interim report front cover- 30062016 - pheim unit trusts ... · pheim interim report 30.06.2016...

PHEIM

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

Your Need

is our Focus

I N T E R I M R E P O R T30 JUNE 2016

Pheim Emerging Companies Balanced Fund

Dana Makmur Pheim

Pheim Income Fund

Pheim Asia Ex-Japan Fund

Pheim Asia Ex-Japan Islamic Fund

PHEIM Interim Report 30.06.2016

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)

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)

PHEIM lnterim Report 30.06.2016

CONTENTS

Page No

1. Funds Information

2. Funds Performance

3. Manager’s Report

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

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 – 41

42 – 74

75 – 106

107 – 138

139 – 173

174 – 208


Fund Information

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1 YourNeedis our Focus

Dear Valued Unit Holders

We are pleased to present the Manager’s Report and the unaudited financial statements for theperiod from 1 January 2016 to 30 June 2016 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.


Fund Information

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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.

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 thatcomply with Shariah requirements. PAXJI will invest in securities listed onthe stock exchanges of the Asia Pacific region excluding Japan with initialfocus in ASEAN countries, Hong Kong SAR, China, Taiwan, Korea,Australia, New Zealand and India that comply with Shariah requirements.


Fund Information

[email protected]


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 theManager and the Trustee that it is in the interest of the Unit Holders forit to continue.

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.

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


Fund Information

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1.4 Funds’ Performance Benchmark (continued)

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.

1.6 Breakdown Of Unit Holdings By Size As At 30.06.2015

1.6.1 PECBF

No. of units held Unitholders

Sizeof holding (‘000) %

No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

84.80 0.35 40 22.34 32 19.75

5,001 - 10,000 235.47 0.98 38 21.23 32 19.75

10,001 -50,000

1,246.14 5.17 62 34.64 58 35.81

50,001 -500,000

4,613.02 19.13 31 17.32 32 19.75

500,001 andabove

17,928.19 74.37 8 4.47 8 4.94

Total 24,107.62 100.00 179 100 162 100.00


Fund Information

[email protected]


1.6.2 DMP



No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

125.69 1.56 53 25.98 47 24.48

5,001 - 10,000 381.48 4.74 53 25.98 52 27.08

10,001 -50,000

1,440.02 17.89 77 37.75 71 36.98

50,001 -500,000

2,505.42 31.13 18 8.82 19 9.90

500,001 andabove

3,595.59 44.68 3 1.47 3 1.56

Total 8,048.20 100.00 204 100.00 192 100.00

1.6.3 PIF



No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

78.16 0.75 26 25.49 25 27.17

5,001 - 10,000 64.84 0.63 15 14.71 8 8.70

10,001 -50,000 638.33 6.16 32 31.37

3133.70

50,001 -500,000

4,572.30 44.09 25 24.51 23 25.00

500,001 andabove

5,016.47 48.37 4 3.92 5 5.43

Total 10,370.10 100.00 102 100.00 92 100.00


Fund Information

[email protected]


1.6.4 PAXJ



No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

103.90 0.53 36 22.36 35 22.15

5,001 -10,000

211.70 1.08 31 19.26 30 18.99

10,001 -50,000

1,068.11 5.45 56 34.78 54 34.18

50,001 -500,000

5,399.89 27.57 30 18.63 31 19.62

500,001 andabove

12,803.19 65.37 8 4.97 8 5.06

Total 19,586.79 100.00 161 100.00 158 100

1.6.5 PAXJI



No. ofAccounts %

No. ofUnitholders %

5,000 andbelow

204.95 2.90 66 29.86 63 28.90

5,001 -10,000

392.09 5.55 56 25.34 55 25.23

10,001 -50,000

1,481.19 20.96 80 36.20 81 37.15

50,001 -500,000

2,932.87 41.49 17 7.69 17 7.80

500,001 andabove

2,057.01 29.10 2 0.91 2 0.92

Total 7,068.11 100.00 221 100.00 218 100.00


Funds’ Performances

www.pheimunittrusts.com [email protected]

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2 FUND PERFORMANCE

2.1 Pheim Emerging Companies Balanced Fund

2.1.1 Portfolio composition

As at 30.06.2016

(%)

As at 30.06.2015

(%)

As at 30.06.2014

(%)

(Percentage of Net Asset Value)

Construction 1.78 1.72 4.34

Consumer Products 6.83 8.54 6.57

Finance 5.79 5.51 1.99

Industrial Products 7.06 10.12 14.70

Home & Furniture - 0.80 -

Infrastructure 1.76 - -

Manufacture 2.78 1.27 1.26

Mining - - 0.98

Oil & Gas 0.49 0.56 1.05

Plantations 4.61 1.57 4.36

Pharmacy & Cosmetic 3.00 2.62 1.25

Properties 10.08 6.60 9.63

Technology 2.45 2.18 3.63

Telecommunications 0.63 1.35 0.98

Trading / Services 7.69 4.01 4.96

Unquoted/Quoted Corporate Bonds 15.42 18.39 13.95

Cash and cash equivalents 29.63 34.76 30.35

Total 100.00 100.00 100.00




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PECBF

2.1.2 Other financial and performance data

6 months ended

30.06.2016

6 months ended

30.06.2015

6 months ended

30.06.2014

Net asset value (RM‘000) 26,014.88 31,040.25 19,325.90

Units in circulation (‘000) 24,107.62 26,572.60 16,351.84

Net asset value per unit (RM) 1.0791 1.1681 1.1819

Highest NAV/ unit for the period

NAV/ unit 1.2153 1.2367 1.2691

Lowest NAV/ unit for the period

NAV/ unit 1.0840 1.1576 1.1844

Total returns for the period (RM’000)

Capital growth (1,424.19) (338.17) (66.03)

Income distribution 257.39 2,639.70 688.34

Income Distribution (Final)

On 28.04.2016

On 27.03.2015

On 29.04.2014

Gross distribution per unit (sen) 6.75 6.75 6.50

Net distribution per unit (sen) 6.75 6.75 6.50

Management expense ratio (MER) (%)

0.91 0.88 0.85

Portfolio turnover ratio (PTR) (time)

0.10 0.34 0.32

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

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

ii) PTR is calculated based on the average of the acquisitions and disposals of

investments of the fund to the average value of the fund calculated on a daily basis. The PTR for the period increased due to the lower trading activities.




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PECBF

2.1.3 Average total return ended 30 June 2016

(%)

One Year -1.79

Three Years +4.37

Five Years +4.70

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

Financial year ended 31 December : (%)

2015 +6.95

2014 +5.01

2013 +10.44

2012 +9.86

2011 -1.82

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

distribution. Data source : Bloomberg

Past performance is not necessarily indicative of future performance and unit prices and

investment returns may go down, as well as up.




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2.2 Dana Makmur Pheim


As at 30.06.2016

(%)

As at 30.06.2015

(%)

As at 30.06.2014

(%)






Properties 11.06 7.15 7.92



Manufacturing 1.85 - -

Sukuk 16.29 24.02 23.23

Cash and Other Assets 33.20 32.38 25.77

Total 100.00 100.00 100.00


6 months ended

30.06.2016

6 months ended

30.06.2015

6 months ended

30.06.2014







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DMP

2.2.2 Other financial and performance data (continued)

6 months ended

30.06.2016

6 months ended

30.06.2015

6 months ended

30.06.2014


NAV/ unit 2.1380 2.0560 2.0597


NAV/ unit 1.9661 1.9309 1.9130


Capital growth (596.09) 273.29 636.90

Income distribution (236.84) 603.81 715.59


On 28.04.2016

On 27.03.2015

On 29.04.2014




0.96 0.93 0.93

Portfolio turnover ratio (PTR) time)

0.10 0.17 0.31


average value of the fund calculated on a daily basis. The MER for the period increased mainly due to the higher total fees and expenses incurred.

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 a daily basis. The PTR for the period decreased due to lower trading activities.




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DMP


(%)

One Year +5.17

Three Years +7.60

Five Years +8.63



2015 +10.04

2014 +5.28

2013 +26.49

2012 +5.87

2011 +1.7

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

Data source : Bloomberg






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2.3 Pheim Income Fund 2.3.1 Portfolio composition

As at 30.06.2016

(%)

As at 30.06.2015

(%)

As at 30.06.2014

(%)


Construction - 0.41 1.72

Consumer Product 1.65 2.80 3.63

Finance 1.18 0.39 3.69



Plantation 0.87 - 1.68

Pharmacy & Cosmetic - 0.23 -

Properties 4.95 3.83 -

Trading/ Services 0.94 1.48 0.55


Pharmacy & Cosmetics 1.62 - -

Oil & Gas 0.49 - -


Unquoted Corporate Bonds 49.46 62.52 47.37

Cash and Other Assets 32.67 19.22 33.92

Total 100.00 100.00 100.00


6 months ended

30.06.2016

6 months ended

30.06.2015

6 months ended

30.06.2014





NAV/ unit 1.1397 1.1005 1.1394


NAV/ unit 1.0564 1.0708 1.0644


Capital growth (318.49) 405.61 161.35

Income distribution 217.15 129.52 91.56




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PIF

2.3.2 Other financial and performance data (continued)

6 months ended

30.06.2016

6 months ended

30.06.2015

6 months ended

30.06.2014


On 28.04.2016

On 27.03.2015

On 29.04.2014




0.76 0.67 0.65

Portfolio turnover ratio (PTR) (time)

0.09 0.14 0.29



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


(%)

One Year +2.36

Three Years +3.66

Five Years +4.08




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PIF 2.3.4 Annual total return for each of the last five financial years


2015 +5.91

2014 +2.29

2013 +3.29

2012 +6.02

2011 +4.36

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

distribution. Data source : Bloomberg

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




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2.4 Pheim Asia Ex-Japan Fund


As at 30.06.2016

(%)

As at 30.06.2015

(%)

As at 30.06.2014

(%)

Industry Sector (Percentage of NAV)

Biochemical and Biotechnology - - 0.79



Computer 1.57 - -

Finance 14.72 7.04 17.00

Electronic 2.80 3.09 -



Infrastructure 0.36 0.82 -

Manufacturing 3.70 1.98 2.62

Mining 0.88 0.74 3.26

Oil & Gas 0.74 2.66 1.15

Pharmacy & Cosmetic 5.10 4.23 2.08


Properties 12.12 11.34 10.15

Retail 1.52 1.12 -





Total 100.00 100.00 100.00




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PAXJ 2.4.2 Other financial and performance data

6 months ended

30.06.2016

6 months ended

30.06.2015

6 months ended

30.06.2014





NAV/ unit 0.9429 0.9857 0.8868


NAV/ unit 0.8398 0.8725 0.8134


Capital growth (1,416.15) 1,250.96 153.73

Income distribution 93.37 1,511.08 593.46


NIL NIL NIL

Gross distribution per unit (sen) NIL NIL NIL

Net distribution per unit (sen) NIL NIL NIL

Management expense ratio (MER) (%) 1.11 0.98 0.88

Portfolio turnover ratio (PTR) (time) 0.20 0.67 0.43

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


iv) PTR is calculated based on the average of the acquisitions and disposals of

investments of the fund to the average value of the fund calculated on a daily basis. The PTR for the period decreased due to lower investment activities.




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PAXJ


(%)

One Year -6.12

Three Years +4.22

Five Years +0.73


Financial year ended 31 December :

(%)

2015 +2.80

2014 +1.80

2013 +4.78

2012 +8.08

2011 -17.39

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







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2.5 Pheim Asia Ex-Japan Islamic Fund


As at 30.06.2016

(%)

As at 30.06.2015

(%)

As at 30.06.2014

(%)

Industry Sector (Percentage of NAV)

Biochemical and Biotechnology - - 1.57

Computer 2.12 - -



Electronic 3.97 0.84 -

Energy and Water Supply 2.14 - 3.56



Mining 5.83 1.56 2.51

Oil & Gas - 2.60 1.66

Pharmacy & Cosmetic 5.69 2.94 -


Properties 10.14 7.93 9.71

Technology 7.82 11.77 14.29




Total 100.00 100.00 100.00




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PAXJI


6 months ended

30.06.2016

6 months ended

30.06.2015

6 months ended

30.06.2014





NAV/ unit 1.0734 1.1069 1.0165


NAV/ unit 0.9832 0.9870 0.9344


Capital growth 119.20 119.20 (137.01)

Income distribution 566.36 566.36 608.97


NIL NIL NIL

Gross distribution per unit (sen) NIL NIL NIL

Net distribution per unit (sen) NIL NIL NIL

Management expense ratio (MER) (%) 1.80 1.14 1.05

Portfolio turnover ratio (PTR) (time) 0.19 0.38 0.34



ii) PTR is calculated based on the average of the acquisitions and disposals of

investments of the fund to the average value of the fund calculated on a daily basis. The PTR for the period decreased due to the lower trading activities.




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PAXJI


(%)

One Year -4.10

Three Years +4.35

Five Years +3.89



2015 +4.07

2014 +3.80

2013 +15.42

2012 +7.41

2011 -7.59

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


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


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 capital

appreciation in longer term by investing in a balanced portfolio of equities and fixed

income instruments.

For the six months period ended 30 June 2016, the net asset value (NAV) per unit of the

Fund declined by 9.70% which has underperformed the benchmark by 8.36%. During the

period, the total NAV decreased to approximately RM26.0 million from RM27.3 million.

The Fund had made an income distribution of 6.75 sen per unit (net of tax) on the 28 April 2016 for the year ended 31 December 2015. After the income distribution, the NAV per unit declined to RM1.0918 from RM1.1593.

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

Benchmark/ Fund

As at 30.06.2016

As at 31.12.2015

Change %

Benchmark of PECBF 105.51% 106.85% -1.34

PECBF – NAV per unit (RM) 1.0791* 1.1950 -9.70

* adjusted for income distribution on 28.04.2016

3.1.2 DMP The Fund has successfully met its investment objective of providing investors with capital appreciation in longer term by investing in a balanced portfolio of equities and fixed income instruments which strictly comply with the principles of the Shariah.

For the six months period ended 30 June 2016, the net asset value (NAV) per unit of the fund declined by 5.84% which has outperformed the benchmark by 0.58%. During the period, the total NAV increased to approximately RM16.0 million from RM14.2 million.


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3.1.2 DMP (contd.)

The Fund had made an income distribution of 6.75 sen per unit (net of tax) on the 28 April 2016 for the year ended 31 December 2015. After the income distribution, the NAV per unit declined to RM2.0164 from RM2.0839.


Benchmark/ Fund

As at 30.06.2016

As at 31.12.2015

Change %

Benchmark of DMP 106.46% 111.72% -5.26

DMP – NAV per unit (RM) 1.9787* 2.1015 -5.84


3.1.3 PIF The Fund has successfully met its investment objective of providing investors with consistent income returns in the medium to longer term by investing primarily in medium to long term fixed income instruments and also equities and other high yielding instruments.

For the six months period ended 30 June 2016, the net asset value (NAV) per unit of the fund declined by 7.06% which has underperformed the benchmark by 8.71%. During the period, the total NAV decreased to approximately RM10.9million from RM11.2 million. The Fund had made an income distribution of 6.75 sen per unit (net of tax) on the 28 April 2016 for the year ended 31 December 2015. After the income distribution, the NAV per unit declined to RM1.0590 from RM1.1265.


Benchmark/ Fund

As at 30.06.2016

As at 31.12.2015

Change %

1-year fixed deposit rate (pro-rated) 49.53% 47.88% +1.65

PIF – NAV per unit (RM) 1.0525* 1.1325 -7.06



Manager’s Report


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3.1.4 PAXJ The Fund has successfully met its investment objective of providing investors with capital appreciation in longer term by investing in a balanced portfolio of equities and fixed income instruments. For the six month period ended 30 June 2016, PAXJ, based on its net asset value (NAV) per unit, declined by 7.14% and underperformed the benchmark by 10.63%. The total NAV decreased to approximately RM17.2 million from RM18.6 million during the review period.

There is no income distribution for the year 2015. Performance table since the last review period (6 months):

Benchmark/ Fund

As at 30.06.2016

As at 31.12.2015

Change %

7% per annum (pro-rated) 69.69% 66.20% +3.49

NAV per unit (RM) 0.8695 0.9364 -7.14

3.1.5 PAXJI The Fund has successfully met its investment objective of providing investors with capital appreciation in long term by investing primarily in Asian markets excluding Japan through investments that comply with Shariah requirements. For the six month period ended 30 June 2016, PAXJI, based on its net asset value (NAV) per unit, declined by 6.06%, underperformed the benchmark by 9.56%. The total NAV decreased to approximately RM7.0 million from RM7.2 million during the review period.


Benchmark/ Fund

As at 30.06.2016

As at 31.12.2015

Change %

7% per annum (pro-rated) 67.32% 63.82% +3.50

NAV per unit (RM) 0.9883 1.0520 -6.06


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3.2 Performance Chart Since Inception

3.2.1 PECBF

3.2.2 DMP


Manager’s Report


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3.2.3 PIF

3.2.4 PAXJ


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3.2.5 PAXJI

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

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

3.3.1 PECBF

Asset Class

As at 30.06.2016

As at 31.12.2015

Change

Equity Securities – in Malaysia 29.92 29.12 +0.80

Equity Securities – outside Malaysia 25.03 26.31 -1.28

Corporate Bonds 15.42 14.62 +0.80

Cash and cash equivalent 29.63 29.95 -0.32

Total 100.00 100.00


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3.3.2 DMP

Asset Class

As at 30.06.2016

As at 31.12.2015

Change

Shariah-compliant equity securities – in Malaysia

50.51 48.69 +1.82

Sukuk 16.29 18.22 -1.93

Cash and cash equivalent 33.20 33.09 +0.11

Total 100.00 100.00

3.3.3 PIF

Asset Class

As at 30.06.2016

As at 31.12.2015

Change

Corporate Bonds – in Malaysia 49.46 32.19 +17.27

Money market & cash 32.67 49.22 -16.55



Total 100.00 100.00

3.3.4 PAXJ

Asset Class

As at 30.06.2016

As at 31.12.2015

Change



Cash and cash equivalent 7.07 9.24 -2.17

Total 100.00 100.00


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3.3.5 PAXJI

Asset Class

As at 30.06.2016

As at 31.12.2015

Change

Shariah-compliant equity securities – outside Malaysia

38.62 48.76 -10.14

Shariah-compliant equity securities – in Malaysia

42.36 44.69 -2.33

Cash and cash equivalent 19.02 6.95 +12.07

Total 100.00 100.00

3.4 Funds’Strategies and Policies Employed

3.4.1 PECBF As at end of June 2016, equities exposure was lower at 54.95% versus 55.43% as at end of December 2015. We rebalance the portfolio as we increase our domestic equities exposure while reduce foreign equities exposure.. As part of diversification strategy, the Fund has invested in foreign equities listed in Hong Kong/China, Singapore, Indonesia, Philippines, Korea and Thailand. We are investing in fixed income securities which have a maturity of less than 5 years in order to mitigate risks in event of an increase in the interest rates.

For the period ended 30 June 2016, PECBF recorded the following gains or losses in the various markets invested.

Market

Net realised and unrealised gain/ (loss)

RM’000

Malaysia (123)

Indonesia (551)

Thailand (351)

Philippines (116)

Singapore (590)

Hong Kong/China (1,199)

3.4.2 DMP As at end of June 2015, Shariah-compliant equities exposure was higher at 50.51% versus 48.69% as at end of December 2015. We increased the Fund Shariah-compliant equity exposure as we took the opportunity to buy undervalued Shariah-compliant stocks with good upside potential.


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3.4.2 DMP (continued)

We are investing in sukuk which have a maturity of less than 5 years in order to mitigate risks in event of an increase in the interest rates. For the period ended 30 June 2016, DMP recorded a net realised and unrealised loss of RM 696,691 due to investments in domestic Shariah-compliant equities.

3.4.3 PIF As at end of June 2016, equities exposure was lower at 17.87% versus 18.59% as at end of December 2015. We decreased the Fund equity exposure as we took some profits from the holdings which have rallied substantially.. As part of diversification strategy, the Fund has invested in foreign equities listed in Hong Kong, Singapore and Indonesia. We are investing in fixed income securities which have a maturity of less than 5 years in order to mitigate risks in event of an increase in the interest rates.

For the period ended 30 June 2016, PIF recorded the following gains or losses in the various markets invested.

Market


RM’000

Malaysia (105)

Indonesia 67

Singapore (62)

Hong Kong/China (130)

3.4.4 PAXJ

The total equity exposure of PAXJ was 92.93% as at 30 June 2016, an increase of 2.17% from 90.76% at the end of December 2015. The increase of exposure was mainly in Malaysia, Hong Kong/China, Taiwan and Indonesia markets. 55.35% was invested in foreign equities and the remaining in domestic equities. During the period, the PAXJ has invested in foreign equities listed in Hong Kong/China, Singapore, Indonesia, Philippines, Thailand, Taiwan and Korea.


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3.4.4 PAXJ (continued) For the period ended 30 June 2016, PAXJ recorded the following gains or losses in the various markets invested.

Market


RM’000

Malaysia (24)

Indonesia (119)

Korea (393)

Philippines (70)

Thailand (387)

Singapore (393)

Hong Kong (1,086)

Taiwan (374)

3.4.5 PAXJI The total equity exposure of PAXJI was 80.98% as at 30 June 2016, a decrease of 10.14% from 93.45% at the end of December 2015. The decrease of exposure was mainly in Hong Kong/China, Singapore and Taiwan markets. 38.62% was invested in Shariah-compliant foreign equities and the remaining in domestic Shariah-compliant equities.

During the period, the PAXJI has invested in Shariah-compliant foreign equities listed in Hong Kong/China, Singapore, Indonesia, Philippines, Thailand, Taiwan and Korea. The Fund had not invested in any sukuk. For the period ended 30 June 2016, PAXJI recorded the following gains or losses in the various markets invested.

Market


RM’000

Malaysia (271)

Indonesia (213)

Korea (62)

Philippines (56)

Thailand (227)

Singapore (55)

Hong Kong (271)

Taiwan (201)


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3.5 Market Review, Outlook and Strategy

3.5.1 Malaysian Bond/Sukuk Market

3.5.1.1 Bond/SukukMarket Review On the 19

th May 2016, Bank Negara Malaysia left its overnight policy rate (OPR)

unchanged at 3.25% for an eleventh consecutive meeting. According to the monetary policy statement, the current stance of monetary policy remains accommodative and supportive of economic activity. The monetary policy committee (MPC) recognises that there are downside risks in the global economic and financial environment and is closely monitoring and assessing their implications on domestic price stability and growth. This is to ensure that the monetary policy stance is consistent with sustainable growth of the Malaysian economy. During the 1

st half of 2015, Standard & Poor’s Ratings Services (S&P) has reaffirmed its

sovereign ratings on Malaysia at A- with stable outlook based on the country’s strong external position and considerable monetary flexibility. Moody's Investors Service has also affirmed the Government of Malaysia's issuer and senior unsecured bond ratings at A3 and changed the outlook to stable from positive, while Fitch Ratings has affirmed Malaysia's sovereign ratings at A- with stable outlooks. While the concerns over the 1MDB issue and the retirement of long-standing governor Tan Sri Zeti Akhtar Aziz in April have caused some uneasiness in the market, the rating agencies remained optimistic with the credit outlook in Malaysia thanks to the current account surplus position and government’s commitment to their fiscal consolidation policies.

3.5.1.2 Bond/Sukuk Market Outlook and Strategy Bank Negara Malaysia said that global growth prospects have also become more susceptible to increased downside risks in light of possible repercussions from the EU referendum in the United Kingdom. International financial markets could also be subject to greater volatility going forward. Overall, while the domestic economy remains on track to expand in 2016 and 2017, the uncertainties in the global environment could weigh on Malaysia’s growth prospects. On the external front, the US Federal Reserve (Fed) remains cautious in hiking interest rates amid a hiring slowdown and uncertain economic outlook. The Fed expects that the interest rate is likely to remain, for some time, below the levels that are expected to prevail in the longer run because headwinds—which include restraint on U.S. economic activity from economic and financial developments abroad, subdued household formation, and meager productivity growth. Given the challenging economic outlook, we would continue to adopt a tight credit assessment policy. Among the fundamental assessment on the bonds include the issuers’ credit profile, management, financial performance and industry outlook.


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In order to mitigate the interest rate risks, we would prefer to invest in fixed income securities/sukuk which offers shorter-dated maturities. Apart from investing in high quality bonds/sukuk that meets our investment criteria, we would ensure that the bonds/sukuk invested would be able to give investors a decent yield for the risks undertaken.

3.5.2 Stock Markets Review

3.5.2.1Malaysian Stock Market – (Bursa Malaysia) The FBM KLCI closed the first half of 2016 at 1,654.08 points, lower by 2.3% year-to-date. The index had been volatile during the period due to uncertainty about the global economy, U.S. Fed’s rate fears, continued weakness in commodity prices and cautious domestic sentiment amid the political noises. However, despite the surprising “Brexit”, the main index held up well to close the month of June at 1,654.08 points, up by 1.7% m.o.m. The ringgit strengthened against the dollar, appreciating by 6.6% year-to-date to close the first half at RM4.0288/USD. The Malaysian economy printed a 4.2% y.o.y GDP growth in 1Q16, a further moderation from a 4.5% growth in 4Q15 and also the weakest growth since 1Q13 as accelerating private and public consumption were not adequate to mitigate the decline in exports and slowdown in investment. The Central Bank projects the economy to grow by 4-4.5% in 2016 and it expects private consumption to improve further on the back of continued growth in wages and employment, and the additional measures announced in the 2016 Budget Recalibration. Bank Negara Malaysia kept its overnight policy rate unchanged at 3.25% for an eleventh consecutive meeting in May, expecting the economy to improve to be driven by domestic demand while also recognizing the downside risks in the global economic environment. Headline inflation was 2.0% in May compared with the same month a year ago, the lowest figure since April 2015, due to the easing of food, housing and utilities prices while the cost of transport declined further. It is expected to ease further for the remaining of the year due to low commodity prices and subdued global inflation. Malaysia’s industrial production index (IPI) printed a 3.0% y.o.y growth in April, mainly driven by a surge in electricity generation and a modest increase in manufacturing activities. It was lower than the 3.5% y.o.y increase expected by economists but slightly higher than the 2.8% y.o.y growth in March. Moving forward, we expect the market to continue to be volatile while the lack of immediate term catalysts may limit the potential upside. The uncertainty about the global economy which is further elevated by Brexit, fears on potentially more aggressive U.S. Fed’s rate hike and weak energy and commodity prices are expected to continue to weigh on sentiment and affect the fundamentals of the market. Domestic sentiment is also expected to be cautious due to heightened 1MDB coverage by the global media. We shall remain watchful for any opportunities as we continue to be selective, focusing on stocks that we deem undervalued with good earnings growth potentials and reasonably geared while also trimming those that have run ahead of fundamentals.


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3.5.3 Foreign Securities Investment - Market Review

3.5.3.1 Singapore Market FSSTI index increased by 1.79% m.o.m in June and recorded a flattish performance YTD. The improvement in June was driven by investor’s expectation of a delay in interest rates hike by Federal Reserve after the Brexit referendum. Inflation in Singapore fell by 0.7% in June, compared to the 1.6% drop in May, mainly due to the government rebates to households cut housing maintenance-related costs. MAS expects the 2016 CPI to be between -1% and 0%. Housing rentals will continue to dampen overall inflationary pressures as a large supply of residential units is expected to come-on-stream this year. MAS is more likely to keep its monetary policy on hold unless there is further downside risk to growth or core inflation. Singapore’s non-oil domestic exports dropped 2.3% y.o.y in June as shipments to China and Europe continue to contract, adding to growing risks for the fragile trade-dependent economy. On a month-on-month seasonally adjusted basis, non-oil domestic exports tumbled 12.9% in June. Overall, exports of electronic products fell 1.7% in June, following the 6% contraction in the previous month. Non-electronic exports shrank 2.5% versus 19% expansion in May. The Singapore economy grew 2.2% y.o.y in 2Q16, marginally higher than the 2.1% expansion in the 1Q16. The economy grew 2.1% y.o.y in 1H16. The manufacturing sector expanded by 0.8% y.o.y, a reversal from the 0.5% decline in the previous quarter. Growth was supported by an increase in the output of the biomedical manufacturing and electronic clusters. Growth in the services producing industries came in at 1.7%, the same pace of growth in the previous quarter. The flattish growth in the services sector is expected to weigh more heavily on overall GDP growth, stagnate wages and could push unemployment rates higher. With Singapore’s economic growth likely to remain sluggish amid lacklustre global outlook, the government is reviewing its GDP forecast of 1% to 3% growth for 2016. Given the uncertainty after the Brexit vote by UK and lack of visibility for Singapore’s corporate earnings, we remain neutral on Singapore market and be selective in stock picking. We expect the slowdown in domestic property market and weak external demand will lead to modest GDP in 2H2016.

3.5.3.2 Hong Kong/ China Market

Hang Seng Index and Hang Seng China Enterprise Index (HSCEI) decreased 5.11% and 9.81% year-to-date to 20,794.37 points and 8,712.89 points respectively. The underperformance of China equities market was affected by weak global macroeconomic outlook, concern on overcapacity and the unexpected Brexit referendum. China’s economy posted a 6.7% y.o.y expansion in 2Q16, as a buoyant property market and government stimulus boosted demand for factory output.


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The economy has settled on a lower trend growth post the global financial crisis as the economy makes a transition towards a service-based economy, a move that tends to result in lower overall productivity growth. China posted 6.9% growth in 2015, the slowest pace in 25 years. The government is aiming for GDP growth of 6.5% to 7% in 2016. China's economy will follow an L-shaped path as downward pressures weigh and new growth momentum has yet to pick up, the People's Daily quoted an "authoritative figure" as saying in an exclusive interview. The source said China's economic growth has been stable and "within expectations," but warned of emerging problems such as a real estate bubble, industrial overcapacity, rising non-performing loans, local government debt and financial market risk. MSCI Inc delayed the inclusion of China A-shares in the MSCI Emerging Markets Index MSCI until it sees further market improvement in accessibility to foreign investors. However, the China A-shares will remain on the 2017 review list, pending the conclusion based on investor feedback that the QFII policy changes and new suspension treatment

are effectively implemented, and the issue of pre-approval requirements is resolved. Hong Kong’s economy unexpectedly contracted in the first quarter as falling retail sales and a weakening property market weigh on the city. GDP fell 0.4% in 1Q16 as compared to previous quarter. Total exports in June fell for the 14

th straight month, dampened by a

slowdown in China while retail sales fell 8.4% y.oy in May, making the 15th consecutive

month of contraction. Hong Kong could face a recession, which is technically defined as two quarters of negative economic growth due to the collateral damage the Brexit. The UK’s decision to leave the EU will increase the uncertainty of global growth outlook. Central Bank is facing pressure to depreciate RMB further of given European and emerging market currency weakness. The current valuation of Hong Kong stock market is near the historical low and remains attractive. However, the lack of growth catalyst in near term support our neutral view on China/Hong Kong market and we will seize the opportunity to accumulate stocks with solid fundamentals. 3.5.3.4 Thailand Market The SET index wrapped with a return of 12.19% for the 1H16 in local currency terms to end at 1444.99 points. Inflation expanded to +0.40% in June compared to -0.53% in January. The Bath appreciated 1.60% against US Dollar to THB35.12/USD compared to US Dollar to THB35.69 in January. On January 29, the Constitution Drafting Committee (CDC) unveiled the revised first draft of the new charter. Meanwhile, the Nation Legislative Assembly approved a bill for a national referendum on the draft constitution that is expected to be held August 7. In May, the BOT held the policy interest rate at 1.5%, with the focus remaining on the fragile growth outlook, the absence of inflationary pressures and concerns over currency strength.


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The cabinet approved THB45.6 bil in farmers’ assistance projects for the 2016-17 season. The projects include cash handouts of THB1,000/rai for a maximum of 10 rai/household, a two-year debt repayment suspension period to BAAC customers, THB258 mil for a farmer’s training programme and THB3.27 bil crop insurance schemes. Year-to-date, Thailand outperformed its peers driven by tourism and government spending despite some overhang of uncertainties on market sentiment; concerns over global economy which involves the Brexit referendum. The index managed to bounce back from the sell-off however we remain cautiously optimistic on the political and economic front but are on the lookout for buying opportunities of companies with solid fundamentals, strong cash flow with good earnings growth. 3.5.3.5 Philippines Market The Philippines equity market gained 12.14% y.o.y in the first half of the year to settle at 7796.25 points in June. The rise was driven by dovish tone from the Fed regarding interest rate hike and the positive outlook on the new administration. The Peso depreciated 0.55% during the first 6 months of the year to PHP47.162/USD at the end of June. Philippines recorded strong 1Q16 GDP growth of 6.9%, compared to a revised 4Q16 GDP growth of 6.5%. Government spending surged 9.9% and household consumption accelerated by 7% y.o.y. The economy is on track to meet the full-year target of 6.8% to 7.8%, according to National Economic and Development Authority (NEDA) chief Emmanuel Esguerra. Philippines inflation increased to 1.6% in May as food prices was higher due to El Nino effects. YTD inflation is at 1.3%, below Bangko Sentral ng Pilipinas (BSP) has a full year target of 2%-4%. President Rodrigo Duterte has officially assumed the Presidency following the inauguration on June 30. The new administration released its 10-point economic agenda, focusing on infrastructure spending, attracting foreign investment, alleviating poverty and the continuation of the current economic policies. Overseas foreign worker (OFW) cash remittances surged 4.1% y.o.y in April to USD2.2 bil. This brought the first 4 months’ remittances growth to USD8.7 bil, a 3.1% y.o.y increase. The government is targeting 4% y.o.y growth to USD26.3 bil in 2016. Philippines’ export slowed 3.8% to USD4.71 bil in May, mainly due to lower demand electronic products. Five-month exports registered 6.6% decrease to USD22.07 bil. Philippine imports surged 39.3% y.o.y in May to USD6.74 bil, boosted mainly by increase in electronic products, transport equipment and industrial machinery import. In the first five months, total imports grew by 18.2% y.o.y to USD31.89 bil. On the economic front, we expect economic growth to be robust, bolstered by strong domestic consumption, infrastructure spending and healthy macroeconomic fundamentals. Nonetheless, we continue to expect volatilities in the Philippines equity market on the back of escalating external uncertainties.


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As the market is trading at high multiples, we are monitoring the corporate earnings closely and are very selective on the Philippines market for undervalued high growth companies.

3.5.3.6 Taiwan Stock Market The TWSE Index increased 3.94% in the first half of the year to close at 8666.58 index points as at end of June 2016. The index dropped to 7664 points in January due to global market correction. In 2

nd quarter, the index rebounded above 8000 points due to fund

inflow and improved market sentiment. The Taiwan dollar appreciated 1.87% against the greenback in the first six months of the year to close at TWD30.258/USD at the end of June. Academia Sinica, the Taiwan top research institute cut its GDP growth forecast for Taiwan this year to 0.52% from its previous estimate of 1.74%, in the wake of Britain’s decision to exit the EU. The institute voiced reservations about a widely expected improvement in the second half, saying the Taiwan’s heavy dependence on China makes it vulnerable to economic rebalancing in Taiwan. The official Purchasing Managers’ Index (PMI) in June settling above the neutral mark for a fourth consecutive month to 53.3 from 54.9 in May, as operating conditions continued to improve thanks to the approaching high-sales season for technology products, the Chung-Hua Institution for Economic Research (CIER) said. The marginal decline of 1.6 points from May’s 54.9 indicated that the pace of improvement was moderate. Taiwan Central Bank cut its key interest rates by 0.125% points to 1.375% in June after concluding a quarterly policymaking meeting. Market analyst said that the rate reduction has been widely expected, aimed to narrow the rate gap between Taiwan and its neighboring markets in a bid to prevent inflows of idle money. For technology sector, total sales of iPhone unit in 1H2016 declined 15.7% y.o.y dragged down earning of Taiwan supply chain, sending most of Apple dependent stocks tumbled. Automotive technology sector continued to do well as electronics content in automotive is expected to increase overtime. With smartphone demand approaching saturation, and new technology such as automated electric car, internet of things, emerging, we are cautiously choosing Taiwan’s companies that are able to adapt in fast changing technology scene.

3.5.3.7 South Korean Stock Market The KOSPI index increased by 0.46% to close at 1970.35 points in 1H16 with mixed events such as recovery in commodity prices, sluggish exports and Brexit referendum. Meanwhile, won appreciated by 1.98% against the dollar in 1H16, seeing its strongest position in the month of April. This is on the back of a stabilizing financial market in China, which is South Korea’s largest trading partner, which ultimately provided a renewed support for the currency.


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For the 1

st quarter of 2016, South Korea’s GDP slowed notably. On a q.o.q basis, GDP

only increased by 2.8% compared to 3.1% in 4Q15. This deceleration was widely expected in the first quarter. There were tumbling external demand at the beginning of the year, which affected Korean exports of goods and services, a continuous deceleration of imports and a slowdown in private consumption. As the country’s growth have been impaired by these events, the Bank of Korea trimmed the 2016 full year GDP growth forecast from 3.0% to 2.8% projected earlier. For the month of June 2016, inflation was on the low side of 0.8% on the back of continuous sluggish domestic demand and consumption. This figure comes in well below the Central Bank’s target inflation range of 2.5%-3.5%. As persistent inflationary pressures have caused Bank of Korea to miss its inflation target consistently for the past 3 years, they have now set a lower expectation for inflation to average 1.2% this year. The unemployment rate in South Korea fell to 3.6% in June 2016 from 3.9% in June 2015. However, it is still seen that youth unemployment rate continues to grow resulting in a more challenging environment for young graduates to search for a job. The unemployment rate for young people between ages 15-29 was recorded at 10.3% in June, up from 9.7% in May. We continue to expect the KOSPI index to be range bound as there still lies some uncertainty for the market especially post Brexit and the possibility of a second cut in its key policy rate for this year after the surprise cut in June. The purpose of the interest rate cut was claimed to be a move to cushion any negative impact from the restructuring of the country’s major shipping companies, which is likely to lead to job losses and further dampening of consumer confidence. Going forward in the 2H, our strategy is to seek for opportunities in South Korea as we selectively pick companies that are appear to be undervalued, with earnings and dividend growth potential and low gearing.

3.5.3.8 Indonesian Stock Market The Jakarta Composite Index (JCI) was rather volatile in the first half of 2016 as uncertainty about the global economy, low commodity prices, U.S. Fed’s rate hike fears and lackluster quarterly corporate results weighed on investors’ sentiment. However, the index managed to perform well and closed the first half at 5,016.65 points, up by 9.2% YTD. The rupiah strengthened against the dollar, appreciating by 4.4% ytd to close the first half at IDR13,210/USD. The Indonesian economic growth slowed further to 4.92% y.o.y in 1Q16 from the 5.04% y.o.y growth recorded in 4Q15 as total investment and government spending slowed. In its 2016 revised state budget, the government expects a 5.2% GDP growth, 4% inflation and rupiah at IDR13,500/USD. Fiscal deficit is assumed wider at 2.35% of GDP. The government also incorporated IDR165 tril revenue from tax amnesty. Indonesia’s current account deficit shrank to USD4.67 bil or 2.14% of GDP in 1Q16 from the revised deficit of USD5.07 bil or 2.37% of GDP in 4Q15.


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The balance of payments (BOP) in 1Q16 slipped back into a deficit of USD287 mil from a surplus of USD5.09 bil in the 4Q15 as capital and financial transaction surpluses were not sufficient to offset the current account deficit. The CPI inflation accelerated slightly to 3.45% y.o.y in June from the 3.33% y.o.y pace recorded in May due intensifying price pressure towards the end of the Muslim fasting month and the upcoming Eid-ul-Fitr. The well controlled inflation rate which falls within the Central Bank’s 3-5% inflation target range creates room for monetary easing again. Bank Indonesia unexpectedly cut its policy rate by 25bps to 6.50% in June mentioning benign inflation, stable currency and narrowing current account deficit. It was the fourth cut in the year after three cuts totalling 75bps in 1Q16 in an effort to spur economic growth. The Central Bank projects the economic growth to be in the range of 5.0-5.4% in 2016. The passage of the tax amnesty is expected to support Indonesia’s fiscal capacity to finance development programs and a successful implementation would positively impact the equity market through increased government spending, higher potential consumption, and lower bond yields as well as through repatriated assets getting invested in equities and mutual funds. We remain optimistic on Indonesia for its long term growth story albeit cautious given the elevated concerns about the global economy post Brexit. Given the relatively high current market valuation, we shall be watchful for any opportunities while also being selective at investing in stocks focusing on those with low valuations, good earnings growth potentials and reasonably leveraged 3.5.3.9 Australian Stock Market The ASX 200 Index remained flat to close at 5,233.38 points, loss 1.18% for the first half of 2015. The index lose ground in 1

st quarter to a low of 4765.35 points in February 12,

and climbed back gradually to a high of 5408 on May 30th before settling down at 5233.38

points end of June. The Aussie Dollar appreciated by 2.2% against the US Dollar to close at AUD1.3422/USD. Australia’s economy grew 1.1% q.o.q in 1

st quarter, 3.1% y.o.y. It is the fastest growth

since March 2012. Growth was driven by surge in export volume. Mining production grew 6.2% q.o.q. The Reserve Bank of Australia (RBA) cut the benchmark interest rate in May from 2.0% to 1.75%. The board indicated that the economy has strengthened, as commodity prices have firmed from recent lows and sentiment in financial markets has improved. Inflation is expected to be low. Monetary policy continues to be accommodative, to support borrowing and spending.


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The CPI rose by 1.0% y.o.y 12 months to June (+1.3% in march quarter 12 months to March) and 0.4% q.o.q in 2Q (-0.2% in 1Q 2016). The most significant price rises this quarter are in medical and hospital services (+4.2%), automotive fuel (+5.9%) and tobacco (+2.1%). These rises are partially offset by falls in domestic holiday travel and accommodation (–3.7%), motor vehicles (–1.3%) and telecommunication equipment and services (–1.5%).

3.5.4 Foreign Securities Investment - Market Outlook and Strategy

In the first half of 2016, the MSCI Far East ex-Japan Index was up 0.8%, outperforming the MSCI World Index which was down 0.6%. The global markets were rattled by the United Kingdom (UK)’s shocking decision to leave the European Union (EU) on 24 June, wiping out more than USD3 trillion value of global stocks in 2 days following the UK’s referendum result. The UK held a non-legally binding referendum on 23 June 2016 to gauge support for the kingdom’s continued membership in the EU. 51.9% of the voters voted to leave the EU. While the majority in England and Wales voted to leave, the majority in Scotland, Northern Ireland and Greater London voted to remain. Immediately following the result, David Cameron announced his resignation as Prime Minister for having lost the referendum. The potential candidates for new Prime Minister hinted that the British government will not be in hurry to invoke Article 50 of the Treaty on EU, which will officially trigger the 2-year withdrawal negotiation period. The Dow Jones Industrial Average Index (DJIA) was up by 2.9% in the first half of 2016. The Federal Reserve (Fed) left the interest rates unchanged for the fourth time this year during its June 2016 meeting. Yet, future rate assessment suggests policymakers still expect two interest-rate hikes this year. The US GDP expanded by 1.1% in first quarter of 2016, higher than a second estimate of 0.8%. The US Dollar Index (DXY) was down 2.5% during the first half of the year. The Stoxx Europe 600 Index was down 9.8% in the first two quarters. The European Central Bank (ECB) lowered its interest rates by 5 basis points to a fresh record low of 0.0% and increased the asset purchase program by EUR20 bil to EUR80 bil a month on March 10

th 2016. In addition, the index fell as much as 11.1% after the “Brexit” result on

24 June before paring some of the losses towards the end of the month. Economists, rating agencies, government officials in Europe, as well as International Monetary Fund (IMF) had warned that “Brexit” would bring forth immediate slowdown of economic growth in UK and Europe due to lower investment activities and hiring. During the first half, British Sterling Pound fell 9.7% against the US Dollar while Euro gained 2.3%. During the first half, the Shenzhen Shanghai CSI 300 Index was down 15.5%, while the Hang Seng China Enterprises Index was down 9.8%. In a commentary on the direction of the Chinese economy, the People’s Daily, official paper of the ruling Communist Party, had quoted an “authoritative person” saying that China’s economic growth trend in the coming years will be “L-shaped”, not “U-shaped” or “V-shaped”. The person also warned that high leverage would inevitably bring about high risks, which could lead to a systemic financial crisis and economic recession.


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Meanwhile, The Chinese economy grew by 6.7% y.o.y in the first quarter of 2016, compared to a 6.8% expansion in the previous period and in line with market expectations. Crude oil price was up 30.5% in the first six months thanks to supply disruptions and expectations of falling production. The long-awaited 17 April meeting of the world’s biggest oil producers was inconclusive as the OPEC members failed to reach an output freeze deal. Oil production has started to decline in the US and some other regions, and unexpected outages in Canada and Nigeria took additional barrels off the market in recent months. However, some market watchers warned that the price rally in recent months could allow U.S. producers to start drilling new wells and increase output. In addition, crude production in Canada is set to recover following wildfires that forced producers to shut down operations. In the ASEAN region, the Philippines’ equities market rallied 6.6% in May and June following Rodrigo Duterte’s victory in the presidential election held on 9

th May. He won the

election with 39% of votes and was sworn in as the new President on June 30. Meanwhile, Indonesia’s parliament approved a tax amnesty that the government expects will draw in billions of dollars needed to finance a widening budget gap as it steps up infrastructure spending to spur economic growth. The central bank estimates that the tax programme, which will be implemented in July, will help draw IDR560 trillion of funds back to the country. The outlook in the Asia Pacific region, especially the ASEAN region, continues to be challenging amid the slowing economic growth in China and Europe, the uncertainty on “Brexit” and potentially more interest rates hikes by the Fed. We will continue to invest in quality stocks that have strong foreseeable earnings growth, low gearing position and reasonable valuation. As we believe in not to be fully invested at all times, we may seek to trim our equity exposure on stocks which have rallied beyond their fundamentals.

3.6 Policy On Rebates And Soft Commission

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

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


PECBF

www.pheimunittrusts.com

[email protected]

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22 August 2016


PECBF

[email protected]

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STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM EMERGING COMPANIES BALANCED FUND

In the opinion of the Manager, the accompanying unaudited financial statements ofPheim Emerging Companies Balanced Fund are drawn up in accordance with MalaysianFinancial Reporting Standards, International Financial Reporting Standards and theSecurities Commission's Guidelines on Unit Trust Funds in Malaysia so as to give a trueand fair view of the unaudited financial position of Pheim Emerging CompaniesBalanced Fund as at 30 June 2016 and of its results, changes in net assets value and cashflows for the period then ended.

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

AZMI MALEK MERICANDirector

HOI WENG KONGDirector

Kuala Lumpur, Malaysia22 AUG 2016

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PHEIM EMERGING COMPANIES BALANCED FUND

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE PERIOD ENDED 30 JUNE 2016

Note 30.06.2016 30.06.2015

RM RM

INVESTMENT INCOME

Gross dividend income 232,895 158,219

Interest Income

- loans and receivables 124,922 128,397

- available for sale ("AFS") 82,385 108,346

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

profit and loss ("FVTPL") 8 (1,334,824) 568,430

Accretion of discounts, net of amortisation of premiums 9 - (1,543)

on AFS financial assets

Net realised gain/(loss) on foreign exchange 53 (493)

(894,569) 961,356

EXPENSES

Manager's fee 4 208,011 213,353

Trustee's fee 5 11,094 11,464

Auditor's remuneration 4,189 4,057

Tax agent's fee 1,240 1,235

Administrative expenses 14,380 13,876

238,914 243,986

Net (loss)/income before tax (1,133,482) 717,371

Income tax expenses 6 - -Net (loss)/income after tax (1,133,482) 717,371

Other comprehensive income

Net change in fair value of AFS financial assets 7,800 13,712

Total comprehensive (loss)/income for the period (1,125,682) 731,083

Net income for the period is made up as follows:

Net realised income 290,716 1,055,541

Net unrealised loss (1,424,198) (338,170)(1,133,482) 717,371

Distribution for the year:

Net distribution 12 1,529,573 1,717,483

Net distribution per unit (sen) 12 6.75 6.75

Gross distribution per unit (sen) 12 6.75 6.75

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

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STATEMENT OF FINANCIAL POSITION (UNAUDITED) AS AT 30 JUNE 2016

Note 30.06.2016 30.06.2015

RM RM

ASSETS

Investment 7 18,303,360 20,186,862

Deposits with licensed financial institutions 10 7,495,184 10,484,914

Amount due from brokers 103,930 127,117

Other receivables 148,434 117,361

Tax recoverable - 3,640

Cash at bank 96,913 178,065

TOTAL ASSETS 26,147,821 31,097,959

LIABILITIES

Amount due to brokers 87,112 -

Amount due to Manager 11 34,147 46,540

Amount due to Trustee 1,917 2,427

Other payables and accruals 9,759 8,738

TOTAL LIABILITIES 132,935 57,705

UNITHOLDERS' EQUITY

Unitholders' capital 19,517,315 22,466,213

Retained earnings 6,492,571 8,566,625

Available for sale reserve 5,000 7,416

TOTAL EQUITY 13 26,014,886 31,040,254

TOTAL EQUITY AND LIABILITIES 26,147,821 31,097,959

UNITS IN CIRCULATION 13 (a) 24,107,625 26,572,597

NET ASSET VALUE ("NAV") PER UNIT 14 1.0791 1.1681


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STATEMENT OF CHANGES IN EQUITY (UNAUDITED)



Unitholders' Retained AFS Total

Capital earnings reserves EquityNote 13(a) Note 13(b) Note 13(d)

and (c )RM RM RM RM

At 1 January 2015 11,267,447 9,566,737 (6,296) 20,827,888

Total comprehensive income for

the period - 717,371 13,712 731,083Creation of units 10,516,438 - - 10,516,438

Cancellation of units (901,834) - - (901,834)Distribution equalisation 1,584,162 - 1,584,162

Distribution for the period (1,717,483) (1,717,483)Balance at 30 June 2015 22,466,213 8,566,625 7,416 31,040,254

At 1 January 2016 18,193,211 9,155,626 (2,800) 27,346,037

Effects of adopting FRS 139 - - -18,193,211 9,155,626 (2,800) 27,346,037

Total comprehensive income forthe period - (1,133,482) 7,800 (1,125,682)

Creation of units 1,791,110 - - 1,791,110Cancellations of units (433,680) - - (433,680)

Distribution equalisation (33,326) - - (33,326)

Distribution for the period - (1,529,573) - (1,529,573)Balance at 30 June 2016 19,517,316 6,492,571 5,000 26,014,887

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STATEMENT OF CASH FLOWS (UNAUDITED)


01.01.2016 01.01.2015

to to

30.06.2016 30.06.2015

RM RM

CASH FLOWS FROM OPERATING AND

INVESTING ACTIVITIES

Proceeds from sale of investments 2,472,986 6,402,891

Purchase of investments (2,971,852) (12,275,803)

Dividends received 164,223 96,854

Interest received from deposits with licensed

financial institutions and other debt securities 203,288 235,544

Proceeds received from bonds on maturity - -

Management fee paid (210,708) (198,092)

Trustee's fee paid (11,238) (10,665)

Payment for other fees and expenses (27,297) (26,430)

Income distribution paid (6,876) (21,600)

Net cash used in operating and investing activities (387,475) (5,797,301)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from creation of units 333,353 10,546,054

Payment for cancellation of units (502,260) (1,043,981)

Net cash (used in)/generated from financing activities (168,907) 9,502,073

NET (DECREASE)/INCREASE IN CASH

AND CASH EQUIVALENTS (556,382) 3,704,772

CASH AND CASH EQUIVALENTS AT

BEGINNING OF YEAR 8,148,478 6,958,207

CASH AND CASH EQUIVALENTS AT THE END OFTHE PERIOD 7,592,097 10,662,979

Cash and cash equivalents comprise the following:

Deposits with licensed financial institutions (Note 10) 7,495,184 10,484,914

Cash at bank 96,913 178,0657,592,097 10,662,979


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NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)FOR THE PERIOD ENDED 30 JUNE 2016

1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

2. BASIS OF PREPARATION

2.1 Statement of Compliance

2.2 Basis of Measurement

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

Pheim Emerging Companies Balanced Fund ("the Fund") was established pursuant to a Master Deed dated 11January 2002 as amended modified and supplemented by a Supplemental Master Deed dated 3 November 2008made between HSBC Trustee (Malaysia) Berhad and Pheim Unit Trusts Berhad ("the Manager"), a secondSupplemental Master Deed dated 29 April 2013 and Third Supplemental Master Deed dated 30 April 2015 madebetween the Manager and Maybank Trustees Berhad ("the Trustee").

The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 of the MasterDeed, which includes investments in equities and fixed income securities traded on Bursa Malaysia or any othermarkets considered as Eligible Market. The Fund commenced operations on 28 January 2002 and will continue itsoperations until terminated by the Trustee as provided under Part 12 of the Master Deed.

The Manager is a public limited company incorporated in Malaysia. It is a wholly owned subsidiary of the PheimAsset Management Sdn Bhd, a private company incorporated in Malaysia. Its principal activity is the managementof unit trust funds. Pheim Asset Management Sdn. Bhd. has been appointed by the Manager as the ExternalInvestment Manager of the Fund with responsibility for the provision of investment management services to theFund.

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

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

The unaudited financial statements were authorised for issue by the Board of Directors of the Manager inaccordance with the resolution of the directors on 22 August 2016.

The unaudited financial statements of the Fund have been prepared on the historical cost convention unlessotherwise indicated in this summary of significant accounting policies in Notes 3.

The accounting policies applied by the Fund are consistent with those applied in the previous financial yearother than the application of the amendments to MFRSs as disclosed in Note 2.3.

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2. BASIS OF PREPARATION (CONT'D.)

2.3 Application of Amendments to MFRSs and IC Interpretations

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

Effective for annual periods beginning on or after 1 January 2016

Amendments to MFRS 101 - Disclosure InitiativeAmendments to MFRSs Classified as "Annual Improvements to MFRSs 2012 - 2014 Cycle"


MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)MFRS 15, Revenue from Contracts with Customers

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

The key enhancements of MFRS 9 are :

During the period, the Fund has applied the following amendments to MFRSs issued by the MalaysianAccounting Standards Board ("MASB") that are relevant to the Fund;s operations and effective for itsaccounting period beginning on or after 1 January 2015 :-

Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2010 - 2012 Cycle"Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2011 - 2013 Cycle"

This initial application of the above amendments to MFRSs have no significant impact on the disclosures or

The Fund had not early adopted the following new MFRSs and amendments to MFRSs issued by the MASBthat are relevant to its operations but are not yet effective :-

The Fund will apply the above new MFRSs and amendments to MFRSs that are applicable once they becomeeffective and they are not expected to have any significant impact on the financial statements of the Fundupon their initial application other than as discussed below:-

The Standard replaces earlier versions of MFRS 9 and introduces a package of improvements which includesa classification and measyrement model, a single forward-looking 'expected loss' impairment model and asubstantially-reformed approach to hedge accounting.

• Under MFRS 9, all recognised financial assets are required to be subsequently measured at either amortisedcost, fair value through other comprehensive incoem ("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 thecontractual cash flow characteristics of the financial assets. These requirements improve and simplify theapproach for classification and measurement of financial assets as the numerous categories of financial assetsunder MFRS 139 had been replaced.

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

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

The key enhancements of MFRS 9 are (cont'd.):

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Financial Assets

Financial assets are recognised in the statement of financial position when, and only when, the Fund becomesa party to the contractual provisions of the financial instruments. Regular way of purchase and sale ofinvestments in financial instruments are recognised on trade dates. When financial assets are recognisedinitially, they are measured at fair value, plus attributable transaction cost, for investment not at fair valuethrough profit or loss.

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

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 beencompleted.

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

• Most of the requirements in MFRS 139 for classification and measurement of financial liabilities werecaaried forward unchanged to MFRS 9, except for the measurement of financial liabilities designated as atFVTPL. Under MFRS 139, the entire amount of the change in the fair value of the financial liabilitydesignated as FVTPL is presented in profit or loss. However, MFRS 9 requires that the amount of change inthe fair bvalue of the finanical liability that is attributable to changes in the credit of that liability is presentedin other comprehensive inceom, unless the recognition of the effects of changes in the liability's own creditrisk in other comprehensive income would create or enlarge an accoutning mismatch in profit or loss. Changesin 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 opposedto an incurred credit loss model under MFRS 139. Under MFRS 9, it is no longer necessary for a credit eventto have occurred before credit losses are recognised. Instead, an entity always accounts for expected creditlosses and changes in those expecetd credit losses at each reporting date to reflect changes in credit risk sinceinitial recognition.

• The new general hedge accounting requirements retain the three types of hedge accoutning mechanismscurrently available in MFRS 139 i.e. fair value hedges, cash flow hedges aand hedges of a net investment in aforeign operation. MFRS 9 incorpoates a new hedge accounting model that aligns the hedge accounting moreclosely with an entity's risk management activities. The new hedge accoutning model has also expanded thescope of eligibility of hedge items and hedging instruments respectively.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT"D.)

3.1 Financial Assets (Cont'd)

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

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

AFS financial assets are financial assets that are designated as available for sale or are not classified asfinancial assets at FVTPL or loans and receivables.

After initial recognition, AFS financial assets are measured at fair value. Gains or losses from changesin fair value of the AFS financial assets are recognised in other comprehensive income, except thatimpairment losses, foreign exchange gains and losses on monetary instruments, dividend income andinterest calculated using effective interest method are recognised in profit or loss.

The cumulative gains or loss previously recognised in other comprehensive income is reclassified fromequity to profit or loss as a reclassification adjustment when the financial assets is derecognised. Interestincome calculated using the effective interest method is recognised in profit or loss. Dividends on anAFS equity instrument are recognised in profit or loss when the Fund's right to receive payment isestablished.

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 financial instrumentstraded in active markets at the reporting date is based on their quoted prices or binding dealer pricequotations, without deduction for transaction costs.

A financial assets is derecognised where the asset is disposed and the contractual right to receive cashflow from the asset has expired. On derecognition of a financial assets in its entirety, the differencebetween the carrying amount and the sum of the consideration received and any cumulative gain or lossthat had been recognised in other comprehensive income is recognised in profit or loss.

Financial assets are classified as financial assets at FVTPL if they are held for trading or are designatedas such upon initial recognition. Financial assets held for trading include securities and fixed incomesecuritiesand collective investment schemes acquired principally for the purpose of selling them in nearterm.

Subsequent to nitial recognition, financial assets at FVTPL are measured at fair value at the date of thestatement of financial position. Changes in the fair value of those financial instruments are recorded in"Net gain or loss on finacial assets at FVTPL". Interest earned and dividend revenue elements of suchinstruments are recorded separately in "Interest income" and "Gross dividend income", respectively.Foreign exchange differences on financial assets at FVTPL are not recognised separately in profit or lossbut included in net gains or net losses on change in fair value of financial assets at FVTPL.

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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

Financial assets with fixed or determinable payments that are not quoted in an active market areclassified as loans and receivables. The Fund includes short term receivables such as balances duefrom broker, Manager and other receivables in the classification. Loans and receivables are recognisedinitially at fair value including transaction costs.

Subsequent to initial recognition, receivables are measured at amortised cost using effective interestmethod. Gains and losses are recognised in profit or loss when the loans and receivables arederecognised or impaired, and through the amortisation process.

Significant or prolonged decline in fair value below cost, weaken fundamental, significant financialdifficulties of the issuer or obligor, and the disappearance of an active trading market are considerationsto determine whether there is objective evidence that investment securities classified as AFS financialassets are impaired. At end of each financial year, the Manager would receive impairment proposal fromthe Fund's external investment manager, if any financial assets of the Fund, in their professionalopinion, warrant an impairment exercise.

If an AFS financial assets is impaired, an amount comprising the differences between its cost (net ofany principal payment and amortisation) and its current fair value, less any impairment loss previouslyrecognised 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 subsequentperiods. Increase in fair value, if any, subsequent to impairment loss is recognised in othercomprehensive income. For AFS debt investments, impairment losses are subsequently reversed inprofit or loss, up to the amount previously recognised as impairment loss, if an increase in the fair valueof the investment can be objectively related to an event occuring after the recognition of the impairmentloss in profit or loss.

The Fund assesses at each reporting date whether there is any objective evidence that a financial asset isimpaired.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assetswithin the period generally established by regulation or convention in the market place concerned. Allregular way purchases and sales of financial assets are recognised or derecognised on trade date,i.e. thedate that the Fund commit to purchase or sell the asset.

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3.2 Impairment of Financial Assets (Contd.)

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

3.3 Classification of Realised and Unrealised Gain and Losses

3.4 Financial Liabilities

Unrealised gain and losses comprise changes in fair value of financial instruments for the period fromreversal 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 throughprofit or loss" are calculated using weighted average method. They represent the difference between aninstrument's initial carrying amount and disposal amount, or cash payment or receipts made of derivativecontracts (excluding payments or receipts on collateral margin accounts for such investments).

Financial liabilities are classified according to the substance of the contractual arrangements entered into andthe definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial positionwhen, and only when, the Fund become 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 amount due to broker, Manager and other payables arerecognised initially at fair value plus directly attributable transaction costs and subsequently measured at theamortised cost using effective interest method.

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

To determine whether there is objective evidence that an impairment loss on financial assets has beenincurred, the Fund considers factors such as the probability of insolvency or significant financialdifficulties 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 theassets's carrying amount and the present value of estimated future cash flows discounted at the financialasset's original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financialassets with the exception of trade receivables, where the amount is reduced through the use of anallowance account. When a trade receivable becomes uncollectible, it is written off against allowanceaccount.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be relatedobjectively to an event occurring after the impairment was recognised, the previously recognisedimpairment loss is reversed to the extent that the carrying amount of the asset does not exceed itsamortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

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3.5 Foreign Currencies

3.6 Unitholders' Capital

3.7 Income Distribution

3.8 Cash and Cash Equivalents

3.9 Income Recognition

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

Income is recognised to the extent that is probable that the economic benefits will flow to the Fund and theincome can be realiably measured. Income is measured at fair value of consideration received 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 fixed incomesecurities, is recognised using effective interest method.

The financial statements of the Fund are measured using the currency of the primary economic environmentin which the Fund operates ("the functional currency"). The financial statements are presented in RinggitMalaysia (RM), which is also the Fund's functional currency.

In preparing the financial statements, transactions in curriencies other than the Fund's functional currency(foreign curriencies) are recorded in the functional currency using teh exchange rates prevailing at the datesof the transactions. At the end of each reporting period, foreign currency monetary assets and liabilities aretranslated at exchange rates prevailing at the end of the reporting period. Non-monetary items that aremeasured at fair value in a foreign currency are translated using exchanges rates at the date when the fairvalue was determined.

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

Exchange differences arising from teh translation of non-monetary items caaried at fair value are included inprofit or loss for the period except for the differences arising on the translation of non-monetary items inrespect of which gains or losses are recognised directly in equity. Exchange differences arising from suchnon-monetary items are recognised directly to equity.

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

Distribution equalisation represents the average distributable amount included in the creation and cancellationprices of units. This amount is either refunded to Unitholders by way of distribution and/or adjustedaccordingly when units are cancelled.

Income distributions are at the discretion of the Manager. Income distribution to the Fund's unitholders isaccounted for as a deduction from realised reserves except where distribution is sourced out of distributionequalisation which is accounted for as deduction from Unitholders' capital.

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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 Trustee is entitled to a fee of 0.07% per annum based on NAV of the Fund (before deducting the manager'sand trustee's fee for the day) calculated and accrued on a daily basis, subject to a minimum of RM18,000 p.a.

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

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

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

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

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 areregularly reviewed by the Manager, External Investment Manager and the fund's Investment Committee. TheExternal Investment Manager and the Fund Investment Commitee jointly assumes the role of chief operationdecision maker, for performance assessment purposes and to make decision about resources allocated to eachinvestment segment.

The preparation of financial statements in accordance with MFRS and IFRS requires the use of certainaccounting estimates and exercise of judgements. Estimates and judgements are continually evaluated and arebased on past experience, reasonable expectations of future events and othe factors.

No major judgements have been made by the Manager in applying the Fund's accounting policies. There areno key assumptions concerning the future and other key sources of estimation uncertainty at the reportingdate, that have significant risk of causing material adjustment to the carrying amounts of assets and liabilitieswithin next year.

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6. TAXATION

30.06.2016 30.06.2015RM RM

Current year Malaysian tax - -Under provision in prior years - -Malaysian tax expense based on result for the year - -

30.06.2016 30.06.2015RM RM

Net income before taxation (1,133,482) 717,371

Taxation at Malaysian statutory rate of 25% (283,371) 179,343(2014: 25%)

Tax effects of:Losses/(Income) not subject to tax 223,642 (240,339)Expenses not deductible for tax purposes 6,678 6,644Restriction on tax deductible expenses for unit trustfunds 53,051 54,352

Tax expense for the financial period - -

7. INVESTMENTS

Financial assets at fair value through profit or loss 30.06.2016 30.06.2015(Note 8) RM RMQuoted equities- in Malaysia 7,785,485 7,125,311- outside Malaysia 6,507,275 7,353,231

14,292,760 14,478,542Available-for-sale financial assets (Note 9)- Unquoted fixed income securities

in Malaysia 4,010,600 5,708,320

Total investments 18,303,360 20,186,862

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

Income tax is calculated at Malaysian statutory tax rate 25% (2015 : 25%) of the estimated assessable income forthe period.

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

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8. FINANCIAL ASSETS AT FVTPL

30.06.2015 30.06.2015RM RM

Financial assets at FVTPL :Quoted equities 14,292,760 14,478,542

Net gain on financial assets at FVTPL comprised:Realised gain on disposals 89,374 906,600Unrealised loss changes in fair values (1,424,198) (338,170)

(1,334,824) 568,430

The currency exposure profile of financial assets atFVTPL is as follows:

- Ringgit Malaysia 7,785,485 7,125,311- Hong Kong Dollar 2,185,679 4,087,045- Indonesian Rupiah 1,356,968 1,029,060- Singapore Dollar 1,587,458 846,389- Thai Baht 444,807 832,709- South Korea Won - 294,584- Phillipines Peso 932,362 263,444

14,292,760 14,478,543

Financial assets at FVTPL as at 30 June 2016 are as detailed below:

Name of Counter

QUOTED EQUITIES- IN MALAYSIA

Main Market Quantity Cost Fair value % ofRM RM NAV

ConstructionHo Hup Construction Co. Bhd 314,000 329,191 249,630 0.96

ConsumerSasbadi Holdings Bhd 244,000 254,350 295,240 1.13Tek Seng Holdings Bhd 525,340 333,710 630,408 2.42

769,340 588,060 925,648 3.55

Industrial ProductsEvergreen Fibreboard Bhd 161,000 111,523 170,660 0.66Eastern & Orinetal Bhd 50,000 80,443 82,500 0.32Jaya Tiasa Holdings Bhd 261,000 474,148 297,540 1.14KNM Group 940,000 468,412 385,400 1.48TA Ann Holdings Bhd 90,000 348,952 297,000 1.14Teo Seng Capital Bhd 173,000 269,309 212,790 0.82

1,675,000 1,752,786 1,445,890 5.56

Oil & GasHibiscus Petroleum Berhad 730,000 132,096 127,750 0.49

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8. Name of Counter Quantity Cost Fair value % ofRM RM NAV

QUOTED EQUITIES- IN MALAYSIA (CONTD.)

PropertiesHua Yang Bhd 137,000 260,386 238,380 0.92KSL Holdings Berhad 71,007 115,326 78,818 0.30Land & General Bhd 1,398,000 627,816 531,240 2.04Matrix Concepts Holdings Berhad 230,217 375,062 568,636 2.19Matrix Concepts Holdings Berhad -Warrant 34,917 - 13,618 0.05Metro Kajang Holdings Berhad 90,400 311,940 229,616 0.88Sentoria Group Bhd 453,000 464,681 366,930 1.41Tambun Indah Land Bhd 141,000 224,163 195,990 0.75

2,555,541 2,379,373 2,223,227 8.54

ManufacturingPecca Group Berhad 100,000 142,000 160,000 0.62Salutica Berhad 308,000 254,064 314,160 1.21

408,000 396,064 474,160 1.83

Plantations

Hap Seng Plantations Holdings Bhd 17,000 47,596 40,800 0.16Sarawak Oil Palms Bhd 94,000 459,198 371,300 1.43TH Plantation Bhd 168,000 351,022 183,120 0.70

279,000 857,816 595,220 2.29TechnologyInari Amertron Bhd 23,500 64,404 69,090 0.27Malaysia Pacific Industries 30,000 115,514 222,000 0.85Pentamaster Corp Bhd 258,000 151,395 199,950 0.77

311,500 331,312 491,040 1.89

Trading/ServicesBerjaya Corp Bhd 640,000 264,482 227,200 0.87Fitters Diversified Bhd 1,018,000 625,867 422,470 1.62Only World Group Holdings Berhad 39,000 86,255 82,290 0.32Tenaga Nasional Bhd 37,000 518,092 520,960 2.00

1,734,000 1,494,696 1,252,920 4.81

TOTAL QUOTEDEQUITIES- IN MALAYSIA 8,776,381 8,261,395 7,785,485 29.92

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8. FINANCIAL ASSETS AT FVTPL (CONTD.)

Name of Counter Quantity Cost Fair value % of

RM RM NAV

QUOTED EQUITIES- OUTSIDE MALAYSIA

Hong Kong Stock Exchange("HKSE")

Agricultural Bank of China-H 313,000 653,705 458,012 1.76Central China Real Estate 32,000 36,225 23,579 0.09China Citic Bank 180,000 572,681 438,989 1.69China Life Insurance Co-H 27,000 262,821 232,291 0.89China Oversea Grand Ocean Group 108,000 214,589 127,214 0.49Hua Han Bio-Pharmaceutical-H 958,000 725,034 333,061 1.28Ind & Comm Bank of China 192,000 553,015 427,408 1.64Sinosoft Technology Group Ltd 64,000 120,934 145,126 0.56

1,874,000 3,139,003 2,185,679 8.40

Jakarta Stock Exchange("JSX")

Astro Agro Lestari TBK PT 14,000 63,082 62,387 0.24Bekasi Fajar Industrial Estate 4,800,000 627,514 389,041 1.50Hexindo Adiperkasa TBK PT 259,000 382,688 147,970 0.57Metropolitan Land TBk 1,010,000 118,367 100,941 0.39Logindo Samudramakmur TBK 800,000 38,095 39,489 0.15PT Indonesia Pondasi Raya TBK 180,000 72,604 80,349 0.31Tempo Scan Pacific TBK PT 590,000 386,390 311,007 1.20Tunas Baru Lampung TBK PT 1,300,000 241,592 225,783 0.87

8,953,000 1,930,332 1,356,968 5.23

Philippines Stock Exchange("PSE")

EEI Corporation 380,000 315,320 248,146 0.95GMA Holdings INC-PDR 1,040,000 600,965 562,991 2.16Rizal Commercial Banking 45,000 132,265 121,226 0.47

1,465,000 1,048,550 932,362 3.58

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Name of Counter Quantity Cost Fair value % ofRM RM NAV

QUOTED EQUITIES- OUTSIDE MALAYSIA (CONTD.)

Stock Exchange Thailand("SET")

Amata Corporation Public Co. Ltd 116,000 215,231 167,282 0.64Amatav Corp Public Co Ltd-NVDR 4,640 4,189 4,636 0.02Sino Thai Engineering &

Construction-NVDR 40,000 113,296 108,100 0.42Total Access Communication-NVDR 45,000 463,248 164,789 0.63

205,640 795,964 444,807 1.71

Singapore Stock Exchange("SGX")

Bumitama Agri Ltd 166,000 404,085 376,519 1.45Centurion Corp Ltd 76,000 112,577 87,325 0.34IX Biopharma Ltd 556,400 703,749 448,349 1.72Indofood Agri Resources Limited 272,000 739,648 389,651 1.50Sbi Offshore Ltd 550,000 177,375 285,613 1.10

1,620,400 2,137,434 1,587,458 6.11

TOTAL QUOTEDEQUITIES- OUTSIDE MALAYSIA 14,118,040 9,051,284 6,507,275 25.03

TOTAL QUOTED EQUITIES

TOTAL FINANCIAL ASSETSAT FVTPL 17,312,678 14,292,760 54.95

EXCESS OF FAIR VALUEOVER COST 17,312,678 14,292,760 54.95

(3,019,918)

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9. AFS FINANCIAL ASSETS30.06.2016 30.06.2015

RM RM

Unquoted fixed income securities 4,010,600 5,708,320

Accretion of discounts, net ofamortisation of premiums on AFS financial assets - (1,543)

Unrealised gain/(loss) on changes in fair values 10,600 7,416

AFS financial assets as at 30 June 2015 are as detailed below:-

Name of Counter Nominal Cost * Fair value % ofAmount RM RM NAV

UNQUOTED FIXED INCOME SECURITIES

SME Bank IMTN -3/17 1,000,000 1,000,000 1,001,600 3.85SABAH 4.275%- 12/2019 3,000,000 3,000,000 3,009,000 11.57

4,000,000 4,000,000 4,010,600 15.42EXCESS OF FAIR VALUEOVER COST 10,600

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

10. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

30.06.2016 30.06.2015RM RM

Licensed investment bank 7,495,184 10,484,914

Averageremaining

WAEIR maturities30.06.2016 30.06.2015 30.06.2016 30.06.2015

% % Days Days

Licensed investment bank 3.23 3.21 7 7

The weighted average effective interest rate ("WAEIR") per annum and the average remaining maturities ofdeposits and placement are as follows:

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11. AMOUNT DUE TO MANAGER

30.06.2016 30.06.2015RM RM

Amount arising from release of units - 2,830Management fee - 43,710

- 46,540

12. INCOME DISTRIBUTION

Distribution declared and paid on 28 April 2016 was 6.75 sen net per unit.Distribution to unitholders are from the following sources:

2016 2015RM RM

Dividend income 25,260 10,928Interest income 52,210 26,057Net realised gain from sale of investment (19,549) 583,715Net realised gain on foreign currency - -Other Income - -

57,921 620,700Less:Expenses 59,658 31,577Taxation - -Previous year's realised gain (1,737) 589,123Distribution out of realised reserves 1,531,310 1,128,360Distribution for the period 1,529,573 1,717,483

Units in circulation at book closing date 22,660,337 25,444,189Gross distribution per units (sen) 6.75 6.75Net distribution per unit (sen) 6.75 6.75Date of distribution 28.04.2016 27.03.2015

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13. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS

Note 30.06.2016 30.06.2015RM RM

Unitholders' capital (a) 19,517,315 22,466,213Retained earnings- Realised (b) 9,903,393 10,206,894- Unrealised (c) (3,410,822) (1,640,269)

6,492,571 8,566,625AFS reserve (d) 5,000 7,416Total equity / Net asset value 26,014,886 31,040,254

(a) Unitholders' Capital01.01.2016 to 30.06.2016 01.01.2015 to 30.06.2015

Number Numberof units RM of units RM

Balance at beginningof the year 22,883,120 18,193,211 17,347,920 11,267,447Add: Creation of units 1,666,442 1,791,110 10,097,569 10,516,438Less: Cancellation of units (441,937) (433,680) (872,892) (901,834)Distribution equalisation - (33,326) - 1,584,162Balance at end of the period 24,107,625 19,517,315 26,572,597 22,466,213

In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 14 August 2006, themaximum number of units that can be issued for circulation is 100,000,000 units. As at 30 June 2016, the numbernot yet issued is 75,892,375 units (30 June 2015: 73,427,403).

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

(b) Realised - Distributable30.06.2016 30.06.2015

RM RM

Balance at the beginning of period 11,142,303 10,868,343Net income after tax (1,133,482) 717,371Net unrealised loss attributable toinvestments held transferred tounrealised reserve 1,424,198 338,170

Net unrealised foreign exchangeloss attributable to foreign currencymonetary items transferred to unrealisedreserve (53) 493

Distribution out of realised reserve (1,529,573) (1,717,483)Balance at the end of period 9,903,393 10,206,894

(c) Unrealised - Non-distributable30.06.2016 30.06.2015

RM RM

Balance at the beginning of period (1,986,677) (1,301,606)Effects of adoption of FRS 139 - -

(1,986,677) (1,301,606)Net unrealised loss attributable toinvestment held transferred fromrealised reserve (1,424,198) (338,170)

Net unrealised foreign exchangeloss attributable to foreigncurrency monetary items transferred fromrealised reserve

Net unrealised (gain)/loss attributable to 53 (493)(3,410,769) (1,640,762)

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14. NET ASSET VALUE PER UNIT

30 June 2016 30 June 2015RM RM/Unit RM RM/Unit

Net asset value attributableto unitholders forissuing/redeeming of units 26,107,308 1.0829 31,114,975 1.1709

Effect from adopting bidprices as fair value (92,421) (0.0038) (74,721) (0.0028)

Net asset value attributableto unitholders perfinancial statements 26,014,887 1.0791 31,040,254 1.1681

15. UNITS HELD BY RELATED PARTIES

30.06.2016 30.06.2015Number of Valued at Number of Valued at

units NAV units NAVRM RM

Directors of the Manager # 130,761 141,106 2,188,799 2,572,693

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

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

Quoted financial assets have been valued at the bid prices at the close of business in accordance with the provisionof MFRS 139. For the purpose of calculation of net asset value attributable to unitholders per unit for the issuanceand 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 as at 30 June 2016 and thenet assets value attributable to unitholders per the financial statements is as follows:-

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16. TRANSACTIONS WITH BROKERS

1 January 2016 to 30 June 2016% of Total

Value of % of Total Brokerage BrokerageTrade Trade Fees Fees

RM % RM %

MIDF Amanah Investment Bank Bhd 4,715,931 34.09 - -Affin Hwang Capital Investment Bank 3,955,631 28.60 703 5.53Kenanga Investment Bank Bhd 721,854 5.22 1,627 12.80RHB OSK Securities Hong Kong Ltd 620,337 4.48 777 6.11DBS Vickers Securities Pte Ltd- Singapore 492,950 3.56 984 7.74CIMB Investment Bank Bhd 476,392 3.44 2,443 19.22PT Samuel Sekuritas 331,320 2.40 332 2.61Hong Leong Investment Bank 287,474 2.08 329 2.59DBS Vickers Securities Pte Ltd - HK 258,506 1.87 644 5.07CCB International Securitites Ltd 234,300 1.69 588 4.62Other brokers 1,738,233 12.57 4,285 33.71

13,832,929 100.00 12,711 100.00

17. MANAGEMENT EXPENSE RATIO ("MER")

30.06.2016 30.06.2015

Management expense ratio 0.91% 0.88%

18. PORTFOLIO TURNOVER RATIO ("PTR")

30.06.2016 30.06.2015

Portfolio turnover (times) 0.10 0.34

This is the ratio of the sum of fees ( inclusive of the manager's, trustee's audit and other proffessional fees) and otheradministrative expenses of the Fund to the average NAV of the Fund calculated on a daily basis. The average NAVof the Fund for the period ended 30 June 2016 was RM26,383,219 (30 June 2015: RM27,845,330)

Details of transactions with stockbroking companies and other investment banks for the period ended 30 June 2016are as follows:

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19. SEGMENT INFORMATION

The Manager and Investment Committee of the Fund are responsible for allocating resources available to the Fundin accordance with the overall investment strategies as set out in the investment Guidelines of the Fund. The Fund ismanaged by two segments:

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

The investment objective of each segment is to achieve consistent returns from the investments in each segmentwhile safeguarding capital by investing in diversified portfolios. There have been no changes is reportable segmentsin the current financial period. The segment information provided is presented to the Manager and InvestmentCommittee of the Fund.

01.01.2016 to 30.06.2016 01.01.2015 to 30.06.2015

Fixed Fixed

Equity Income Total Equity Income Total

Portfolio Portfolio Portfolio Portfolio

RM RM RM RM RM RM

Gross dividend income 232,895 - 232,895 158,219 - 158,219

Interest Income - 207,308 207,308 - 236,743 236,743

Net (loss)/gain from

investments:

- financial assets at fair value

through profit and loss

("FVTPL") (1,334,824) - (1,334,824) 568,430 - 568,430

- available for sale ("AFS") - - (1,543) - (1,543)

- net amortisation of

discount/(premium) - - - - - -

- net unrealised loss on

foreign exchange 53 - 53 (493) - (493)

- net unrealised gain on

changes in value of

investments - - - - - -

Total segment operating (loss)/

income for the period (1,101,876) 207,308 (894,569) 724,613 236,743 961,356

Deposit with financial institutions 7,495,184 7,495,184 - 10,484,914 10,484,914

Financial assets at FVTPL 14,292,760 - 14,292,760 14,478,542 - 14,478,542

AFS financial assets - 4,010,600 4,010,600 - 5,708,320 5,708,320

Other assets 124,106 24,328 148,434 80,453 36,908 117,361

Total segment assets 14,416,866 11,530,112 25,946,978 14,558,995 16,230,142 30,789,137

Other liabilities 87,112 - 87,112 - - -

Total segment liabilities 87,112 - 87,112 - - -

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

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19. SEGMENT INFORMATION (CONTD.)

30.06.2016 30.06.2015RM RM

Net reportable segment operating income (894,569) 961,356Expenses (238,914) (243,986)Net income before tax (1,133,482) 717,371Income tax expense - -Net income after tax (1,133,482) 717,371

30.06.2016 30.06.2015RM RM

Total segment assets 25,946,978 30,789,137Tax recoverable - 3,640Amount due from Broker 103,930 -Cash at bank 96,913 178,065Total assets of the Fund 26,147,821 30,970,842

Total segment liabilities 87,112 -Other payables and accruals 9,759 8,738Amount due to Manager 34,147 46,540Amount due to Trustee 1,917 2,427Total liabilities of the Fund 132,934 57,705

22. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

Expenses of the Fund are not considered part of the performance of any operating segment. The following tableprovides a reconciliation between reportable segment income/(loss) and operating profits/(loss).

The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either fair value or atamortised cost based on their respective classification. The significant accounting policies in Note 3 describe howthe classes of financial instruments are measured, and how income and expenses, including fair value gains andlosses are recognized. The following table analyses the financial assets and liabilities of the Fund in the statementof financial position by the class of financial instrument to which they are assigned, and therefore by themeasurement basis.

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

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20. FINANCIAL INSTRUMENTS (CONTD.)

(a) Classification of financial instruments (Contd.)

Financial

liabilities

Financial AFS at

assets at financial Loan and amortised

FVTPL assets receivables cost Total

30-Jun-15 RM RM RM RM RM

Assets

Investments 14,292,760 4,010,600 - - 18,303,360

Deposits with licensed

financial institutions - - 7,495,184 - 7,495,184

Amount due from brokers - - 103,930 - 103,930

Other receivables - - 148,434 - 148,434

Cash at bank - - 96,913 - 96,913

Total financial assets 14,292,760 4,010,600 7,844,461 - 26,147,821

Total non-financial assets -

26,147,821

Liabilities

Amount due to Brokers - - - 87,112 87,112

Amount due to Manager - - - 34,147 34,147

Amount due to Trustee - - - 1,917 1,917

Other payables - - - 9,759 9,759

Total financial liabilities - - - 132,934 132,934

Financial

liabilities

Financial AFS at



30-Jun-14 RM RM RM RM RM

Assets

Investments 10,768,954 2,696,380 - - 13,465,334



Amount due from brokers - - - - -


Cash at bank - - 73,023 - 73,023

Total financial assets 10,768,954 2,696,380 5,873,442 - 19,338,776

Total non-financial assets 21,771

19,360,547

Liabilities

Amount due to Brokers - - - - -

Amount due to Manager - - - 24,675 24,675


Other payables - - - 8,440 8,440

Total financial liabilities - - - 34,644 34,644

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(b) Fair value

(i) Financial instruments that are carried at fair value

Level 1 Level 2 Total

RM RM RMAs at 30 June 2016

Financial asset at FVTPL- Quoted equities 14,292,760 - 14,292,760

AFS financial assets-Fixed income securities - 4,010,600 4,010,600

14,292,760 4,010,600 18,303,360


RM RM RMAs at 30 June 2015

Financial asset at FVTPL- Quoted equities 14,478,542 - 14,478,542

AFS financial assets-Fixed income securities - 5,708,320 5,708,320

14,478,542 5,708,320 20,186,862

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

Quoted equity instrumentsFair value is determined directly by reference to their published market bid price on the relevant stockexchanges at the reporting date.

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

The Fund held the following financial instruments carried at fair value on the statement of financialposition as at the end of period :

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

Level 1 : Quoted (unadjusted) prices in active markets for identical assets or liabilitiesLevel 2 : Inputs other than quoted prices included within Level 1 that are observable for the asset or

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

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(b) Fair value (Contd.)


21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES

(i) Market Risk

(a) Equity Price Risk

Effect on profitor loss and equity

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

30 June 2016+6/-6 857,566/ (857,566)

30 June 2015+6/-6 868,713/ (868,713)

Equity price risk is the risk of unfavourable changes in the fair value of equities as the result of changes in thelevels of equity indices and the value of individual shares. The equity price risk exposure arises from theFund's investments in equity securities.

The table below summarises the effect of sensitivity from the Fund's underlying investments in quotedequities on the profit or loss and equity of the Fund due to possible changes in equity prices, with all othervariables held constant:

The Fund maintains investment portfolios in a variety of quoted and unquoted financial instruments as dictated byits Trust Deed and investment management strategy.

The Fund is exposed to a variety of risks including market risk (which include interest rate risk, equity price riskand currenct risk), credit risk, and liquidity risk. Whilst these are the most important types of financial risksinherent in each type of financial instruments, the Manager and the Trustee would like to highlight that this list doesnot 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 theFund’s activities, but it is managed through a process of ongoing identification, measurement and monitoring ofrisks. Financial risk management is also carried out through sound internal control systems and adherence to theinvestment restrictions as stipulated in the Trust Deed, the Securities Commission’s Guidelines on Unit Trust Fundsand the Capital Markets and Service Act, 2007.

The Fund's principal exposure to market risk arises primarily due to changes or developments in the marketenvironment and typically includes changes in regulations, politics and the economy of the country. Marketrisk is also influenced by global economics and geopolitical developments. The Fund seeks to diversify awaysome of this risk by investing into different sectors to mitigate risk exposure to any single asset class.

The Fund's market risk is affected primilary due to changes in market prices, interest rates and foreigncurrency exchange rates.

Financial instruments not carried at fair value comprise financial instruments and financial liabilitiesclassified as loans and receivables and financial liabilities at amortised cost respectively. The carryingamount of these financial instruments at the end of the period approximated their fair values due to theirshort term to maturity.

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

(i) Market Risk (Contd.)

(b) Interest Rate Risk

Effect on profitor loss and equity

Change In Basis Points * Increase / (Decrease)RM

30 June 2016+25/-25 9,676/(9,676)

30 June 2015+25/-25 6,544/(6,544)

*

(c) Currency Risk

Effect on profit orloss and equity

30 June 2016 30 June 2015RM RM

Singapore Dollar 158,746 -South Korean Won - 29,458Thai Baht 44,481 83,271Indonesia Rupiah 135,697 102,906Philippines Peso 93,236 26,344Hong Kong Dollar 218,568 408,705

650,727 735,323

This risk refers to the effect of interest rate changes on the market value of fixed income securities anddeposits with financial institutions. In the event of rising interest rates, the return on deposits with financialinstitutions will rise while prices of bond will decrease and vice versa, thus affecting the net asset value of theFund. This risk wil be minimized via the management of the duration structure of the portfolio of bond anddeposits with financial institutions.

The following table demonstrates the sensitivity of the profit or loss and equity of the Fund to a reasonablypossible 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 currentlyobservable market environtment.

The Fund is exposure to currency risk primilary its investment in overseas quoted equities and bank balancesthat are denominated in foreign currencies. The Fund's foreign currency exposure profiles of its investment inquoted equities has been discolsed under Note 8.

A 10% strengtening or weakening of the RM against the following foreign currencies as at the end of periodwould have decreased or increased respectively the profit or loss and equity of the Fund by the amount shownbelow. This analysis assumes all other variables are held constant.

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(ii) Credit Risk

(iii) Liquidity Risk

30 June 2016 1 month-3 Above 3months months Total

RM RM RM

Financial assets 14,292,760 - 14,292,760Financial assets held at FVTPL - 4,010,600 4,010,600AFS financial assets 7,495,184 - 7,495,184Deposits with financial institutions 349,277 - 349,277Other assets 22,137,221 4,010,600 26,147,821Total undiscounted financial assets:

Non-Financial assetsTax Recoverable - - -

Total Assets 22,137,221 4,010,600 26,147,821

Financial liabilitiesOther Liabilities 132,935 132,935Total undiscountedfinancial liabilities 132,935 132,935

Unitholders capital 26,014,886 26,014,886

Liquidity gap (3,877,665) 3,877,665

The following table summarises the maturity profile of the Fund's financial liabilities and the correspondingassets available to meet commitments associated with those financial liabilities and redemption by theunitholders.

The Fund's prinicipal exposure to credit risk arises primarily due to changes in the financial conditions ofcompanies issuing debt securities and stockbroking companies, which may affect their creditworthiness. Thisin turn may lead to default in the payment. Such events can lead to loss of capital or delayed or reducedincome for the Fund resulting in a reduction in the Fund's asset value and thus unit price. This risk is mitigatedby vigorous credit analysis and diversification of the bond portfolio of the Fund and to enage differentstockbroking companies with good reputation. Bond rating of the Fund's portfolio is disclosed in Note 8.

This risk occurs in thinly traded or illiquid equity securities. Should the Fund needs to sell a relatively largeamount of such securities, the act itself may significantly depress the selling price. As the Fund is exposed todaily redemption of units, the risk is minimised by placing a prudent level of funds in short term deposits andby investing in stocks whose liquidity is adjudged to be commensurate with the expected exposure level of theFunds.

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(iii) Liquidity Risk (Contd.)

30 June 2015 1 month-3 Above 3

months months Total

RM RM RM

Financial assets

Financial assets held at FVTPL 14,478,542 - 14,478,542

AFS financial assets - 5,708,320 5,708,320

Deposits with financial institutions 10,484,914 - 10,484,914

Other assets 422,543 - 422,543Total undiscounted financial assets: 25,385,999 5,708,320 31,094,319

Non-Financial assetsTax Recoverable - 3,640 3,640

Total Assets 25,385,999 5,711,960 31,097,959

Financial liabilitiesOther Liabilities - 57,705 57,705Total undiscountedfinancial liabilities - 57,705 57,705

Unitholders capital 31,040,254 - 31,040,254

Liquidity gap (5,654,255) 5,654,255

(iv) Stock Specific Risk

(v) Single Issuer Risk

(vi) Capital Management

The Fund is exposed to the individual risk of the respective companies issuing securities which includeschanges to the business performance of the company, consumer tastes and demand, lawsuits and managementpractices. 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 itsnet assets 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 changesignificantly on a daily basis as the Fund is subject to daily redemption and subscription at the discretion ofunitholders. The Manager manages the Fund's capital with the objective of maximising unitholders' value,while maintaining sufficient liquidity to meet untiholder's redemption as explained in Note 21 (iii) above.

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[email protected]

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75

Your Need

is our Focus

22 August 2016


DMP


[email protected]

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76

Your Need

is our Focus

22 August 2016


DMP


[email protected]

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STATEMENT BY MANAGER TO THE UNITHOLDERS OF

DANA MAKMUR PHEIM

In the opinion of the Manager, the accompanying unaudited financial statements of

Dana Makmur Pheim are drawn up in accordance with Malaysian Financial Reporting

Standards, International Financial Reporting Standards and the Securities Commission's

Guidelines on Unit Trust Funds in Malaysia so as to give a true and fair view of the

unaudited financial position of Dana Makmur Pheim as at 30 June 2016 and of its

results, changes in the net asset value and cash flows for the period then ended.

For and on behalf of the Manager,

PHEIM UNIT TRUSTS BERHAD

AZMI MALEK MERICAN

Director

HOI WENG KONG

Director

Kuala Lumpur, Malaysia

22 AUG 2016

DMP

DANA MAKMUR PHEIM



Note 30.06.2016 30.06.2015

RM RM

INVESTMENT INCOME


Profit from Shariah-compliant investements

- receivables 86,978 61,347

- available for sale ("AFS") financial assets 52,819 74,596


profit or loss ("FVTPL") 8 (532,812) 432,632

Amortisation of premiums, net of accretion of

discounts on AFS financial assets 9 (1,573) (1,565)

(306,894) 642,487

EXPENDITURE

Manager's fee 4 124,353 114,703

Trustee's fee 5 9,488 9,195




151,733 139,701

Net (loss)/income before taxation (458,627) 502,786

Tax expenses 6 - -Net (loss)/income for the period (458,627) 502,786

Other comprehensive income

Net gain on change in fair value of AFS financial assets 8,073 11,295

8,073 11,295

Total comprehensive income for the period (450,554) 514,081

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

Net realised income 137,469 229,495

Net unrealised (loss)/income (596,096) 273,291(458,627) 502,786

Distribution for the year

Net distribution (RM) 13 515,713 506,524

Net distribution per unit (sen) 13 6.75 6.75

Gross distribution per unit (sen) 13 6.75 6.75


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DANA MAKMUR PHEIM


Note 30.06.2016 30.06.2015

RM RM

ASSETS

Shariah-compliant investments 7 10,659,569 10,701,123

Islamic deposit with licensed financial institutions 10 5,122,095 4,182,151

Amount due from brokers 29,714 -


Tax recoverable - 267

Cash at bank 154,000 78,855TOTAL ASSETS 16,014,944 15,041,061

LIABILITIES




Other payables and accruals (634) (682)


EQUITY


Retained earnings 4,985,172 5,034,609

Available for sale reserve (3,985) 581

TOTAL EQUITY 14 15,959,662 15,019,014





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Capital earnings reserves Equity

Note 14(a) Note 14(b) Note 14 (d)

and 14 (c)

RM RM RM RM

At 1 January 2015 8,495,870 5,038,347 (10,714) 13,523,503


the period - 502,786 11,295 514,081

Creation of units 1,278,789 - - 1,278,789

Cancellation of units (165,149) - - (165,149)

Distribution equalisation 374,314 - - 374,314

Distribution in the period - (506,524) (506,524)Balance at 30 June 2015 9,983,824 5,034,609 581 15,019,014

At 1 January 2016 -

Effects of adopting FRS 139 8,289,361 5,959,512 (12,058) 14,236,815

(Note 2.2) 8,289,361 5,959,512 (12,058) 14,236,815


the period - (458,627) 8,073 (450,554)

Creation of units 1,993,819 - - 1,993,819

Cancellations of units (206,658) - - (206,658)

Distribution equalisation 901,953 - - 901,953

Distribution in the period - (515,713) - (515,713)Balance at 30 June 2016 10,978,475 4,985,172 (3,985) 15,959,662

80

DMP

DANA MAKMUR PHEIM



01.01.2016 01.01.2015

to to

30.06.2016 30.06.2015

RM RM



Proceeds from sale of Shariah-compliant investments 776,933 1,529,791

Purchase of Shariah-compliant investments (2,432,998) (3,681,087)


Profits received from Islamic deposits with licensed

financial institutions and sukuk 140,295 135,911




Income distribution paid (9,822) (57)

Net cash used in from operating and investing activities (1,585,025) (2,103,114)


Proceeds from creation of units 2,822,216 1,253,211

Payment for cancellation of units (356,274) (256,458)

Net cash generated from financing activities 2,465,942 996,753

NET INCREASE/(DECREASE) IN CASH

AND CASH EQUIVALENTS 880,917 (1,106,361)


BEGINNING OF YEAR 4,395,178 5,367,367



Islamic deposits with licensed financial institutions (Note 10) 5,122,095 4,182,151

Cash at bank 154,000 78,8555,276,095 4,261,006


81

DMP

DANA MAKMUR PHEIM

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)






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

Dana Makmur Pheim ("the Fund") was established pursuant to a Master Deed dated 11 January 2002as amended and modified and supplemented by a Supplemental Master Deed dated 3 November 2008made between HSBC Trustee (Malaysia) Berhad and Pheim Unit Trusts Berhad ("the Manager"), asecond Supplemental Master Deed dated 29 April 2013 and Third Supplemental Master Deed dated 30April 2015 made between the Manager and Maybank Trustees Berhad ("the Trustee").

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-compliantsecurities on the Bursa Malaysia or any other markets considered as Eligible Market, Shariahcompliant collective investment schemes, sukuk, and other Shariah-compliant investments. Theactivities of the fund shall be conducted strictly in compliance with Shariah requirements and asapproved by the Shariah Advisory Council of the Securities Commission and/or the Shariah Adviser ofDana Makmur Pheim. The Fund commenced operations on 28 January 2002 and will continue itsoperations until terminated according to the conditions in the Master Deed.

The Manager is a public limited company incorporated in Malaysia. It is a wholly owned subsidiary ofPheim Asset Management Sdn Bhd, a private company incorporated in Malaysia. Its principal activityis the management of unit trust funds. Pheim Asset Management Sdn. Bhd. has been appointed by theManager as the External Investment Manager of the Fund with responsibility for the provision ofinvestment 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 22 August 2016.

The financial statements of the Fund are prepared under the historical cost convention unlessotherwise indicated in the summary of significant accounting policies in Note 3.

The accounting policies applied by the Fund are consistent with those applied in the previousfinancial year other than the application of the amendments to MFRSs as disclosed in Note 2.3.

82

DMP

2. BASIS OF PREPARATION (CONTD.)

2.3 Application of Amendments to MFRSs

Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2010 - 2012 Cycle"


The initial application of the above amendments to MFRSs have no significant impact on the

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



Amendments to MFRS 101 - Disclosure Initiative



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

MFRS 15, Revenue from Contracts with Customers



During the period, the Fund has applied where applicable, the following amendments to MFRSsissued by the Malaysian Accounting Standard Board ("MASB") that are relevant to the Fund'soperations and effective for its accounting period beginning on or after 1 January 2015 :-

The Fund has not early adopted the following new MFRSs and amendments to MFRSs issued bythe MASB that are relevant to its operations but are not yet effective :-

The Fund will apply the above new MFRSs and amendments to MFRSs that are applicableonce they become effective and they are not expected to have any significant impact on thefinancial statements of the Fund upon their initial application other than as discussed below:-

The Standard replaces earlier versions of MFRS 9 and introduces a package of improvementswhich includes a classification and measurement model, a single forward-looking 'expectedloss' impairment model and a substantially-reformed approach to hedge accounting.

• Under MFRS 9, all recognisd financial assets are required to be subsequently measured ateither amortised cost, fair value through other comprehensive income ("FVTOCI") or fairvalue through profit or loss ("FVTPL") on the basis of both an entity's business model formanaging the financial assets and the contractual cash flow characteristics of the financialassets. These requirements improve and simplify the approach for classification andmeasurement of financial assets as the numerous categories of financial assets under MFRS139 had been replaced.

83

DMP


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

detailed review has been completed.

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.

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 receivables.

• Most of the requirements in MFRS 139 for classification and measurement of financalliabilities were carried forward unchanged to MFRS 9, except for the measurement offinancial liabilities designated as at FVTPL. Under MFRS 139, the entire amount of thechange in the fair value of the financial liability designated as FVTPL is presented in profit orloss. However, MFRS 9 requires that the amount of change in the fair value of the financialliability that is attributable to changes in the credit risk of that is liability is presented in othercomprehensive income, unless the recognition of the effects of changes in the liability's owncredit risk in other comprehensive income would create or enlarge an accounting mismatch inprofit or loss. Changes in fair value attributable to a financial liability's credit risk are notsubsequently reclassified to profit or loss.

• In relation to the impairment of financial assets, MFRS 9 requires an expected credit lossmodel, as opposed to an incurred credit loss model under MFRS 139. Under MFRS 9, it is nolonger necessary for a credit event to have occurred before credit lossses are recognised.Instead, an entity always accounts for expected credit losses and changes in those expectedcredit 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 accountingmechanisms currrently available in MFRS 139 i.e. fair value hedges, cash flow hedges andhedges of a net investment in a foreign operation. MFRS 9 incorporates a new hedgeaccounting model that aligns the hedge accounting more closely with an entity's riskmanagement activities. The new hedge accounting model has also expanded the scope ofeligibility of hedge items and hedging instruments respectively.

84

DMP

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)


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


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". Profit earnedand dividend revenue elements of such instruments are recorded separately in "Profitincome" and "Dividend income", respectively. Foreign exchange differences on financialassets at FVTPL are not recognised separately in profit or loss but included in net gains ornet 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 and receivables.

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

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

Fair value is the amount for which an assets could be exchanged, or a 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 their quotedprice or binding dealing price quotations, without deduction for transaction costs.

A financial asset is derecognised when the asset is disposed and the contractual right toreceive cash flows from the asset has expired. On derecognition of 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.

85

DMP



(b) Available-for-sale ("AFS") financial assets (Cont'd)

(c) Receivables


The Fund assesses at each reporting date whether there is any objective evidence that

a financial asset is impaired.


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

If an AFS financial asset is impaired, an amount comprising the differences 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 to profitor loss.

Impairment losses on AFS Shariah-compliant equity investments are not reversed in profitor loss in the subsequent periods. Increase in fair value, if any, subsequent to impairmentloss is recognised in other comprehensive income. For AFS sukuk investments,impairment losses are subsequently reversed in profit or loss, up to the amount previouslyrecognised as impairment loss, if an increase in the fair value of the investment can beobjectively related to an event occurring after the recognition of the impairment loss inprofit or loss.

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

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. Receivablesare 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.

86

DMP


3.2 Impairment of Financial Assets (Cont'd)




To determine whether there is objective evidence that an impairment loss on financialassets has been incurred, the Fund consider 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 profit 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,it's written off against allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decreasecan be related objectively to an event occuring 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.

Unrealised gain and losses comprise changes in fair value of financial instruments for the periodfrom reversal of prior period's unrealised gains 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 cashpayment or receipts made of Shariah-compliant derivative contracts (excluding payments orreceipts on collateral margin accounts for such investments).

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

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financialposition when, 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 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.

87

DMP


3.5 Functional and Presentation Currency





3.10 Income Tax

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.

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.

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.

Cash and cash equivalents comprise cash at bank and Islamic deposits with financial institutionswhich have 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 realiably 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.

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.

88

DMP




4. MANAGER'S FEE

5. TRUSTEE' S FEE

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 fee for the day) calculated and accrued on a daily basis.

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 InvestmentManagers 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.

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.

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 significant risk of causing material adjustment to thecarrying amounts of assets and liabilities within next year.

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 Trustees for the day) calculated and accrued on a daily basis subject to a minimumof RM18,000 p.a.

89

DMP

6. TAXATION

30.06.2016 30.06.2015

RM RM

Current year Malaysian tax - -

Overprovision in prior year - -Malaysian tax expense based on results for the year - -

30.06.2016 30.06.2015

RM RM

Net income before tax (458,627) 502,786

Tax at Malaysian statutory rate of 25% (2015: 25%) (114,657) 125,697

Tax effects of:

Income not subject to tax 76,724 (160,621)

Expenses not deductible for tax purposes 5,807 5,233

Restriction on tax deductible expenses for unit trust funds 32,125 29,691Tax expense/(recoverable) for the financial year - -

7. SHARIAH-COMPLIANT INVESTMENTS30.06.2016 30.06.2015

Financial assets at fair value through

profit or loss (Note 8)

Quoted Shariah-compliant equities

in Malaysia 8,059,439 7,093,263

Available-for-sale financial assets

(Note 9)

Unquoted sukuk 2,600,130 3,607,860Total Shariah-compliant investment 10,659,569 10,701,123

Income tax is calculated at Malaysian statutory tax rate 25% of the estimated assessable net income forthe financial period.

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

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

90

DMP


30.06.2016 30.06.2015

RM RM

Financial assets at FVTPL:Quoted Shariah-compliant equities 8,059,439 7,093,263

Net gain on financial assets at FVTPL comprised:

Realised gain on disposals 63,283 159,341

Unrealised gain changes in fair values (596,096) 273,291(532,812) 432,632

Financial assets held-for-trading as at 30 June 2016 are as detailed below:

Name of Counter Quantity Cost Fair value % ofRM RM NAV

QUOTED SHARIAH-COMPLIANT EQUITIES

- IN MALAYSIA

Main Market

Construction

Ho Hup Construction Co.Bhd 337,000 436,008 267,915 1.68

Muhibbah Engineering (M) Bhd 88,000 194,300 193,600 1.21

Econpile Holdings Berhad 150,000 158,084 198,000 1.24

575,000 788,392 659,515 4.13

Consumer Product

Sasbadi Holdings Bhd 122,400 123,539 148,104 0.93

Tek Seng Holdings Bhd 345,000 203,090 414,000 2.59

467,400 326,630 562,104 3.52

Industrial Products

Eastern & Oriental Berhad 205,020 324,245 338,283 2.12

Evergreen Fibreboard Bhd 82,000 54,968 86,920 0.54

Jaya Tiasa Holdings Berhad 547,050 897,620 623,637 3.91

KNM Group Bhd 952,200 468,809 390,402 2.45

Kian Joo Can Factory Berhad[11(i)] 73,000 236,518 219,730 1.38

Ta Ann Holdings Bhd 99,600 382,219 328,680 2.06

Teo Seng Capital Berhad 243,000 384,102 298,890 1.87

2,201,870 2,748,480 2,286,542 14.33

91

DMP



RM RM NAV


- IN MALAYSIA (CONTD.)

Plantation

Hap Seng Plantations Holdings Bhd 104,000 286,571 249,600 1.56

Sarawak Oil Palms Bhd 164,800 874,541 650,960 4.08

268,800 1,161,112 900,560 5.64

Properties

Hua Yang Bhd 202,333 441,404 352,059 2.21

KSL Holding Berhad 201,863 329,568 224,068 1.40

Matrix Concepts Holdings Bhd 148,583 229,941 367,000 2.30

Matrix Concepts Holdings Bhd-Warrants 27,083 - 10,562 0.07

MKH Berhad 181,500 599,822 461,010 2.89

Tambun Indah Land Bhd 251,300 431,947 349,307 2.19

1,012,662 2,032,682 1,764,007 11.06

Technology

Inari Amertron Bhd 89,906 214,248 264,324 1.66

PentaMaster Corp Bhd 308,300 194,875 238,933 1.50

Malaysian Pacific Industries 46,600 246,633 344,840 2.16

444,806 655,756 848,096 5.32

Trading/ Services

Fitters Diversified Bhd 629,000 394,115 261,035 1.64

Uzma Bhd 90,000 158,508 171,900 1.08

Tenaga Nasional Bhd 22,000 306,803 309,760 1.94

741,000 859,426 742,695 4.66

Manufacturing

Salutica Berhd 196,000 161,735 199,920 1.25

Pecca Group Berhad 60,000 85,200 96,000 0.60

256,000 246,935 295,920 1.85

TOTAL QUOTEDSHARIAH-COMPLIANT

EQUITIES 5,967,538 8,819,412 8,059,439 50.51


EXCESS OF FAIR VALUEOVER COST (759,974)

92

DMP

9. AFS FINANCIAL ASSETS

30.06.2016 30.06.2015

RM RM

Unquoted Sukuk 2,600,130 3,607,860

Amortisation of premiums, net of accretionof discounts on AFS financial assets (1,573) (1,565)

Unrealised gain/(loss) on changes in fair values 8,073 11,295

AFS financial assets as at 30 June 2016 are as detailed below:


RM RM NAV

UNQUOTED SUKUK

SME Bank IMTN -3/17 1,300,000 1,300,000 1,302,080 8.16

Poh Kong IMTN 10/17 1,300,000 1,304,115 1,298,050 8.13

2,600,000 2,604,115 2,600,130 16.29


* Cost of sukuk includes amortisation of premium

10. ISLAMIC DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

30.06.2016 30.06.2015

RM RM

Licensed investment banks 5,122,095 4,182,151

Average

remaining

WAERR maturities

30.06.2016 30.06.2015 30.06.2016 30.06.2015

% % Days Days

Licensed investment banks 3.20 3.12 3 7

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

93

DMP

11. SHARIAH INFORMATION OF THE FUND

(i)

(ii)

(iii)


2016 2015

RM RM

Amount arising from (creation) of units - (99)

Management fee - 21,154- 21,056

13. DISTRIBUTION FOR THE PERIOD

Distribution declared and paid on 28 April 2016 was 6.75 sen net per unit.

Distribution to unitholders are from the following sources:

2016 2015

RM RM

Dividend (local) Quoted Shariah-compliant securities 3,004 2,928

Profit from Corporate Sukuk 4,381 870

Profit from Islamic deposit 2,602 4,716

Amortisation of premium on corporate sukuk (78) (64)

Net realised gain from sale of Shariah-compliant investment 65,440 43,548

75,349 51,998

Less:

Expenses 7,389 5,426

Taxation - -

Previous year's realised gain 67,960 46,572

Distribution out of realised reserves 447,753 459,952Distribution for the period 515,713 506,524

Units in circulation at book closing date 7,640,194 7,504,060

Gross distribution per unit (sen) 6.75 6.75

Net distribution per unit (sen) 6.75 6.75Date of distribution 27.03.2016 27.03.2015

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

Equity securities listed on Bursa Malaysia which have been classified as Shariah-compliant bythe Shariah Advisory Council of the Securities Commission Malaysia ("SACSC"); except for,Kian Joo Can Factory Berhad, a security which was reclassified as Shariah non-compliant by theSACSC on 27 May 2016. This securitiy will be disposed of soonest practical, once the totalamount of dividends received and the market value of this security equal the original investmentcost;

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.

94

DMP

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

Note 30.06.2016 30.06.2015

RM RM

Unit holders' capital (a) 10,978,475 9,983,824

Retained earnings

- Realised (b) 4,560,502 5,289,594

- Unrealised (c) 424,670 (254,985)

4,985,172 5,034,609

AFS reserve (d) (3,985) 581Total equity / Net asset value 15,959,662 15,019,014

(a) Unitholders' Capital

Number Number

of units RM of units RM

Balance at beginning

of year 6,774,748 8,289,361 6,976,355 8,495,870

Add: Creation of units 1,463,640 1,993,819 869,781 1,278,789

Less: Cancellation of units (172,544) (206,658) (129,283) (165,149)

Distribution equalisation - 901,953 - 374,314

Balance at end ofperiod 8,065,843 10,978,475 7,716,853 9,983,824

(b) Realised - Distributable

30.06.2016 30.06.2015

RM RM

Balance at the beginning of period 6,130,938 5,566,623

Net income after taxation (458,627) 502,786

Net unrealised gain attributable to

Shariah-compliant investments held

transferred to unrealised reserve (596,096) (273,291)

Distribution out of realised reserve (515,713) (506,524)Balance at the end of period 4,560,502 5,289,594

01.01.2016 to 30.06.2016 01.01.2015 to 30.06.2015

In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 19December 2001, the maximum number of units that can be issued for circulation is 100 million units.As at 30 June 2016 the number not yet issued is 91,934,157 units (30 June 2015: 92,283,147 units).

95

DMP

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

(c) Unrealised - Non-distributable

30.06.2016 30.06.2015

RM RM

Balance at the beginning of period (171,426) (528,276)


Shariah-compliant investment held

transferred from realised reserve 596,096 273,291Balance at the end of period 424,670 (254,985)


RM RM/Unit RM RM/Unit

Net asset value attributable

to unitholders for

issuing/redeeming of units 16,006,717 1.9845 15,046,415 1.9498

Effect from adopting bid

prices as fair value (47,055) (0.0058) (27,401) (0.0035)


to unitholders per

financial statements 15,959,662 1.9787 15,019,014 1.9463


Number of Valued at Number of Valued at

units NAV units NAV

RM RM

Directors of the Manager# 333,316 659,523 423,390 824,028

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

30.06.2016 30.06.2015

30 June 2016 30 June 2015


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 at and thenet value attributable to unitholders per the financial statements is as follows:-

96

DMP


1 January 2016 to 30 June 2016

% of Total

Value of % of Total Brokerage Brokerage

Trade Trade Fees Fees

RM % RM %

MIDF Amanah Investment 3,285,147 33.05 - -

- Bank Bhd

KAF Investment Bank Bhd 2,080,458 20.93 - -

RHB Investment Bank Bhd 1,532,785 15.42 832 11.35

Affin Hwang Capital Investment 687,278 6.92 1,546 21.09

- Bank Bhd

Kenanga Investment Bank Bhd 632,540 6.37 1,420 19.37

Maybank Investment Bank Bhd 581,280 5.85 1,303 17.78

JF Apex Securities Bhd 313,059 3.15 702 9.58

Alliance Investment Bank Bhd 222,100 2.23 361 4.92

CIMB Investment Bank Bhd 214,398 2.16 481 6.56

JP Morgan Securities (M) Sdn Bhd 160,531 1.62 362 4.95

Other brokers 228,919 2.30 323 4.409,938,495 100.00 7,330 100.00

18. MANAGEMENT EXPENSE RATIO

30.06.2016 30.06.2015


19. PORTFOLIO TURNOVER RATIO

30.06.2016 30.06.2015


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 period ended 30 June 2016 was RM15,750,851 (30June 2015: RM14,971,164)

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

Details of transactions with stockbroking companies and other investment banks for the periodended 30 June 2016 are as follows:

97

DMP


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 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 in eachsegment while safeguarding capital by investing in diversified portfolios. There have been no changesis reportable segments in the current financial year. The segment information provided is presented tothe Manager, the appointed External Investment Manager and Investment Committee of the Fund.

Shariah- Islamic Shariah- Islamic

compliant Deposit compliant Deposit

Equity and Sukuk Total Equity and Sukuk Total

Portfolio Portfolio Portfolio PortfolioRM RM RM RM RM RM


Profit from Islamic

deposits with licensed financial

institutions and sukuk - 139,798 139,798 - 135,943 135,943

Net gain on financial assets

at FVTPL (532,812) - (532,812) 432,632 - 432,632

Amortisation of premium, net of

accretion of discount on

AFS financial assets (1,573) (1,573) (1,565) (1,565)

Total segment operating incomefor the period (445,118) 138,224 (306,894) 508,109 134,378 642,486

Islamic deposits

with financial institutions 5,122,095 5,122,095 4,182,151 4,182,151


AFS financial assets 2,600,130 2,600,130 3,607,860 3,607,860Other assets 25,030 24,536 49,566 77,931 733 78,664



01.01.2016 to 30.06.2016 01.01.2015 to 30.06.2015

98

DMP


30.06.2016 30.06.2015

RM RM

Net reportable segment operating income (306,894) 642,487

Expenses (151,733) (139,701)

Net (Loss)/income before tax (458,627) 502,786

Tax expense - -Net (Losses)/income after tax (458,627) 502,786

30.06.2016 30.06.2015

RM RM

Total segment assets 15,831,230 14,961,938

Tax recoverable - 267

Other receivables - -

Amount due from broker 29,714.37 -

Cash at bank 154,000 78,855

Total assets of the Fund 16,014,944 15,041,060

Total segment liabilities 33,492 -

Other payables and accruals (634) (682)

Amount due to Manager 20,861 21,055


Total liabilities of the Fund 55,283 22,046



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

In addition, certain assets and liabilities are not considered to be part of the net assets or liabilities ofan individual segment. The following table provides reconciliation between the total reportablese gment a sse t s and l i ab i l i t i e s and to t a l a sse t s and l i ab i l i t i e s o f the Fu nd .

The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either fairvalue or at amortised cost based on their respective classification. The significant accounting policiesin Note 3 describe how the classes of financial instruments are measured, and how income andexpenses, including fair value gains and losses are recognized. The following table analyses thefinancial assets and liabilities of the Fund in the statement of financial position by the class offinancial instrument to which they are assigned, and therefore by the measurement basis.

99

DMP


(a) Classification of financial instruments (contd.)

Financial

liabilities

Financial AFS at

assets at financial Receivables amortised

FVTPL assets cost Total

RM RM RM RM RM

30 June, 2016

Assets

Quoted Shariah-compliant

equities 8,059,439 2,600,130 - - 10,659,569

Islamic deposits with -

licensed financial institutions - - 5,122,095 - 5,122,095


Cash at bank - - 154,000 - 154,000Total financial assets 8,059,439 2,600,130 5,355,376 - 16,014,944

Total non-financial assets -16,014,944

Liabilities

Amount due to Manager - - - 20,861 20,861Amount due to Trustee - - - 1,564 1,564

Other payables and accruals - - - (634) (634)Total financial liabilities - - - 55,283 55,283

30 June, 2015

Assets


equities 7,093,263 3,607,860 - - 10,701,123

Islamic deposits with -

licensed financial institutions - - 4,182,151 - 4,182,151



Total non-financial assets 26715,041,060

Liabilities


Other payables and accruals - - - (682) (682)Total financial liabilities - - - 22,046 22,046

100

DMP


(b) Fair value


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:


RM RM RM

8,059,439 - 8,059,439

- 2,600,130 2,600,130

8,059,439 2,600,130 10,659,569

7,093,263 - 7,093,263

- 3,607,860 3,607,860

7,093,263 3,607,860 10,701,123

As at 30 June 2016Financial assets at FVTPL- Quoted Shariah-compliant equities

AFS financial assets- Sukuk

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 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 on informationprovided by Bond Pricing Agency Malaysia Sdn Bhd.

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 observablefor the asset or liability either directly or indirectly

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

As at 30 June 2015Financial assets at FVTPL- Quoted Shariah-compliant equities

AFS financial assets- Sukuk

101

DMP


(b) Fair value (Contd.)

(ii) Financial instruments not carried at fair value


(i) Market Risk


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

The 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 Markets and ServiceAct, 2007.

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

The Fund's market risk is affected primarily due to changes in market prices and interest rates.

Financial instruments not carried at fair value comprise of 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.

102

DMP



(a) Equity Price Risk (Contd.)

Effect on profit

or loss and equity

Change in Shariah-compliant Increase/(Decrease)

equity price (%) RM

30/06/2016+6/-6 483,566 /(483,566)

30/06/2015+6/-6 425,596 /(425,596)


Effect on profit

or loss and equity

Increase/(Decrease)

Change In Basis Points* RM

30/06/2016+25/-25 4,560/ (4,560)

30/06/2015

+25/-25 4,952/ (4,952)

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

based on the currently observable market environment

The risk refers to the effect of interest rate changes on the valuation for sukuk and Islamicdeposits with financial institutions. In the event of rising interest rates, the return on Islamicdeposits with financial institutions will rise while valuation for sukuk will decrease and viceversa, thus affecting the net asset value of the Fund. This risk will be minimized via themanagement of the duration structure of the portfolio of sukuk and Islamic deposits withfinancial institutions.

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

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

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:

103

DMP


(ii) Credit Risk


1 month - Above

30 June 2016 3 months 3 months Total

RM RM RM

Financial Assets:

Financial assets at FVTPL 8,059,439 - 8,059,439

AFS financial assets 2,600,130 2,600,130

Islamic deposits 5,122,095 - 5,122,095

with financial institutions

Other assets 233,280 - 233,280

Total undiscounted financial

assets: 13,414,814 2,600,130 16,014,944

Non-Financial assets

Tax Recoverable - - -

Total Assets 13,414,814 2,600,130 16,014,944

Financial Liabilities

Other liabilities 55,282 - 55,282

Total undiscounted financial liabilities 55,282 55,282

Unitholders NAV 15,959,662 - 15,959,662Liquidity gap (2,600,130) 2,600,130

This risk occurs in thinly traded or illiquid Shariah-compliant securities. Should the Fund needsto sell a relatively large amount of such Shariah-compliant securities, the act itself maysignificantly depress the selling price. As the fund is exposed to daily redemption of units, therisk is minimised by placing a prudent level of funds in short term Islamic deposits and byinvesting in Shariah-compliant stocks whose liquidity is adjudged to commensurate with theexpected exposure level 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 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 date of Financial Position, 30 June 2016, the fund only invested in a relatively stablesukuk.

104

DMP



30 June 2015 1 month - Above

3 months 3 months

Financial Assets: RM RM


AFS financial assets 3,607,860 3,607,860

Islamic deposits 4,182,151 - 4,182,151

with financial institutions

Other assets 157,519 - 157,519

Total undiscounted financial

assets: 11,432,933 3,607,860 15,040,793

Non-Financial assets

Tax Recoverable - 267 267

Total Assets 11,432,933 3,608,127 15,041,060



Total undiscounted financial liabilities 22,046 22,101

Unitholders NAV 15,019,014 - 15,019,014Liquidity gap (3,608,127) 3,608,127



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 is minimised through thewell diversified nature of the Fund.

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 theShariah-complaint securities of any issuer is minimised.

105

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 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 unitholder'sredemption as explained in Note 22 (iii) above.

106


PIF


[email protected]

28

107

Your Need

is our Focus

22 August 2016


PIF


[email protected]

59

108

Your Need

is our Focus


PHEIM INCOME FUND


Pheim Income Fund are drawn up in accordance with Malaysian Financial Reporting

Standards, International Financial Reporting Standards and the Securities Commission's

Guidelines on Unit Trust Funds in Malaysia so as to give the true and fair view of the

unaudited financial position of Pheim Income Fund as at 30 June 2016 and of its results,

changes in net assets value and cash flows for the period then ended.



AZMI MALEK MERICAN

Director

HOI WENG KONG

Director


22 AUG 2016

PIF

PHEIM INCOME FUND



Note 30.06.2016 30.06.2015

RM RM

INVESTMENT INCOME


Interest Income :


- available-for-sale ("AFS") financial assets 111,700 172,162


profit or loss ("FVTPL") 8 (266,104) 446,345

Amortisation of premiums, net of accretion of

discounts on AFS financial assets 9 1,847 (3,017)

Net realised gain/(loss) on foreign exchange 78 (69)

(73,246) 692,188

EXPENSES

Manager's fee 4 58,360 77,010





83,853 101,301

Net (loss)/income before tax (157,099) 590,887

Tax expense 6 - -Net (loss)/income for the period (157,099) 590,887

Other comprehensive incomeNet (loss)/gain on change in fair value of AFS financial assets (15,259) 23,934

Total comprehensive (loss)/income for the period (172,358) 614,821

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


Net unrealised (loss)/gain (318,492) 405,610(157,099) 590,887

Distribution for the year :

Net distribution 11 661,771 271,329

Net distribution per unit (sen) 11 6.75 2

Gross distribution per unit (sen) 11 6.75 2


109

PIF

PHEIM INCOME FUND


Note 30.06.2016 30.06.2015

RM RM

ASSETS

Investments 7 7,356,067 11,263,279

Deposits with licensed financial institutions 10 3,537,952 2,536,935

Amount due from brokers - 42,372



Cash at bank 64,776 26,942

TOTAL ASSETS 11,008,046 13,961,636

LIABILITIES






EQUITY


(Accumulated losses)/Retained earnings (106,023) 303,170

Available-for-sale reserve (31,867) 5,401

TOTAL EQUITY 12 10,913,961 13,938,824





110

PIF

PHEIM INCOME FUND





Capital earnings/ reserves Equity

(Accumulated

losses)

Note 12(a) Note 12(b) Note 12(d)

and 12(c)

RM RM RM RM

At 1 January 2015 16,779,408 (16,388) (18,533) 16,744,487


the period - 590,887 23,934 614,821

Creation of units 317,904 - - 317,904

Cancellation of units (3,411,301) - - (3,411,301)


Distribution - (271,329) - (271,329)Balance at 30 June 2015 13,630,254 303,170 5,401 13,938,824

At 1 January 2016 -

Effects of adopting FRS 139 10,508,176 712,847 (16,608) 11,204,415

10,508,176 712,847 (16,608) 11,204,415


the period - (157,099) (15,259) (172,358)

Creation of units 761,399 - - 761,399

Cancellations of units (208,457) - - (208,457)


Distribution for the period - (661,771) - (661,771)Balance at 30 June 2016 11,051,851 (106,023) (31,867) 10,913,962

111

PIF

PHEIM INCOME FUND



01.01.2016 01.01.2015

to to

30.06.2016 30.06.2015

RM RM



Proceeds from sale of investments 976,347 2,207,618


Proceeds received from bonds on maturity - -


Interest received 167,790 228,588




Income distribution paid (3,418) (951)

Net cash generated/(used in) from operating

and investing activities 42,780 307,860


Proceeds from creation of units 115,466 33,462


Net cash used in from financing activities (109,224) (3,435,302)

NET DECREASE IN CASH

AND CASH EQUIVALENTS (66,444) (3,198,151)

CASH AND CASH EQUIVALENTS AT THE

BEGINNING OF THE YEAR 3,669,172 5,762,028



Deposits with licensed financial institutions (Note 10) 3,537,952 2,536,935

Cash at bank 64,776 26,9423,602,728 2,563,877


112

PIF

PHEIM INCOME FUND







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

Pheim Income Fund ("the Fund") was established pursuant to a Master Deed dated 11 January 2002 as amendedmodified and supplemented by a Supplemental Master Deed dated 3 November 2008 made between HSBCTrustee (Malaysia) Berhad and Pheim Unit Trusts Berhad ("the Manager"), a second Supplemental MasterDeed dated 29 April 2013 and Third Supplemental Master Deed dated 30 April 2015 made between theManager and Maybank Trustees Berhad ("the Trustee").

The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 of the MasterDeed, which includes investments in equities and fixed income securities traded on Bursa Malaysia or any othermarkets considered as Eligible Market. The Fund commenced operations on 28 January 2002 and will continueits operations until terminated by the Trustee as provided under Part 12 of the Master Deed.

The Manager is a public limited company incorporated in Malaysia. It is a wholly owned subsidiary of thePheim Asset Management Sdn Bhd, a private company incorporated in Malaysia. Its principal activity is themanagement of unit trust funds. Pheim Asset Management Sdn. Bhd. has been appointed by the Manager as theExternal Investment Manager of the Fund with responsibility for the provision of investment managementservices to the Fund.

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


The unaudited financial statements were authorised for issue by the Board of Directors of the Manager inaccordance with the resolution of the directors on 22 August 2016.

The unaudited financial statements of the Fund is prepared under the historical cost convention unlessotherwise indicated in the summary of significant accounting policies in Note 3.

The accounting policies applied by the Fund are consistent with those applied in the previous financialyear other than the application of amendments to MFRSs as disclosed in Note 2.3 .

113

PIF



Amendments to MFRSs Classified as "Annual Improvement to MFRSs 2010-2012 Cycle"

Amendments to MFRSs Classified as "Annual Improvement to MFRSs 2011-2013 Cycle"

The initial application of the above amendments to MFRSs have no significant impact on the disclosure

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




Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2012-2014 Cycle"


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

MFRS 15 - Revenue from Contracts with Customers

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

effective and they are not expected to have any significant impact on the financial statement of the Fund upon

their initial application other than as discussed below:-

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

The Standard replaces earlier version of MFRS 9 and introduce a package of improvement which include

a classification and measurement model, a single forward-looking "expected loss' impairment model

and a substantially-reformed approach to hedge accounting.

The key enhancement of MFRS 9 are:

● Under MFRS 9, all recognised financial asset 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 asset and the

contractual cash flow charateristics 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.

During the financial year, the Fund has applied where applicable, the following amendments to MFRSsissued by the Malaysian Accounting Standars Board ("MASB") that are relevant to the funds operation andeffective for its accounting period beginning on or after 1 January 2015:-

The Fund has not early adopted the following new MFRSs and amendments to MFRSs issued by theMASB that are relevant to its operation but are not yet effective :-

114

PIF



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

The key enhancements of MFRS 9 are (cont'd):

• Most of the requirement 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 account 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 requirement retain the three type of hedge accounting mechanisms

currently available in MFRS 139 i.e fair value hedges, cash flow hedges and hedges of a net

investment in foreign operation. MFRS 9 incorporates a new hedge accounting model that aligns

the hedge accounting more closely with an entity's risk managements activities. The new hedge accounting

model has also expanded the scope of eligibilty 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.

115

PIF





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

Financial assets are recognised in the statement of financial position when, and only when, the Fundbecomes a party to the contractual provisions of the financial instruments. Regular way of purchase andsale of investments in financial instruments are recognised on trade dates. When financial assets arerecognised initially, they are measured at fair value, plus attributable transaction cost, for investment not atfair value through profit or loss.

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

Financial assets are classified as financial assets at FVTPL if they are held for trading or aredesignated as such by the Manager upon initial recognition. Financial assets held for trading includesecurities and fixed income securities acquired principally for the purpose of selling them in nearterm.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value at the date ofthe statement of financial position. Changes in the fair value of those financial instruments arerecorded in "Net gain or loss on financial assets at FVTPL". Interest earned and dividend revenueelements of such instruments are recorded separately in "Interest income" and "Dividend income",respectively. Foreign exchange differences on financial assets at FVTPL are not recognisedseparately in profit or loss but included in net gains or net losses on changes in fair value of financialassets at FVTPL.

AFS financial assets are financial assets that are designated as available for sale or are not classifiedas financial assets at FVTPL or loans and receivables.

After initial recognition, AFS financial assets are measured at fair value. Gains or losses fromchanges 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, dividendincome 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 reclassifiedfrom equity to profit or loss as a reclassification adjustment when the financial asset isderecognised. Interest income calculated using the effective interest method is recognised in profitor loss. Dividends on an AFS equity instrument are recognised in profit or loss when the Fund'sright to receive payment is established.

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

A financial asset is derecognised when the asset is disposed and the contractual right to receive cashflows from the asset has expired. On derecognition of a financial asset in its entirety, the differencebetween the carrying amount and the sum of the consideration received and any cumulative gain orloss that had been recognised in other comprehensive income is recognised in profit or loss.

116

PIF



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

(c) Loans and receivables



Regular way purchases or sales are purchases or sales of financial assets that require delivery ofassets within the period generally established by regulation or convention in the market placeconcerned. All regular way purchases and sales of financial assets are recognised or derecognised ontrade date, i.e. the date that the Fund commits to purchase or sell the asset.

Financial assets with fixed or determinable payments that are not quoted in an active market areclassified as loans and receivables. The Fund includes short term receivables such as balances duefrom broker, Manager and other receivables in the classification. Loans and receivables arerecognised initially at fair value including transaction costs.

Subsequent to initial recognition, loans and receivables are measured at amortised cost usingeffective interest method. Gains and losses are recognised in profit or loss when the loans andreceivables 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 isimpaired.

Significant or prolonged decline in fair value below cost, weaken fundamental, significant financialdifficulties of the issuer or obligor, and the disappearance of an active trading market areconsiderations to determine whether there is objective evidence that investment securities classifiedas AFS financial assets are impaired. At end of each financial year, the Manager would receiveimpairment proposal from the Fund's external investment manager, if any financial assets of theFund, in their professional opinion, warrant an impairment exercise.

If an AFS asset is impaired, an amount comprising the difference between its cost (net of anyprincipal payment and amortisation) and its current fair value, less any impairment loss previouslyrecognised 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 subsequentperiod. Increase in fair value, if any, subsequent to impairment loss is recognised in othercomprehensive income. For AFS debt investments, impairment losses are subsequently reversed inprofit or loss, up to the amount previously recognised as impairment loss, if an increase in the fairvalue of the investment can be objectively related to an event occurring after the recognition of theimpairment loss in profit or loss.

117

PIF


3.2 Impairment of Financial Assets (Contd.)




To determine whether there is objective evidence that an impairment loss on financial assets hasbeen incurred, the Fund considers factors such as the probability of insolvency or significantfinancial 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 betweenthe asset's carrying amount and the present value of estimated future cash flows discounted at thefinancial asset's original effective interest rate. The impairment loss is recognised in profit or loss.

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

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

Unrealised gain and losses comprise changes in fair value of financial instruments for the period fromreversal 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 throughprofit or loss" are calculated using weighted average method. They represent the difference between aninstrument's initial carrying amount and disposal amount, or cash payment or receipts made of derivativecontracts (excluding payments or receipts on collateral margin accounts for such investments).

Financial liabilities are classified according to the substance of the contractual arrangements entered intoand the definition of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial positionwhen, 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 valueplus directly attributable transaction costs and subsequently measured at the amortised cost using effectiveinterest method.

A financial liability is derecognised when the obligation under the liability is extinguished. Gains andlosses are recognised in profit or loss when the liabilities are derecognised, and through the amortisationprocess.

118

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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 are presentedin Ringgit Malaysia (RM), which is also the Fund's functional currency.

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 datesof the transactions. At the end of each reporting period, foreign currency monetary assets and liabilities aretranslated at exchange rates prevailing at the end of the reporting period. Non-monetary items that aremeasured at fair value in a foreign currency are translated using exchange rates at the date when the fairvalue was determined.

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

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

The unitholders' contributions to the Fund meet the definition of puttable instruments classified as equityinstruments 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 distribution and/oradjusted accordingly when units are cancelled.

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

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

119

PIF



3.10 Income Tax



Income is recognised to the extent that is probable that the economic benefits will flow to the Fund and theincome 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 incomesecurities, is recognised using effective interest method.

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

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


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 resultsare regularly reviewed by the Manager, External Investment Manager and the Fund's InvestmentCommittee. The External Investment Manager and the Fund Investment Committee jointly assumes therole of chief operation decision maker, for performance assessment purposes and to make decision aboutresources allocated to each investment segment.

The preparation of financial statements in accordance with MFRS and IFRS requires the use of certainaccounting estimates and exercise of judgements. Estimates and judgements are continually evaluated andare based on past experience, reasonable expectations of future events and other factors.

No major judgements have been made by the Manager in applying the Fund's accounting policies. Thereare no key assumptions concerning the future and other key sources of estimation uncertainty at thereporting date, that have significant risk of causing material adjustment to the carrying amounts of assetsand liabilities within next year.

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4. MANAGER'S FEE

5. TRUSTEE' S FEE

6. TAXATION 30.06.2016 30.06.2015

RM RM

Current year Malaysian tax - -Overprovision in prior year - -

Malaysian tax expense based on - -

results for the year

30.06.2016 30.06.2015

RM RM


Taxation at Malaysian statutory rate of 25% (2015: 25%) (39,275) 147,722

Tax effects of:


Expenses not deductible for tax purposes 5,331 5,058Restriction on tax deductible expenses for unit trust funds 15,633 20,267

Tax expense for the financial period - -

The Manager is entitled to an annual management fee of 1.0% p.a. of net asset value of the Fund (beforededucting 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'sand Trustee's fees for the day) calculated and accrued on a daily basis subject to a minimum of RM18,000 p.a.

Income tax is calculated at Malaysian statutory tax rate of 25% (2015: 25%) of the estimated assessable netincome for the year.

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

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

121

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7. INVESTMENTS

Financial assets at fair value through profit or loss 30.06.2016 30.06.2015

(Note 8) RM RM

Quoted Equities

- in Malaysia 1,557,195 1,726,028

- outside Malaysia 392,702 822,631

1,949,897 2,548,659

Available-for-sale financial assets (Note 9)

Unquoted fixed income

securities in Malaysia 5,406,170 8,714,620Total investments 7,356,067 11,263,279


30.06.2016 30.06.2015

RM RM

Financial assets at FVTPL:Quoted equity investments 1,949,897 2,548,659


Realised gain/(loss) on disposals 52,388 40,735

Unrealised gain on changes in fair values (318,492) 405,610(266,104) 446,345

The currency exposure profile of financial assets at

FVTPL is as follows :

- Ringgit Malaysia 1,557,195 1,726,028

- Hong Kong Dollar 255,423 495,177

- Singapore Dollar 83,804 287,819

- Indonesia Rupiah 53,475 39,6351,949,897 2,548,659

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RM RM NAV

QUOTED EQUITY INVESTMENTS

- IN MALAYSIA

Main Market

Manufacturing

Supermax Corp Berhad 30,000 64,688 63,900 0.59Pecca Group Berhad 40,000 56,800 64,000 0.59

70,000 121,488 127,900 1.18Consumer Products

Tek Seng Holdings Bhd 105,600 73,047 126,720 1.16105,600 73,047 126,720 1.16

Industrial Products

Evergreen Fibreboard Bhd 23,000 14,514 24,380 0.22Jaya Tiasa Holdings Bhd 227,000 370,382 258,780 2.37Teo Seng Capital Bhd 72,000 111,108 88,560 0.81

322,000 496,004 371,720 3.40

Properties

Land & General Bhd 387,000 172,475 147,060 1.35KNM Group Berhad 325,000 164,617 133,250 1.22Metro Kajang Holdings Bhd 57,500 170,165 146,050 1.34Sentoria Group Bhd 140,000 124,452 113,400 1.04

909,500 631,709 539,760 4.95

Technology

Pentamaster Corp Bhd 180,000 110,730 139,500 1.28

Trading/Services

Berjaya Corp Bhd 130,000 53,658 46,150 0.42


268,000 134,441 103,420 0.94

Plantation

Sarawak Oil Palms Berhad 24,000 113,452 94,800 0.87

Oil & Gas

Hibiscus Petroleum Berhad 305,000 55,191 53,375 0.49

TOTAL QUOTED

EQUITY INVESTMENTS- IN MALAYSIA 2,184,100 1,736,061 1,557,195 14.27

123

PIF



RM RM NAV

QUOTED EQUITY INVESTMENTS

- OUTSIDE MALAYSIA

Hong Kong Stock Exchange

("HKSE")

Agricultural Bank of China 38,000 72,249 55,605 0.51

China Citic Bank 9,000 28,896 21,949 0.20

China Life Insurance Co-H 6,000 58,405 51,620 0.47

Consun Pharmaceutical Group 45,000 120,874 92,468 0.85

Goldpac Group Ltd 30,000 83,526 33,780 0.31

128,000 363,949 255,423 2.34

Jakarta Stock Exchange

Astra Agro Lestari TBK PT 12,000 54,071 53,475 0.49

Singapore Stock Exchange

("SGX")

IX Biopharma Ltd 104,000 137,884 83,804 0.77

TOTAL QUOTED

EQUITY INVESTMENTS

- OUTSIDE MALAYSIA 244,000 555,904 392,702 3.60

TOTAL QUOTED EQUITIES 2,428,100 2,291,965 1,949,897 17.87



124

PIF

9. AFS FINANCIAL ASSETS

30.06.2016 30.06.2015

RM RM

Unquoted fixed income securities 5,406,170 8,714,620

Accretion of discounts, net of amortisationof premiums of AFS financial assets (1,847) (3,017)

Unrealised gain on changes in fair values 1,349 5,401

AFS financial assets as at 30 June 2016 are as detailed below:

Nominal

Name of Counter Amount Cost* Fair value % of

RM RM NAV

UNQUOTED FIXED INCOME SECURITIES

SME Bank IMTN -3/17 1,700,000 1,700,000 1,702,720 15.58

Poh Kong IMTN 10/17 1,700,000 1,704,821 1,697,450 15.53

Sabah 4.275%- 12/19 2,000,000 2,000,000 2,006,000 18.35

5,400,000 5,404,821 5,406,170 49.46

EXCESS OF FAIR VALUEOVER COST 1,349

* Cost of fixed income security includes accretion of discount and/or amortisation of premium.


30.06.2016 30.06.2015

RM RM


Average

remaining

WAEIR maturities

30.06.2016 30.06.2015 30.06.2016 30.06.2015

% % Days Days

Licensed investment banks 3.23 3.20 6 5

The weighted average effective interest rate ("WAEIR") per annum and the average remaining maturities ofdeposits and placement are as follows:

125

PIF


Distribution declared and paid on 28 April 2016 was 6.75 sen net per unit.

Distribution to unitholders are from the following sources:

2016 2015RM RM

Dividend Income 2,318 5,512

Interest Income 73,241 106,655

Net realised gain from sale of investment 21,814 (47,145)

Net realised loss on foreign exchange - -

Net accretion of discount on corporate bond (794) (1,278)

Other Income - (42,632)

96,579 21,112

Less:

Expenses 35,882 42,677

Taxation - -

Current year's realised income 60,697 (21,565)

Distribution out of previous year's realised reserves 601,074 292,894Distribution for the year 661,771 271,329

Unit in circulation at book closing date 9,804,013 13,566,447

Gross distribution per unit (sen) 6.75 2.0

Net distribution per unit (sen) 6.75 2.0Date of distribution 28.04.2016 27.03.2015


Note 30.06.2016 30.06.2015

RM RM

Unitholder's capital (a) 11,051,851 13,630,254

Retained earnings/(Accumulated losses)

- Realised earnings/(losses) (b) 204,880 334,345

- Unrealised earnings (c) (310,903) (31,175)

(106,023) 303,170

AFS reserve (d) (31,867) 5,401Total equity / Net asset value 10,913,962 13,938,824


Number Number



of year 9,897,334 10,508,176 15,645,726 16,779,408

Add: Creation of units 675,174 761,399 281,402 317,904

Less: Cancellation of units (203,358) (208,457) (3,194,196) (3,411,301)

Distribution equalisation - (9,268) - (55,757)Balance at end of period 10,369,150 11,051,851 12,732,932 13,630,254

01.01.2016 to 30.06.2016 01.01.2015 to 30.06.2015

In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 14 August 2006,the maximum number of units that can be issued for circulation is 100,000,000 units. As at 30 June 2016, thenumber not yet issued is 89,630,850 units (30 June 2015: 87,267,068).

126

PIF



30.06.2016 30.06.2015

RM RM

Balance at the beginning of period 705,336 420,328

Net income after taxation (157,099) 590,887

Net unrealised gain attributable to investments

held transferred to unrealised reserve 318,492 (405,610)

Net unrealised foreign exchange loss

attributable to foreign currency monetary

item transferred to unrealised reserve (78) 69

Distribution out of realised reserve (661,771) (271,329)Balance at the end of period 204,880 334,345


30.06.2016 30.06.2015

RM RM

Balance at the beginning of period 7,511 (436,716)

Net unrealised gain attributable to investment

held transferred from realised reserve (318,492) 405,610

Net unrealised foreign exchange (loss)/gain


item transferred from realised reserve 78 (69)Balance at the end of period (310,903) (31,175)

127

PIF




to unitholders for





to unitholders per




units NAV units NAV

RM RM

Directors of the Manager # 201,091 211,656 1,853,512 2,029,052

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

30.06.2016 30.06.2015

30 June 2016 30 June 2015


Quoted financial assets in the financial statements have been valued at the bid prices at the close of business inaccordance with the provision of MFRS 139. For the purpose of calculation of net asset value attributable tounitholders per unit for the issuance and redemption of units in accrodance with the Deed, quoted financialassets are stated at the last done market price.

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

128

PIF


Trading % of total Brokerage % of total

value trading fees brokerage

RM value RM fees

MIDF Amanah Investment Bank Bhd 2,482,413 39.61 - -

Affin Hwang Capital Investment Bank 1,983,652 31.65 489 9.76

Kenanga Investment Bank Bhd 244,330 3.90 548 10.94

CIMB Investment Bank Bhd 240,616 3.84 990 19.76

CIMB-GK Securities Pte Ltd - Singapore 232,236 3.71 580 11.57

Maybank Investment Bank Bhd 163,687 2.61 368 7.36

RHB Investment Bank Bhd 144,587 2.31 326 6.52Hong Leong Investment Bank 133,278 2.13 173 3.45

CIMB-GK Securities Ltd - Indonesia 129,900 2.07 387 7.73

DBS Vicker Securities Pte Ltd - Singapore 104,046 1.66 208 4.15

Others 408,285 6.51 939 18.766,267,030 100.00 5,008 100.00


30.06.2016 30.06.2015


17. PORTFOLIO TURNOVER

30.06.2016 30.06.2015


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 net asset value NAV of the Fund calculated on adaily basis.The average NAV of the Fund for the period ended 30 June 2016 was RM 11,070,043 (30 June 2015: RM15,056,764)

This is the the ratio of the average of acquisitions and disposals of the Fund for the period to average NAV of theFund for the year calculated on daily basis.

Details of transactions with stockbroking companies and other investment banks for the period ended 30June 2016 are as follows:

129

PIF


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 investment strategies asset out in the investment Guidelines of the Fund. The Fund is managed by two segments:

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

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

01.01.2016 to 30.06.2016 01.01.2015 to 30.06.2015

Fixed Fixed

Equity income Equity Income

Portfolio Portfolio Total Portfolio Portfolio Total

RM RM RM RM RM RMGross dividend income 21,275 - 21,275 21,346 - 21,346

Interest Income - 227,583 227,583 - 227,583 227,583

Net gain on financial assets

at ("FVTPL") (266,104) - (266,104) 446,345 - 446,345

Accretion of discount,net of

amortisation of premium

AFS financial assets - 1,847 1,847 - (3,017) (3,017)

Net realised (loss)/gain on

foreign exchange 78 - 78 (69) - (69)

Total segment operating incomefor the period (244,750) 229,430 (15,319) 467,622 224,566 692,190

Deposit with financial institutions 3,537,952 3,537,952 2,536,935 2,536,935


AFS financial assets - 5,406,170 5,406,170 - 8,714,620 8,714,620Other assets 9,152 40,099 49,251 7,811 65,718 73,529


Other liabilities 74,710 - 74,710 - - -Total segment liabilities 74,710 - 74,710 - - -


130

PIF


30.06.2016 30.06.2015

RM RM


Expenses (83,853) (101,301)


Tax expense - -Net income for the year (157,099) 590,887

30.06.2016 30.06.2015

RM RM



Amount due from broker - 42,372Cash at bank 64,776 26,942




Other payables and accruals 8,259 8,138Amount due to Trustee 1,564 1,673




Expenses of the Fund are not considered part of the performance of any operating segment. The followingtable 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 anindividual segment. The following table provides reconciliation between total reportable segment assets andliabilities 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 orat amortised cost based on their respective classification. The significant accounting policies in Note 3describe how the classes of financial instruments are measured, and how income and expenses, includingfair value gains and losses are recognised. The following table analyses the financial assets and liabilitiesof the Fund in the statement of financial position, by the class of financial instrument to which they areassigned, and therefore by the measurement basis.

131

PIF



Financial

liabilities

Financial AFS at



RM RM RM RM RM

30 June 2016

Assets

Investments 1,949,897 5,406,170 - - 7,356,067



Amount due from brokers - - - - -




Liabilities


Other payables and accruals - - - 8,259 8,259Total financial liabilities - - - 94,085 94,085

30 June 2015

AssetsInvestments 2,548,659 8,714,620 - - 11,263,279



Amount due from brokers 42,372 - - - 42,372



Total non-financial assets 18,57913,961,636

LiabilitiesAmount due to Manager - - - 11,221 11,221


Other payables and accruals - - - 8,150 8,150Total financial liabilities - - - 20,752 20,752

132

PIF


(b) Fair Value



RM RM RM

As at 30 June 2016

Financial assets as FVTPL

- Quoted Equities 1,949,897 - 1,949,897

AFS financial assets

-Fixed income securities - 5,406,170 5,406,170

1,949,897 5,406,170 7,356,067

As at 30 June 2015

Financial assets as FVTPL

- Quoted equities 2,548,659 - 2,548,659

AFS financial assets

-Fixed income securities - 8,714,620 8,714,620

2,548,659 8,714,620 11,263,279

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

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

Unquoted fixed income securitesThe published market prices for RM-denominated unquoted bonds are based on information providedby Bond Pricing Agency Malaysia Sdn Bhd.

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

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

Level 2 : Inputs other than quoted prices included within Level 1 that are observable for the 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 held the following financial instruments carried at fair value on the statement of financialposition as at the end of the period :

133

PIF


(b) Fair Value (Contd.)

(ii) Financial Instruments not carried at fair value


(i) Market Risk


The Fund maintains investment portfolios in a variety of quoted and unquoted financial instruments as dictatedby 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 pricerisk and currency risk), credit risk, and liquidity risk. Whilst these are the most important types of financial risksinherent in each type of financial instruments, the Manager and the Trustee would like to highlight that this listdoes 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 inthe Fund’s activities, but it is managed through a process of ongoing identification, measurement andmonitoring of risks. Financial risk management is also carried out through sound internal control systems andadherence to the investment restrictions as stipulated in the Trust Deed, the Securities Commission’s Guidelineson Unit Trust Funds and the Capital Markets and Service Act, 2007.

The Fund's principal exposure to market risk arises primarily due to changes or developments in the marketenvironment and typically includes changes in regulations, politics and the economy of the country. Marketrisk is also influenced by global economics and geopolitical developments. The Fund seeks to diversifyaway 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 thelevels of equity indices and the value of individual shares. The equity price risk exposure arises fromthe Fund's investments in quoted equity securities.

Financial instruments not carried at fair value comprise financial assets and financial liabilitiesclassified as loans and receivables and financial liabilities at amortised cost respectively. Thecarrying amount of these financial instruments at the end of the financial year approximated theirfair values due to their short term to maturity.

134

PIF



(a) Equity Price Risk (Contd.)

Effect on profit

or loss and equity

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

RM

30 June 2016+6/-6 116,994/ (116,994)

30 June 2015+6/-6 152,920/ (158,924)


Effect on profit

or loss and equity

Change In Basis Points* Increase/(Decrease)

RM

2015+25/-25 4,470/ (4,470)

2014+25/-25 2,622/ (2,622)

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

observable market environment

This risk refers to the effect of interest rate changes on the market value of fixed income securitiesand deposits with financial institutions. In the event of rising interest rates, the return on depositswith financial institutions will rise while prices of fixed income securities will decrease and viceversa, thus affecting the net asset value of the Fund. This risk will be minimized via themanagement of the duration structure of the portfolio of fixed income securities and deposits withfinancial institutions.

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

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

135

PIF



(c) Currency Risk

Effect on profit or loss

and equity

30 June 2016 30 June 2015

RM RM

Indonesian Rupiah 5,347 3,964

Phillipines Peso - -

Hong Kong Dollar 25,542 49,518

Singapore Dollar 8,380 28,78239,270 82,263

(ii) Credit Risk

The Fund is exposed to currency risk primarily through its investment in overseas quoted equitiesand bank balances that are denominated in foreign currencies. The Fund's foreign currency exposureprofiles of it's investment in quoted equities has been disclosed under Note 8.

A 10% strenghtening or weakening of the RM againts the following foreign currencies as at the endof the period would have decreased or increased respectively the profit or loss and equity of the Fundby the amount shown below. The analysis assumes all other variables are held constant.

The Fund's principal exposure to credit risk arises primarily due to changes in the financial conditions ofcompanies 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 orreduced income for the Fund resulting in a reduction in the Fund's asset value and thus unit price. This riskis mitigated by vigorous credit analyses and diversification of the bond portfolio of the Fund and to engagedifferent stockbroking companies with good reputation. Bond rating of the Fund's portfolio has beendisclosed in Note 9.

136

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1 month - 3 Above 3

30 June 2016 months months Total

RM RM RM

Financial Assets




Other assets 114,027 - 114,027

Total undiscounted financial asset: 5,601,876 5,406,170 11,008,046

Non-Financial Asset

Tax recoverable - 0 0

Total Assets 5,601,876 5,406,170 11,008,046



Total undiscounted

financial liabilities 94,085 - 94,085

Unitholder's NAV 10,913,961 - 10,913,961Liquidity gap (5,406,171) 5,406,170 -

This risk occurs in thinly traded or illiquid equity securities. Should the Fund need to sell a relatively largeamount of such securities, the act itself may significantly depress the selling price. As the Fund is exposedto daily redemption of units, the risk is minimized by placing a prudent level of funds in short-termdeposits and by investing in stocks whose liquidity is adjudged to be commensurate with the expectedexposure level of the Fund.

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

137

PIF



30 June 2015

Financial Assets




Other assets 142,843 - 142,843

Total undiscounted financial asset: 5,228,437 8,714,620 13,943,057

Non-Financial Asset

Tax recoverable - 18,579 18,579

Total Assets 5,228,437 8,733,199 13,961,635



Total undiscounted

financial liabilities 22,811 - 22,811

Unitholder's NAV 13,938,825 - 13,938,825Liquidity gap (8,733,199) 8,733,199 -




The Fund is exposed to the individual risk of the respective companies issuing securities which includeschanges to the business performance of the company, consumer tastes and demand, lawsuits andmanagement 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 itsnet asset value. Under such restriction, the risk exposure to the securities of any issuer is minimised.

The capital is represented by unitholder's subscription to the Fund. The amount of capital can changesignificantly on a daily basis as the Fund is subject to a daily redemption and subscription at the discretionof 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 20 (iii)above.

138


PAXJ


23

139

YourNeed

is our Focus

22 August 2016


PAXJ


[email protected]

59

140

Your Need

is our Focus


PHEIM ASIA EX-JAPAN FUND


Pheim Asia Ex-Japan Fund are drawn up in accordance with Malaysian Financial

Reporting Standards, International Financial Reporting Standards and the Securities

Commission's Guidelines on Unit Trust Funds in Malaysia so as to give a true and fair

view of the unaudited financial position of Pheim Asia Ex-Japan Fund as at 30 June

2016 and of its results, changes in net asset value and cash flows for the period then

ended.



AZMI MALEK MERICAN

Director

HOI WENG KONG

Director


22 AUG 2016

PAXJ




Note 30.06.2016 30.06.2015

RM RM

INVESTMENT INCOME


Interest Income:



profir or loss ("FVTPL") 8 (1,389,390) 1,688,456

Net realised loss on foreign exchange (2,400) (396)

(1,130,739) 1,907,202

EXPENDITURE

Manager's fee 4 137,941 175,830





193,995 224,118

Net (loss)/income before tax (1,324,734) 1,683,084

Tax expenses 6 - -Net (loss)/income for the period (1,324,734) 1,683,084

Total comprehensive (loss)/income for the period (1,324,734) 1,683,084

Net income after tax is made up of the following:


Net unrealised (loss)/income (1,416,159) 1,250,964(1,324,734) 1,683,084


142

PAXJ



Note 30.06.2016 30.06.2015

RM RM

ASSETS

Investments 7 15,828,387 16,795,967

Deposits with licensed financial institutions 9 885,899 2,101,552



Tax recoverable - -

Cash at bank 296,438 298,697

TOTAL ASSETS 17,158,475 19,344,723

LIABILITIES






EQUITY


Accumulated losses (3,066,189) (1,921,074)

Available for sale reserve - -

TOTAL EQUITY 12 17,030,753 19,075,489





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Unitholders' Retained Total

Capital earnings/ Equity

(Accumulated

losses)

Note 12(a) Note 12(b)

and (c )

RM RM RM

At 1 January 2015 30,086,824 (3,604,158) 26,482,666

Effects of adopting FRS 139 - - -

30,086,824 (3,604,158) 26,482,666


the period - 1,683,084 1,683,084

Creation of units 86,298 - 86,298

Cancellation of units (10,255,520) - (10,255,520)

Distribution equalisation 1,078,961 - 1,078,961

Balance at 30 June 2015 20,996,563 (1,921,074) 19,075,490

At 1 January 2016 20,337,777 (1,741,455) 18,596,322

Effects of adopting FRS 139 - - -

20,337,777 (1,741,455) 18,596,322

Total comprehensive loss for

the period - (1,324,734) (1,324,734)


Cancellations of units (246,315) - (246,315)

Distribution equalisation 1,945 - 1,945Balance at 30 June 2016 20,096,942 (3,066,189) 17,030,754

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01.01.2016 01.01.2015

to to

30.06.2016 30.06.2015

RM RM



Proceeds from sale of investments 3,404,613 17,240,350



Interest received from deposits with licensed 19,752 38,705

financial institutions and other debt securities - -

Tax refund - -




Net cash generated from/(used in) operating

and investing activities (284,396) 3,712,603




Net cash used in from financing activities (222,962) (8,853,463)

NET DECREASE IN CASH

AND CASH EQUIVALENTS (507,358) (5,140,860)


BEGINNING OF THE YEAR 1,689,695 7,541,109



Deposits with licensed financial institutions

(Note 9) 885,899 2,101,552

Cash at bank 296,438 298,6971,182,337 2,400,249


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

year other than the application of the amendments to MFRSs as disclosed in Note 2.3.

Pheim Asia Ex-Japan Fund ("the Fund") was established pursuant to a Deed dated 26 May 2006 asamended by the Supplemental Deed dated 3 December 2008 and a second Supplemental Master Deeddated 30 April 2015 made between Pheim Unit Trusts Berhad ("the Manager") and Maybank TrusteesBerhad ("the Trustee").

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

The Manager is a public limited company incorporated in Malaysia. It is a wholly owned subsidiary ofthe Pheim Asset Management Sdn Bhd, a private company incorporated in Malaysia. Its principalactivity is the management of unit trust funds. Pheim Asset Management Sdn. Bhd. has been appointedby the Manager as the External Investment Manager of the Fund with responsibility for the provisionof investment management services to the Fund.



The unaudited financial statements were authorised for issue by the Board of Directors of the Managerin accordance with the resolution of the directors on 22 August 2016.

The unaudited 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.

The unaudited financial statements of the Fund have been prepared on the historical cost conventionunless otherwise indicated in the summary of significant accounting policies in Note 3.

145

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2.3



2.4





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

MFRS 15 - Revenue from Contracts with Customers


The initial application of the above amendments to MFRSs have no significant impact on the

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

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

they become effective and they are not expected to have any significant impact on the financial

statements of the Fund upon their initial application other than as discussed below :-

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.

• 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.

Application of Amendments to MFRSs and new IC Interpretation

During the financial year, the Fund has applied where applicable, the following amendments to

MFRSs issued by the Malaysian Accounting Standards Board ("MASB") that are relevant to the

Fund's operations and effective for its accounting period beginning on or after 1 January 2015 :-

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

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

been issued by the MASB that are relevant to its operations but are not yet effective :-


146

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2. BASIS OF PREPARATION (CONT'D.)

2.4



The key enhancements of MFRS 9 are (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 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.

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.

• 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)

MFRS 9, Financial Instruments (IFRS 9 issued in July 2014) [cont'd.]


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 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.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

3.1 Financial Assets (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

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.

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.

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.

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.

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.

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.

148

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(b) Available-for-sale ("AFS") financial assets (cont'd)




The Fund assesses at each reporting date whether there is any objective evidence that a financial

asset is impaired.

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.

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.

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.

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


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.

149

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3.2 Impairment of Financial Assets (Cont'd.)

(a) AFS financial assets (cont'd.)



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.

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


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.

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 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


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).

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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.

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.

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.

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.

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.

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3.10 Income Tax


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.

Cash and cash equivalents comprise cash at bank and deposits with financial institutions which 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 the distribution issourced out of distribution equalisation which is accounted for as a deduction from unitholders'capital.

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



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

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4. MANAGER'S FEE

5. TRUSTEE' S FEE

6. TAXATION

30.06.2016 30.06.2015

RM RM

Overprovision in prior year's income tax expenses - -

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

No major judgements have been made by the Manager in applying the Fund's accounting policies.There are no key assumptions concerning the future and other key sources of estimation uncertaintyat the reporting date, that have significant risk of causing material adjustment to the carryingamounts 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 (beforededucting the Manager's and Trustee's fees for the day) calculated and accrued on a daily basis.

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

Income tax is calculated at the Malaysian statutory tax rate of 25% (2015:25%) of the estimatedassessable income for the period.

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

153

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6. TAXATION (CONT'D)

A reconciliation of income tax expense applicable to net income before tax at the statutory income tax rate

to tax income at the effective tax rate of the Fund is as follows:

30.06.2016 30.06.2015

RM RM

Net (loss)/income before tax (1,324,734) 1,683,084

Taxation at Malaysian statutory rate of 25% (2015: 25%) (331,183) 420,771

Tax effects of:



Restriction on tax deductible expenses for unit trust funds 44,973 44,973Tax expense for the financial period - -

7. INVESTMENTS

Financial assets at fair value through profit or loss 30.06.2016 30.06.2015

(Note 8) RM RM

Quoted equities:

-in Malaysia 6,228,305 5,724,814

-outside Malaysia 9,600,082 11,071,15315,828,387 16,795,967


30.06.2016 30.06.2015

RM RM

Financial assets at FVTPL:Quoted equities 15,828,387 16,795,967


Realised gain on disposals 26,769 437,492

Unrealised (loss)/gain changes in fair values (1,416,159) 1,250,964(1,389,390) 1,688,456

The currency exposure profile of financial assets at 30.06.2016 30.06.2015



- Hong Kong Dollar 2,853,598 4,603,231

- Indonesian Rupiah 1,106,493 1,108,722

- South Korean Won 958,812 1,370,270

- Thai Baht 397,911 1,072,202- Philippine Peso 493,428 210,302

- Singapore Dollar 2,028,458 1,808,477

- New Taiwan Dollar 1,761,382 897,94815,828,387 16,795,966

154

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RM RM NAV

QUOTED EQUITIES

- IN MALAYSIA

Main Market

Construction


Consumer Products



644,000 457,256 774,460 4.55

Industrial Products


Kian Joo Can Factory Bhd 125,700 404,246 378,357 2.22

KNM Group Berhad 951,000 474,036 389,910 2.29

Jaya Tiasa Holdings Berhad 180,000 260,628 205,200 1.20


Teo Seng Capital Bhd 116,000 192,011 142,680 0.84

1,567,700 1,762,769 1,551,327 9.11

Manufacturing


Salutica Berhad 200,000 165,085 204,000 1.20

265,000 257,385 308,000 1.81

Oil & Gas

Hibiscus Petroleum Berhad 725,000 131,192 126,875 0.74

Plantation


TDM Holdings Berhad 205,000 159,463 141,450 0.83

308,000 766,941 548,300 3.22

Properties

Land & General Bhd 528,000 306,719 200,640 1.18

Matrix Concepts Holdings Bhd 220,500 322,230 544,635 3.20

Matrix Concepts Holdings Bhd

- Warrants 25,500 - 9,945 0.06

Metro Kajang Holdings Bhd 153,000 549,824 388,620 2.28

Sentoria Group Bhd 432,000 472,505 349,920 2.05

1,359,000 1,651,278 1,493,760 8.77

155

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RM RM NAV

Technology




394,343 467,353 629,638 3.70

Trading/Services

Berjaya Corp Bhd 420,000 173,232 149,100 0.88


Only World Group Holdings Berhad 40,000 88,466 84,400 0.50

983,000 643,262 450,545 2.65

TOTAL QUOTED

EQUITIES- IN MALAYSIA 6,403,043 6,488,639 6,228,305 36.58

QUOTED EQUITIES

- OUTSIDE MALAYSIA


("HKSE")

Agricultural Bank of China 178,000 371,404 260,467 1.53

Asia Cement China Holdings 84,000 161,663 61,894 0.36

Bank of China Ltd 180,000 358,417 288,612 1.69

Bank of Communication Co-H 55,000 177,564 138,987 0.82Central China Real Estate 244,000 238,790 179,789 1.06

China Citic Bank 96,000 303,899 234,128 1.37

China Life Insurance Co-H 18,000 175,214 154,861 0.91

China Overseas Grand Ocean Group 142,000 281,811 167,262 0.98

156

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RM RM NAV

QUOTED EQUITIES

-OUTSIDE MALAYSIA (CONTD.)


("HKSE") (Contd.)


Hua Han Bio-Pharmaceutical-H 584,000 436,102 203,035 1.19

Ind & Comm Bank of China 115,000 313,831 255,999 1.50

Real Gold Mining Ltd* 191,000 155,535 150,181 0.88

Sinosoft Technology Group Ltd 94,000 189,690 213,154 1.25

Tongda Group Holdings Ltd 238,000 144,345 186,482 1.09

Xinyi Glass Holdings Ltd 52,000 122,227 153,262 0.90

2,371,000 3,702,777 2,853,598 16.74


("JSX")

Alam Sutera Realty TBK PT 890,000 124,015 130,168 0.76Astra Agro Lestari TBK PT 11,000 49,565 49,019 0.29Bekasi Fajar Industrial Esta 2,990,000 393,645 242,340 1.42

Indomobil Sukses International 192,000 332,135 87,461 0.51

Logindo Samudramakmur TBK 700,000 29,224 34,553 0.20

Metropolitan Land TBK PT 1,963,300 196,168 196,215 1.15

Pt Indonesia Pondasi Raya TBK 240,000 96,805 107,133 0.63

Ramayana Lestari Sentosa PT 800,000 202,013 259,604 1.52

7,786,300 1,423,570 1,106,493 6.48

157

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RM RM NAV

QUOTED EQUITIES- OUTSIDE MALAYSIA (CONTD.)

Korea Stock Exchange

(''KE'')

Hana Financial Group 4,000 442,102 325,054 1.91

Industrial Bank of Korea 4,300 209,698 167,577 0.98

Kia Motors Corporation 1,045 217,160 157,605 0.93

Lg Electronics Inc 1,641 482,761 308,576 1.8110,986 1,351,721 958,812 5.63

Philippines Stock Exchange

("PSE")

EEI Corporation 259,400 209,503 169,392 0.99

GMA Holdings Inc-PDR 300,000 177,521 162,402 0.95

Rizal Commercial Banking 60,000 176,447 161,634 0.95

619,400 563,471 493,428 2.89

Stock Exchange of Thailand

("SET")

Amata Corporation Public Co Ltd 140,000 263,374 201,892 1.19

Amata VN Corporation Public Co Ltd 5,600 5,056 5,596 0.03

Total Access Communication-NVDR 52,000 516,787 190,423 1.12

197,600 785,217 397,911 2.34

158

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RM RM NAV

QUOTED EQUITIES

- OUTSIDE MALAYSIA (CONTD.)

Singapore Exchange

("SGX")

Bumitama Agri Ltd 120,000 287,258 272,183 1.60

Centurion Corp Ltd 285,000 444,114 327,470 1.92

IndoFood Agri Resources Ltd 270,000 568,056 386,786 2.27

IxBio Pharma Ltd 569,920 650,103 459,244 2.70

Sbi Offshore Ltd 785,000 253,163 407,647 2.39

Wilmar International Limited 18,000 177,741 175,128 1.03

2,047,920 2,380,435 2,028,458 11.91

Taiwan Stock Exchange

("TWSE")

Casetek Holdings Ltd 11,000 169,425 154,415 0.91

Catcher Technology Co Ltd 9,000 331,052 266,717 1.57

China Development Financial 118,000 136,600 114,112 0.67

Flexium Interconnect Inc 35,000 391,837 362,486 2.13

Mediatek Inc 14,000 444,894 425,375 2.50

Pegatron Corp 38,000 409,117 321,483 1.89

Sercomm Corp 13,000 121,962 116,794 0.69

238,000 2,004,887 1,761,382 10.36

TOTAL QUOTED

EQUITIES

- OUTSIDE MALAYSIA 13,271,206 12,212,078 9,600,082 56.35

TOTAL QUOTED EQUITIES 18,700,717 15,828,387 92.93


EXCESS OF COSTOVER FAIR VALUE (2,872,330)

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

159

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30.06.2016 30.06.2015

RM RM

Licensed investment bank 885,899 2,101,552

Average

remaining

maturities

30.06.2016 30.06.2015 30.06.2016 30.06.2015

% % Days Days

Licensed investment bank 3.20 3.18 1.5 5.76


30.06.2016 30.06.2015

RM RM

Amount due from release of units - 233,452

Management fee - 27,226- 260,678


There is no income distribution to unitholders for the financial year ended 31 December 2015.

WAEIR

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

160

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Note 30.06.2016 30.06.2015

RM RM


Accumulated losses

- Realised earnings (b) 2,186,318 2,287,902

- Unrealised losses (c) (5,252,507) (4,208,976)

(3,066,189) (1,921,074)Total equity/Net asset value 17,030,753 19,075,489


Number Number



of the year 19,859,321 20,337,777 30,737,234 30,086,824


Less: Cancellation of units (276,534) (246,315) (10,223,920) (10,255,520)Distribution equalisation - 1,945 - 1,078,961

Balance at end ofperiod 19,586,786 20,096,942 20,602,130 20,996,563


30.06.2016 30.06.2015

RM RM

Balance at the beginning of the year 2,092,493 1,855,386

Net (loss)/income after taxation (1,324,734) 1,683,084

Net unrealised loss/(gain) attributable to

investments held transferred to

unrealised reserve 1,416,159 (1,250,964)



items transferred to unrealised reserve 2,400 396

Balance at the end of period 2,186,318 2,287,902

01.01.2016 to 30.06.2016 01.01.2015 to 30.06.2015

The Fund has an approved fund size of 200 million units. As at 30 June 2016, the number of units not inissue is 180,413,214 (30 June 2015: 179,397,870) units.

161

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


30.06.2016 30.06.2015

RM RM

Balance at the beginning of the year (3,833,948) (5,459,544)


investment held transferred from

realised reserve (1,416,159) 1,250,964

Net unrealised foreign exchange

loss attributable to foreign

currency monetary items transferred from

realised reserve (2,400) (396)Balance at the end of period (5,252,507) (4,208,976)




to unitholders forissuing/redeeming of units 17,116,431 0.8739 19,180,652 0.9310




to unitholders per



30.06.2016 30.06.2015


units NAV units NAV

RM RM

Directors of the Manager # - - 60,868 56,358

#

30 June 2016 30 June 2015



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

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

162

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1 January 2016 to 30 June 2016

% of Total

Value of % of Total Brokerage Brokerage

Trade Trade Fees Fees

RM % RM %

MIDF Amanah Investment

Bank Bhd 2,596,358 26.63 - -

DBS Vickers Securites Pte Ltd

- Singapore 782,230 8.02 1,646 9.10

Sinopac Securities Co Ltd 599,983 6.15 1,203 6.65

CIMB Investment Bank Bhd 549,127 5.63 3,851 21.28

KGI Securities Co Ltd - Taiwan 487,938 5.00 1,223 6.76

Kenanga Investment Bank Bhd 452,341 4.64 1,017 5.62

Affin Hwang Capital Investment Bank 442,400 4.54 806 4.46

Masterlink Securities Corporation 410,288 4.21 676 3.74

CIMB-GK Securities Pte Ltd

390,816 4.01 981 5.42

RHB OSK Securities Pte Ltd

363,485 3.73 455 2.51

Others 2,675,991 27.44 6,235 34.46

9,750,957 100.00 18,093 100.00


30.06.2016 30.06.2015



30.06.2016 30.06.2015


- Hong Kong

- Hong Kong

Details of transactions with stockbroking companies and other investment banks for the period ended30 June 2016 are as follows:

This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other professionalfees) and other administrative expenses of the Fund to the average NAV of the Fund calculated on adaily basis. The average NAV of the Fund for the period ended 30 June 2016 was RM 17,444,399 (30June 2015: RM 22,929,430).

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

163

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

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

institutions.

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

01.01.2016 to 30.06.2016 01.01.2015 to 30.06.2015Fixed Fixed

Equity Income Equity Income

Portfolio Portfolio Total Portfolio Portfolio TotalRM RM RM RM RM RM

Gross Dividend income 241,327 - 241,327 181,310 - 181,310

Interest Income - 19,724 19,724 - 37,832 37,832

Net (loss)/gain on

financial assets at FVTPL (1,389,390) - (1,389,390) 1,688,456 - 1,688,456

Net realised gain/ (loss) on

foreign exchange (2,400) - (2,400) (396) - (396)

Total segment operating (loss)/income for the period (1,150,464) 19,724 (1,130,740) 1,869,369 37,832 1,907,201

Deposit with financial institutions 885,899 885,899 2,101,552 2,101,552


AFS financial assets - - - - - -

Other assets 117,960 78 118,037 63,579 184 63,763

Total segment assets 15,946,347 885,977 16,832,323 16,859,546 2,101,736 18,961,282

Other liabilities 88,415 - 88,415 - - -

Total segment liabilities 88,415 - 88,415 - - -


164

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30.06.2016 30.06.2015

RM RM

Net reportable segment operating income/(loss) (1,130,739) 1,907,202

Expenses (193,995) (224,118)

Net income/(loss) before tax (1,324,734) 1,683,084

Tax expense - -Net income/(loss) tax for the period (1,324,734) 1,683,084

30.06.2016 30.06.2015

RM RM


Amount due from Broker 29,714 84,744

Cash at bank 296,438 298,697









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 profit.

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

The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either fair valueor at amortised cost based on their respective classification. The significant accounting policies in Note2 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 assetsand liabilities of the Fund in the statement of financial position by the class of financial instrument towhich they are assigned, and therefore by the measurement basis.

165

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Financial

liabilities

Financial AFS atassets at financial Loan and amortised


30.06.2016 RM RM RM RM RM

AssetsQuoted equities 15,828,387 - - 15,828,387

Deposits with licensedfinancial institutions - - 885,899 - 885,899

Amount due from brokers - - 29,714 - 29,714Other receivables - - 118,037 - 118,037

Cash at bank - - 296,438 - 296,438Total financial assets 15,828,387 - 1,330,088 - 17,158,475


Liabilities

Amount due to brokers - - - 88,414 88,414Amount due to Manager - - - 23,292 23,292Amount due to Trustee - - - 2,074 2,074

Other payables - - - 13,942 13,942Total financial liabilities - - - 127,722 127,722

30.06.2015

Assets

Quoted equities 16,795,967 - - - 16,795,967Deposits with licensed


Amount due from brokers - - 84,744 - 84,744Other receivables - - 63,763 - 63,763

Cash at bank - - 298,697 - 298,697Total financial assets 16,795,967 - 2,548,756 - 19,344,723


Liabilities


Other payables - - - 6,547 6,547Total financial liabilities - - - 269,234 269,234

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(b) Fair Value


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

financial position as at the end of period:

Level 1 Level 2 Level 3 Total

RM RM RM RM

As at 30 June 2016

Financial asset

at FVTPL- Quoted Securities 15,678,206 - 150,181 15,828,387

As at 30 June 2015

Financial asset

at FVTPL- Quoted Securities 16,655,172 - 140,795 16,795,967

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 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. Thefair values of these financial assets were determined using prices in active markets foridentical assets.

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

167

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

2016 2015

RM RM

Financial assets at FVTPLBalance at 1 January 160,256 130,443

Total loss recognised in profit or loss :

- Net (loss)/gain on financial assets at FVTPL (10,075) 10,352

Transfer from Level 1

Balance at 30 June 150,181 140,795



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

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

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

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

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

168

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(i) Market Risk


Effect on profit

or loss and equity

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

RM

2016

+6/-6 949,703/ (949,703)

2015

+6/-6 1,007,758/ (1,007,758)

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

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

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

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:

169

PAXJ




Effect on profit

or loss and equity

Change in basis points* Increase/(Decrease)

RM

2016

+25/-25 2,924/ (2,924)

2015

+25/-25 4,857/ (4,857)

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

on the current observable market environment

(c) Currency Risk

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

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

The Fund is exposed to currency risk primarily through its investment in overseas quotedequities that are denominated in foreign currencies. The Fund's foreign currency exposureprofile of its investment in quoted equities has been disclosed under Note 8. The currencyrisk is minimised by proper portfolio allocation and to avoid concentration in a singlecountry.

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

170

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(c) Currency Risk (Contd.)

30 June 2016 30 June 2015

RM RM



South Korean Won 95,881 137,027

Thai Baht 39,791 107,220

Philippine Peso 49,343 21,030

Singapore Dollar 202,846 180,848

New Taiwan Dollar 176,138 89,795

960,008 1,107,115

(ii) Credit Risk


Effect on profit

or loss and equity

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

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

171

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1 month 3 months

30 June 2016 - 3 months -5 years Total

RM RM RM

Financial Assets:


Deposits with financial institutions 885,899 885,899

Other assets 444,189 - 444,189

Total undiscounted

financial assets: 17,158,475 - 17,158,475

Non-Financial Assets

Tax recoverable - - -

Total Assets 17,158,475 - 17,158,475

Financial liabilitites

Other liablities - 127,722 127,722

Total undiscounted

financial liabilities - 127,722 127,722

Unitholders' NAV 17,030,753 17,030,753

Liquidity gap 127,722 (127,722)

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

172

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1 month 3 months

30 June 2015 - 3 months - 5 years Total

RM RM RM

Financial Assets


Deposits with financial institutions 2,101,552 2,101,552

Other assets 447,204 - 447,204

Total undiscounted

financial assets 19,344,723 - 19,344,723


Tax recoverable - -

Total Assets 19,344,723 - 19,344,723

Financial Liabilitites

Other liablities - 269,234 269,234

Total undiscounted

financial liabilities - 269,234 269,234

Unitholders' NAV 19,075,489 - 19,075,489

Liquidity gap 269,234 (269,234)




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

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

The capital is represented by unitholders’ subscription to the Fund. The amount of capital canchange significantly on a daily basis as the Fund is subject to daily redemption and subscription atthe discretion of unitholders. The Manager manages the Fund’s capital with the objective ofmaximising unitholders' value while maintaining sufficient liquidity to meet unitholders'redemption as explained in Note 20 (iii) above.

173


PAXJI


23

174

YourNeed

is our Focus

22 August 2016


PAXJI


[email protected]

59

175

Your Need

is our Focus

22 August 2016


PAXJI


[email protected]

59

176

Your Need

is our Focus


PHEIM ASIA EX-JAPAN ISLAMIC FUND

In the opinion of the Manager, the accompanying unaudited financial statement of

Pheim Asia Ex-Japan Islamic Fund are drawn up in accordance with Malaysian

Financial Reporting Standards, International Financial Reporting Standards and

Securities Commission's Guidelines on Unit Trust Funds in Malaysia so as to give a true

and fair view of the unaudited financial position of Pheim Asia Ex-Japan Islamic Fund

as at 30 June 2016 and of its results, changes in net asset value and cash flows for the

period then ended.



AZMI MALEK MERICAN

Director

HOI WENG KONG

Director


22 AUG 2016

PAXJI




Note 30.06.2016 30.06.2015

RM RM

INVESTMENT INCOME


Profit from Shariah-compliant deposits with licensed financial

institutions 14,717 32,345

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

- profit or loss ("FVTPL") 8 (410,756) 446,314

Net realised loss on foreign exchange (425) (179)

(322,414) 548,824

EXPENDITURE

Manager's fee 4 58,024 72,973


Audit fee 4,195 4,062



132,424 108,536


Income tax expenses 6 - -Net (loss)/income for the period (454,838) 440,288

Total comprehensive (loss)/income for the period (454,838) 440,288

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

Net realised (loss)/gain (358,623) 321,085

Net unrealised (loss)/gain (96,215) 119,203(454,838) 440,288


177

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Note 30.06.2016 30.06.2015

RM RM

ASSETS

Quoted Shariah-compliant investments 7 5,655,930 6,707,758

Shariah-based deposits with licensed financial institutions 9 1,001,952 1,847,141




Cash at bank 118,318 104,679TOTAL ASSETS 7,075,868 8,944,324

LIABILITIESAmount due to brokers 56,944 -





EQUITY


Accumulated losses (2,529,811) (2,164,871)

TOTAL EQUITY 12 6,985,268 8,917,518





178

PAXJI





Unitholders' Retained Total

Capital earnings Equity

Note 12(a) Note 12(b)

and (c )

RM RM RM

At 1 January 2015 12,254,512 (2,605,159) 9,649,353

12,254,512 (2,605,159) 9,649,353

Total comprehensive loss for

the period 440,288 440,288

Creation of units 238,120 238,120

Cancellation of units (1,655,520) - (1,655,520)


At 1 January 2016 9,695,889 (2,074,973) 7,620,916

9,695,889 (2,074,973) 7,620,916


the period - (454,838) (454,838)


Cancellations of units (437,757) - (437,757)


179

PAXJI




01.01.2016 01.01.2015

to to

30.06.2016 30.06.2015

RM RM



Proceeds from sale of Shariah-compliant investments 1,939,413 3,391,864

Purchase of Shariah-compliant investments (889,510) (3,872,878)


Profits received from Shariah-compliant deposits with licensed - -

financial institutions 14,630 32,744




Net cash generated from/(used in) operating and investing activities 1,013,028 (512,008)




Net cash used in financing activities (182,022) (1,175,922)

NET INCREASE/(DECREASE) IN CASH

AND CASH EQUIVALENTS 831,006 (1,687,930)

CASH AND CASH EQUIVALENTS AT THE

BEGINNING OF YEAR 289,265 3,639,750



Shariah-compliant deposits with licensed financial institutions

(Note 9) 1,001,952 1,847,141

Cash at bank 118,318 104,6791,120,270 1,951,820


180

PAXJI


NOTES TO THE FINANCIAL STATEMENTS






Pheim Asia Ex-Japan Islamic Fund ("the Fund") was established pursuant to a Deed dated 12September 2006 as amended by the Supplemental Deed dated 3 December 2008 and a SecondSupplemental Master Deed dated 30 April 2015 made between Pheim Unit Trusts Berhad ("theManager") and Maybank Trustees Berhad ("the Trustee").

The principal activity of the Fund is to invest in "Permitted Investments" in compliance with Shariahrequirements as defined under Part 7 of the Deed, which includes quoted Shariah-compliant stocks andshares of companies quoted on the Bursa Malaysia or any other markets considered as an EligibleMarket. The activities of the Fund should be conducted strictly in compliance with Shariahrequirements and as approved by the Shariah Advisory Council of the Securities Comissions ofMalaysia and/or the Shariah Adviser of the Fund. The Fund commenced operations on 1 November2006 and will continue its operations until terminated by Trustee as provided under Part 12 of theDeed.

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



The unaudited financial statements were authorised for issue by the Board of Directors of the Managerin accordance with the resolution of the directors on 22 August 2016.

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

The unaudited financial statements of the Fund are prepared under the historical cost conventionunless otherwise indicated in the summary of significant acounting policies in Note 3.

181

PAXJI


2.2 Basis of Measurement (Cont'd)


2.4


Amendments to MFRS 101-Disclosure Initiative



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

MFRS 15, Revenue from Contracts with Customers

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

they become effective and they are not expected to have any significant impact

on the financial statements of the Fund upon their initial application other than as discussed below:-

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

year other than the application of amendments to MFRSs as disclosed in Note 2.3 below.

The Fund has not early adopted the following new MFRSs and amendments to MFRSs been issued

by the MASB that are relevent to its operations but are not yet effective:-

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.

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


During the financial year, the Fund has applied where applicable, the following amendments ofMFRSs issued by the Malaysian Accounting Standards Board ("MASB") that are relevant to theFund's operation and effective for its accounting period beginning on or after 1 January 2015 :-

Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2010-2012 Cycle"Amendmetns to MFRSs Classified as "Annual Improvements to MFRSs 2011-2013 Cycle"

The initial application of the above amendments to MFRSs have no significant impact on thedisclosures or the amounts recognised in the Fund's financial statements.

182

PAXJI



The key enhancements of MFRS 9 are:


• 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.


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.

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

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.

The initial application of MFRS 9 may have an impact on the financial statements of the Fund.However, it is not praticable to provide a reasonable estimate of the effect until a detailed reviewhas been completed.

183

PAXJI





Financial assets are classified as financial assets at FVTPL if they are held for trading or aredesignated as such by the Manager upon initial recognition. Financial assets held for tradinginclude securities and fixed income securities acquired principally for the purpose of sellingthem in near term.

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

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 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.

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

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

184

PAXJI



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




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.

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

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

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

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, weaken fundamental, significantfinancial difficulties of the issuer or obligor, and the disappearance of an active tradingmarket are considerations to determine whether there is objective evidence that investmentsecurities classified as AFS financial assets are impaired. At end of each financial year, theManager would receive impairment proposal from the Fund's external investment manager,if any financial assets of the Fund, in their professional opinion, warrant an impairmentexercise.

185

PAXJI


3.2 Impairment of Financial Assets (Cont'd)

(a) AFS financial assets (cont'd)



If an AFS asset is impaired, an amount comprising the difference between its cost (net ofany principal payment and amortisation) and its current fair value, less any impairment losspreviously 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 thesubsequent period. 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 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 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

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.

186

PAXJI


3.3 Classification of Realised and Unrealised Gain and Losses (Cont'd)



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 derivative contracts (excluding payments or receipts on collateralmargin accounts 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, 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 trade and other payables are recognised initially atfair value plus directly attributable transaction costs and subsequently measured at the amortisedcost using effective interest 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.

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

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

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

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

187

PAXJI






3.10 Income Tax

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.

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

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

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

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.


Interest income, which includes the accretion of discount and amortisation of premium on fixedincome securities, is recognised using effective interest method.

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.



188

PAXJI




4. MANAGER'S FEE

5. TRUSTEE' S FEE

6. TAXATION

30.06.2016 30.06.2015

RM RM

(Over)/Under provision in prior years - -

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.

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

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.

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 theManager's and Trustee's fee for the day) calculated and accrued on a daily basis, subject to a minimimof RM18,000 per annum.

Income tax is calculated at the Malaysian statutory tax rate of 25% (2015 : 25%) of the estimatedassessable income for the period.

189

PAXJI

6. TAXATION (CONT'D)

30.06.2016 30.06.2015

RM RM


Tax at Malaysian statutory rate of 25% (2015:25%) (113,709) 110,072

Tax effects of:



Restriction on tax deductible expenses for unit trust funds 15,555 19,259Tax (income)/expense for the period - -

7. QUOTED SHARIAH-COMPLIANT INVESTMENTS

30.06.2016 30.06.2015

Financial assets at fair value through profit or loss RM RM

(Note 8)

Ouoted Shariah-compliant equities:

- in Malaysia 2,956,996 3,397,846

- outside Malaysia 2,698,934 3,309,9125,655,930 6,707,758


30.06.2016 30.06.2015

RM RM

Financial assets at FVTPL:Quoted Shariah-compliant equities 5,655,930 6,707,758


Realised (loss)/gain on disposals (96,215) 119,203

Unrealised (loss)/gain on changes in fair values (314,541) 327,111(410,756) 446,314

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

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

190

PAXJI

8. FINANCIAL ASSETS AT FVTPL (CONT'D)

30.06.2016 30.06.2015

RM RM

The currency exposure profile of financial assets at



- Hong Kong Dollar 625,071 1,340,774

- Indonesian Rupiah 629,267 649,992

- Philippine Peso 205,047 254,568

- South Korean Won 109,064 92,536

- Thai Baht 373,775 589,983

- Singapore Dollar 440,080 96,126

- New Taiwan Dollar 316,629 285,9335,655,930 6,707,758




- IN MALAYSIA


RM RM NAV

Main Market

Construction

Ho Hup Construction Co.Bhd 260,000 370,776 206,700 2.96


327,500 529,367 355,200 5.09

Consumer Products



219,000 162,787 263,460 3.77

Industrial Products


Eastern & Oriental Bhd 28,560 44,593 47,124 0.67

Kian Joo Can Factory Berhad 35,000 113,416 105,350 1.51

KNM Group Berhad 449,000 220,920 184,090 2.64

Jaya Tiasa Holdings Bhd 120,000 317,580 136,800 1.96


Teo Seng Capital Bhd 27,000 34,780 33,210 0.48

723,560 881,545 655,054 9.38

191

PAXJI



- IN MALAYSIA


RM RM NAV

Plantation

Hap Seng Plantations Holdings Bhd 75,000 206,279 180,000 2.58


142,000 587,646 444,650 6.37

Manufacturing


Salutica Berhad 95,000 78,116 96,900 1.39

125,000 120,716 144,900 2.08

Properties

Hua Yang Bhd 48,000 101,144 83,520 1.20

Matrix Concepts Holdings Berhad 114,083 166,033 281,785 4.03

Matrix Concepts Holdings Berhad-W 13,583 - 5,297 0.08

Metro Kajang Holdings Bhd 59,000 209,284 149,860 2.15

Tambun Indah Land Bhd 56,000 108,705 77,840 1.11

290,666 585,166 598,302 8.57

Technology




209,350 242,444 343,125 4.92

Trading/Services


367,000 247,296 152,305 2.18

TOTAL QUOTED SHARIAH-

COMPLIANT EQUITIES

- IN MALAYSIA 2,279,076 3,356,968 2,956,996 42.36

192

PAXJI



- OUTSIDE MALAYSIA

Hong Kong Stock Exchange("HKSE")

Best Pacific International H 16,000 29,260 47,739 0.68China National Offshore Oil Corp 30,000 191,582 149,755 2.14


Goldpac Group Ltd 40,000 105,444 45,041 0.64

Real Gold Mining Ltd * 60,000 63,456 47,177 0.68

Tongda Group Holdings Ltd 171,000 89,916 133,985 1.92

415,000 750,916 625,071 8.94


("JSX")

Bekasi Fajar Industrial Estate 1,900,000 305,653 153,995 2.20

Metropolitan Land Tbk 1,100,000 74,766 109,936 1.57

Sampoerna Agro TBK PT 305,000 144,633 180,756 2.59

United Tractor TBK PT 41,000 326,811 184,580 2.64

3,346,000 851,863 629,267 9.00

Korea Stock Exchange

(''KE'')

LG Electronics Inc 580 170,601 109,064 1.56

Thailand Stock Exchange

("SET")

GFPT Public Co Ltd-NVDR 194,000 255,289 240,113 3.44

Total Access Communication-NVDR 36,500 359,385 133,663 1.91

230,500 614,675 373,775 5.35

Philippines Stock Exchange

("PSE")

EEI Corporation 314,000 260,874 205,047 2.94

193

PAXJI



- OUTSIDE MALAYSIA


RM RM NAV

Singapore Stock Exchange

("SGX")

Ix Biopharma Ltd 243,360 286,290 196,101 2.81

Silverlake Axis Ltd 45,000 81,587 68,493 0.98

CNMC Goldmine Holdings Ltd 140,000 109,805 175,486 2.51

428,360 477,682 440,080 6.30

Taiwan Stock Exchange

("TWSE")

Casetek Holdings Ltd 12,000 235,283 168,453 2.41

Catcher Technology Co Ltd 5,000 195,580 148,176 2.12

17,000 430,863 316,629 4.53

TOTAL QUOTED SHARIAH-

COMPLIANT EQUITIES

- OUTSIDE MALAYSIA 4,463,080 3,557,474 2,698,934 38.62

TOTAL FINANCIAL ASSETS

AT FVTPL 6,914,442 5,655,930 80.98

EXCESS OF FAIR VALUE

OVER COST (1,258,512)

*

9. SHARIAH-BASED DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

30.06.2016 30.06.2015

RM RM


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

194

PAXJI

9. SHARIAH-BASED DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS (CONT'D)

Average

remaining

WAEPR maturities

30.06.2016 30.06.2015 30.06.2016 30.06.2015

% % Days Days

Licensed investment banks 3.15 3.12 - 9


30.06.2016 30.06.2015

RM RM

Amount arising from (creation) of units (2,423) (54)

Management fee 9,296 12,758

6,873 12,704


There is no income distribution to unitholders for the financial year ended 31 December 2015


Note 30.06.2016 30.06.2015

RM RM


Retained earnings

- Realised (losses)/earnings (b) 851,262 819,633- Unrealised losses (c) (3,381,074) (2,984,504)

(2,529,812) (2,164,871)Total equity / Net asset value 6,985,268 8,917,518

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

195

PAXJI

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


Number Number



of year 7,248,668 9,695,889 9,786,315 12,254,512


Less: Cancellation of units (370,736) (437,757) (1,317,556) (1,655,520)

Distribution equalisation - 31,441 - 245,277Balance at end of period 7,068,112 9,515,078 8,654,454 11,082,389


30.06.2016 30.06.2015

RM RM

Balance at the beginning of the year 991,985 706,635

Net income after tax (454,838) 440,288

Net unrealised loss/(gain) attributable to

Shariah-compliant investments held

transferred to unrealised reserve 314,541 (327,111)



items transferred to unrealised reserve (425) (179)Balance at the end of period 851,262 819,633



30.06.2016 30.06.2015

RM RM

Balance at the beginning of period (3,066,958) (3,311,794)


Shariah-compliant investment held

transferred from realised reserve (314,541) 327,111

reserve 425 179Balance at the end of period (3,381,074) (2,984,504)

01.01.2016 to 30.06.2016 01.01.2015 to 30.06.2015

In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 14August 2006, the maximum number of units that can be issued for circulation is 200,000,000 units. Asat 30 June 2016, the number not yet issued is 192,931,888 units (30 June 2015: 191,345,546 ).

196

PAXJI




to unitholders for





to unitholders per



30.06.2016 30.06.2015


units NAV units NAV

RM RM

Directors of the Manager # - - 394,621 406,618

#

30 June 2016 30 June 2015

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:-



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

197

PAXJI


Value of % of Total Brokerage % of Total

Trade Trade Fees Brokerage Fees

RM % RM %

MIDF Amanah Investment Bank - - - -

Berhad 1,237,735 29.85 - -

Affin Hwang Capital Investment Bank 298,621 7.21 547 7.00

PT Mandiri Sekuritas Indonesia 293,434 7.08 1,035 13.26

KGI Securities Co. Ltd- Taiwan 229,505 5.54 576 7.38

Kenanga Investment Bank Bhd 224,016 5.40 505 6.47

Masterlink Securities Corporation 212,107 5.12 425 5.44

Hong Leong Investment Bank 202,700 4.89 362 4.63

Maybank Investment Bank Berhad 184,806 4.46 414 5.31

CIMB-GK Securities Pte Ltd Thailand 168,956 4.08 424 5.43

CIMB Investment Bank Bhd 130,113 3.14 1,022 13.09

Others 962,633 23.23 2,498 31.994,144,626 100.00 7,808 100.00


30.06.2016 30.06.2015



30.06.2016 30.06.2015


Details of transactions with stockbroking companies and other investment banks for the financial ended30 June 2016 are as follows:

This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other professionalfees) and other administrative expenses of the Fund to the average NAV of the Fund calculated on adaily basis. The average NAV of the Fund for the period ended 30 June 2016 was RM7,339,407 (30June 2015: RM9,517,844).

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.

198

PAXJI


01.01.2016 to 30.06.2016 01.01.2015 to 30.06.2015Shariah- Shariah-

compliant compliant

Deposits Deposits

Equity and sukuk Total Equity and sukuk Total

Portfolio Portfolio Portfolio PortfolioRM RM RM RM RM RM


Profit from Shariah-compliant

deposits with licensed financialinstitution - 14,717 14,717 - 32,345 32,345

Net (loss)/gain from Shariah-

compliant investments:

- financial assets at FVTPL (410,756) - (410,756) 446,314 - 446,314

Net realised gain/(loss) onforeign exchange (425) - (425) (179) - (179)

Total segment operatingincome for the period (337,131) 14,717 (322,415) 516,478 32,345 548,823

Shariah-compliant deposits with

financial institution - 1,001,952 1,001,952 - 1,847,141 1,847,141

Financial assets at FVTPL 5,655,930 - 5,655,930 6,707,758 - 6,707,758Other assets 17,737 86 17,823 27,550 235 27,785


Other liabilities 56,944 - 56,944 - - -Total segment liabilities 56,944 - 56,944 - - -

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

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

financial institutions.

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

199

PAXJI


30.06.2016 30.06.2015

RM RM


Expenses (132,424) (108,536)


Tax Income / (expense) - -Net income for the year (454,838) 440,288

30.06.2016 30.06.2015

RM RM



Amount due from Broker 281,845 252,130

Cash at bank 118,318 104,679









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

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

The Fund’s financial assets and financial liabilities are measured on an ongoing basis at eitherfair value or at amortised cost based on their respective classification. The significant accountingpolicies in Note 2 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.

200

PAXJI



Financialliabilities

Financial atassets at Loans and amortised

FVTPL receivables cost TotalRM RM RM RM

30 June 2016Assets


equities 5,655,930 - - 5,655,930Shariah-compliant deposits with

licensed financial institutions - 1,001,952 - 1,001,952Amount due from brokers - 281,845 - 281,845

Other receivables - 17,823 - 17,823Cash at bank - 118,318 - 118,318

Total financial assets 5,655,930 1,419,938 - 7,075,868


Liabilities

Amount due to brokers - - 56,944 56,944Amount due to Manager - - 6,873 6,873Amount due to Trustee - - 2,578 2,578

Other payables - - 24,205 24,205Total financial liabilities - - 90,600 90,600

30 June 2015Assets

Quoted Shariah-compliantequities 6,707,758 - - 6,707,758

Shariah-compliant deposits with -

licensed financial institutions - 1,847,141 - 1,847,141Amount due from brokers - 252,130 - 252,130

Other receivables - 27,785 - 27,785Cash at bank - 104,679 - 104,679

Total financial assets 6,707,758 2,231,735 - 8,939,493

Total non-financial assets 4,8318,944,324

Liabilities

Amount due to Manager - - 12,704 12,704Amount due to Trustee - - 1,673 1,673

Other payables - - 12,429 12,429Total financial liabilities - - 26,806 26,806

201

PAXJI


(b) Fair Value


Level 1 Level 2 Level 3 Total

RM RM RM RM

As at 30 June 2016

Financial asset at FVTPL- Quoted Securities 5,608,753 - 47,177 5,655,930

As at 30 June 2015

Financial asset at FVTPL- Quoted Securities 6,663,529 - 44,229 6,707,758

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


Level 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 fairvalues of these financial assets were determined using prices in active markets for identicalassets.

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

The Fund held the following financial instruments carried at fair value on the statement offinancial position as at the period ended 30 June 2014:

202

PAXJI



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

2016 2015

RM RM

Financial assets at FVTPLBalance at 1 January 50,342 40,977

Total loss recognised in profit or loss :

- Net (loss)/gain on financial assets at FVTPL (3,165) 3,252

Balance at 30 June 47,177 44,229



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

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

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

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk, equityprice risk and currency risk), credit risk, liquidity risk and reclassification of Shariah status risk. Whilstthese are the most important types of financial risks inherent in each type of financial instruments, theManager and the Trustee would like to highlight that this list does not purport to constitute anexhaustive 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 Services Act,2007.

203

PAXJI


(i) Market Risk


Effect on profit

Change in Shariah-compliant or loss and equity

equity price (%) Increase/(Decrease)

RM

30 June 2016

+6/-6 339,356 /(339,356)

30 June 2015

+6/-6 402,465 /(402,465)


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 currency exchange rates.

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

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

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

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

204

PAXJI



(b) Interest Rate Risk (Contd.)

Effect on profit

or loss and equity

Change in basis point * Increase/(Decrease)

RM

30 June 2016+25/-25 2,622/(2,622)

30 June 2015+25/-25 2,767/(2,767)

*

(c) Currency Risk

30.06.2016 30.06.2015

RM RM



South Korean Won 10,906 9,254

Thai Baht 37,378 58,998

Philippines Peso 20,505 25,457

Singapore Dollar 44,008 9,613

New Taiwan Dollar 31,663 28,593269,893 330,991

Effect on profit

or loss and equity

The assumed movement in basis points for interest rate sensitivity analysis is based on thecurrently 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 foreigncurrency exposure profile of its investment in Shariah-compliant quoted equities has beendisclosed under Note 7. The currency risk is minimised by proper portfolio allocation and toavoid concentration in a single country.

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.

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:

205

PAXJI


(ii) Credit Risk


1 month - 3 Above

30.06.2016 months 3 months Total

RM RM RM

Financial Assets



Other assets 417,986 - 417,986

Total undiscounted



Tax recoverable - - -

Total Assets 7,075,868 - 7,075,868


Other liablities 66,395 24,205 90,600

Total undiscounted

financial liabilities 66,395 24,205 90,600

Unitholders' NAV 6,985,268 - 6,985,268

Liquidity gap 24,205 (24,205)

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 of capitalor delayed or reduced income for the Fund resulting in a reduction in the Fund’s asset value andthus unit price. This risk is mitigated by vigorous credit analysis and diversification of the sukukportfolio of the Fund.

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

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

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

206

PAXJI



1 month - 3 Above

30.06.2015 months 3 months Total

RM RM RM

Financial Assets



Other assets 384,594 - 384,594

Total undiscounted -



Tax recoverable - 4,831 4,831

Total Assets 8,939,493 4,831 8,944,324


Other liablities 14,377 12,429 26,806

Total undiscounted

financial liabilities 14,377 12,429 26,806

Unitholders' NAV 8,917,518 - 8,917,518

Liquidity gap 7,598 (7,598)



(vi) Reclassification of Shariah Status Risk

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

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

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 of Malaysia ("SACSC")performed twice yearly. If this occurs, the value of the Fund may be adversely affected where theManager will take the necessary steps to dispose of such securities.

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PAXJI


(vii) 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 subscription atthe discretion of unitholders. The Manager manages the Fund’s capital with the objective ofmaximising unitholders' value, while maintaining sufficient liquidity to meet unitholders'redemption as explained in Note 20 (iii) above.

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interim report front cover- 30062016 - pheim unit trusts ... · pheim interim report 30.06.2016...

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