactions with stockbroking companies and other investment banks for the financial year

ended 31 December 2014 are as follows:

This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other

professional fees) and other administrative expenses of the Fund to the average NAV of the Fund

calculated on a daily basis. The average NAV of the Fund for the year ended 31 December 2014 was

RM 14,157,778 (2013: RM14,485,858).

This is the ratio of the average of acquisitions and disposals of the Fund for the year to average NAV

of the Fund for the year calculated on daily basis.

MIDF Amanah Investment Bank Bhd

140

PIF


The Manager, the appointed External Investment Manager and Investment Committee of the Fundare responsible for allocating resources available to the Fund in accordance with the overallinvestment strategies as set out in the investment Guidelines of the Fund. The Fund is managed bytwo segments:

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

institutions.


2014 2013

Fixed Fixed

Equity income Equity income



Interest income - 397,600 397,600 - 356,896 356,896

Net gain on financial assets at FVTPL 89,838 - 89,838 202,228 - 202,228

Accretion of discounts, net of amortisation - - -

of premiums on AFS financial assets - (6,931) (6,931) - 27,971 27,971

Net realised gain/(loss) on - - -

foreign exchange (568) - (568) 1,060 - 1,060Total segment operating income for the year 154,721 390,670 545,390 299,213 384,867 684,080

Deposits with financial institutions - 5,563,949 5,563,949 - 7,483,917 7,483,917


AFS financial assets - 8,693,720 8,693,720 - 4,104,610 4,104,610

Other assets 3,230 66,722 69,952 17,684 57,920 75,604Total segment assets 2,640,817 14,324,391 16,965,208 2,710,403 11,646,447 14,356,850

Other liabilities 390,764 - 390,764 - - -

Total segment liabilities 390,764 - 390,764 - - -

141

PIF

19. SEGMENT INFORMATION (CONT'D.)

2014 2013

RM RM

Net reportable segment operating income 545,389 684,080

Expenses (191,562) (195,336)


Tax income/(expense) 10,357 (4,363)Net income for the year 364,184 484,382

2014 2013

RM RM


Tax recoverable 3,969 9,778


Total segment liabilities 390,764 -






Expenses of the Fund are not considered part of the performance of any operating segment. The

following table provides a reconciliation between reportable segment income and operating profits.

In addition, certain assets and liabilities are not considered to be part of the assets and liabilities of an

individual segment. The following table provides reconciliation between total reportable segment

assets and liabilities and total assets and liabilities of the Fund.

The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either

fair value or at amortised cost based on their respective classification. The significant accounting

policies in Note 3 describe how the classes of financial instruments are measured, and how

income and expenses, including fair value gains and losses are recognised. The following table

analyses the financial assets and liabilities of the Fund in the statement of financial position, by

the class of financial instrument to which they are assigned, and therefore by the measurement

basis.

142

PIF

20. FINANCIAL INSTRUMENTS (CONT'D.)

(a) Classification of financial instruments (Cont'd.)

Financial

liabilities

Financial AFS at



RM RM RM RM RM

2014

Assets

Investments 2,637,587 8,693,720 - - 11,331,307






Liabilities

Amount due to Broker - - - 390,764 390,764



Other payables and accruals - - - 15,400 15,400Total financial liabilities - - - 422,769 422,769

2013

Assets

Investments 2,692,719 4,104,610 - - 6,797,329






Liabilities





143

PIF


(b) Fair value


Quoted equity instruments

Unquoted fixed income securities

Level 1 Level 2 Total

RM RM RM

2014


- Quoted equities 2,637,587 - 2,637,587


- Fixed income securities - 8,693,720 8,693,7202,637,587 8,693,720 11,331,307

2013


- Quoted equities 2,692,719 - 2,692,719


- Fixed income securities - 4,104,610 4,104,6102,692,719 4,104,610 6,797,329

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

fair values of these financial assets were determined using prices in active markets for

identical assets.

Fair value is determined directly by reference to their published market bid prices on the

relevant stock exchanges at the reporting date.


Level 2: Inputs other than quoted prices included within Level 1 that are observable for the

The Fund uses the following level of fair value hierarchy for determining and disclosing the

fair value of financial instruments carried at fair value in the statement of financial

position :

The published market prices for RM-denominated unquoted bonds are based on

information provided by Bond Pricing Agency Malaysia Sdn Bhd.

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

financial position as at the end of the financial year :

144

PIF


(b) Fair Value (Cont'd.)



(i) Market Risk


The Fund's principal exposure to market risk arises primarily due to changes or developments in

the market environment and typically includes changes in regulations, politics and the economy

of the 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 mitigate risk exposure to any single asset class.

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

foreign currency exchange rates.

Equity price risk is the adverse changes in the fair value of equities as a result of changes in

the levels of equity indices and the value of individual shares. The equity price risk

exposure arises from the Fund’s investments in quoted equity securities.

Financial instruments not carried at fair value comprise financial assets and financial

liabilities classified as loans and receivables and financial liabilities at amortised cost

respectively.The carrying amount of these financial instruments at the end of the financial

year approximated their fair values due to their short term to maturity.

The Fund maintains investment portfolios in a variety of quoted and unquoted financial instruments as

dictated by its Trust Deed and investment management strategy.

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk,

equity price risk and currency risk), credit risk, and liquidity risk. Whilst these are the most important

types of financial risks inherent in each type of financial instruments, the Manager and the Trustee

would like to highlight that this list does not purport to constitute an exhaustive list of all the risks

inherent in an investment in the Fund.

The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk is

inherent 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 sound

internal 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 Services

Act, 2007.

145

PIF

21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONT'D.)

(i) Market Risk (Cont'd.)

(a) Equity Price Risk (Cont'd.)

Effect on profit

or loss and equity

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

RM

2014+6/-6 158,255 /(158,255)

2013+6/-6 161,563 /(161,563)


Effect on profit

or loss and equity

Change in basis points * Increase/(Decrease)RM

2014+25/-25 13,910 / (13,910)

2013+25/-25 5,053 / (5,053)

*

The following table demonstrates the sensitivity of the profit or loss and equity of the Fund

to a reasonably possible change in interest rates, with all other variables held constant:

This risk refers to the effect of interest rate changes on the market value of fixed income

securities and deposits with financial institutions. In the event of rising interest rates, the

return on deposits with financial institutions will rise while prices of fixed income

securities will decrease and vice versa, thus affecting the net asset value of the Fund. This

risk will be minimized via the management of the duration structure of the portfolio of

fixed income securities and deposits with financial institutions.

The table below summarises the effect of sensitivity from the Fund’s underlying

investments in quoted equities on the profit or loss and equity of the Fund due to possible

changes in equity prices, with all other variables held constant:


146

PIF



(c) Currency Risk

2014 2013

RM RM


Hong Kong Dollar 66,934 104,540


Phillipines Peso 7,165 10,223112,737 166,522

(ii) Credit Risk

or loss and equity

Effect on profit

The Fund is exposed to currency risk primarily through its investment in overseas quoted

equities that are denominated in foreign currencies. The Fund's foreign currency exposure

profile of its investment in quoted equities has been disclosed under Note 8.

A 10% strenghtening or weakening of the RM against the following foreign currencies as at

the end of the financial year would have decreased or increased respectively the profit or

loss and equity of the Fund by the amount shown below. This analysis assumes all other

variables are held constant.





asset value and thus unit price. This risk is mitigated by vigorous credit analyses and



147

PIF

21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONT'D.)


1 month - 3 3 months - 5

2014 months years Total

RM RM RM

Financial Assets




institutions 5,563,949 5,563,949

Other assets 268,031 - 268,031

Total undiscounted


Non-Financial Asset - 3,969 3,969

Total Assets 8,469,567 8,697,689 17,167,256



Total undiscounted


Unitholders' NAV 16,744,487 - 16,744,487

Liquidity gap (8,697,689) 8,697,689 -

This risk occurs in thinly traded or illiquid equity securities. Should the Fund need to sell a

relatively large amount of such securities, the act itself may significantly depress the selling

price. As the Fund is exposed to daily redemption of units, the risk is minimized by placing a

prudent level of funds in short-term deposits and by investing in stocks whose liquidity is

adjudged to be commensurate with the expected exposure level of the Fund.

The following table summarises the maturity profile of the Fund’s financial liabilities and the

corresponding assets available to meet commitments associated with those financial liabilities

and redemption by unitholders.

148

PIF



1 month - 3 3 months - 5

2013 months years Total

RM RM RM

Financial Assets




institutions 7,483,917 7,483,917

Other assets 209,628 - 209,628

Total undiscounted


Non-Financial Asset - 9,778 9,778

Total Assets 10,386,264 4,114,388 14,500,652



Total undiscounted


Unitholders' NAV 14,475,538 - 14,475,538

Liquidity gap (4,114,388) 4,114,388 -



The Fund’s exposure to securities issued by any issuer is limited to not more than a certain

percentage of its net asset value. Under such restriction, the risk exposure to the securities of any

issuer is minimised.

The Fund is exposed to the individual risk of the respective companies issuing securities which

includes changes to the business performance of the company, consumer tastes and demand,

lawsuits and management practices. This risk is minimised through the well diversified nature of

the Fund.

149

PIF



The capital is represented by unitholders' subscription to the Fund. The amount of capital can

change significantly on a daily basis as the Fund is subject to a daily redemption and subscription

at the discretion of unitholders. The Manager manages the Fund's capital with the objective of

maximising unitholders' value, while maintaining sufficient liquidity to meet unitholders'

redemption as explained in Note 21 (iii) above.

150


PAXJ

[email protected]

151Your Need

is our Focus

23 February 2015


PAXJ

[email protected]

152Your Need

is our Focus

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

We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Pheim Asia Ex-Japan Fund are drawn up inaccordance with the Deed, Malaysian Financial Reporting Standards, InternationalFinancial Reporting Standards and Securities Commission's Guidelines on Unit TrustFunds in Malaysia so as to give a true and fair view of the financial position of PheimAsia Ex-Japan Fund as at 31 December 2014 and of its financial performance and cashflows for the financial year then ended.





PAXJ


PHEIM ASIA EX-JAPAN FUND



We have audited the financial statements of Pheim Asia Ex-Japan Fund ("the Fund"), which

comprise statement of financial position as at 31 December 2014, and statement of comprehensive

income, statement of changes in equity and statement of cash flows for the year then ended, and a

summary of significant accounting policies and other explanatory information, as set out on pages

155 to 170 .


The Manager of the Fund, Pheim Unit Trusts Berhad, is responsible for the preparation of

financial statements so as to give a true and fair view in accordance with Malaysian Financial

Reporting Standards, International Financial Reporting Standards and the requirements of the

Securities Commission's Guidelines on Unit Trust Funds in Malaysia. The Manager is also

responsible for such internal control as the Manager determines is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud

or error. The Trustee is responsible for ensuring that the Manager maintains proper accounting and

other records as are necessary to enable fair presentation of these financial statements.


conducted our audit in accordance with approved standards on auditing in Malaysia. Those

standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on our judgment,

including the assessment of risks of material misstatement of the financial statements, whether

due to fraud or error. In making those risk assessments, we consider internal control relevant to the

entity’s preparation of financial statements that give a true and fair view in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the

appropriateness of the accounting policies used and the reasonableness of accounting estimates

made by the Manager, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion.

153

PAXJ


PHEIM ASIA EX-JAPAN FUND (CONTD.)

Opinion

Other Matters


AF: 0502 No. 900/03/16(J/PH)


Kuala Lumpur

In our opinion, the financial statements give a true and fair view of the financial position of the

Fund as at 31 December 2014 and of its financial performance and cash flows for the year then

ended in accordance with Malaysian Financial Reporting Standards, International Financial

Reporting Standards and the requirements of the Securities Commission's Guidelines on Unit

Trust Funds in Malaysia.

This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We

do not assume responsibility to any other person for the content of this report.


154

PAXJ




Note 2014 2013

RM RM

INVESTMENT INCOME


Interest income :



profit or loss ("FVTPL") 8 277,800 812,582

Net realised (loss)/gain on foreign exchange (6,236) 4,263

1,032,906 1,765,780

EXPENSES

Manager's fee 4 415,540 423,733

Trustee's fee 5 19,392 19,774




574,736 483,201


Tax income/(expense) 6 11,001 (27,642)Total comprehensive income for the year 469,171 1,254,937


Net realised income/(loss) 1,028,527 (843,720)

Net unrealised (loss)/income (559,356) 2,098,657469,171 1,254,937


155

PAXJ




Note 2014 2013

RM RM

ASSETS

Investments 7 18,001,637 24,902,367




Amount due from Brokers 987,892 190,705


LIABILITIES





EQUITY


Accumulated losses (3,604,158) (4,073,329)

TOTAL EQUITY 12 26,482,666 28,071,122





156

PAXJ




Unitholders' Accumulated Total

capital losses Equity

RM RM RM

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


the year - 1,254,937 1,254,937

Creation of units 634,438 - 634,438

Cancellation of units (3,847,489) - (3,847,489)

Distribution equalisation 22,315 - 22,315

Balance at 31 December 2013 32,144,451 (4,073,329) 28,071,122


the year - 469,171 469,171

Creation of units 276,184 - 276,184


Distribution equalisation 46,021 - 46,021Balance at 31 December 2014 30,086,824 (3,604,158) 26,482,666


157

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2014 2013

RM RM











Net cash generated from operating and investing activities 6,661,289 2,203,081


Proceeds from creation of units 269,515 652,025


Net cash used in financing activities (2,081,919) (3,141,895)

NET INCREASE/(DECREASE) IN CASH AND

CASH EQUIVALENTS 4,579,370 (938,814)

CASH AND CASH EQUIVALENTS AT


CASH AND CASH EQUIVALENTS AT END OFTHE YEAR 7,541,109 2,961,739


Deposits with licensed financial institutions (Note 9) 7,103,656 2,941,887

Cash at bank 437,453 19,8527,541,109 2,961,739


158

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The financial statements of the Fund have been prepared on the historical cost convention unless

otherwise indicated in the summary of accounting policies below.

Pheim Asia Ex-Japan Fund ("the Fund") was constituted pursuant to a Deed dated 26 May 2006 as

amended by the Supplemental Deed dated 3 December 2008 between the Manager; Pheim Unit Trusts

Berhad, 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 the

Deed, which includes investments in equities and fixed income securities traded on the Bursa

Malaysia Securities Berhad ("Bursa Malaysia") or any other markets considered as an Eligible Market.

The Fund commenced operations on 30 June 2006 and will continue its operations until terminated by

Trustee as provided under Part 12 of the Deed.



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 with responsibility

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.






159

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2.3





2.3

(b)

2.4








The Amendments have been applied retrospectively and the application has no impact on the

disclosures or the amounts recognised in the Fund's financial statements.





Application of Amendments to MFRSs and new IC Interpretation (Cont'd)


Accounting










160

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2.4



Amendments to MFRS 10, MFRS 12 and MFRS 128 - Investment Entities: Applying the

Consideration Exception





Amendments to MFRS 116 and MFRS 138 - Clarification of Acceptable Methods of

Depreciation and Amortisation





MFRS 15 - Revenue from Contracts with Customers

























they become effective. The main features of the new applicable standard is summarised below :-

New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective (Cont'd.)

161

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2.4




The accounting policies set out below have been applied consistently to the periods, presented in these

financial statements and have been applied consistently by the Fund, unless otherwise stated.




financial assets are recognised initially, they are measured at fair value, plus attributable

transaction cost, for investment not at fair value through profit or loss.





designated as such by the Manager upon initial recognition. Financial assets held for trading

include securities and fixed income securities acquired principally for the purpose of selling

them in near term.

The initial application of MFRS 9 in the future may have an impact on the financial statements of

the Fund. However, it is not practicable to provide a reasonable estimate of the effect until a



of the Fund.

MFRS 9, Financial Instruments (IFRS 9 issued in July 2014) [cont'd.]













162

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(a) Financial assets at fair value through profit or loss ("FVTPL") [Cont'd.]


Subsequent to initial recognition, financial assets at FVTPL are measured at fair value at the

date of the statement of financial position. Changes in the fair value of those financial




assets at FVTPL are not recognised separately in profit or loss but included in net gains or net

losses on changes in fair value of financial assets at FVTPL.



After initial recognition, AFS financial assets are measured at fair value. Gains or losses from

changes in fair value of the AFS financial assets are recognised in other comprehensive

income, except that impairment losses, foreign exchange gains and losses on monetary

instruments, dividend income and interest calculated using effective interest method are





recognised in profit or loss. Dividends on an AFS equity instrument are recognised in profit

or loss when the Fund's right to receive payment is established.










Regular way purchases or sales are purchases or sales of financial assets that require delivery

of assets within the period generally established by regulation or convention in the market

place concerned. All regular way purchases and sales of financial assets are recognised or

derecognised on trade date, i.e. the date that the Fund commits to purchase or sell the asset.

163

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To determine whether there is objective evidence that an impairment loss on financial assets

has been incurred, the Fund considers factors such as the probability of insolvency or







subsequent period. Increase in fair value, if any, subsequent to impairment loss is recognised

in other comprehensive income. For AFS debt investments, impairment losses are

subsequently reversed in profit or loss, up to the amount previously recognised as impairment

loss, if an increase in the fair value of the investment can be objectively related to an event

occurring after the recognition of the impairment loss in profit or loss.

If an AFS asset is impaired, an amount comprising the difference between its cost (net of any

principal payment and amortisation) and its current fair value, less any impairment loss



asset is impaired.

Financial assets with fixed or determinable payments that are not quoted in an active market

are classified as loans and receivables. The Fund includes short term receivables such 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 cost using

effective interest method. Gains and losses are recognised in profit or loss when the loans

and receivables are derecognised or impaired, and through the amortisation process.





Manager would receive impairment proposal from the Fund's external investment manager, if

any financial assets of the Fund, in their professional opinion, warrant an impairment

exercise.

164

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3.2 Impairment of Financial Assets (Cont'd.)

(b) Trade and other receivables and other financial assets carried at amortised cost (cont'd)










financial assets with the exception of trade receivables, where the amount is reduced through

the use of an allowance account. When a trade receivable becomes uncollectible, it is written

off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can

be related objectively to an event occurring after the impairment was recognised, the








through profit or loss" are calculated using weighted average method. They represent the

difference between an instrument's initial carrying amount and disposal amount, or cash

payment or receipts made of derivative contracts (excluding payments or receipts on collateral

margin accounts for such investments).




position when, only when, the Fund becomes a party to the contractual provisions of the financial

instrument. Financial liabilities are classified as other financial liabilities.

165

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monetary assets and liabilities are translated at exchange rates prevailing at the end of the

reporting period. Non-monetary items that are measured at fair value in a foreign currency are

translated using exchange rates at the date when the fair value was determined.




included in profit or loss for the period except for the differences arising on the translation of non-

monetary items in respect of which gains or losses are recognised directly in equity. Exchange

differences arising from such non-monetary items are recognised directly to equity.

The unitholders' contributions to the Fund meet the definition of puttable instruments classified

as equity instruments under MFRS 132.

Distribution equalisation represents the average distributable amount included in the creation and

cancellation prices of units. This amount is either refunded to unitholders by way of distribution

and/or adjusted accordingly when units are cancelled.

Income is recognised to the extent that is probable that the economic benefits will flow to the

Fund and the income can be reliably measured. Income is measured at fair value of consideration





capital.






166

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3.9 Income Recognition (Cont'd.)

3.10 Income Tax




4. MANAGER'S FEE




Current tax assets and liabilities are measured at the amount expected to be recovered from or

paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that

are enacted or substantively enacted by the reporting date.

For management purposes, the Fund is managed by 2 main portfolios, namely (1) equity

securities and (2) fixed income instruments. Each segment engages in separate business activities

and the operating results are regularly reviewed by the Manager, External Investment Manager

and the Fund's Investment Committee. The External Investment Manager and the Fund

Investment Committee jointly assumes the role of chief operation decision maker, for

performance assessment purposes and to make decision about resources allocated to each

investment segment.


certain accounting estimates and exercise of judgements. Estimates and judgements are

continually evaluated and are based on past experience, reasonable expectations of future events

and other factors.



policies. There are no key assumptions concerning the future and other key sources of estimation

uncertainty at the reporting date, that have significant risk of causing material adjustment to the

carrying amounts of assets and liabilities within next year.

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.

167

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5. TRUSTEE'S FEE

6. TAXATION

2014 2013

RM RM

Current year Malaysian tax based on result for the year (11,001) 27,642

2014 2013

RM RM


Taxation at Malaysian statutory rate of 25% (2013: 25%) 114,543 320,645

Tax effects of :



Restriction on tax deductible expenses

for unit trust funds 107,257 110,009

Overprovision of prior year's taxation (11,001) -Tax (income)/expense for the financial year (11,001) 27,642

7. INVESTMENTS

2014 2013

RM RM



Quoted equities

- in Malaysia 5,337,000 5,913,750

- outside Malaysia 12,664,637 18,988,61718,001,637 24,902,367

The Trustee is entitled to a fee of 0.07% 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, subject to a

minimum of RM18,000 per annum.

Income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimated

assessable income for the financial year.

The tax charge for the financial year is in relation to the taxable income earned by the Fund after

deducting tax allowable expenses. In accordance with Schedule 6 of the Income Tax Act 1967,

interest income earned by the Fund is exempted from tax.

A reconciliation of income tax expense applicable to net income before tax at the statutory income tax

rate to tax (income)/ expense at the effective income tax rate of the Fund is as follows:

168

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2014 2013

RM RM

Financial assets at FVTPL:Quoted equities 18,001,637 24,902,367

Net gain on financial assets at FVTPL comprised:Realised (loss)/gain on disposals 837,156 (1,286,074)

Unrealised (loss)/gain on changes in fair values (559,356) 2,098,656277,800 812,582




- Hong Kong Dollar 5,178,851 10,159,036


- South Korean Won 1,099,977 2,791,747

- Thai Baht 737,975 1,889,998

- Philippine Peso 475,620 567,229

- Singapore Dollar 2,422,239 1,846,114

- New Taiwan Dollar 334,165 1,014,04018,001,637 24,902,366

Financial assets at FVTPL as at 31 December 2014 are as detailed below :

QUOTED EQUITIES

- IN MALAYSIA

Name of Counter Quantity Cost Fair value % ofRM RM NAV

Main Market

Construction

Ho Hup Construction Co. Bhd 200,000 246,827 250,000 0.94

Consumer



243,500 425,336 349,600 1.32

169

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QUOTED EQUITIES

- IN MALAYSIA


RM RM NAV

Industrial Product

Can-One Berhad 175,000 592,785 372,750 1.41


Malaysia Steel Works KL Bhd 130,000 132,972 112,450 0.42

Supermax Corp Bhd 134,000 287,033 225,120 0.85

Ta Ann Holdings Bhd 131,000 568,631 495,180 1.87

833,000 2,427,217 1,973,460 7.45

Plantation


Properties

Land & General Bhd 218,000 140,169 110,090 0.42

Matrix Concepts Holdings Bhd 203,000 303,943 548,100 2.07


552,000 946,019 998,790 3.78

Technology


Vitrox Corp Bhd 40,000 59,305 90,400 0.33

102,000 290,095 371,260 1.39

Trading/Services

Berjaya Corp Bhd 843,000 425,268 345,630 1.31

Berjaya Auto Bhd 34,000 109,486 111,860 0.42

Fitters Diversified Bhd 370,000 277,221 225,700 0.85

1,247,000 811,975 683,190 2.58

TOTAL QUOTED EQUITIES

- IN MALAYSIA 3,315,500 5,961,372 5,337,000 20.14

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QUOTED EQUITIES

- OUTSIDE MALAYSIA


RM RM NAV


("HKSE")

Agricultural Bank of China 422,000 651,241 745,566 2.82



China Huishan Diary Holdings

Co.Ltd 627,000 677,019 378,669 1.43

China Meidong Auto Holdings 466,000 349,844 336,042 1.27

Consun Pharmaceutical Group 100,000 270,351 263,659 1.00

Dongfeng Motor Group Co. Ltd 58,000 294,701 287,024 1.08


Ind & Comm Bank of China 187,000 428,583 477,030 1.80

Jintian Pharmaceutical Group 152,000 211,917 180,857 0.68

Real Gold Mining Ltd * 191,000 904,283 130,443 0.49

SPT Energy Group Inc 210,000 208,114 134,399 0.51

82,000 286,987 266,463 1.01


Tianneng Power International Ltd 280,000 454,757 259,964 0.98

Trigiant Group Ltd 286,000 280,850 163,703 0.62

Tongda Group Holdings Ltd 612,000 282,559 251,004 0.95

4,684,000 7,122,033 5,178,851 19.55


("JSX")

Alam Sutera Realty TBK PT 4,290,000 597,781 677,477 2.56

Indomobil Sukses Internasional 256,000 442,847 288,768 1.09

Lippo Karawaci TBK PT 465,000 146,037 133,097 0.50

Metropolitan Land TBK PT 2,000,000 232,084 245,340 0.93Modernland Realty TBK PT 4,770,000 617,717 692,747 2.62Total Bangun Persada 790,000 161,683 248,400 0.94Tunas Baru Lampung TBK PT 610,500 101,505 129,981 0.49

13,181,500 2,299,654 2,415,810 9.13

Philippines Stock Exchange

("PSE")

8990 Holdings Inc 550,000 308,683 303,143 1.14EEI Corporation 202,400 155,111 172,477 0.65

752,400 463,794 475,620 1.79

TCL Communication Tech Holdings

171

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QUOTED EQUITIES

- OUTSIDE MALAYSIA


RM RM NAV

Korea Stock Exchange

(''KE'')

Hana Financial Group 2,000 235,303 204,806 0.77Kia Motors Corporation 2,045 424,969 341,607 1.29KT&G Corp 1,000 302,473 243,208 0.92LG Electronics Inc 1,641 482,761 310,356 1.17

6,686 1,445,506 1,099,977 4.15

Stock Exchange of Thailand

("SET")

Malee Sampran Public Co-NVDR 116,000 420,897 338,555 1.2839,000 421,404 399,420 1.51

155,000 842,301 737,975 2.79

Singapore Exchange

("SGX")

Centurion Corp Ltd 120,000 178,818 158,741 0.60

China Environment Ltd 568,000 332,944 202,871 0.77

Ezion Holdings Ltd 36,000 164,598 106,674 0.40

Indofood Agri Resources Ltd 356,000 1,396,542 678,141 2.56

Midas Holdings Ltd 564,000 709,254 373,041 1.41

SBI Offshore Limited 885,000 285,413 667,306 2.52

Sino Grandness Food Industry 200,000 242,716 235,465 0.89

2,729,000 3,310,285 2,422,239 9.15

Taiwan Stock Exchange

("TWSE")

Ginko International Co Ltd 9,000 387,204 334,165 1.26

TOTAL QUOTEDEQUITIES



EXCESS OF COST OVERFAIR VALUE (3,830,512)

* This security has been suspended since 27 May 2011 and its fair value has been determined by the

Manager with the consent of the Trustee.

Total Access Communication-NVDR

172

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2014 2013

RM RM


2014 2013 2014 2013

% % Days Days



2014 2013

RM RM

Amount arising from release of units 983 25,274

Management fee 36,377 36,92137,360 62,195


There is no distribution to unitholders for the financial year ended 31 December 2014.


Note 2014 2013

RM RM


Accumulated losses

- Realised earnings (b) 1,855,385 826,859

- Unrealised losses (c) (5,459,544) (4,900,188)

(3,604,159) (4,073,329)Total equity/ Net asset value 26,482,666 28,071,122

The weighted average effective interest rate ("WAEIR") per annum and the average remaining

maturities of deposits and placement are as follows:

Average

remaining

maturitiesWAEIR

173

PAXJ

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


Number Number



of the year 33,120,887 32,144,451 37,047,399 35,335,187

Add: Creation of units 301,911 276,184 753,634 634,438


Distribution equalisation - 46,021 - 22,315

Balance at endof the year 30,737,234 30,086,824 33,120,887 32,144,451


2014 2013

RM RM

Balance at the beginning of the year 826,859 1,670,579

Net income after taxation 469,171 1,254,937


investments held transferred to

unrealised reserve 559,356 (2,098,657)Balance at the end of the year 1,855,386 826,859


2014 2013

RM RM

Balance at the beginning of the year (4,900,188) (6,998,845)

Net unrealised (loss)/gain attributable to investment

held transferred from realised reserve (559,356) 2,098,657Balance at the end of the year (5,459,544) (4,900,188)

2014

The Fund has an approved fund size of 200 million units. As at 31 December 2014, the number of

units not in issue is 169,262,766 (2013: 166,879,113) units.

2013

174

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to unitholders for







2014 2013


units NAV units NAV

RM RM


2014 2013



value attributable to unitholders per unit for the issuance and redemption of units in accordance with

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

A reconciliation of net asset value attributable to unitholders for issuing/redeeming units to the net



175

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% of Total



RM % RM %

MIDF Amanah Investment

Bank Bhd 19,700,329 25.74 -

DBS Vickers Securites Pte Ltd -

- Hong Kong 7,009,884 9.16 17,529 11.27

CIMB-GK Securities Pte Ltd

-Hong Kong 5,956,649 7.78 14,914 9.59

Oriental Patron Securities Ltd

-Hong Kong 4,581,854 5.99 13,200 8.48

Hwang-DBS Investment Bank Bhd 3,271,142 4.27 1,295 0.83

PT Danareksa-Indonesia 2,737,494 3.58 14,359 9.23

Maybank Investment Bank Bhd 2,291,867 2.99 7,075 4.55

DBS Vickers Securites Pte Ltd

- Korea 2,166,906 2.83 5,430 3.49

CIMB-GK Securities- Indonesia 2,141,013 2.80 6,419 4.13

PT Mandiri Sekuritas 1,902,217 2.48 7,329 4.71

Other brokers 24,780,960 32.38 68,023 43.7276,540,315 100.00 155,573 100.00


2014 2013



2014 2013


This is the ratio of the average of acquisitions and disposals of the Fund for the year to the average

NAV of the Fund for the year calculated on a daily basis.

This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other

professional fees) and other administrative expenses of the Fund to the average NAV of the Fund

calculated on a daily basis. The average NAV of the Fund for the year ended 31 December 2014 was

RM27,701,762 (2013: RM28,220,093).

Details of transactions with stockbroking companies and other investment banks for the financial yearended 31 December 2014 are as follows:

176

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2014 2013

Fixed Fixed

Equity income Equity income



Interest income - 79,307 79,307 - 121,571 121,571

Net gain on financial

assets at FVTPL 277,800 - 277,800 812,582 - 812,582

Net realised gain/(loss) on

foreign exchange (6,236) - (6,236) 4,263 - 4,263

Total segment operatingincome for the year 953,599 79,307 1,032,906 1,644,209 121,571 1,765,780

Deposits with financial - 7,103,656 7,103,656 - 2,941,886 2,941,886

institutions

Financial assets at FVTPL 18,001,637 - 18,001,637 24,902,367 - 24,902,367Other assets 1,014,539 1,058 1,015,597 260,013 234 260,247


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 financialinstitutions.


177

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2014 2013

RM RM

Net reportable segment operating income 1,032,906 1,765,780

Expenses (574,736) (483,201)


Tax expenses 11,001 (27,642)Net income for the year 469,171 1,254,937

2014 2013

RM RM











following table provides a reconciliation between reportable segment income/(loss) and operating

profit/(loss).

In addition, certain assets and liabilities are not considered to be part of the assets and liabilities of an

individual segment. The following table provides reconciliation between total reportable segment


The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either

fair value or at amortised cost based on their respective classification. The significant accounting

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 recognized. The following table

analyses the financial assets and liabilities of the Fund in the statement of financial position by

the class of financial instrument to which they are assigned, and therefore by the measurement

basis.

178

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Financial

liabilities

Financial AFS at



RM RM RM RM RM

2014

Assets

Quoted equities 18,001,637 - - - 18,001,637





Cash at bank - - 437,453 - 437,453Total financial assets 18,001,637 - 8,556,706 - 26,558,343


Liabilities


Other payables - - - 36,619 36,619Total financial liabilities - - - 75,677 75,677

2013

Assets

Quoted equities 24,902,367 - - - 24,902,367



- - 190,705 - 190,705


Cash at bank - - 19,853 - 19,853

Total financial assets 24,902,367 - 3,221,986 - 28,124,353


Liabilities


Other payables - - - 16,300 16,300Total financial liabilities - - - 80,218 80,218

Amount due from Brokers

179

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(b) Fair Value


Quoted equity

Level 1 Level 2 Level 3 Total

RM RM RM RM

2014

Financial assets

at FVTPL-Quoted securities 17,871,194 - 130,443 18,001,637

2013

Financial assets

at FVTPL-Quoted securities 24,780,164 - 122,203 24,902,367


fair value of financial instruments carried at fair value in the statement of financial position:


Level 2: Inputs other than quoted prices included within Level 1 that are observable for

the asset or liability either directly or indirectly




identical assets.

Fair value of quoted equity instruments is determined directly by reference to their published

market bid prices on the relevant stock exchanges at the reporting date. The fair value of

quoted equity instruments which have lost active trading market due to suspension in their

trading, is determined by reference to their published net tangible assets.


financial position as at the end of financial year:

180

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

2014 2013

RM RM


Balance at 1 January 122,203 114,168

Total gain recognised in profit or loss :

- Net gain on financial assets at FVTPL 8,240 8,035

Balance at 31 December 130,443 122,203



(i) Market Risk

The Fund's principal exposure to market risk arises primarly due to changes or developments in

the market environment and typically includes changes in regulations, politics and the economy

of the 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 mitigate risk exposure to any single asset class.

The following table shows a reconciliation from the beginning balance to the ending balance

for the fair value measurement under Level 3 of the fair value hierarchy :



respectively.The carrying amount of these financial instruments at the end of the financial



dictated by its Trust Deed and investment management strategy.

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk,

equity price risk and currency risk), credit risk, and liquidity risk Whilst these are the most important

types of financial risks inherent in each type of financial instruments, the Manager and the Trustee

would like to highlight that this list does not purport to constitute an exhaustive list of all the risks

inherent in an investment in the Fund.




internal 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 Services Act,

2007.

181

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Effect on profit

or loss and equity

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

RM

2014

+6/-6 1,080,099 /(1,080,099)

2013

+6/-6 1,494,142 /(1,494,142)


Effect on profit

or loss and equity

Change in basis points * Increase/(Decrease)

RM

2014+25/-25 4,521/(4,521)

2013+25/-25 7,008/(7,008)

*

The Fund's market risk arises primarily due to changes in market prices, interest rates and foreign

currency exchange rates.

Equity price risk is the adverse changes in the fair value of equities as a result of changes in

the levels of equity indices and the value of individual shares. The equity price risk exposure

arises from the Fund’s investments in quoted equity securities.

The table below summarises the effect of sensitivity from the Fund's underlying investments

in quoted equities on the profit or loss and equity of the Fund due to possible changes in

equity prices, with all other variables held constant:

This risk refers to the effect of interest rate changes on the market value of fixed income

securities and deposits with financial institutions. In the event of rising interest rates, the

return on deposits with financial institutions will rise while prices of fixed income securities

will decrease and vice versa, thus affecting the net asset value of the Fund. This risk will be

minimized via the management of the duration structure of the portfolio of fixed income

securities and deposits with financial institutions.

The following table demonstates the sensitivity of the profit and loss and equity of the Fund

to a reasonably possible change in interest rates, with all other variables held constant:


182

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(c) Currency Risk

2014 2013

RM RM

Hong Kong Dollar 517,885 1,015,904



Thai Baht 73,798 189,000

Philippine Peso 47,562 56,723


New Taiwan Dollar 33,417 101,404

1,266,465 1,898,862

(ii) Credit Risk

Effect on profit

or loss and equity





asset value and thus unit price. This risk is mitigated by vigorous credit analysis and



The Fund is exposed to currency risk primarily through its investment in overseas quoted

equities that are denominated in foreign currencies. The Fund's foreign currency exposure

profile of its investment in quoted equities has been disclosed under Note 7. The currency

risk is minimised by proper portfolio allocation and to avoid concentration in a single

country.


the end of the financial year would have decreased or increased respectively the profit or loss

and equity of the Fund by the amount shown below. This analysis assumes all other variables

are held constant.

the currently observable market environment.

183

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1 month 3 months

- 3 months - 5 years Total

2014 RM RM RM

Financial Assets



Other assets 1,453,050 - 1,453,050

Total undiscounted

financial assets 26,558,343 - 26,558,343


Total Assets 26,558,343 - 26,558,343



Total undiscounted


Unitholders' NAV 26,482,666 - 26,482,666

Liquidity gap - - -

This risk occurs in thinly traded or illiquid equity securities. Should the Fund needs to sell a

relatively large amount of such securities, the act itself may significantly depress the selling


prudent level of funds in short-term deposits and by investing in stocks whose liquidity is

adjudged to be commensurate with the expected exposure level of the Fund.


corresponding assets available to meet commitments associated with those financial liabilities

and redemption by unitholders.

184

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1 month 3 months

2013 - 3 months - 5 years Total

RM RM RM

Financial Assets



Other assets 280,100 - 280,100

Total undiscounted

financial assets 28,124,353 - 28,124,353

Non-Financial Assets

Tax recoverable - 26,987 26,987

Total Assets 28,124,353 26,987 28,151,340



Total undiscounted


Unitholders' NAV 28,071,122 - 28,071,122

Liquidity gap (26,987) 26,987 -




The Fund is exposed to the individual risk of the respective companies issuing securities which

includes changes to the business performance of the company, consumer tastes and demand,

lawsuits and management practices. This risk is minimised through the well diversified nature of

the Fund.

The Fund’s exposure to securities issued by any issuer is limited to not more than a certain

percentage of its net asset value. Under such restriction, the risk exposure to the securities of any

issuer is minimised.

The capital is represented by unitholders’ subscription to the Fund. The amount of capital can

change significantly on a daily basis as the Fund is subject to daily redemption and subscription

at the discretion of unitholders. The Manager manages the Fund’s capital with the objective of

maximising unitholders' value while maintaining sufficient liquidity to meet unitholders'


185


PAXJI

[email protected]

186Your Need

is our Focus

23 February 2015


PAXJI

[email protected]

187Your Need

is our Focus

23 February 2015


PAXJI

[email protected]

188Your Need

is our Focus

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

We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Pheim Asia Ex-Japan Islamic Fund are drawn upin accordance with the Deed, Malaysian Financial Reporting Standards, InternationalFinancial Reporting Standards and Securities Commission's Guidelines on Unit TrustFunds in Malaysia so as to give a true and fair view of the financial position of PheimAsia Ex-Japan Islamic Fund as at 31 December 2014 and of its financial performanceand cash flows for the financial year then ended.





PAXJI


PHEIM ASIA EX-JAPAN ISLAMIC FUND


We have audited the financial statements of Pheim Asia Ex-Japan Islamic Fund ("the Fund"), which

comprise statement of financial position as at 31 December 2014, and statement of comprehensive

income, statement of changes in equity and statement of cash flows for the year then ended, and a

summary of significant accounting policies and other explanatory information, as set out on pages

191 to 204.


The Manager of the Fund, Pheim Unit Trusts Berhad, is responsible for the preparation of financial

statements so as to give a true and fair view in accordance with Malaysian Financial Reporting

Standards, International Financial Reporting Standards and the requirements of the Securities

Commission's Guidelines on Unit Trust Funds in Malaysia. The Manager is also responsible for

such internal control as the Manager determines is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error. The Trustee is

responsible for ensuring that the Manager maintains proper accounting and other records as are

necessary to enable fair presentation of these financial statements.



conducted our audit in accordance with approved standards on auditing in Malaysia. Those

standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from material

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on our judgment, including

the assessment of risks of material misstatement of the financial statements, whether due to fraud or

error. In making those risk assessments, we consider internal control relevant to the entity’s

preparation of financial statements that give a true and fair view in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness

of the accounting policies used and the reasonableness of accounting estimates made by the

Manager, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our audit opinion.

189

PAXJI


PHEIM ASIA EX-JAPAN ISLAMIC FUND (CONTD.)

Opinion

Other Matters


AF: 0502 No. 900/03/16(J/PH)


Kuala Lumpur

This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We

do not assume responsibility to any other person for the content of this report.


In our opinion, the financial statements give a true and fair view of the financial position of the

Fund as at 31 December 2014 and of its financial performance and cash flows for the year then

ended in accordance with Malaysian Financial Reporting Standards, International Financial

Reporting Standards and the requirements of the Securities Commission's Guidelines on Unit Trust

Funds in Malaysia.

190

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Note 2014 2013

RM RM

INVESTMENT INCOME


Profit from Shariah-based deposits with licensed financial

institutions 57,326 49,171


profit or loss ("FVTPL") 8 304,652 1,116,726

Net realised (loss)/gain on foreign exchange (1,179) 385

518,306 1,409,934

EXPENSES

Manager's fee 4 149,562 133,759

Trustee's fee 5 18,000 18,000




220,891 201,824


Tax income/(expense) 6 14,728 (8,060)Net income for the year 312,143 1,200,050



Net realised income 399,509 1,159,402

Net unrealised (loss)/income (87,366) 40,648312,143 1,200,050


191

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Note 2014 2013

RM RM

ASSETS

Quoted Shariah-compliant investments 7 6,032,557 6,381,426

Shariah-based deposits with licensed financial

institutions 9 3,601,223 1,645,327



Amount due from Broker - 67,824


LIABILITIES





EQUITY


Accumulated losses (2,605,159) (2,917,302)

TOTAL EQUITY 12 9,649,353 8,175,597


UNITS IN CIRCULATION 12(a) 9,786,315 8,595,137



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PAXJI




Unitholders' Accumulated Total

capital losses Equity

RM RM RM

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


the year - 1,200,050 1,200,050

Creation of units 1,299,609 - 1,299,609


Distribution equalisation 689,985 - 689,985

Balance at 31 December 2013 11,092,899 (2,917,302) 8,175,597


the year - 312,143 312,143

Creation of units 4,505,742 - 4,505,742


Distribution equalisation (169,746) - (169,746)Balance at 31 December 2014 12,254,512 (2,605,159) 9,649,353


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2014 2013RM RM



Proceeds from sale of Shariah-compliant investments 8,352,656 8,272,675

Purchase of Shariah-compliant investments (7,631,312) (4,229,282)


Profits received from Shariah-based deposits with licensed

financial institutions 57,022 48,886





Net cash generated from operating and investing activities 753,138 4,101,389




Net cash used in financing activities 1,163,076 (3,010,425)

NET INCREASE IN CASH

AND CASH EQUIVALENTS 1,916,214 1,090,964


BEGINNING OF THE YEAR 1,723,536 632,572



Shariah-based deposits with licensed financial institutions (Note 9) 3,601,223 1,645,327

Cash at bank 38,527 78,2093,639,750 1,723,536


194

PAXJI











Pheim Asia Ex-Japan Islamic Fund ("the Fund") was established pursuant to a Deed dated 12 September

2006 as amended by the Supplemental Deed dated 3 December 2008 between the Manager; Pheim Unit

Trusts Berhad, the Trustee; Maybank Trustees Berhad and the registered unitholders of the Fund.

The principal activity of the Fund is to invest in "Permitted Investments" in compliance with Shariah

requirements as defined under Part 7 of the Deed, which includes quoted Shariah-compliant stocks and

shares of companies quoted on the Bursa Malaysia Securities Berhad ("Bursa Malaysia") or any other

markets considered as an Eligible Market. The activities of the Fund shall be conducted strictly in

compliance with Shariah requirements and as approved by the Shariah Advisory Council of the

Securities Commission of Malaysia and/or the Shariah Adviser of the Fund. The Fund commenced

operations on 1 November 2006 and will continue its operations until terminated by the Trustee as

provided under Part 12 of the Deed.



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 with responsibility for the

provision of investment management services to the Fund.

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

50250 Kuala Lumpur.




The financial statements of the Fund are prepared under the historical cost convention unless


195

PAXJI


2.2 Basis of Measurement (Cont'd)

2.3




(b)


discontinuation of hedge accounting in MFRS 139, Financial Instruments: Recognition and





The accounting policies applied by the Fund are consistent with those applied in the previous




During the financial year, the Fund has applied the following amendments to MFRSs issued by the

Malaysian Accounting Standards Board ("MASB") which are effective for accounting period


Amendments to MFRS 139, Novation of Derivatives and Continuation of Hedge

Accounting






196

PAXJI

2.4









Amendments to MFRS 10, MFRS 12 and MFRS 128 - Investment Entities: Applying the Consideration

Exception



Amendments to MFRS 116 and MFRS 138 - Clarification of Acceptable Methods of Depreciation

and Amortisation





MFRS 15, Revenue from Contracts with Customers





● Under MFRS 9, all recognised financial assets are required to be subsequently measured at either

amortised cost, fair value through other comprehensive income ("FVTOCI") or fair value through

profit or loss ("FVTPL") on the basis of both an entity's business model for managing the financial

assets and the contractual cash flow characteristics of the financial assets. These requirements

improve and simplify the approach for classification and measurement of financial assets as the

numerous categories of financial assets under MFRS 139 had been replaced.










197

PAXJI


2.4

MFRS 9, Financial Instruments (IFRS 9 issued in July 2014) (Cont'd.)



● Most of the requirements in MFRS 139 for classification and measurement of financial liabilities

were carried forward unchanged to MFRS 9, except for the measurement of financial liabilities

designated as at FVTPL. Under MFRS 139, the entire amount of the change in the fair value of the

financial liability designated as FVTPL is presented in profit or loss. However, MFRS 9 requires

that the amount of change in the fair value of the financial liability that is attributable to changes in

the credit risk of that liability is presented in other comprehensive income, unless the recognition of

the effects of changes in the liability's own credit risk in other comprehensive income would create

or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial

liability's credit risk are not subsequently reclassified to profit or loss.

New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective (Cont'd.)

The initial application of MFRS 9 may have an impact on the financial statements of the Fund.

However, it is not practicable to provide a reasonable estimate of the effect until a detailed review

has been completed. The initial application of other new MFRSs and amendments to MFRSs is not

expected to have any significant impact on the financial statements of the Fund.

The accounting policies set out below have been applied consistently to the periods, presented in these

financial statements and have been applied consistently by the Fund, unless otherwise stated.




financial assets are recognised initially, they are measured at fair value, plus attributable transaction

cost, for investment not at fair value through profit or loss.

● In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss model,

as opposed to an incurred credit loss model under MFRS 139. Under MFRS 9, it is no longer

necessary for a credit event to have occurred before credit losses are recognised. Instead, an entity

always accounts for expected credit losses and changes in those expected credit losses at each

reporting date to reflect changes in credit risk since initial recognition.

● The new general hedge accounting requirements retain the three types of hedge accounting



that aligns the hedge accounting more closely with an entity's risk management activities. The new

hedge accounting model has also expanded the scope of eligibility of hedge items and hedging

instruments respectively.

198

PAXJI











recognised in profit or loss. Dividends on an AFS equity instrument are recognised in profit or

loss when the Fund's right to receive payment is established.






designated as such by the Manager upon initial recognition. Financial assets held for trading

include securities and fixed income securities acquired principally for the purpose of selling

them in near term.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value at the

date of the statement of financial position. Changes in the fair value of those financial




assets at FVTPL are not recognised separately in profit or loss but included in net gains or net

losses on changes in fair value of financial assets at FVTPL.



After initial recognition, AFS financial assets are measured at fair value. Gains or losses from

changes in fair value of the AFS financial assets are recognised in other comprehensive

income, except that impairment losses, foreign exchange gains and losses on monetary

instruments, dividend income and interest calculated using effective interest method are


199

PAXJI



(b) Available-for-sale ("AFS") financial assets (Cont'd)









Regular way purchases or sales are purchases or sales of financial assets that require delivery

of assets within the period generally established by regulation or convention in the market

place concerned. All regular way purchases and sales of financial assets are recognised or

derecognised on trade date, i.e. the date that the Fund commits to purchase or sell the asset.

If an AFS asset is impaired, an amount comprising the difference between its cost (net of any

principal payment and amortisation) and its current fair value, less any impairment loss


Financial assets with fixed or determinable payments that are not quoted in an active market

are classified as loans and receivables. The Fund includes short term receivables such 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 cost using

effective interest method. Gains and losses are recognised in profit or loss when the loans

and receivables are derecognised or impaired, and through the amortisation process.


asset is impaired.





Manager would receive impairment proposal from the Fund's external investment manager, if

any financial assets of the Fund, in their professional opinion, warrant an impairment

exercise.

200

PAXJI


3.2 Impairment of Financial Assets (Contd.)

(a) AFS financial assets (Cont'd)




subsequent period. Increase in fair value, if any, subsequent to impairment loss is recognised

in other comprehensive income. For AFS debt investments, impairment losses are

subsequently reversed in profit or loss, up to the amount previously recognised as impairment

loss, if an increase in the fair value of the investment can be objectively related to 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 financial assets

has been incurred, the Fund considers factors such as the probability of insolvency or







financial assets with the exception of trade receivables, where the amount is reduced through

the use of an allowance account. When a trade receivable becomes uncollectible, it is written

off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can

be related objectively to an event occurring after the impairment was recognised, the








through profit or loss" are calculated using weighted average method. They represent the difference

between an instrument's initial carrying amount and disposal amount, or cash payment or receipts

made of derivative contracts (excluding payments or receipts on collateral margin accounts for

such investments).

201

PAXJI








position when, only when, the Fund becomes a party to the contractual provisions of the financial

instrument. Financial liabilities are classified as other financial liabilities.







The unitholders' contributions to the Fund meet the definition of puttable instruments classified as

equity instruments under MFRS 132.

Distribution equalisation represents the average distributable amount included in the creation and

cancellation prices of units. This amount is either refunded to unitholders by way of distribution

and/or adjusted accordingly when units are cancelled.







monetary assets and liabilities are translated at exchange rates prevailing at the end of the reporting

period. Non-monetary items that are measured at fair value in a foreign currency are translated

using exchange rates at the date when the fair value was determined.




included in profit or loss for the period except for the differences arising on the translation of non-

monetary items in respect of which gains or losses are recognised directly in equity. Exchange

differences arising from such non-monetary items are recognised directly to equity.

202

PAXJI





3.10 Income Tax





capital.






For management purposes, the Fund is managed by 2 main portfolios, namely (1) equity securities

and (2) fixed income instruments. Each segment engages in separate business activities and the

operating results are regularly reviewed by the Manager, External Investment Manager and the

Fund's Investment Committee. The External Investment Manager and the Fund Investment

Committee jointly assumes the role of chief operation decision maker, for performance assessment

purposes and to make decision about resources allocated to each investment segment.

Income is recognised to the extent that is probable that the economic benefits will flow to the Fund

and the income can be reliably measured. Income is measured at fair value of consideration





Current tax assets and liabilities are measured at the amount expected to be recovered from or paid

to the tax authorities. The tax rates and tax laws used to compute the amount are those that are

enacted or substantively enacted by the reporting date.

203

PAXJI



4. MANAGER'S FEE

5. TRUSTEE' S FEE

6. TAXATION

2014 2013

RM RM


Overprovision in prior year (14,728) (2,356)



certain accounting estimates and exercise of judgements. Estimates and judgements are continually

evaluated and are based on past experience, reasonable expectations of future events and other

factors.

The tax charge for the financial year is in relation to the taxable income earned by the Fund after

deducting tax allowable expenses. In accordance with Schedule 6 of the Income Tax Act 1967, profit

income earned by the Fund is exempted from tax.

No major judgements have been made by the Manager in applying the Fund's accounting policies.

There are no key assumptions concerning the future and other key sources of estimation uncertainty

at the reporting date, that have significant risk of causing material adjustment to the carrying

amounts of assets and liabilities within next year.

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 daily basis.

The Trustee is entitled to a fee of 0.07% per annum of the NAV of the Fund (before deducting the

Manager's and Trustee's fee for the day) calculated and accrued on a daily basis, subject to a minimim of

RM18,000 per annum.

Income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimated

assessable income for the financial year.

204

PAXJI

6. TAXATION (CONT'D.)

2014 2013

RM RM


Tax at Malaysian statutory rate of 25% (2013: 25%) 74,354 302,028

Tax effects of:



Restriction on tax deductible expenses for unit trust funds 40,027 36,494


7. QUOTED SHARIAH-COMPLIANT INVESTMENTS

2014 2013

RM RM



Quoted Shariah-compliant equities

- in Malaysia 2,680,188 2,035,795

- outside Malaysia 3,352,369 4,345,6316,032,557 6,381,426


Financial assets at FVTPL:Quoted Shariah-compliant equities 6,032,557 6,381,426


Realised gain on disposals 392,018 1,076,078Unrealised (loss)/gain on changes in fair values (87,366) 40,648

304,652 1,116,726

A reconciliation of tax expense applicable to income before tax at the statutory income tax rate to tax

(income)/expense at the effective income tax rate of the Fund is as follows:

205

PAXJI

8. FINANCIAL ASSETS AT FVTPL (CONT'D)




- Hong Kong Dollar 703,938 2,086,838


- South Korean Won 164,317 319,949

- Thai Baht 339,085 295,861


- New Taiwan Dollar 672,964 900,877

- Philippines Peso 170,432 -6,032,557 6,381,426



- IN MALAYSIA


RM RM NAV

Main Market

Construction

Ho Hup Construction Co. Bhd 260,000 370,776 325,000 3.37

Muhibbah Engineering (M) Bhd 36,000 111,220 66,960 0.69

296,000 481,996 391,960 4.06

Consumer


Industrial Products

Can-One Berhad 52,000 174,321 110,760 1.15



Supermax Corp Berhad 50,000 106,728 84,000 0.87


Thong Guan Industries Bhd 38,000 112,689 70,680 0.73

Thong Guan Industries Bhd-ICULS 19,000 19,000 30,970 0.32

Thong Guan Industries Bhd-WT19 9,500 - 6,935 0.07

401,500 1,003,399 772,095 8.00

206

PAXJI



- IN MALAYSIA


RM RM NAV

Plantation

Hap Seng Plantations Holdings Bhd 75,000 206,279 188,250 1.95


127,000 516,228 456,050 4.73

Properties

Hua Yang Berhad 48,000 101,144 96,000 0.99




342,500 517,635 524,175 5.42

Technology


Notion Vtec Berhad 190,000 147,621 79,800 0.83

Vitrox Corp Bhd 29,000 41,692 65,540 0.68

255,600 321,227 311,138 3.23

Trading/Services


TOTAL QUOTED SHARIAH-

COMPLIANT EQUITIES

- IN MALAYSIA 1,565,600 3,061,560 2,680,188 27.77

207

PAXJI



- OUTSIDE MALAYSIA


RM RM NAV

1.3786

Hong Kong Stock Exchange 4.8081

("HKSE")


China National Offshore Oil Corp 30,000 191,582 141,159 1.46


Real Gold Mining Ltd * 60,000 368,936 40,977 0.42


619,000 1,347,749 703,938 7.28


("JSX")

Bekasi Fajar Industrial Esta 1,531,900 228,079 313,197 3.25

Kawasan Industri Jababeka TBK PT 2,500,000 222,542 207,270 2.15

Sampoerna Agro TBK PT 710,200 472,371 417,576 4.33

Tambang Batubara Bukit Asam 19,000 133,281 66,975 0.69

United Tractor TBK PT 41,000 326,811 200,312 2.08

4,802,100 1,383,084 1,205,330 12.50

Korea Stock Exchange

(''KE'')

Kia Motors Corporation 327 61,168 54,624 0.57

LG Electronics Inc 580 170,601 109,693 1.14

907 231,769 164,317 1.71

Thailand Stock Exchange

("SET")

Malee Sampran Public Co-NVDR 46,000 167,746 134,254 1.39

20,000 210,156 204,831 2.12

66,000 377,902 339,085 3.51

Philippine Stock Exchange

EEI Corporation 200,000 157,094 170,432 1.77

Total Access Communication-NVDR

208

PAXJI



- OUTSIDE MALAYSIA


RM RM NAV

Singapore Stock Exchange

("SGX")

CNMC Goldmine Holdings Ltd 140,000 109,805 96,303 1.00

Taiwan Stock Exchange

("TWSE")

AIC Inc 16,000 309,379 210,970 2.19

Ginko International Co. Ltd 6,000 274,472 222,777 2.31

Power Tech Technology Inc 40,000 274,032 239,217 2.48

62,000 857,883 672,964 6.98

TOTAL QUOTED SHARIAH-

COMPLIANT EQUITIES



EXCESS OF COST OVERFAIR VALUE (1,494,289)

*

9. SHARIAH-BASED DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

2014 2013

RM RM


This security has been suspended since 27 May 2011 and its fair value has been determined by the

Manager with the consent of the Trustee.

209

PAXJI

9. SHARIAH-BASED DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS (CONT'D)

2014 2013 2014 2013

% % Days Days



2014 2013

RM RM

Amount arising from creation of units (1,088) (2,553)

Management fee 13,192 11,04612,104 8,493


There is no distribution to unitholders for the financial year ended 31 December 2014.


Note 2014 2013

RM RM


Accumulated losses

- Realised earnings (b) 706,635 307,126- Unrealised losses (c) (3,311,794) (3,224,428)

(2,605,159) (2,917,302)Total equity / Net asset value 9,649,353 8,175,597

The weighted average effective profit rate ("WAEPR") per annum and the average remaining maturities

of deposits and placement are as follows:

Average

remaining

WAEPR maturities

210

PAXJI

12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY) (CONT'D)


Number Number



of the year 8,595,137 11,092,899 12,128,436 14,110,426



Distribution equalisation - (169,746) - 689,985Balance at end of the year 9,786,315 12,254,512 8,595,137 11,092,899


2014 2013

RM RM

Balance at the beginning of the year 307,126 (852,276)

Net income after tax 312,143 1,200,050



transferred to unrealised reserve 87,366 (40,648)Balance at the end of the year 706,635 307,126


Balance at the beginning of the year (3,224,428) (3,265,076)



transferred to unrealised reserve (87,366) 40,648Balance at the end of the year (3,311,794) (3,224,428)

2014 2013

In accordance with Article 6.1.1 of the Deed and Securities Commision's approval letter dated 14 August

2006, the maximum number of units that can be issued for circulation is 200 million units. As at 31

December 2014, the number of units not in issue is 190,213,685 (2013: 191,404,863) units.

211

PAXJI




to unitholders for







2014 2013


units NAV units NAV

RM RM

Directors of the Manager 394,621 389,099 - -


Net asset value attributable to unitholders is classified as equity in the Statement of Financial Position.



value attributable to unitholders per unit for the issuance and redemption of units in accordance with the

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



2014 2013

212

PAXJI


% of Total



RM % RM %

MIDF Amanah Investment Bank

Bhd 7,056,579 27.56 - -

KAF Investment Bank Bhd 3,042,447 11.88 - -

Fubon Securities Companies Ltd 1,280,262 5.00 3,122 8.01

DBS Vickers Securites Pte Ltd

- Hong Kong 1,166,155 4.55 2,918 7.48

Kenanga Investment Bank Bhd 1,113,470 4.35 2,504 6.42

CIMB Investment Bank Bhd 1,111,483 4.34 2,613 6.70

CIMB-GK Securities Pte Ltd

- Hong Kong 1,076,940 4.20 2,699 6.92

RHB OSK Securities (Hong Kong)

Limited 902,049 3.52 1,191 3.06

RHB OSK Securities (Thailand) PCL 839,338 3.28 1,679 4.31

PT Mandiri Sekuritas Indonesia 817,465 3.19 3,148 8.08

Other brokers 7,202,564 28.13 19,111 49.0225,608,752 100.00 38,985 100.00

16. MANAGEMENT EXPENSE RATIO till here 14/02 @ 8.30pm

2014 2013



2014 2013


Details of transactions with stockbroking companies and other investment banks for the financial year

ended 31 December 2014 are as follows:

This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other professional

fees) and other administrative expenses of the Fund to the average NAV of the Fund calculated on a

daily basis. The average NAV of the Fund for the year ended 31 December 2014 was RM 9,987,081

(2013: RM8,907,120).

This is the ratio of the average of acquisitions and disposals of Shariah-compliant investments for the

year to average NAV of the Fund for the year calculated on daily basis.

213

PAXJI


A portfolio of Shariah-compliant equity instruments.


The Manager and Investment Committee of the Fund are responsible for allocating resources available

to the Fund in accordance with the overall investment strategies as set out in the investment Guidelines

of the Fund. The Fund is managed by two segments:

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

The investment objective of each segment is to achieve consistent returns from the investments in each

segment while safeguarding capital by investing in diversified portfolios. There have been no changes in

reportable segments in the current financial year. The segment information provided is presented to the

Manager, the appointed External Investment Manager and Investment Committee of the Fund.

2014 2013

Shariah- Shariah-

based based

Deposits Deposits

Equity and Sukuk Equity and Sukuk



Profit from Shariah-based

deposits with licensed financial institutions - 57,326 57,326 - 49,171 49,171

Net gain from Shariah-compliant investments:

- financial assets at FVTPL 304,652 - 304,652 1,116,726 - 1,116,726

Net realised gain/(loss) on foreign exchange (1,179) - (1,179) 385 - 385

Total segment operatingincome for the year 460,981 57,326 518,306 1,360,763 49,171 1,409,934

Shariah-based deposits with financial institutions - 3,601,223 3,601,223 - 1,645,327 1,645,327


Other assets 11,711 634 12,345 99,589 330 99,919Total segment assets 6,044,268 3,601,857 9,646,125 6,481,015 1,645,657 8,126,672

214

PAXJI


2014 2013

RM RM

Net reportable segment operating income 518,306 1,409,934

Expenses (220,891) (201,824)



2014 2013

RM RM



Cash at bank 38,527 78,209

Total assets of the Fund 9,684,652 8,207,237





Total liabilities of the Fund 35,300 31,640



The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either fair

value or at amortised cost based on their respective classification. The significant accounting

policies in Note 3 describe how the classes of financial instruments are measured, and how income

and expenses, including fair value gains and losses are recognised. The following table analyses the

financial assets and liabilities of the Fund in the statement of financial position, by the class of

financial instrument to which they are assigned, and therefore by the measurement basis.


following table provides a reconciliation between reportable segment income/(loss) and operating

profit/(loss).

In addition, certain assets and liabilities are not considered to be part of the assets or liabilities of an

individual segment. The following table provides reconciliation between the total reportable segment


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Financial

liabilities

Financial at

assets at Loans and amortised

FVTPL receivables cost Total

RM RM RM RM

2014


equities 6,032,557 - - 6,032,557

Shariah-based deposits with

licensed financial institutions - 3,601,223 - 3,601,223

Amount due from Brokers - - - -

Other receivables - 12,346 - 12,346

Cash at bank - 38,527 - 38,527Total financial assets 6,032,557 3,652,096 - 9,684,653


Liabilities

Amount due to Manager - - 12,104 12,104Amount due to Trustee - - 1,627 1,627

Other payables - - 21,569 21,569Total financial liabilities - - 35,300 35,300

2013


equities 6,381,426 - - 6,381,426

Shariah-based deposits with

licensed financial institutions - 1,645,327 - 1,645,327

Amount due from Brokers - 67,824 - 67,824

Other receivables - 32,095 - 32,095

Cash at bank - 78,209 - 78,209Total financial assets 6,381,426 1,823,455 - 8,204,881


Liabilities

Amount due to Manager - - 8,493 8,493Amount due to Trustee - - 1,578 1,578

Other payables - - 21,569 21,569Total financial liabilities - - 31,640 31,640

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(b) Fair Value


Level 1 Level 2 Level 3 Total

RM RM RM RM

2014

Financial assets

at FVTPL

- Quoted securities 5,991,580 - 40,977 6,032,557

2013

Financial assets

at FVTPL

- Quoted securities 6,343,038 - 38,388 6,381,426


fair value of financial instruments carried at fair value in the statement of financial position.


Level 2: Inputs other than quoted prices included within Level 1 that are observable for the

Quoted equity instruments

Fair value of quoted equity instruments is determined directly by reference to their published

market bid prices on the relevant stock exchanges at the reporting date. The fair value of

quoted equity instruments which have lost active trading market due to suspension in their

trading, is determined by reference to their published net tangible assets.


financial position as at the end of financial year :

liability either directly or indirectly




identical assets.

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PAXJI



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

2014 2013

RM RM


Balance at 1 January 38,388 35,864

Total loss recognised in profit or loss :

- Net loss on financial assets at FVTPL 2,589 2,524

Balance at 31 December 40,977 38,388



The following table shows a reconciliation from the beginning balance to the ending balance

for the fair value measurement under Level 3 of the fair value hierarchy:


dictated by its Deed and investment management strategy.

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk, equity

price risk and currency risk), credit risk, liquidity risk and reclassification of Shariah status risk. Whilst

these are the most important types of financial risks inherent in each type of financial instruments, the

Manager and the Trustee would like to highlight that this list does not purport to constitute an exhaustive

list of all the risks inherent in an investment in the Fund.




internal 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 Services Act,

2007.



respectively. The carrying amount of these financial instruments at the end of the financial


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(i) Market Risk


Effect on profit

Change in Shariah-compliant or loss and equity

equity price (%) Increase/(Decrease)

RM

2014

+6/-6 361,953 /(361,953)

2013

+6/-6 382,885 /(382,885)


The Fund's principal exposure to market risk arises primarily due to changes or developments in the

market environment and typically includes changes in regulations, politics and the economy of the

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 mitigate risk

exposure to any single asset class.

This risk refers to the effect of interest rate changes on the demand for sukuk and Shariah-

based deposits with financial institutions. In the event of rising interest rates, the return on

Shariah-based deposits with financial institutions will rise while demand for sukuk will

decrease and vice versa, thus affecting the net asset value of the Fund. This risk will be

minimized via the management of the duration structure of the portfolio of sukuk and Shariah-

based deposits with financial institutions.

Interest rate is a general economic indicator that will have an impact on the management of

fund regardless of whether it is a Shariah-based fund or otherwise. It does not in any way

suggest that this fund will invest in conventional financial instruments. All investments

carried out for this fund are in accordance with requirement of the Shariah.

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

foreign currency exchange rates.

Equity price risk is the adverse changes in the fair value of Shariah-compliant equities as a

result of changes in the levels of Shariah-compliant equity indices and the value of individual

Shariah-compliant shares. The equity price risk exposure arises from the Fund’s investments

in quoted Shariah-compliant equity securities.

The table below summarises the effect of sensitivity from the Fund’s underlying investments

in quoted Shariah-compliant equities on the profit or loss and equity of the Fund due to

possible changes in Shariah-compliant equity prices, with all other variables held constant:

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PAXJI



(b) Interest Rate Risk (Contd.)

Effect on profit

or loss and equity

Change in basis point * Increase/(Decrease)

RM

2014+25/-25 3,432/(3,432)

2013+25/-25 3,000/(3,000)

(c) Currency Risk

2014 2013

RM RM

Hong Kong Dollar 70,394 208,684



Thai Baht 33,909 29,586


New Taiwan Dollar 67,296 90,088

Philiipines Peso 17,043 -335,237 434,564

The following table demonstrates the sensitivity of the profit or loss and equity of the Fund to

a reasonably possible change in interest rates, with all other variables held constant:

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

currently observable market environment.

The Fund is exposed to currency risk primarily through its investment in overseas Shariah-

compliant quoted equities that are denominated in foreign currencies. The Fund's foreign

currency exposure profile of its investment in Shariah-compliant quoted equities has been

disclosed under Note 8. The currency risk is minimised by proper portfolio allocation and to

avoid concentration in a single country.


the end of the financial year would have decreased or increased respectively the profit or loss

and equity of the Fund by the amount shown below. This analysis assumes all other variables

are held constant.

Effect on profit

or loss and equity

220

PAXJI


(ii) Credit Risk


1 month - 3 Above

2014 months 3 months Total

RM RM RM

Financial Assets



Other assets 50,873 - 50,873

Total undiscounted

financial assets: 9,684,653 - 9,684,653


Total Assets 9,684,653 - 9,684,653


Other liablities 13,731 21,569 35,300

Total undiscounted

financial liabilities 13,731 21,569 35,300

Unitholders' NAV 9,649,353 - 9,649,353

Liquidity gap 21,569 (21,569) -


conditions of companies issuing sukuk, which may affect their creditworthiness. This in turn may

lead to default in the payment of principal and profit. Such events can lead to loss of capital or

delayed or reduced income for the Fund resulting in a reduction in the Fund’s asset value and thus

unit price. This risk is mitigated by vigorous credit analysis and diversification of the sukuk

portfolio of the Fund.

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

This risk occurs in thinly traded or illiquid Shariah-compliant securities. Should the Fund need to

sell a relatively large amount of such securities, the act itself may significantly depress the selling


prudent level of funds in short-term Shariah-based deposits and by investing in Shariah-compliant

stocks whose liquidity is adjudged to be commensurate with the expected exposure level of the

Funds.


corresponding assets available to meet commitments associated with those financial liabilities and

redemption by the unitholders.

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1 month - 3 Above

2013 months 3 months Total

RM RM RM

Financial Assets



Other assets 178,128 - 178,128

Total undiscounted

financial assets: 8,204,881 - 8,204,881

Non-Financial Assets - 2,356 2,356

Total Assets 8,204,881 2,356 8,207,237


Other liablities 10,071 21,569 31,640

Total undiscounted

financial liabilities 10,071 21,569 31,640

Unitholders' NAV 8,175,597 - 8,175,597

Liquidity gap 19,213 (19,213) -



(vi) Reclassification of Shariah Status Risk

This risk refers to the risk that the currently held Shariah-compliant securities in the portfolio of

Shariah-based funds may be reclassified to be Shariah non-compliant upon review of the 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 adversely affected where the Manager

will take the necessary steps to dispose of such securities.

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 minimised through the well

diversified nature of the Fund.

The Fund’s exposure to Shariah-compliant securities issued by any issuer is limited to not more

than a certain percentage of its net asset value. Under such restriction, the risk exposure to the

securities of any issuer is minimised.

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(vii) Capital Management

The capital is represented by unitholders’ subscription to the Fund. The amount of capital can

change significantly on a daily basis as the Fund is subject to daily redemption and subscription at

the discretion of unitholders. The Manager manages the Fund’s capital with the objective of

maximising unitholders' value, while maintaining sufficient liquidity to meet unitholders'


223

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