Post on 26-Mar-2021
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
A N N U A L R E P O R T31 DECEMBER 2014
Pheim Emerging Companies Balanced Fund
Dana Makmur Pheim
Pheim Income Fund
Pheim Asia Ex-Japan Fund
Pheim Asia Ex-Japan Islamic Fund
PHEIM Annual Report 31.12.2014
TRUST DIRECTORY
MANAGERPheim Unit Trusts Berhad (545919-A)
Registered Office and Head Office:7th Floor, Menara Hap Seng (Letter Box 12)
Jalan P. Ramlee, 50250 Kuala LumpurTel:(603) 2142 8888 Fax:(603) 2141 9199
BOARD OF DIRECTORSDr. Tan Chong Koay (Non-independent)Azmi Malek Merican (Non-independent)
Wong Cheng Leong (Independent)Hoi Weng Kong (Independent)
INVESTMENT COMMITTEEOng Kheng Liat (Non-independent)
Foong Mei Phong (Non-independent)Zarina Omar (Independent)
Rostam Effendi Abdul Rahim (Independent)Pee Ban Hock (Independent)Ho Sen Feek (Independent)
Mark Wing Kong (Independent)
EXTERNAL INVESTMENT MANAGERPheim Asset Management Sdn Bhd (269564-A)
SHARIAH ADVISERIBFIM (763075-W)
Amanie Advisors Sdn Bhd (684050-H)
TRUSTEEMaybank Trustees Berhad (5004-P)
AUDITORSFolks DFK & Co
TAXATION CONSULTANTFolks Taxation Sdn Bhd (178104-M)
PHEIM Annual Report 31.12.2014
CONTENTS
Page No
1. Funds Information
2. Funds Performance
3. Manager’s Report
4. Trustee’s Report, Statement by the Manager,Shariah Adviser’s Report and Audited FinancialStatements:
Pheim Emerging Companies Balanced Fund
Dana Makmur Pheim
Pheim Income Fund
Pheim Asia Ex-Japan Fund
Pheim Asia Ex-Japan Islamic Fund
1 – 6
7 – 21
22 – 40
41 – 77
78 – 113
114 – 150
151 – 185
186 – 223
PHEIM Annual Report 31.12.2014
Fund Information
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Dear Valued Unit Holders
We are pleased to present the Manager’s Report and the audited financial statements for thefinancial period from 1 January 2014 to 31 December 2014 for the following funds:
i. Pheim Emerging Companies Balanced Fund (PECBF)
ii. Dana Makmur Pheim (DMP)
iii. Pheim Income Fund (PIF)
iv. Pheim Asia Ex-Japan Fund (PAXJ)
v. Pheim Asia Ex-Japan Islamic Fund (PAXJI)
1 FUND INFORMATION
1.1 Fund Category and Type
Fund Category and type
PECBF PECBF is a balanced fund that aims to provide income and some capitalgrowth.
DMP DMP is an Islamic balanced fund that aims to provide Shariah permissibleincome and some capital growth.
PIF PIF is a bond fund that aims to provide steady income.
PAXJ PAXJ is an equity growth fund that aims to achieve capital appreciation inthe long term by investing primarily in Asian markets excluding Japan.
PAXJI PAXJI is an equity growth fund that aims to achieve capital appreciation inthe long term by investing primarily in Asian markets excluding Japanthrough investments that comply with Shariah requirements.
1.2 Funds’ Investment Objective and Strategy
Fund Investment objective and strategy
PECBF PECBF aims to provide Unit Holders with steady income and someprospects for capital appreciation (income and growth) in the longer term.PECBF will invest in a balanced portfolio of equities and fixed incomeinstruments subject to a maximum of 60% in equities and a minimum of40% in fixed income instruments and liquid assets.
DMP DMP aims to provide Unit Holders with steady income and someprospects for capital appreciation (income and growth) in the longer term.DMP will invest in a balanced portfolio of Shariah-compliant equities andsukuk subject to a maximum of 60% in Shariah-compliant equities and aminimum of 40% in sukuk and Islamic liquid assets. All investment will bemade in accordance to Shariah requirements.
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PIF PIF aims to provide unit holders with consistent income returns in themedium to longer term. PIF will invest primarily in medium to long-termfixed income instruments subject to a minimum of 80% in fixed incomeinstruments and liquid assets and a maximum of 20% in equities.
PAXJ PAXJ aims to achieve capital appreciation in the long term by investingprimarily in Asian markets excluding Japan. PAXJ will invest, withoutrestraint, in securities listed on the stock exchanges of the Asia Pacificregion excluding Japan with initial focus in ASEAN countries, Hong KongSAR, China, Taiwan, Korea, Australia, New Zealand and India.
PAXJI PAXJI aims to achieve capital appreciation in the long term by investingprimarily in Asian markets excluding Japan through investments that complywith Shariah requirements. PAXJI will invest in securities listed on the stockexchanges of the Asia Pacific region excluding Japan with initial focus inASEAN countries, Hong Kong SAR, China, Taiwan, Korea, Australia, NewZealand and India that comply with Shariah requirements.
1.3 Duration of the Funds
Fund Duration of the Fund
PECBF PECBF was launched on 28 January 2002 and its offer period endedon 15 February 2002. It shall exist for as long as it appears to theManager and the Trustee that it is in the interest of the Unit Holders forit to continue.
DMP DMP was launched on 28 January 2002 and its offer period ended on15 February 2002. It shall exist for as long as it appears to the Managerand the Trustee that it is in the interest of the Unit Holders for it tocontinue.
PIF PIF was launched on 28 January 2002 and its offer period ended on 15February 2002. It shall exist for as long as it appears to the Managerand the Trustee that it is in the interest of the Unit Holders for it tocontinue.
PAXJ PAXJ was launched on 30 June 2006 and its offer period ended on 20July 2006. It shall exist for as long as it appears to the Manager and theTrustee that it is in the interest of the Unit Holders for it to continue.
PAXJI PAXJI was launched on 1 November 2006 and its offer period ended on21 November 2006. It shall exist for as long as it appears to the Managerand the Trustee that it is in the interest of the Unit Holders for it tocontinue.
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1.4 Funds’ Performance Benchmark
The performance benchmarks deemed relevant to access the performance of the respectiveFunds are shown in the following table:
Fund Performance Benchmark Source
PECBFWeighted average of:1. 60% of FTSE Bursa Malaysia EMAS Index return, and2. 40% of Maybank 1-year fixed deposit rate at the
beginning of the financial year.
BursaMalaysia&Maybank
DMPWeighted average of:1. 60% of FTSE Bursa Malaysia EMAS Shariah Index*, and2. 40% of Maybank 1-year General Investment Account
(GIA) rate obtained at the beginning of the financial year.
BursaMalaysia&Maybank
PIFMaybank 1-year fixed deposit rate at the beginning of thefinancial year.
Maybank
The performance benchmark for both the PAXJ and PAXJI is 7% growth in NAV per annumover the long term.
This is not a guaranteed return and is only a measurement of the respective Fund’sperformance. The Funds may or may not achieve the 7% per annum growth rate in anyparticular financial year but the manager targets to achieve this growth over the long term.
* KL Syariah Index was discontinued from 1 November 2007 by Bursa Malaysia. The new index that issubstituting KL Syariah Index is FTSE Bursa Malaysia EMAS Shariah Index (FBMS).
1.5 Funds’ Distribution Policy
Fund Distribution Policy
PECBF,DMP& PIF
The Funds intend to distribute income, if any, on an annual basis. Theincome distribution may be declared at the end of each financial year orany specified period as maybe approved by the Trustee.
PAXJ &PAXJI Distribution by the Funds is incidental.
PHEIM Annual Report 31.12.2014
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1.6 Breakdown Of Unit Holdings By Size As At 31.12.2014
1.6.1 PECBFNo. of units held Unitholders
Sizeof holding (‘000) %
No. ofAccounts %
No. ofUnitholders %
5,000 andbelow
115.46 0.67 42 21.88 35 20.00
5,001 - 10,000 334.19 1.93 46 23.96 44 25.14
10,001 -50,000
1,315.94 7.58 61 31.77 57 32.57
50,001 -500,000
5,010.55 28.88 36 18.75 32 18.29
500,001 andabove
10,571.77 60.94 7 3.64 7 4.00
Total 17,347.91 100.00 192 100.00 175 100.00
1.6.2 DMP
No. of units held Unitholders
Sizeof holding (‘000) %
No. ofAccounts %
No. ofUnitholders %
5,000 andbelow
150.03 2.15 55 27.36 51 26.98
5,001 - 10,000 357.14 5.12 50 24.87 49 25.92
10,001 -50,000
1,491.82 21.38 77 38.31 71 37.57
50,001 -500,000
2,244.12 32.17 17 8.46 16 8.47
500,001 andabove
2,733.24 39.18 2 1.00 2 1.06
Total 6,976.35 100.00 201 100.00 189 100.00
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1.6.3 PIF
No. of units held Unitholders
Sizeof holding (‘000) %
No. ofAccounts %
No. ofUnitholders %
5,000 andbelow
74.55 0.48 26 22.61 25 24.27
5,001 - 10,000 119.59 0.76 17 14.78 12 11.65
10,001 -50,000
876.55 5.60 39 33.91 36 34.95
50,001 -500,000
4,643.19 29.68 26 22.61 24 23.30
500,001 andabove
9,931.85 63.48 7 6.09 6 5.83
Total 15,645.73 100.00 115 100.00 103 100.00
1.6.4 PAXJ
No. of units held Unitholders
Sizeof holding (‘000) %
No. ofAccounts %
No. ofUnitholders %
5,000 andbelow
144.18 0.47 47 23.98 47 24.48
5,001 -10,000
266.27 0.87 38 19.39 37 19.27
10,001 -50,000
1,311.41 4.27 66 33.67 63 32.81
50,001 -500,000
6,487.45 21.10 35 17.86 35 18.23
500,001 andabove
22,527.92 73.29 10 5.10 10 5.21
Total 30,737.23 100.00 196 100.00 192 100.00
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1.6.5 PAXJI
No. of units held Unitholders
Sizeof holding (‘000) %
No. ofAccounts %
No. ofUnitholders %
5,000 andbelow
233.52 2.39 73 26.64 72 26.57
5,001 -10,000
503.51 5.14 71 25.91 70 25.83
10,001 -50,000
2,000.93 20.45 106 38.69 106 39.11
50,001 -500,000
4,029.28 41.17 22 8.03 21 7.75
500,001 andabove
3,019.07 30.85 2 0.73 2 0.74
Total 9,786.31 100.00 274 100.00 271 100.00
PHEIM Annual Report 31.12.2014
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2 FUND PERFORMANCE
2.1 Pheim Emerging Companies Balanced Fund
2.1.1 Portfolio composition
FYE31.12.2014
(%)
FYE31.12.2013
(%)
FYE31.12.2012
(%)
(Percentage of Net Asset Value)
Biochemical & Biotechnology - 2.60 2.30
Construction 1.62 2.56 5.64
Consumer Products 7.54 5.05 4.61
Energy & Water Supply 2.54 - -
Finance - 10.16 16.84
Home Furniture - - 0.27
Infrastructure - - 3.85
Industrial Products 7.83 11.16 4.36
Manufacturing - 1.09 -
Mining - - 1.34
Oil and Gas 1.21 1.03 -
Plantations 2.85 2.99 1.59
Pharmacy & Cosmetic 1.04 0.23 1.53
Properties 8.23 10.21 1.16
Technology 2.58 1.64 -
Telecommunications 2.11 1.05 1.05
Trading / Services 1.64 6.56 7.79
Utilities - - 1.78
Unquoted/Quoted Corporate Bonds 27.35 18.40 33.71
Cash and cash equivalents 33.46 25.27 12.18
Total 100.00 100.00 100.00
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PECBF
2.1.2 Other financial and performance data
FYE31.12.2014
FYE31.12.2013
FYE31.12.2012
Net asset value (RM‘000) 20,827.89 18,497.14 17,512.03
Units in circulation (‘000) 17,347.92 15,334.87 15,237.39
Net asset value per unit (RM) 1.2006 1.2062 1.1493
NAV/ unit (RM) – ex-distribution
NAV/ unit 1.2006 1.2062 1.1493
Highest NAV/ unit for the period
NAV/ unit 1.2691 1.2158 1.2123
Lowest NAV/ unit for the period
NAV/ unit 1.1810 1.1043 1.0864
Total returns for the period(RM’000)
Capital growth (1,181.27) 534.11 (582.00)
Income distribution 1,828.76 1,141.45 2,019.31
Income Distribution (Final)On
29.04.2014On
26.04.2013On
27.04.2012
Gross distribution per unit (sen) 6.50 6.00 6.00
Net distribution per unit (sen) 6.50 6.00 6.00
Management expense ratio (MER)(%)
1.78 1.85 1.82
Portfolio turnover ratio (PTR)(time)
0.65 0.56 0.64
Note:i) MER is calculated based on total fees and expenses incurred by the fund divided by
average value of the fund calculated on a daily basis. The MER for the year decreasedcompare with the previous year due to the increase in averaged NAV for the year.
ii) PTR is calculated based on the average of the acquisitions and disposals ofinvestments of the fund to the average value of the fund calculated on a daily basis.The increase in PTR for the year was mainly due to higher investment trading.
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PECBF
2.1.3 Average total return ended 31 December 2014
(%)
One Year +5.01
Three Years +8.41
Five Years +6.74
2.1.4 Annual total return for each of the last five financial years
Financial year ended 31 December : (%)
2014 +5.01
2013 +10.44
2012 +9.86
2011 -1.82
2010 +10.7
Note : All returns above are calculated based on NAV per unit adjusted for incomedistribution.
Data source : Bloomberg
Past performance is not necessarily indicative of future performance and unitprices and investment returns may go down, as well as up.
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2.2 Dana Makmur Pheim
2.2.1 Portfolio composition
FYE31.12.2014
(%)
FYE31.12.2013
(%)
FYE31.12.2012
(%)
(Percentage of Net Asset Value)
Construction 4.61 1.92 10.58
Consumer Products 2.12 0.79 4.82
Finance - 3.73 1.63
Industrial Products 12.50 15.37 16.05
Infrastructure - - 4.68
Plantations 5.51 3.45 -
Properties 8.79 8.88 3.99
Technology 2.38 2.50 -
Trading / Services 1.46 7.27 16.09
Sukuk 26.61 3.74 5.85
Cash and Other Assets 36.02 52.35 36.31
Total 100.00 100.00 100.00
2.2.2 Other financial and performance data
FYE31.12.2014
FYE31.12.2013
FYE31.12.2012
Net asset value (RM‘000) 13,523.50 13,399.07 8,661.04
Units in circulation (‘000) 6,976.36 7,032.64 5,574.49
Net asset value per unit (RM) 1.9385 1.9053 1.5537
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DMP
2.2.2 Other financial and performance data (continued)
FYE31.12.2014
FYE31.12.2013
FYE31.12.2012
NAV/ unit (RM) – ex-distribution
NAV/ unit 1.9385 1.9053 1.5537
Highest NAV/ unit for the period
NAV/ unit 2.0860 1.9229 1.6554
Lowest NAV/ unit for the period
NAV/ unit 1.8912 1.5398 1.5208
Total returns for the period(RM’000)
Capital growth (1,422.09) 845.15 (517.93)
Income distribution 2,449.17 2,369.85 772.33
Income Distribution (Final)
On29.04.2014
On26.04.2013
On27.04.2012
Gross distribution per unit (sen) 6.50 6.00 6.00
Net distribution per unit (sen) 6.50 6.00 6.00
Management expense ratio (MER)(%)
1.86 2.05 2.09
Portfolio turnover ratio (PTR)time)
0.47 0.51 0.72
Note:i) MER is calculated based on total fees and expenses incurred by the fund divided by
average value of the fund calculated on a daily basis. The MER for the year decreasemainly due to the increase in averaged NAV for the year.
ii) PTR is calculated based on the average of the acquisitions and disposals of Shariah-compliant investments of the fund to the average value of the fund calculated on adaily basis. The decrease in PTR for the year was mainly due to lower investmentactivity.
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DMP
2.2.3 Average total return ended 31 December 2014
(%)
One Year +5.28
Three Years +12.13
Five Years +9.69
2.2.4 Annual total return for each of the last five financial years
Financial year ended 31 December : (%)
2014 +5.28
2013 +26.49
2012 +5.87
2011 +1.7
2010 +10.7
Note : All returns above are calculated based on NAV per unit adjusted for incomedistribution.
Data source : Bloomberg
Past performance is not necessarily indicative of future performance and unitprices and investment returns may go down, as well as up.
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2.3 Pheim Income Fund
2.3.1 Portfolio composition
FYE31.12.2014
(%)
FYE31.12.2013
(%)
FYE31.12.2012
(%)
(Percentage of Net Asset Value)
Construction 1.60 0.90 1.71
Consumer Product 3.15 3.06 2.14
Finance 0.79 3.79 7.65
Home Furniture - - 0.74
Industrial Products 4.00 3.78 0.70
Infrastructure - - 2.10
Manufacturing 1.00 0.71 -
Mining 0.81 - -
Oil and Gas 1.12 - -
Pharmacy and Cosmetic - 0.23 -
Plantation 0.58 2.30 0.90
Properties 1.20 0.95 -
Trading/ Services 1.50 1.92 3.02
Technology - 0.98 -
Unquoted Corporate Bonds 51.88 28.35 46.27
Cash and Other Assets 32.37 53.03 34.77
Total 100.00 100.00 100.00
2.3.2 Other financial and performance data
FYE31.12.2014
FYE31.12.2013
FYE31.12.2012
Net asset value (RM‘000) 16,744.49 14,475.54 14,301.78
Units in circulation (‘000) 15,645.73 12,989.98 12,665.75
Net asset value per unit (RM) 1.0702 1.1144 1.1292
NAV/ unit (RM) – ex-distributionNAV/ unit 1.0702 1.1144 1.1292
Highest NAV/ unit for the periodNAV/ unit 1.1394 1.1541 1.1318
Lowest NAV/ unit for the periodNAV/ unit 1.0644 1.0874 1.0804
Total returns for the period(RM’000)
Capital growth (285.23) (423.06) 88.35
Income distribution 544.67 901.61 748.77
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PIF2.3.2 Other financial and performance data (continued)
FYE31.12.2014
FYE31.12.2013
FYE31.12.2012
Income Distribution (Final)On
29.04.2014On
27.04.2013On
28.04.2012
Gross distribution per unit (sen) 7.00 5.00 1.50
Net distribution per unit (sen) 7.00 5.00 1.50
Management expense ratio (MER)(%)
1.35 1.35 1.31
Portfolio turnover ratio (PTR)(time)
0.50 0.41 0.42
Note:i) MER is calculated based on total fees and expenses incurred by the fund divided by
average value of the fund calculated on a daily basis. The MER for the year remainsconsistent with the previous year.
ii) PTR is calculated based on the average of the acquisitions and disposals of investmentsof the fund to the average value of the fund calculated on a daily basis. The increase inPTR for the year was mainly due to the increase in investment activity.
2.3.3 Average total return ended 31 December 2014
(%)
One Year +2.29
Three Years +3.86
Five Years +3.86
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PIF
2.3.4 Annual total return for each of the last five financial years
Financial year ended 31 December : (%)
2014 +2.29
2013 +3.29
2012 +6.02
2011 +4.36
2010 +3.40
Note : All returns above are calculated based on NAV per unit adjusted for incomedistribution.
Data source : Bloomberg
Past performance is not necessarily indicative of future performance and unitprices and investment returns may go down, as well as up.
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2.4 Pheim Asia Ex-Japan Fund
2.4.1 Portfolio composition
FYE31.12.2014
(%)
FYE31.12.2013
(%)
FYE31.12.2012
(%)
Industry Sector (Percentageof NAV)
(Percentageof NAV)
(Percentage of NAV)
Biochemical and Biotechnology - 0.86 0.67
Computer - - 1.42
Construction 3.02 2.81 4.06
Consumer Products 13.91 15.82 17.84
Diversified - - 1.70
Energy and Water Supply 3.50 - 1.63
Finance 5.39 22.67 20.50
Home Furniture - - 0.27
Industrial Products 14.18 14.93 14.79
Infrastructure - 1.65 3.73
Manufacturing 1.08 1.93 -
Mining 0.49 2.25 4.16
Oil & Gas related 2.54 1.05 -
Pharmaceutical and Cosmetic 1.68 0.24 1.05
Plantations 3.17 1.69 1.83
Properties 10.39 11.14 1.02
Technology 3.51 3.05 8.65
Telecommunications 2.52 1.04 0.90
Trading / Services 2.58 7.56 1.55
Utilities - - 1.55
Cash and cash equivalents 32.04 11.31 12.68
Total 100.00 100.00 100.00
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PAXJ
2.4.2 Other financial and performance data
FYE31.12.2014
FYE31.12.2013
FYE31.12.2012
Net asset value (RM‘000) 26,482.67 28,071.12 30,006.92
Units in circulation (‘000) 30,737.23 33,120.89 37,047.40
Net asset value per unit (RM) 0.8616 0.8475 0.8100
NAV/ unit (RM) – ex-distribution
NAV/ unit 0.8616 0.8475 0.8100
Highest NAV/ unit for the period
NAV/ unit 0.9239 0.8559 0.8492
Lowest NAV/ unit for the period
NAV/ unit 0.8134 0.7571 0.7300
Total returns for the period (RM’000)
Capital growth (559.36) 2,098.66 2,548.32
Income distribution 982.51 (821.41) (1,062.61)
Income Distribution (Final)n.a. n.a. n.a.
Gross distribution per unit (sen) - - -
Net distribution per unit (sen) - - -
Management expense ratio (MER) (%) 2.07 1.71 1.74
Portfolio turnover ratio (PTR) (time) 0.96 0.95 0.83
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 yearincreased mainly due to the higher expenses incurred for the year.
ii) PTR is calculated based on the average of the acquisitions and disposals ofinvestments of the fund to the average value of the fund calculated on a daily basis.The higher PTR for the year was mainly due to the increased investment trading forthe year.
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PAXJ
2.4.3 Average total return ended 31 December 2014
(%)
One Year +1.80
Three Years +4.85
Five Years +0.25
2.4.4 Annual total return for each of the last five financial years
Financial year ended 31 December :(%)
2014 +1.80
2013 +4.78
2012 +8.08
2011 -17.39
2010 +6.0
Note : All returns above are calculated based on NAV per unit adjusted for incomedistribution
Data source : Bloomberg
Past performance is not necessarily indicative of future performance and unitprices and investment returns may go down, as well as up.
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2.5 Pheim Asia Ex-Japan Islamic Fund
2.5.1 Portfolio composition
FYE31.12.2014
(%)
FYE31.12.2013
(%)
FYE31.12.2012
(%)
Industry Sector (Percentageof NAV)
(Percentageof NAV)
(Percentageof NAV)
Biochemical and Biotechnology - 2.08 1.42
Computer - - 0.70
Construction 4.06 - 2.14
Consumer Products 6.16 8.60 12.75
Energy and Water Supply 1.46 4.47 3.97
Industrial Products 17.54 20.93 19.58
Manufacturing - - 2.40
Mining 4.19 6.27 9.51
Oil & Gas related 0.88 2.28 -
Pharmacy and Cosmetics - - 4.86
Plantations 9.06 2.57 2.83
Properties 7.57 9.58 2.06
Technology 9.04 6.71 8.27
Telecommunications 2.12 7.41 5.34
Trading / Services 0.44 7.15 18.38
Cash and cash equivalents 37.48 21.95 5.79
Total 100.00 100.00 100.00
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PAXJI
2.5.2 Other financial and performance data
FYE31.12.2014
FYE31.12.2013
FYE31.12.2012
Net asset value (RM‘000) 9,649.35 8,175.60 9,993.07
Units in circulation (‘000) 9,786.32 8,595.14 12,128.44
Net asset value per unit (RM) 0.9860 0.9512 0.8239
NAV/ unit (RM) – ex-distribution
NAV/ unit 0.9860 0.9512 0.8239
Highest NAV/ unit for the period
NAV/ unit 1.0755 0.9615 0.8514
Lowest NAV/ unit for the period
NAV/ unit 0.9344 0.8185 0.7389
Total returns for the period (RM’000)
Capital growth (87.37) 40.65 2,705.96
Income distribution 569.26 1,849.39 (2,453.06)
Income Distribution (Final)n.a. n.a. n.a.
Gross distribution per unit (sen) - - -
Net distribution per unit (sen) - - -
Management expense ratio (MER) (%) 2.21 2.27 2.18
Portfolio turnover ratio (PTR) (time) 0.80 0.70 0.93
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 yeardecreased mainly due to the higher averaged NAV for the year.
ii) PTR is calculated based on the average of the acquisitions and disposals ofinvestments of the fund to the average value of the fund calculated on a daily basis.The increase in PTR for the year was mainly due to the higher investment trading forthe year.
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PAXJI
2.5.3 Average total return ended 31 December 2014
(%)
One Year +3.80
Three Years +8.77
Five Years +4.92
2.5.4 Annual total return for each of the last five financial years
Financial year ended 31 December : (%)
2014 +3.80
2013 +15.42
2012 +7.41
2011 -7.59
2010 +6.5
Note : All returns above are calculated based on NAV per unit adjusted for incomedistribution
Data source : Bloomberg
Past performance is not necessarily indicative of future performance and unitprices and investment returns may go down, as well as up.
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3 MANAGER’S REPORT
3.1 Performance Review
3.1.1 PECBF
The Fund has successfully met its investment objective of providing investors with capitalappreciation in longer term by investing in a balanced portfolio of equities and fixedincome instruments.
For the year ended 31 December 2014, the net asset value (NAV) per unit of the funddeclined by 0.46%, which has outperformed the benchmark by 4.67%. However, in thesecond half of 2014, the fund has outperformed the benchmark by 10.02%. The totalNAV increased to approximately RM20.8million from RM18.5million
The Fund had made an income distribution of 6.50 sen per unit (net of tax) on the 29April 2014 for the period ended 31 December 2013. After the income distribution, theNAV per unit declined to RM1.1867 from RM1.2517.
Performance table since the last review period (6 months):
Benchmark/ FundAs at
31.12.2014As at
30.06.2014Change
%
Benchmark of PECBF 106.68% 115.12% -8.44
PECBF – NAV per unit (RM) 1.2006^ 1.1819 +1.58
Performance table for financial year 2014 (1 year):
Benchmark/ FundAs at
31.12.2014As at
31.12.2013Change
%
Benchmark of PECBF 106.68% 111.81% -5.13
PECBF – NAV per unit (RM) 1.2006^ 1.2062 -0.46
^adjusted for income distribution on 29.04.2014
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3.1.2 DMP
The Fund has successfully met its investment objective of providing investors with capitalappreciation in longer term by investing in a balanced portfolio of equities and fixedincome instruments which strictly comply with the principles of the Shariah.
For the year ended 31 December 2014, the net asset value (NAV) per unit of the fundincreased by 1.74%, which has outperformed the benchmark by 4.18%. However, in thesecond half of 2014, the fund has outperformed the benchmark by 5.04%. The total NAVincreased to approximately RM13.5 million from RM RM13.4 million.
The Fund had made an income distribution of 6.50 sen per unit (net of tax) on the 29April 2014 for the period ended 31 December 2013. After the income distribution, theNAV per unit declined to RM1.9722 from RM2.0372.
Performance table since the last review period (6 months):
Benchmark/ FundAs at
31.12.2014As at
30.06.2014Change
%
Benchmark of DMP 105.78% 112.82% -7.04
DMP – NAV per unit (RM) 1.9385^ 1.9780 -2.00
Performance table for financial year 2014 (1 year):
Benchmark/ FundAs at
31.12.2014As at
31.12.2013Change
%
Benchmark of DMP 105.78% 108.22% -2.44
DMP – NAV per unit (RM) 1.9385^ 1.9053 +1.74
^adjusted for income distribution on 29.04.2014
3.1.3 PIF
The Fund has successfully met its investment objective of providing investors withconsistent income returns in the medium to longer term by investing primarily in mediumto long term fixed income instruments and also equities and other high yieldinginstruments.
For the year ended 31 December 2014, the net asset value (NAV) per unit of the funddeclined by 3.97%, which has underperformed the benchmark by 7.12%.However, in thesecond half of 2014, the fund has underperformed the benchmark by 1.36%. The totalNAV increased to approximately RM16.7 million from RM14.5 million.
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3.1.3 PIF (contd.)
The Fund had made an income distribution of 7.00 sen per unit (net of tax) on the 29April 2014 for the period ended 31 December 2013. After the income distribution, theNAV per unit declined to RM1.0648 from RM1.1348.
Performance table since the last review period (6 months):
Benchmark/ FundAs at
31.12.2014As at
30.06.2014Change
%
1-year fixed deposit rate (pro-rated) 44.58% 43.00% +1.58
PIF – NAV per unit (RM) 1.0702^ 1.0679 +0.22
Performance table for financial year 2014 (1 year):
Benchmark/ FundAs at
31.12.2014As at
31.12.2013Change
%
1-year fixed deposit rate (pro-rated) 44.58% 41.43% +3.15
PIF – NAV per unit (RM) 1.0702^ 1.1144 -3.97
^adjusted for income distribution on 29.04.2014
3.1.4 PAXJ
The Fund has successfully met its investment objective of providing investors withcapital appreciation in long term by investing primarily in Asian markets excludingJapan.
For the year ended 31 December 2014, the net asset value (NAV) per unit of the fundincreased by 1.66%, which has underperformed the benchmark marginally by 5.34%.However, in the second half of 2014, the fund has underperformed the benchmark by4.50%. The total NAV declined to approximately RM26million from RM28million.
Performance table since the last review period (6 months):
Benchmark/ FundAs at
31.12.2014As at
30.06.2014Change
%
7% per annum (pro-rated) 59.20% 55.67% +3.53
NAV per unit (RM) 0.8616 0.8700 -0.97
Performance table for financial year 2014 (1 year):
Benchmark/ FundAs at
31.12.2014As at
31.12.2013Change
%
7% per annum (pro-rated) 59.20% 52.20% +7.00
NAV per unit (RM) 0.8616 0.8475 +1.66
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3.1.5 PAXJI
The Fund has successfully met its investment objective of providing investors with capitalappreciation in long term by investing primarily in Asian markets excluding Japan throughinvestments that comply with Shariah requirements.
For the year ended 31 December 2014, the net asset value (NAV) per unit of the fundincreased by 3.66%, which has underperformed the benchmark by 3.34%. However, inthe second half of 2014, the fund has underperformed the benchmark by 6.10%. Thetotal NAV increased to approximately RM9.6 million from RM8.2 million.
Performance table since the last review period (6 months):
Benchmark/ FundAs at
31.12.2014As at
30.06.2014Change
%
7% per annum (pro-rated) 56.82% 53.30% +3.52
NAV per unit (RM) 0.9860 1.0121 -2.58
Performance table for financial year 2014 (1 year):
Benchmark/ FundAs at
31.12.2014As at
31.12.2013Change
%
7% per annum (pro-rated) 56.82% 49.82% +7.00
NAV per unit (RM) 0.9860 0.9512 +3.66
3.2 Performance Chart Since Inception
3.2.1 PECBF
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3.2.2 DMP
3.2.3 PIF
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3.2.4 PAXJ
3.2.5 PAXJI
Note: The data source for all the above performance returns is Bloomberg.
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3.3 Changes in Asset Allocation since the last review (in percentage)
3.3.1 PECBF
Asset ClassAs at
31.12.2014As at
31.12.2013 Change
Equity Securities – in Malaysia 15.43 28.06 -12.63
Equity Securities – outside Malaysia 23.75 28.27 -4.52
Corporate Bonds 27.35 18.40 +8.95
Cash and cash equivalent 33.47 25.27 +8.20
Total 100.00 100.00
3.3.2 DMP
Asset ClassAs at
31.12.2014As at
31.12.2013 Change
Shariah-compliant equity securities– in Malaysia
37.37 43.91 -6.54
Sukuk 26.61 3.74 +22.87
Cash and cash equivalent 36.02 52.35 -16.33
Total 100.00 100.00
3.3.3 PIF
Asset ClassAs at
31.12.2014As at
31.12.2013 Change
Corporate Bonds – in Malaysia 51.91 28.35 +23.56
Money market & cash 32.34 53.03 -20.69
Equity Securities – in Malaysia 9.02 7.11 +1.91
Equity Securities – outside Malaysia 6.73 11.51 -4.78
Total 100.00 100.00
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3.3.4 PAXJ
Asset ClassAs at
31.12.2014As at
31.12.2013 Change
Equity Securities – outside Malaysia 47.82 67.65 -19.83
Equity Securities – in Malaysia 20.14 21.04 -0.90
Cash and cash equivalent 32.04 11.31 +20.73
Total 100.00 100.00
3.3.5 PAXJI
Asset ClassAs at
31.12.2014As at
31.12.2013 ChangeShariah-compliant equity securities –outside Malaysia
34.75 53.15 -18.40
Shariah-compliant equity securities –in Malaysia
27.75 24.90 +2.85
Cash and cash equivalent 37.50 21.95 +15.55
Total 100.00 100.00
3.4 Funds’ Strategies and Policies Employed
3.4.1 PECBF
As at end-December 2014, Pheim Emerging Companies Balanced Fund’s assetallocation was 39.18% in equities, 27.35% in fixed income securities and 33.47% incash. We reduced our equity exposure to 39.18% from 56.33% as we took profits fromselected stocks. During the year, the fund had invested in foreign equities listed in HongKong/China, Singapore, Indonesia, Thailand and South Korea as part of thediversification strategy.
Going forward, we may increase our exposure in fixed income securities that offer goodyield for the risks undertaken. We prefer to invest in fixed income securities which have amaturity of less than 5 years in order to mitigate interest rate risk.
For the year ended 31 December 2014, PECBF recorded the following gains or lossesin the various markets invested.
Market
Net realised andunrealised gain/ (loss)
RM’000
Malaysia 1,103Indonesia 348Thailand (109)Korea 87Philippines 46Singapore (133)Hong Kong/China (421)
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3.4.2 DMP
As at end-December 2014, Dana Makmur Pheim’s asset allocation was 37.37% inShariah-compliant equities, 26.61% in sukuk and 36.02% in cash. We have reduced theShariah-compliant equity exposure to 37.37% from 43.91% as we took profits fromselective Shariah-compliant stocks.
During the year 2014, the sukuk exposure increased to 26.61% from 3.74% in thepreceding year as we increased our exposure on sukuk that offer good yield for the risksundertaken.
For the year ended 31 December 2014, DMP recorded a net realised and unrealised gainof RM1,363,182 due to investments in domestic Shariah-compliant equities.
3.4.3 PIF
As at end-December 2014, Pheim Income Fund’s asset allocation was 51.91% incorporate bonds, 32.34% in money market/cash and 15.75% in equities. Although wewere cautiously optimistic on the Asia ex-Japan equity market in the year 2014, theequity exposure of 15.75% was relatively unchanged (2013: 18.62%) as the maximumequity exposure allowable was 20%. As part of our diversification strategy, the fund hadinvested in foreign equities listed in Hong Kong/China, Singapore and Indonesia.
Going forward, we may increase our exposure in fixed income securities that offer goodyield for the risks undertaken. We are maintaining our stance of investing in fixed incomesecurities which have a maturity of less than 5 years in order to mitigate interest rate risk.
For the year ended 31 December 2014, PIF recorded the following gains or losses inthe various markets invested.
Market
Net realised andunrealised gain/ (loss)
RM’000
Malaysia 1Indonesia 17Philippines 42Singapore (145)Hong Kong/China (43)Thailand 15
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3.4.4 PAXJ
During the year, the Fund’s total equity exposure decreased by 20.73% as the Funddecreased exposure in foreign equities as some foreign stocks have outrun thefundamental. As at 31st December 2014, PAXJ’s total equity exposure was 67.96%whereby 47.82% was invested in foreign equities and the remaining is in domesticequities.
During the year, the PAXJ has invested in foreign equities listed in Hong Kong/China,Singapore, Indonesia, Taiwan, Thailand, the Philippines and Korea.
For the year ended 31 December 2014, PAXJ recorded the following gains or losses inthe various markets invested.
Market
Net realised andunrealised gain/ (loss)
RM’000
Malaysia 596Indonesia 743Korea (155)Thailand (957)Singapore (868)Hong Kong (1,547)Philippines 132Taiwan (189)
3.4.5 PAXJI
During the year, the Fund’s total equity exposure decreased by 15.55% as the Funddecreased exposure in foreign equities as some foreign stocks have outrun thefundamental. As at 31st December 2014, PAXJI’s total equity exposure was 62.50%whereby 34.75% was invested in Shariah-compliant foreign equities and the remainingin domestic Shariah-compliant equities.
During the year, the PAXJI has invested in Shariah-compliant foreign equities listed inHong Kong/China, Singapore, Indonesia, Taiwan, Thailand, the Philippines and Korea.The fund has not invested in any sukuk.
For the year ended 31 December 2014, PAXJI recorded the following gains or losses inthe various markets invested.
Market
Net realised andunrealised gain/ (loss)
RM’000
Malaysia 423Indonesia (30)Korea (85)Thailand (240)Singapore 109Philippines 10Hong Kong (721)Taiwan (262)
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3.5 Market Review, Outlook and Strategy
3.5.1 Malaysian Bond/Sukuk Market
3.5.1.1 Bond/Sukuk Market Review
On the local front, Bank Negara Malaysia increased the overnight policy rate (OPR) by25 basis points on the 10th of July. The floor and ceiling rates of the corridor of the OPRrate were also similarly raised bringing these to 3.00% and 3.50% respectively.According to the monetary policy statement, the normalization of the monetary conditionswere to mitigate the risk of broader economic and financial imbalances that couldundermine the growth prospects of the Malaysian economy. Given the developments inmonetary and financial conditions, the current monetary policy stance is consideredaccommodative and is assessed to be appropriate by Bank Negara Malaysia.
As a result of sharply weaker oil prices (WTI is now down more than 50% from its peakof around USD100), there has been increasing concern that Malaysia would have its own“twin deficit”. The national oil company Petronas warned that its capital expenditure in2015 might be cut by 15% to 20%. As revenue from oil accounts for more than 30% ofthe country’s revenue collection, it is clear that there is a real risk that the governmentmay not be able to achieve the fiscal deficit target of 3.0% of gross domestic product(GDP) for 2015 without trimming its outlays.
On the external front, the US remains committed to keeping interest rates atexceptionally low levels. However, this could change anytime as the US economicrecovery continues to be promising. That being said, we believe the hike in interest rateswould be done on a gradual basis to avoid disrupting US economic recovery. In fact, theUS Federal Reserve has reiterated that the interest rates would be kept low for aconsiderable time and signalled that it would be patient in deciding on the timing to raisethe interest rates.
3.5.1.2 Bond/Sukuk Market Outlook and Strategy
In its 2013 annual report, Bank Negara Malaysia mentioned that inflation in 2014 and2015 is expected to be above the historical average of between 3% to 4%. We believe thehigher inflationary pressure comes from higher domestic costs such as wages, electricitytariff increase and the gradual removal of subsidies coupled with the depreciation of theringgit against the USD. Besides, the introduction of goods and services tax (GST) in April2015 can be expected to result in a price spike, though this GST effect may only be one-off.
Due to higher inflationary pressures, we do not discount the possibility of another 25 basispoints hike in the Malaysia’s OPR rate in the year 2015 and therefore, we expect the yieldon Malaysian government securities to steepen especially for the longer dated securities.We remain conservative and would prefer maturities of less than 5 years of maturity tomitigate interest rate risks.
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We would continue to adopt a prudent approach with key assessment criteria that includethe issuers’ credit profile, management, financial performance, asset quality, riskmanagement and industry outlook. We would continue to focus on investment gradebonds/sukuks.
3.5.2 Stock Markets Review
3.5.2.1 Malaysian Stock Market – (Bursa Malaysia)
The FBM KLCI registered a decline of 5.7% y.o.y in 2014 to close the year at 1,761.25points. It was the worst performing market among the key Asian markets as oil pricestumbled and the ringgit weakened, aggravated by foreign outflows. The ringgit hasweakened against the USD to RM3.4973/USD as at end of December 2014 compared toRM3.2757/USD from a year earlier. It is set to weaken further.
GDP growth in the third quarter of 2014 expanded 5.6% y.o.y, decelerating from arevised 6.5% growth in the previous quarter as all sectors in the economy rose at aslower pace. The trade surplus in November expanded to RM11.1 bil, the highest sinceNovember 2011, mainly driven by the surprising growth in exports and flattish imports.
Budget 2015, tabled in October, sees a Gross Domestic Product (GDP) growth of 5-6%,with total federal government expenditure rising to RM273.9 bil. It also highlighted thegovernment’s commitment to roll out RM160 bil in railway-related infrastructure over thenext few years and leverage on the public-private partnership (PPP) model to developfurther highway infrastructure. However, there are concerns that the government mayhave to revise Budget 2015 due to changing macro environment amid the plunge in theoil prices and weaker ringgit which may derail the government’s 3% fiscal deficit target for2015.
The inflation rate, inched up to 3.0% y.o.y in November, from +2.8% in the previousmonth and compared with +2.6% in September. The higher inflation in November wasreflected in a faster increase in the core inflation rate, largely due to a sharp increase inthe prices of alcoholic beverages & tobacco. Bank Negara Malaysia maintained theOvernight Policy Rate after raising it by 25bps to 3.25% in July. With the implementationof the GST as well as subsidy reductions, the inflation is expected to trend higher goingforward.
We maintain our neutral view given that Malaysia runs the risk of a trade deficit andcurrent account deficit with weaker oil and CPO prices, which may put pressure on thecountry’s credit ratings. In addition, the government’s fiscal reforms continue to be a dragon consumption with subsidy rationalization and the rollout of GST. Market valuation alsoremains relatively high compared to its regional peers. Although we do not see a quickreturn to bullish outlook, we believe there are companies that may benefit from weakerringgit and lower commodity prices. We remain selective in our search for undervaluedstocks in this challenging market environment.
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3.5.3 Foreign Securities Investment - Market Review
3.5.3.1 Singapore Market
The FSSTI was up modestly in 2014 with a gain of 6.24% y.o.y. The top performers in2014 included banks, land transport, S-REIT and telecommunications. S-REITs made acomeback after a poor performance in 2013, as interest rates remained low. The bankingsector performed well in the 2nd half of 2014 as the market expected that the US FederalReserve will increase interest rates due to strengthening in economy. In 2014, the SGDdepreciated by 4.95% y.o.y against the USD to close at 1.3255/USD.
The Singapore economy grew a less-than-expected 1.5% in the last three months of2014 compared to 2.8% in the previous quarter. On the quarter-on-quarter seasonallyadjusted annualized basis, the economy expanded by 1.6%, slower than the 3.1%expansion in the previous quarter. The lackluster fourth quarter growth figure wasdragged down mainly by the manufacturing and construction sectors. The manufacturingsector contracted 2% over same period in 2013, while the construction industry expandedby merely 0.8%. The services sector which makes up 70% of the Singapore economy,grew 2.6%.
Singapore was hit by deflation for the first time in five years on the back of plummetingglobal crude oil prices. Consumer prices across the economy fell by 0.3% in Novemberover the same month last year. This was mainly caused by declining private roadtransport costs, which includes car and petrol pump prices. Core inflation came in at1.5% versus the previous month's 1.7%.
Non-oil exports grew 2.3% in December over the same month in 2013, after the 0.8%growth in previous month, driven by higher shipments of both electronics and non-electronics products. The top three contributors to non-oil export growth were SouthKorea, Malaysia and European Union.
Corporate earnings in 2014 were generally below market expectations resulting in marketconsensus earnings downgraded throughout the year. Singapore market is expect to bevolatile in the first half of 2015 given the rising concerns on external issues such asweaker growth in China, interest rate hike by US Federal Reserve and Greece possiblyleaving the European Union. In addition, the domestic challenges of economicrestructuring, tight labour market and elevated cost will remain key challenges forSingapore’s economy growth.
3.5.3.2 Hong Kong/ China Market
The Hang Seng Index rose 1.28% in 2014 to close at 23,605.04 points. Sector wise,telecom, REITs and utilities performed well while gaming sector was hit by negativenews flows, driven by the junket default, tighter liquidity, corruption crackdown andeconomic slowdown in China.
Total retail sales volume in Hong Kong increased 7.5% in November 2014 over thesame month in the previous year, driven by the sales of food-related category, clothingand foodwear, jewellery, watches as well as the sales at department stores. However,some of the headwinds in Hong Kong’s retail industry should not be neglected. Despite
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the improvement in retail sales during a 79 day-long street occupation by pro-democracydemonstrators, the market remained concerned about the change in tourism spendingamid economic slowdown in China. The Hong Kong stock market is becoming morechallenging as it is now facing both economic and political risks.
China economy grew by 7.4% in 2014, in line with market expectations and was theweakest expansion in 24 years. The GDP growth was slightly below the governmenttarget of 7.5% for the year. The China government is focusing on a more sustainablepath while tackling a housing slowdown, softening domestic demand and weak globalrecovery. Main contribution to GDP was spending on consumption, which up from 48.2%in 2013 to 51.2% in 2014. Industrial production grew 8.3% in 2014 versus 9.7% in 2013,while fixed-asset investment rose by 15.7% y.o.y, down from 19.6%, the slowest rate in13 years. China’s slowdown provided a huge impact on global commodity prices andexporters around the world. IMF lowered its forecast for China’s economy in 2015 from7.1% growth to 6.8% growth, due to the slowdown in property and investment.
In November 2014, China cut benchmark interest rates for the first time since July 2012with the one-year lending rate reduced by 0.4 percentage point to 5.6%, while the one-year deposit rate was lowered by 0.25 percentage point to 2.75%. The policymakers alsodecided to increase ceiling for deposit rates to 1.2 times the benchmark rate from theprevious 1.1 times. This was another move by its central bank to bolster flaggingeconomic growth after the injection of more than USD 126 billion into the bankingsystem in September and October. The rate cut boosted investors’ sentiments anddrove strong gains in the stock market in the last quarter of 2014.
The China economy is still facing downside risks as traditional industries continue toundergo capacity elimination process while the housing market down-cycle persists.With the recent macro data staying weak, the market is expecting further monetaryeasing in the first half of 2015. The China/Hong Kong market is expected to be liquidity-driven given a lack of fundamental support.
3.5.3.3 Indonesia Market
The Indonesian stock market was among the best performers in 2014. The JCI closedthe year at 5,226.95 points, up 22.3% y.o.y. Despite a hiccup in Sep-Oct period amidglobal jitters, the Index managed to recoup nearly all it had lost from the year’s peak of5,246.48 points. The rupiah depreciated by 1.8% y.o.y against the USD to close 2014 atIDR12,388/USD. The dollar gain on the JCI was 20.5% y.o.y.
Bank Indonesia has maintained the policy rate at 7.75% in December after raising it by25bps in an extraordinary meeting in November in an effort to tame the inflation followingthe hike of subsidized petrol and diesel prices in same month.
The 2014 third quarter GDP growth slowed to 5.01% y.o.y, the weakest in 5 years, from5.12% in previous quarter. Bank Indonesia in its December Monetary Policy Reviewprojected economic growth to continue decelerating in the 2014 fourth quarter but willrebound in 2015 first quarter. The Central Bank projected the GDP growth in 2014towards the lower end of the 5.1-5.5% range before rebounding to 5.4-5.8% in 2015.According to information from the Central Bank, the current account deficit narrowed to3.1% of GDP in the third quarter from 4.3% of GDP in the previous quarter mainly due to
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resumed mineral exports after the government and several miners managed to finalizerenegotiations.
Inflation in December was recorded at 8.36% y.o.y higher than 6.23% in Novembermainly due to the fuel price hike in a month earlier. Thanks to the currently lower crude oilprices, the Government announced full removal of the subsidy for RON88 gasoline, anda fixed IDR1,000/litre subsidy for diesel fuel from January 1st, 2015. The Governmentestimates that 2015 oil and gas subsidy expenditure will fall from IDR276 tril to only aboutIDR60 tril.
Joko Widodo was sworn in as Indonesia’s 7th President on October 20th after winning atight race against rival candidate Prabowo Subianto in the July’s Presidential Election. Heformed a cabinet of which professionals constitute 59% of his 34 ministries. Infrastructuredevelopment is going to be the main focus of the Government where the fuel subsidyreform is expected to provide more room for more productive sectors such as the muchneeded infrastructure which will ultimately benefit the country. The challenge, however,would be efficient implementation.
We maintain our cautiously optimistic view on Indonesia and we are hopeful that thelargest economy with the biggest population in the Asean region will see a better futureahead under the strong leadership of Joko Widodo. Our investment strategy is to look forcompanies well positioned to benefit from the country’s development and growth.
3.5.3.4 Thailand Market
The SET index wrapped up 2014 with a strong gain of 15.32% to end at 1497.67 points.As at end FY14, headline inflation stood at 0.60% and policy rate remained benign at2.00%. Inflation tumbled 64% and policy rate fell 11% respectively for the year. The ThaiBhat depreciated marginally 0.63% against US Dollar as the currency closed atBaht32.91 compared to US Dollar to Baht32.71 in 2013. Local institutions recorded theirhighest net buy (THB24 bil) since June 2013, driven by year-end LTF purchases whilelocal retail investors showed another THB16 bil net buy at end December. Foreigninvestors on the flipside recorded another USD1 bil outflow, after the already-largeoutflow of USD6.2 bil in 2013.
The economy showed some stability in recent months following events including theBangkok shut down beginning 2014 which led to the declaration of martial law in May andeventually a coup. The political stalemate then settled with the formation of a militarygovernment where Military junta Chief Prayuth Chan-ocha became Thailand’s 29th PrimeMinister on August 25, 2014.
The Monetary Policy Committee decided to bring down the policy rate by another 25bp to2.00% in March as the prolonged political unrest curbed local demand, hurt tourism.These and other problems raised downside risks on the country’s economic outlook. TheBank of Thailand has also revised its GDP forecast for 2014 from 1.5% to 0.8% becauseof lower-than-expected government spending, slow recovery of private investment,tourism income and export expansion.
After strong rallies throughout the year, Thailand’s SET underperformed significantly inDecember. However as a whole, Thailand has rebounded drastically from the low as the
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political stalemate ended with a military government. We are looking for opportunities tosecure a better position stepping into 2015 while mitigating downside earnings risks froma moderating growth outlook. We remain cautiously optimistic on Thailand.
3.5.3.5 Philippines Market
In 2014, the Philippines equity market surged 22.8% y.o.y to settle at 7230.57 points inDecember, buoyed by positive economic data and healthy corporate earnings. The Pesodepreciated 0.73% y.o.y in 2014 with PHP44.72 /USD recorded at the end of December.
The Philippines registered slower GDP growth of 5.6%, 6.4% and 5.3% respectively in1Q14, 2Q14 and 3Q14 mainly due to slowdown in government spending.
In 2014, the Bangko Sentral ng Pilipinas (BSP) increased the benchmark borrowing,lending rates and Special Deposit Account (SDA) rate twice to 4%, 6% and 2.5%respectively. Also, the reserve requirement of banks was raised twice in the year of 2014.
Philippines inflation eased to 3.7% in November from the 4.3% in October due to lowerfood prices and utility prices. YTD inflation reported at 4.3%. Lower inflationary pressurewould allow the central bank to have more room to maintain the loose monetary policy.
On the Philippines sovereign credit rating in 2014, Standard and Poor’s upgraded thePhilippine’s sovereign credit rating to BBB from BBB- with a stable outlook, one notchabove the investment grade. S&P cited the country’s strong external liquidity andinvestment position, and effective monetary policy framework will likely be sustainable.Moody’s Investors Service followed suit and raised the Philippine’s credit caring to Baa2with a stable outlook.
The Philippines market was one of the best-performing markets in the region this year,but the most expensive market trading at 2014PE of 20.8x. We expect the Philippineseconomy to remain robust in 2015 driven by healthy domestic consumption, mainly dueto lower oil prices, higher cash remittances in Peso terms and election spending. We arewatchful of potential risks from correction in market valuation and remain selective on thePhilippines market for undervalued high growth companies.
3.5.3.6 Taiwan Stock Market
The TWSE Index surged 8.08% y.o.y to close the year at 9307.26 index points. Theindex was volatile during the year, with robust performance in 1H14 driven by interest intechnology stocks on Apple new products. However, this was followed by a sell down andprofit-taking on stocks related to the Apple supply chain. Investors’ confidence was onceagain boosted in 4Q14 by healthy exports data and Legislative Yuan passing the bill toplace on hold the capital gains tax rule for three years. The Taiwan Dollar (TWD)depreciated 6.2% y.o.y against the USD in 2014 to close at TWD31.656/USD at the endof December.
Directorate-General of Budget, Accounting, and Statistics reported that Taiwan's GDPgrowth rate was 3.41% y.o.y, 3.87% y.o.y and 3.63% y.o.y in 1Q14, 2Q14 and 3Q14respectively, mainly bolstered by strong demand for Taiwan’s exports of electronicproduct and domestic consumption.
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Taiwan official manufacturing Purchasing Managers’ Index (PMI) recorded at 50.1 inDecember, against the 49.2 recorded in November, supported by a recovery in the US.Another set of data published by Markit Economics shows that the HSBC Taiwan PMIstagnated in December at 50.0, down from 51.4 in November.
November’s exports grew 3.7% y.o.y buoyed by consumer electronic componentshipments, bringing 11-month exports to USD288.2 bil, up 3.3% y.o.y.
The general elections of all local governments in Taiwan on November 29 turned out tobe a landslide victory for the opposition party, Democratic Progressive Party (DPP),which won 13 seats in Taiwan's 22 counties and cities, versus only 6 seats won by theruling party – Kuomintang (KMT). After the mayoral election, the Taiwanese President MaYing-Jeou resigned as chairman of Kuomintang (KMT) for the defeat in the election.
In 2014, Taiwan's central bank left its key interest rates unchanged. Discount rateremained unchanged at 1.875%, the secured loan rate at 2.25% and the unsecured loanrate at 4.125%.
US economic recovery and lower TWD are expected to cushion the slower growth inother major export partners namely China, Europe and Japan. In the domestic market,lower oil prices would lift household purchasing power and support domesticconsumption. We will continue to invest in undervalued high growth companies in Taiwanespecially on cloud computing, Internet of Things, mid- to low-end smartphone playersand consumer names with strong growth.
3.5.3.7 South Korean Stock Market
During the year ended 2014, the KOSPI index declined by 4.76% to close at 1,915.59points due to concern over economic uncertainty and a continued depreciation of theJapanese yen against the Korean Won. Meanwhile, the KRW depreciated by 3.92%against the USD following the ending of the quantitative easing measure by the USFederal Reserve.
The South Korea’s GDP grew by 3.2% y.o.y in the 3Q14. On a q.o.q basis, the economyincreased marginally by 0.9%. According to the International Monetary Fund (IMF), SouthKorea is expected to grow by 4% in the year 2015.
In line with the slow pace of economic growth, South Korea’s inflation eased to 0.8% inDecember from 1% in the previous month. It was the lowest inflation in more than 15years which may reinforce the case for loose monetary policies to boost the economicgrowth.
The South Korean unemployment rate declined to 3.40% in November 2014 from 3.50%in October as more jobs were created in the health services, internal trade andconstruction sectors.
Despite the challenging economic outlook, we expect further upside potential on theKOSPI index on the back of foreign buying interest, low valuation and supportive fiscaland monetary policies. Nevertheless, South Korea may continue to face key issues suchas ageing population, slow economic growth and the continued depreciation of the
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Japanese yen against the Korean Won. Moreover, the KOSPI index may continue to seehuge redemption at key resistance of 2,000 levels as most retail investors in Korea adopta short-term investment culture.
3.5.3.8 Australian Stock Market
The ASX 200 index recorded a marginal gain of 1.10% y.o.y to close the year of 2014 at5,411 points. The Aussie Dollar weakened by 8.32% against the US Dollar fromAUD1.1217/USD by the end of 2013 to close 2014 at AUD1.2239/USD.
Australia’s GDP grew 2.7% y.o.y in 3Q 2014 after expanding by 2.3% y.o.y in 3Q 2013.In its November Statement of Monetary Policy, The Reserve Bank of Australia (RBA)maintained its GDP growth estimate for 2014 at 2.25-3.25% and for 2015 at 2.0-3.0% inthe view to the low level of interest rates and the strong population growth which isexpected to continue to underpin rising housing activity and housing prices. Exports,especially of resources, are expected to continue to contribute to growth, while decliningmining investment and, to a lesser extent, fiscal consolidation at both the state andfederal levels are likely to weigh on growth over the forecast period.
The RBA has left the cash rate unchanged throughout 2014 at a record low of 2.50%.The RBA cited that the Aussie Dollar is still too high and needs to fall further to aideconomic growth, especially considering recent significant falls in commodity prices.Australia’s CPI inflation rate increased marginally to 2.3% y.o.y in 3Q 2014, comparedwith a rate of 2.2% in 2Q 2013.
The unemployment rate edged higher over the year to 11-year high at 6.3% in November2014 from 5.8% in November 2013.
3.5.4 Foreign Securities Investment - Market Outlook and Strategy
For the year ended 2014, the MSCI Far East ex-Japan (USD) closed marginally higher by0.54%, underperforming the MSCI World index which increased by 2.93%. During theyear, institutional funds were seen reducing their exposures in emerging markets infavour of developed markets.
The US equity market was unperturbed when the quantitative easing (QE) programmecame to an end in October 2014 as it continued to rally reaching a historical high of18,103.45 points in December and closing with a gain of 7.52% for the year. It seemedlike the baton of quantitative easing measures has been passed on to Japan, Europe andChina. During the year, the Bank of Japan announced that it will expand its monetarybase to 80 trillion yen from 50 trillion yen. The European Central Bank (ECB) alsoconfirmed plans to pump in 1 trillion Euro of fresh stimulus to stimulate growth. Within theAsia ex-Japan equity markets, the top three performing markets, in local currenciesterms were India (+29.89%), Philippines (+22.76%) and Indonesia (+22.29%).Meanwhile, the worst performing markets were Malaysia (-5.66%), South Korea (-4.76%)and Hong Kong (+1.28%).
Emerging markets were hit at the start of the year by a combination of negative eventsincluding an expected slowdown in China and the tapering of the bond purchases by the
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US Federal Reserve. After a bumpy ride in the January 2014, equities market roaredback to life towards the end of June due the expectations that the Federal Reservechairperson, Janet Yellen would be able to orderly manage the end of the quantitativeeasing without damage to the economic recovery.
Towards the 2nd half of the year, falling oil prices became the main theme. Oil and gasstocks came off the boil with oil prices falling to a near 6-year low (Brent falling belowUSD55 per barrel). Higher US shale oil production as well as weaker demand saw asupply overhang in world oil markets. This was worsened by the Organization ofPetroleum Exporting Countries (OPEC)’s decision, that there would be no cuts inproduction. The slide in oil prices also dragged down other commodity stocks such as thepalm oil.
Overtime, lower oil prices are expected to benefit most economies through lower pricesand therefore, arguably, conferring more spending power on consumers. For oil exportingcountries like Malaysia which is trying to manage its fiscal deficit to 3% of its GDP, theeffects are net negative and for this reason, we see a likelihood that certain plannedcapital expenditure under the “2015 Budget” could be trimmed or deferred which maylead to weaker earnings outlook for the country’s construction sector.On balance, we believe the fundamentals of the Asia ex-Japan region remain relativelygood backed by sufficient headrooms for favourable fiscal and monetary policies shouldthese be required. We expect liquidity conditions to remain positive for the equitiesmarket and that interest rates will continue to stay low and accommodative.
The challenging global economic outlook will keep cautious investors on the side-lines.We will continue to invest in defensive stocks with solid fundamentals. Within the Asiaex-Japan region, we are overweighting our equity exposure on China/Hong Kong as webelieve the undemanding valuation may provide more upside potential for the equityfunds. Although there are signs that China is facing an economic slowdown, we believeChina would avoid a hard landing. In fact, China’s projected GDP growth is still one of thehighest in the world and it seems unjustifiable that the Hong Kong/China equity marketsare trading at or near their historical lows.
3.6 Policy On Rebates And Soft Commission
It is our policy to pay all rebates from stockbrokers to the respective Funds. However, softcommissions from stockbrokers (if any) will be retained by the Manager only if the goodsand services are demonstrable benefit to the unit holders such as research materials,data quotation services and computer software incidental to the management of theFunds.
During the year, the Manager has not received any soft commissions from stockbrokers.
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23 February 2015
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STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM EMERGING COMPANIES BALANCED FUND
We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Pheim Emerging Companies Balanced Fund aredrawn up in accordance with the Deed, Malaysian Financial Reporting Standards,International Financial Reporting Standards and Securities Commission's Guidelines onUnit Trust Funds in Malaysia so as to give a true and fair view of the financial positionof Pheim Emerging Companies Balanced Fund as at 31 December 2014 and of itsfinancial performance and cash flows for the financial year then ended.
For and on behalf of the Manager,PHEIM UNIT TRUSTS BERHAD
AZMI MALEK MERICANDirector
HOI WENG KONGDirector
Kuala Lumpur, Malaysia23 FEB 2015
PECBF
INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF
PHEIM EMERGING COMPANIES BALANCED FUND
Report on the financial statements
We have audited the financial statements of Pheim Emerging Companies Balanced Fund ("theFund"), which comprise statement of financial position as at 31 December 2014, and statement ofcomprehensive income, statement of changes in equity and statement of cash flows for the yearthen ended, and a summary of significant accounting policies and other explanatory information, asset out on pages 45 to 58.
Manager’s and Trustee’s responsibility for the financial statements
The Manager of the Fund, Pheim Unit Trusts Berhad, is responsible for the preparation of financialstatements so as to give a true and fair view in accordance with Malaysian Financial ReportingStandards, International Financial Reporting Standards and the requirements of the SecuritiesCommission's Guidelines on Unit Trust Funds in Malaysia. The Manager is also responsible forsuch internal control as the Manager determines is necessary to enable the preparation of financialstatements that are free from material misstatement, whether due to fraud or error. The Trustee isresponsible for ensuring that the Manager maintains proper accounting and other records as arenecessary to enable fair presentation of these financial statements.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with approved standards on auditing in Malaysia. Thosestandards require that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on our judgment, includingthe assessment of risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, we consider internal control relevant to the entity’spreparation of financial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriatenessof the accounting policies used and the reasonableness of accounting estimates made by theManager, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.
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INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF
PHEIM EMERGING COMPANIES BALANCED FUND
Opinion
Other Matters
FOLKS DFK & CO. KHOO PEK LING
AF: 0502 No. 900/03/16(J/PH)
CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT
Kuala Lumpur
Date: 23 February 2015
In our opinion, the financial statements give a true and fair view of the financial position of theFund as at 31 December 2014 and of its financial performance and cash flows for the year thenended in accordance with Malaysian Financial Reporting Standards, International FinancialReporting Standards and the requirements of the Securities Commission's Guidelines on Unit TrustFunds in Malaysia.
This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. Wedo not assume responsibility to any other person for the content of this report.
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PHEIM EMERGING COMPANIES BALANCED FUND
STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Note 2014 2013
RM RM
INVESTMENT INCOME/(LOSS)
Gross dividend income 260,848 343,723
Interest income
- loans and receivables 195,835 37,531
- available-for-sale ("AFS") financial assets 99,798 188,624
Net gain on financial assets at fair value through
profit or loss ("FVTPL") 8 644,137 1,522,826
Accretion of discounts, net of amortisation of
premiums on AFS financial assets 9 (4,316) 33,613
Net realised loss on foreign exchange (1,428) (20,072)
1,194,874 2,106,245
EXPENSES
Manager's fee 4 298,471 260,812
Trustee's fee 5 18,000 18,000
Auditor's remuneration 9,085 11,660
Tax agent's fee 3,000 3,064
Administrative expenses 26,647 27,352
355,203 320,888
Net income before tax 839,671 1,785,357
Tax income/(expense) 6 39,808 (17,383)
Net income for the year 879,479 1,767,974
Other comprehensive loss
Net loss on change in fair value of AFS financial assets (2,424) (33,873)
Total comprehensive income for the year 877,055 1,734,101
Net income after tax is made up of the following:
Net realised income 2,060,750 1,233,864
Net unrealised (loss)/income (1,181,271) 534,110879,479 1,767,974
Distribution for the year:
Net distribution 11 1,004,289 858,410
Net distribution per unit (sen) 11 6.5 6
Gross distribution per unit (sen) 11 6.5 6
The accompanying notes form an integral part of the financial statements.
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PECBF
PHEIM EMERGING COMPANIES BALANCED FUND
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
Note 2014 2013
RM RM
ASSETS
Investments 7 13,860,468 13,813,768
Deposits with licensed financial institutions 10 6,842,964 3,947,113
Other receivable 55,289 91,492
Amount due from Brokers - 289,788
Cash at bank 115,244 420,940TOTAL ASSETS 20,873,965 18,563,101
LIABILITIES
Tax payable - 26,068
Amount due to Manager 28,450 22,720
Amount due to Trustee 1,627 1,578
Other payables and accruals 16,000 15,600
TOTAL LIABILITIES 46,077 65,966
UNITHOLDERS' EQUITY
Unitholders' capital 11,267,447 8,809,460
Retained earnings 9,566,737 9,691,547
Available-for-sale reserve (6,296) (3,872)
TOTAL EQUITY 12 20,827,888 18,497,135
TOTAL EQUITY AND LIABILITIES 20,873,965 18,563,101
UNITS IN CIRCULATION 12 (a) 17,347,920 15,334,865
NET ASSET VALUE ("NAV") PER UNIT 13 1.2006 1.2062
The accompanying notes form an integral part of the financial statements.
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PHEIM EMERGING COMPANIES BALANCED FUND
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Unitholders' Retained AFS Total
capital earnings reserve Equity
RM RM RM RM
At 1 January 2013 8,700,042 8,781,983 30,001 17,512,026
Total comprehensive income for
the year - 1,767,974 (33,873) 1,734,101
Creation of units 2,409,920 - - 2,409,920
Cancellation of units (2,208,083) - - (2,208,083)
Distribution equalisation (92,419) - - (92,419)
Income distribution (Note 11) - (858,410) - (858,410)
Balance at 31 December 2013 8,809,460 9,691,547 (3,872) 18,497,135
Total comprehensive income for
the year - 879,479 (2,424) 877,055
Creation of units 2,906,659 - - 2,906,659
Cancellation of units (680,664) - - (680,664)
Distribution equalisation 231,993 - - 231,993
Income distribution (Note 11) - (1,004,289) - (1,004,289)Balance at 31 December 2014 11,267,447 9,566,737 (6,296) 20,827,888
The accompanying notes form an integral part of the financial statements.
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PECBF
PHEIM EMERGING COMPANIES BALANCED FUND
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
2014 2013
RM RM
CASH FLOWS FROM OPERATING AND
INVESTING ACTIVITIES
Proceeds from sale of investments 12,523,770 9,804,305
Purchase of investments (13,347,157) (9,633,486)
Dividends received 290,880 301,558
Interest received 300,376 226,257
Proceeds received from bonds on maturity 1,700,000 2,500,000
Tax paid (520) -
Tax refunded 18,131 46,258
Management fee paid (294,546) (256,789)
Trustee's fee paid (17,951) (17,947)
Payment for other fees and expenses (38,330) 39,076
Income distribution paid (20,800) (19,586)
Net cash generated from operating
and investing activities 1,113,853 2,989,646
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from creation of units 2,286,342 1,925,729
Payment for cancellation of units (810,040) (2,653,636)
Net cash generated from/(used in) financing activities 1,476,302 (727,907)
NET INCREASE IN CASH
AND CASH EQUIVALENTS 2,590,155 2,261,739
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE YEAR 4,368,053 2,106,314
CASH AND CASH EQUIVALENTS AT THE END OFTHE YEAR 6,958,208 4,368,053
Cash and cash equivalents comprise the following:
Deposits with licensed financial institutions (Note 10) 6,842,964 3,947,113
Cash at bank 115,244 420,9406,958,208 4,368,053
The accompanying notes form an integral part of the financial statements.
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PECBF
PHEIM EMERGING COMPANIES BALANCED FUND
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES
2. BASIS OF PREPARATION
2.1 Statement of Compliance
2.2 Basis of Measurement
The accounting policies applied by the Fund is consistent with those applied in the previous
financial year other than the application of the new and revised MFRSs, Issues Committee ("IC")
Interpretations and amendments to MFRSs and IC Interpretations as disclosed in Note 2.3 below.
Pheim Emerging Companies Balanced Fund ("the Fund") was established pursuant to a Master Deeddated 11 January 2002 as amended by a Second Supplemental Master Deed dated 29 April 2013between the Manager; Pheim Unit Trusts Berhad, the Trustee; Maybank Trustees Berhad and theregistered unitholders of the Fund.
The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 of theMaster Deed, which includes investments in equities and fixed income securities traded on BursaMalaysia Securities Berhad ("Bursa Malaysia") or any other markets considered as Eligible Market. TheFund commenced operations on 28 January 2002 and will continue its operations until terminated by theTrustee as provided under Part 12 of the Master Deed.
The Manager, Pheim Unit Trusts Berhad, is a public company incorporated in Malaysia. It is a whollyowned subsidiary of Pheim Asset Management Sdn Bhd, a private company incorporated in Malaysia.Its principal activity is the management of unit trust funds. Pheim Asset Management Sdn Bhd has beenappointed by the Manager as the External Investment Manager of the Fund with responsibility for theprovision of investment management services to the Fund.
The principal place of business of the Fund is located at 7th Floor, Menara Hap Seng, Jalan P. Ramlee,50250 Kuala Lumpur.
The financial statements are presented in Ringgit Malaysia (RM).
The financial statements were authorised for issue by the Board of Directors of the Manager inaccordance with the resolution of the directors on 23 February 2015.
The financial statements of the Fund have been prepared in accordance with Malaysian FinancialReporting Standards ("MFRSs"), International Financial Reporting Standards ("IFRSs") and theSecurities Commission's Guidelines on Unit Trust Funds in Malaysia.
The financial statements of the Fund have been prepared on the historical cost convention unlessotherwise indicated in the summary of significant accounting policies.
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2. BASIS OF PREPARATION (CONTD.)
2.3
Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities
Amendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge Accounting
(a) Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities
(b)
2.4
Effective for annual periods beginning on or after 1 July 2014
Amendments to MFRS 119, Defined Benefit Plans: Employee ContributionsAmendments to MFRSs Classified as "Annual Improvements to MFRSs 2010 - 2012 Cycle"Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2011 - 2013 Cycle"
The Amendments have been applied retrospectively and the application has no impact on
the disclosures or the amounts recognised in the Fund's financial statements.
The Amendments introduce a narrow-scope exception to the requirement for the
discontinuation of hedge accounting in MFRS 139, Financial Instruments : Recognition and
Measurement. Specifically, the Amendments provide relief from discontinuing hedge
accounting when a novation of a derivative as a hedging instrument meets certain criteria.
The Amendments clarify the requirements relating to the offset of financial assets and
financial liabilities. Specifically, the Amendments clarify the meaning of 'currently has a
legally enforceable right of set-off' and 'simultaneous realisation and settlement'.
The Amendments have been applied retrospectively and the application has no impact on
the disclosures or the amounts recognised in the Fund's financial statements.
Application of Amendments to MFRSs and new IC Interpretation
During the financial year, the Fund has applied the following amendments to MFRSs issued by
the Malaysian Accounting Standards Board ("MASB") which are effective for accounting period
beginning on or after 1 January 2014 :-
The Fund has not early adopted the following new MFRSs and amendments to MFRSs that have
been issued by the MASB but are not yet effective :-
Amendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge
Accounting
New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective
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2. BASIS OF PREPARATION (CONTD.)
2.4
Effective for annual periods beginning on or after 1 January 2016
MFRS 14, Regulatory Deferral AccountsAmendments to MFRS 10, MFRS 12 and MFRS 128 - Investment Entities: Applying the
Consideration ExceptionAmendments to MFRS 10 and MFRS 128 - Sale or Contribution of Assets between an Investor
and its Associate or Joint VentureAmendments to MFRS 11 - Accounting for Acquisitions of Interests in Joint OperationsAmendments to MFRS 101 - Disclosure InitiativeAmendments to MFRS 116 and MFRS 138 - Clarification of Acceptable Methods of
Depreciation and AmortisationAmendments to MFRS 116 and MFRS 141 - Agriculture : Bearer PlantsAmendments to MFRS 127 - Equity Method in Separate Financial StatementsAmendments to MFRSs Classified as "Annual Improvements to MFRSs 2012 - 2014 Cycle"
Effective for annual periods beginning on or after 1 January 2017
Effective for annual periods beginning on or after 1 January 2018
MFRS 9 - Financial Instruments (IFRS 9 issued in July 2014)
The Standard replaces earlier versions of MFRS 9 and introduces a package of improvements
which includes a classification and measurement model, a single forward-looking ‘expected loss’
impairment model and a substantially-reformed approach to hedge accounting.
The Fund will apply the above new MFRSs and amendments to MFRSs that are applicable once
they become effective. The main features of the new applicable standards and amendments to
standards are summarised below :-
MFRS 15 -Revenue from Contracts with Customers
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)
New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective (Cont'd)
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2. BASIS OF PREPARATION (CONT'D.)
2.4
The key enhancements of MFRS 9 are :
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)(Cont'd)
• Under MFRS 9, all recognised financial assets are required to be subsequently measured at
either amortised cost, fair value through other comprehensive income ("FVTOCI") or fair value
through profit or loss ("FVTPL") on the basis of both an entity's business model for managing the
financial assets and the contractual cash flow characteristics of the financial assets. These
requirements improve and simplify the approach for classification and measurement of financial
assets as the numerous categories of financial assets under MFRS 139 had been replaced.
• Most of the requirements in MFRS 139 for classification and measurement of financial
liabilities were carried forward unchanged to MFRS 9, except for the measurement of financial
liabilities designated as at FVTPL. Under MFRS 139, the entire amount of the change in the fair
value of the financial liability designated as FVTPL is presented in profit or loss. However,
MFRS 9 requires that the amount of change in the fair value of the financial liability that is
attributable to changes in the credit risk of that liability is presented in other comprehensive
income, unless the recognition of the effects of changes in the liability's own credit risk in other
comprehensive income would create or enlarge an accounting mismatch in profit or loss.
Changes in fair value attributable to a financial liability's credit risk are not subsequently
reclassified to profit or loss.
New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective (Cont'd)
• In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss
model, as opposed to an incurred credit loss model under MFRS 139. Under MFRS 9, it is no
longer necessary for a credit event to have occurred before credit losses are recognised. Instead,
an entity always accounts for expected credit losses and changes in those expected credit losses
at each reporting date to reflect changes in credit risk since initial recognition.
• The new general hedge accounting requirements retain the three types of hedge accounting
mechanisms currently available in MFRS 139 i.e. fair value hedges, cash flow hedges and hedges
of a net investment in a foreign operation. MFRS 9 incorporates a new hedge accounting model
that aligns the hedge accounting more closely with an entity's risk management activities. The
new hedge accounting model has also expanded the scope of eligibility of hedge items and
hedging instruments respectively.
The initial application of MFRS 9 in the future may have an impact on the financial statements of
the Fund. However, it is not practicable to provide a reasonable estimate of the effect until a
detailed review has been completed. The initial application of other new MFRSs and
amendments to MFRSs is not expected to have any significant impact on the financial statements
of the Fund.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 Financial Assets
(a) Financial assets at fair value through profit or loss ("FVTPL")
(b) Available-for-sale ("AFS") financial assets
Financial assets are recognised in the statement of financial position when, and only when, theFund becomes a party to the contractual provisions of the financial instruments. Regular way ofpurchase and sale of investments in financial instruments are recognised on trade dates. Whenfinancial assets are recognised initially, they are measured at fair value, plus attributabletransaction cost, for investment not at fair value through profit or loss.
The Fund determines the classification of its financial assets at the initial recognition, and thecategories include financial assets at fair value through profit or loss, available-for-sale financialassets and loans and receivables.
Financial assets are classified as financial assets at FVTPL if they are held for trading or aredesignated as such upon initial recognition. Financial assets held for trading includesecurities and fixed income securities and collective investment schemes acquiredprincipally for the purpose of selling them in near term.
Subsequent to initial recognition, financial assets at FVTPL are measured at fair value at thedate of statement of financial position. Changes in the fair value of those financialinstruments are recorded in "Net gain or loss on financial assets at FVTPL". Interest earnedand dividend revenue elements of such instruments are recorded separately in "Interestincome" and "Gross dividend income", respectively. Foreign exchange differences onfinancial assets at FVTPL are not recognised separately in profit and loss but included in netgains or net losses on changes in fair value of financial assets at FVTPL.
AFS financial assets are financial assets that are designated as available for sale or are notclassified as financial assets at FVTPL or loans and receivables.
After initial recognition, AFS financial assets are measured at fair value. Gains or lossesfrom changes in fair value of the AFS financial assets are recognised in othercomprehensive income, except that impairment losses, foreign exchange gains and losseson monetary instruments, dividend income and interest calculated using effective interestmethod are recognised in profit or loss.
The cumulative gain or loss previously recognised in other comprehensive income isreclassified from equity to profit or loss as a reclassification adjustment when the financialasset is derecognised. Interest income calculated using the effective interest method isrecognised in profit or loss. Dividends on an AFS equity instrument are recognised in profitor loss when the Fund's right to receive payment is established.
The accounting policies set out below have been applied consistently to the periods, presented in thesefinancial statements and have been applied consistently by the Fund, unless otherwise stated.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.1 Financial Assets (Contd.)
(b) Available-for-sale ("AFS") financial assets (Contd.)
(c) Loan and receivables
3.2 Impairment of Financial Assets
(a) AFS financial assets
Significant or prolonged decline in fair value below cost, weaken fundamental, significant
financial difficulties of the issuer or obligor, and the disappearance of an active trading
market are considerations to determine whether there is objective evidence that investment
securities classified as AFS financial assets are impaired. At end of each financial year, the
Manager would receive impairment proposal from the Fund's external investment manager,
if any financial assets of the Fund, in their professional opinion, warrant an impairment
exercise.
Regular way purchases or sales are purchases or sales of financial assets that requiredelivery of assets within the period generally established by regulation or convention in themarket place concerned. All regular way purchases and sales of financial assets arerecognised or derecognised on trade date, i.e. the date that the Fund commit to purchase orsell the asset.
A financial asset is derecognised when the asset is disposed and the contractual right toreceive cash flows from the asset has expired. On derecognition of a financial asset in itsentirety, the difference between the carrying amount and the sum of the considerationreceived and any cumulative gain or loss that had been recognised in other comprehensiveincome is recognised in profit or loss.
Fair value is the amount for which an asset could be exchanged, or liability settled, betweenknowledgeable, willing parties in an arm's length transaction. The fair value for financialinstruments traded in active markets at the reporting date is based on their quoted price orbinding dealer price quotations, without deduction for transaction costs.
Financial assets with fixed or determinable payments that are not quoted in an active marketare classified as loans and receivables. The Fund includes short term receivables such asbalances due from broker, Manager and other receivables in the classification. Loans andreceivables are recognised initially at fair value including transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortised costusing effective interest method. Gains and losses are recognised in profit or loss when theloans and receivables are derecognised or impaired, and through the amortisation process.
The Fund assesses at each reporting date whether there is any objective evidence that a financialasset is impaired.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.2 Impairment of Financial Assets (Cont'd)
(a) AFS financial assets (Cont'd)
(b) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assetshas been incurred, the Fund considers factors such as the probability of insolvency orsignificant financial difficulties of the debtor and default or significant delay in payments.
If any such evidence exists, the amount of impairment loss is measured as the differencebetween the asset's carrying amount and the present value of estimated future cash flowsdiscounted at the financial asset's original effective interest rate. The impairment loss isrecognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for allfinancial assets with the exception of trade receivables, where the amount is reducedthrough the use of an allowance account. When a trade receivable becomes uncollectible, itis written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease canbe related objectively to an event occurring after the impairment was recognised, thepreviously recognised impairment loss is reversed to the extent that the carrying amount ofthe asset does not exceed its amortised cost at the reversal date. The amount of reversal isrecognised in profit or loss.
If an AFS financial asset is impaired, an amount comprising the difference between its cost(net of any principal payment and amortisation) and its current fair value, less anyimpairment loss previously recognised in profit or loss, is transferred from equity to profitor loss.
Impairment losses on AFS equity investments are not reversed in profit or loss in thesubsequent periods. Increase in fair value, if any, subsequent to impairment loss isrecognised in other comprehensive income. For AFS debt investments, impairment lossesare subsequently reversed in profit or loss, up to the amount previously recognised asimpairment loss, if an increase in the fair value of the investment can be objectively relatedto an event occurring after the recognition of the impairment loss in profit or loss.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.3 Classification of Realised and Unrealised Gain and Losses
3.4 Financial Liabilities
3.5 Foreign Currencies
Unrealised gain and losses comprise changes in fair value of financial instruments for the periodfrom reversal of prior period's unrealised gain and losses for financial instruments which wererealised (i.e. sold, redeemed or matured) during the reporting period.
Realised gains and losses on disposals of financial instruments classified as part of "at fair valuethrough profit or loss" are calculated using weighted average method. They represent thedifference between an instrument's initial carrying amount and disposal amount, or cash paymentor receipts made of derivative contracts (excluding payments or receipts on collateral marginaccounts for such investments).
Financial liabilities are classified according to the substance of the contractual arrangementsentered into and the definition of a financial liability.
Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financialposition when, and only when, the Fund becomes a party to the contractual provisions of thefinancial instrument. Financial liabilities are classified as other financial liabilities.
The Fund's financial liabilities which include amount due to broker, Manager and other payablesare recognised initially at fair value plus directly attributable transaction costs and subsequentlymeasured at the amortised cost using effective interest method.
A financial liability is derecognised when the obligation under the liability is extinguished. Gainsand losses are recognised in profit or loss when the liabilities are derecognised, and through theamortisation process.
The financial statements of the Fund are measured using the currency of the primary economicenvironment in which the Fund operates ("the functional currency"). The financial statements arepresented in Ringgit Malaysia (RM), which is also the Fund's functional currency.
In preparing the financial statements, transactions in currencies other than the Fund's functionalcurrency (foreign currencies) are recorded in the functional currency using the exchange ratesprevailing at the dates of the transactions. At the end of each reporting period, foreign currencymonetary assets and liabilities are translated at exchange rates prevailing at the end of thereporting period. Non-monetary items that are measured at fair value in a foreign currency aretranslated using exchange rates at the date when the fair value was determined.
Exchange differences arising from the settlement of foreign currency transactions and from thetranslation of foreign currency monetary assets and liabilities are recognised in profit or loss.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.5 Foreign Currencies (Contd.)
3.6 Unitholders' Capital
3.7 Income Distribution
3.8 Cash and Cash Equivalents
3.9 Income Recognition
The unitholders' contributions to the Fund meet the definition of puttable instruments classifiedas equity instruments under MFRS 132.
Distribution equalisation represents the average distributable amount included in the creation andcancellation prices of units. This amount is either refunded to unitholders by way of distributionand/or adjusted accordingly when units are cancelled.
Cash and cash equivalents comprise cash at bank and deposits with financial institutions whichhave insignificant risk of changes in value.
Income is recognised to the extent that is probable that the economic benefits will flow to theFund and the income can be reliably measured. Income is measured at fair value of considerationreceived or receivable.
Dividend income is recognised when the Fund's right to receive payment is established.
Interest income, which includes the accretion of discount and amortisation of premium on fixedincome securities, is recognised using effective interest method.
Income distributions are at the discretion of the Manager. Income distribution to the Fund'sunitholders is accounted for as a deduction from realised reserves except where distribution issourced out of distribution equalisation which is accounted for as deduction from unitholders'capital.
Exchange differences arising from the translation of non-monetary items carried at fair value areincluded in profit or loss for the period except for the differences arising on the translation ofnon-monetary items in respect of which gains or losses are recognised directly in equity.Exchange differences arising from such non-monetary items are recognised directly to equity.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.10 Income Tax
3.11 Segment Reporting
3.12 Significant Accounting Estimates and Judgements
4. MANAGER'S FEE
5. TRUSTEE' S FEE
The Manager is entitled to an annual management fee of 1.50% per annum of the NAV of the Fund(before deducting manager's and trustee's fees for the day) calculated and accrued on a daily basis.
The Trustee is entitled to a fee of 0.07% per annum based on NAV of the Fund (before deducting themanager's and trustee's fee for the day) calculated and accrued on a daily basis, subject to a minimum ofRM18,000 per annum.
The preparation of financial statements in accordance with MFRS and IFRS requires the use ofcertain accounting estimates and exercise of judgements. Estimates and judgements arecontinually evaluated and are based on past experience, reasonable expectations of future eventsand other factors.
Current tax assets and liabilities are measured at the amount expected to be recovered from orpaid to the tax authorities. The tax rates and tax laws used to compute the amount are those thatare enacted or substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to itemsrecognised outside profit or loss, either in other comprehensive income or directly in equity.
No deferred tax is recognised as there are no material temporary differences.
For management purposes, the Fund is managed by 2 main portfolios, namely (1) equitysecurities and (2) fixed income instruments. Each segment engages in separate business activitiesand the operating results are regularly reviewed by the Manager, External Investment Managerand the Fund's Investment Committee. The External Investment Manager and the FundInvestment Committee jointly assumes the role of chief operation decision maker, forperformance assessment purposes and to make decision about resources allocated to eachinvestment segment.
No major judgements have been made by the Manager in applying the Fund's accountingpolicies. There are no key assumptions concerning the future and other key sources of estimationuncertainty at the reporting date, that have a significant risk of causing a material adjustment tothe carrying amounts of assets and liabilities within next year.
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6. TAXATION
2014 2013
RM RM
Current year Malaysian tax - 19,547
Overprovision in prior year (39,808) (2,164)
Malaysian tax (income)/expense based onresults for the year (39,808) 17,383
2014 2013
RM RM
Net income before tax 839,671 1,785,357
Taxation at Malaysian statutory rate of 25% (2013: 25%) 209,918 446,339
Tax effects of:
Income not subject to tax (298,719) (507,015)
Expenses not deductible for tax purposes 11,064 11,430
Restriction on tax deductible expenses for unit trust
funds 77,737 68,793
Overprovision in prior year (39,808) (2,164)Tax (income)/expense for the financial year (39,808) 17,383
7. INVESTMENTS
2014 2013
RM RM
Financial assets at fair value through
profit or loss (Note 8)
Quoted equities
- in Malaysia 3,218,150 5,189,385
- outside Malaysia 4,946,168 5,221,493
8,164,318 10,410,878
Available-for-sale financial assets
(Note 9)
- Unquoted fixed income securities
in Malaysia 5,696,150 3,402,890Total investments 13,860,468 13,813,768
Income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimatedassessable income for the financial year.
The tax charge for the financial year is in relation to the taxable income earned by the Fund afterdeducting allowable expenses. In accordance with Schedule 6 of Income Tax Act 1967, interest incomeearned by the Fund is exempted from tax.
A reconciliation of tax expense applicable to net income before tax at the statutory income tax rate totax (income)/expense at the effective income tax rate of the Fund is as follows:
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8. FINANCIAL ASSETS AT FVTPL
2014 2013RM RM
Financial assets at FVTPL:Quoted equities 8,164,318 10,410,878
Net gain on financial assets at FVTPL comprised:
Realised gain on disposals 1,825,408 995,148
Unrealised (loss)/gain on changes in fair values (1,181,271) 527,678644,137 1,522,826
The currency exposure profile of financial assets at
FVTPL is as follows :
- Ringgit Malaysia 3,218,150 5,189,385
- Hong Kong Dollar 1,238,735 3,127,987
- Indonesian Rupiah 1,827,824 266,228
- Singapore Dollar 864,926 670,250
- Thai Baht 286,763 320,087
- Philippines Peso 282,386 258,411
- South Korean Won 445,534 578,5308,164,318 10,410,878
Financial assets at FVTPL as at 31 December 2014 are as detailed below:
Name of Counter Quantity Cost Fair value % of
RM RM NAV
QUOTED EQUITIES
- IN MALAYSIA
Main Market
Construction
Ho Hup Construction Co. Berhad 145,000 178,984 181,250 0.87
Muhibbah Engineering (M) Berhad 37,000 55,033 68,820 0.33
182,000 234,017 250,070 1.20
Consumer
Padini Holdings Berhad 100,000 198,553 146,000 0.70
Yee Lee Corporation Berhad 108,500 142,163 151,900 0.73
208,500 340,716 297,900 1.43
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8. FINANCIAL ASSETS AT FVTPL (CONTD.)
QUOTED EQUITIES
- IN MALAYSIA (Contd.)
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Industrial Products
Can-One Berhad 110,000 372,197 234,300 1.12
Jaya Tiasa Holdings Berhad 144,000 318,856 280,800 1.35
Kian Joo Can Factory Berhad 90,000 238,478 262,800 1.26
Malaysia Steel Works KL Berhad 40,000 40,914 34,600 0.17
Scientex Berhad 6,000 32,010 42,120 0.20
Ta Ann Holdings Berhad 75,000 348,952 283,500 1.36
465,000 1,351,407 1,138,120 5.46
Plantations
Hap Seng Plantations Holdings Berhad 17,000 47,596 42,670 0.20
Sarawak Oil Palms Berhad 30,000 168,560 154,500 0.74
TH Plantations Berhad 168,000 351,022 265,440 1.27
215,000 567,178 462,610 2.21
Properties
Land & General Berhad 164,000 106,998 82,820 0.40
Matrix Concepts Holdings Berhad 171,500 251,533 463,050 2.22
Metro Kajang Holdings Berhad 50,000 201,307 130,000 0.62
385,500 559,838 675,870 3.24
Technology
Malaysian Pacific Industries 68,000 261,831 308,040 1.48
Trading/Services
Berjaya Auto Berhad 26,000 83,725 85,540 0.41
TOTAL QUOTED
EQUITIES
- IN MALAYSIA 1,550,000 3,398,712 3,218,150 15.43
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8. FINANCIAL ASSETS AT FVTPL (CONTD.)
QUOTED EQUITIES
- OUTSIDE MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Hong Kong Stock Exchange
("HKSE")
China Fiber Optic Network SY 252,000 215,088 237,375 1.14
China Gas Holdings Ltd 26,000 155,539 143,196 0.70
China Huishan Dairy Holdings Co. Ltd 232,000 238,911 140,113 0.68
China Meidong Auto Holdings Ltd 248,000 195,011 178,838 0.86
Goldpac Group Ltd 68,000 226,044 164,271 0.79
Tianneng Power International Ltd 124,000 167,536 115,127 0.55
TCL Communication Tech Holdings Ltd 47,000 166,460 152,729 0.73
Termbray Petro King Oilfield 220,000 372,156 107,086 0.51
1,217,000 1,736,745 1,238,735 5.96
Jakarta Stock Exchange
("JSX")
Alam Sutera Realty TBK PT 2,270,000 322,038 358,479 1.72
Charoen Pokphand Indonesia PT 180,000 208,275 191,365 0.92
Hexindo Adiperkasa TBK PT 259,000 382,688 255,998 1.23
Metropolitan Land TBK PT 1,000,000 118,367 122,670 0.59
Modernland Realty TBK PT 3,840,000 488,501 557,683 2.68
Tempo Scan Pacific TBK PT 260,000 212,240 207,496 1.00
Tunas Baru Lampung TBK PT 630,000 105,825 134,133 0.64
8,439,000 1,837,934 1,827,824 8.78
Korea Exchange("KE")
SK Hynix Inc 1,500 221,775 229,207 1.10Yuhan Corp 400 206,352 216,327 1.04
1,900 428,127 445,534 2.14
Philippines Stock Exchange Stock Exchange("PSE")
8990 Holdings Inc 160,000 88,406 88,187 0.42San Miguel pure Food. Co 12,000 262,256 194,199 0.93
172,000 350,662 282,386 1.35
Stock Exchange Thailand Stock Exchange("SET")
Total Access Communication-NVDR 28,000 303,741 286,763 1.38
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8. FINANCIAL ASSETS AT FVTPL (CONTD.)
QUOTED EQUITIES- OUTSIDE MALAYSIA(Contd.)
Name of Counter Quantity Cost Fair value % ofRM RM NAV
Singapore Exchange
("SGX")Centurion Corp Ltd 76,000 112,577 100,536 0.48
Indofood Agri Resources Ltd 136,000 546,939 259,065 1.24
Midas Holdings Ltd 137,000 176,755 90,615 0.43
SBI Offshore Limited 550,000 177,375 414,710 1.99
899,000 1,013,646 864,926 4.14
TOTAL QUOTED
EQUITIES
- OUTSIDE MALAYSIA 10,756,900 5,670,855 4,946,168 23.75
TOTAL FINANCIAL ASSETSAT FVTPL 9,069,567 8,164,318 39.18
EXCESS OF COST OVERFAIR VALUE (905,249)
9. AFS FINANCIAL ASSETS
2014 2013
RM RM
Unquoted fixed income securities 5,696,150 3,402,890
Accretion of discounts, net ofamortisation of premiums on AFS financial assets -4,316 33,613
AFS financial assets as at 31 December 2014 are as detailed below:
Nominal
Name of Counter Amount Cost * Fair value % of
RM RM NAV
UNQUOTED FIXED INCOME SECURITIES
SME Bank IMTN 3.7% 1,000,000 1,000,000 997,500 4.79
Malaysian Government Securities 1,700,000 1,702,446 1,697,450 8.15
-10/15
SABH 4.275% 3,000,000 3,000,000 3,001,200 14.41
-12/195,700,000 5,702,446 5,696,150 27.35
EXCESS OF COST OVERFAIR VALUE (6,296)
* Cost of fixed income securities include accretion of discount and/or amortisation of premium.
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10. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS
2014 2013
RM RM
Licensed investment bank 6,842,964 3,947,113
2014 2013 2014 2013% % Days Days
Licensed investment bank 3.05 2.91 3 6
11. INCOME DISTRIBUTION
Distributions to unitholders are from the following sources:
2014 2013
RM RM
Dividend income 18,973 6,563
Interest income 14,279 20,051
Net realised gain from sale of investments 130,266 66,386
Net accretion of discount on corporate bond 8,070 3,212
Other income - 123
171,588 96,335
Less:
Expenses 30,888 30,697
Taxation - -
Current year's realised income 140,700 65,638
Distribution out of previous year's realised reserves 863,589 792,772Distribution for the year 1,004,289 858,410
Units in circulation at book closing date 15,450,593 14,306,838
Gross distribution per unit (sen) 6.5 6
Net distribution per unit (sen) 6.5 6Date of distribution 29.4.2014 26.4.2013
WAEIR
Average
remaining
maturities
The weighted average effective interest rate ("WAEIR") per annum and the average remainingmaturities of deposits and placement are as follows:
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12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY)
Note 2014 2013
RM RM
Unitholders' capital (a) 11,267,447 8,809,460
Retained earnings
- Realised earnings (b) 10,868,343 9,811,882
- Unrealised losses (c) (1,301,606) (120,335)
9,566,737 9,691,547
AFS reserve (6,296) (3,872)Total equity/ Net asset value 20,827,888 18,497,135
(a) Unitholders' Capital
Number Number
of units RM of units RM
Balance at beginning
of the year 15,334,865 8,809,460 15,237,393 8,700,042
Add: Creation of units 2,681,987 2,906,659 2,367,288 2,409,920
Less: Cancellation of units (668,932) (680,664) (2,269,816) (2,208,083)
Distribution equalisation - 231,993 - (92,419)
Balance at endof the year 17,347,920 11,267,447 15,334,865 8,809,460
2014 2013
In accordance with Article 6.1.1 of the Deed and Securities Commision's approval letter dated 19
December 2001, the maximum number of units that can be issued for circulation is 100 million units.
As at 31 December 2014, the number of units not in issue is 82,652,080 (2013: 84,665,135 ) units.
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12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY)(CONTD.)
(b) Realised - Distributable2014 2013RM RM
Balance at the beginning of the year 9,811,882 9,436,428Net income after tax 879,479 1,767,974
Net unrealised loss/(gain) attributable toinvestments held transferred to
unrealised reserve 1,181,271 (527,679)
Net unrealised foreign exchange
(gain)/loss attributable to foreign currency
monetary items transferred to unrealised reserve - (6,431)
Distribution out of realised reserve (1,004,289) (858,410)Balance at the end of the year 10,868,343 9,811,882
(c) Unrealised - Non-distributable
2014 2013
RM RM
Balance at the beginning of year (120,335) (654,445)
Net unrealised (loss)/gain attributable to
investment held transferred from
realised reserve (1,181,271) 527,679
Net unrealised foreign exchange
gain/(loss) attributable to foreign
currency monetary items transferred from
realised reserve - 6,431Balance at the end of the year (1,301,606) (120,335)
13. NET ASSET VALUE PER UNIT
RM RM/Unit RM RM/Unit
NAV attributable to unitholders
for issuing/redeeming units 20,918,607 1.2058 18,536,711 1.2088
Effect from adopting bid prices
as fair value (90,719) (0.0052) (39,576) (0.0026)
NAV attributable to unitholdersper financial statements 20,827,888 1.2006 18,497,135 1.2062
2014 2013
Quoted financial assets have been valued at the bid prices at the close of business in accordance with
the provisions of MFRS 139. For the purpose of calculation of net asset value attributable to unitholders
per unit for the issuance and redemption of units in accordance with the Deed, quoted financial assets
are stated at the last done market price.
Net asset value attributable to unitholders is classified as equity in the statement of financial position.
A reconciliation of net asset value attributable to unitholders for issuing/redeeming units and the net
asset value attributable to unitholders per the financial statements is as follows:-
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14. UNITS HELD BY RELATED PARTIES
2014 2013
Number of Valued at Number of Valued at
units NAV units NAV
RM RM
Directors of the Manager 415,315 498,627 69,050 83,289
The Directors of the Manager are the legal and beneficial owners of the units.
15. TRANSACTIONS WITH BROKERS
% of Total
Value of % of Total Brokerage Brokerage
Trade Trade Fees Fees
RM % RM %
MIDF Amanah Investment Bank Bhd 7,457,869 22.10 - -Hwang-DBS Investment Bank Bhd 3,101,004 9.20 445 0.73KAF Investment Bank Bhd 2,500,000 7.41 - -
DBS Vickers Securities Pte Ltd- Hong Kong 1,718,325 5.10 4,323 7.05
PT Danareksa Sekuritas - Indonesia 1,515,846 4.49 8,281 13.52
PT Mandiri Sekuritas 1,374,809 4.08 4,118 6.72
Kenanga Investment Bank Bhd 1,314,861 3.90 2,780 4.54
Daiwa Securities SMBC Co Ltd - Seoul 1,290,326 3.83 4,526 7.39
CIMB-GK Securities Ltd
- Hong Kong 1,255,279 3.72 3,144 5.13DBS Vickers Securities Ltd - Korea 1,158,625 3.44 3,026 4.94
Others 11,037,441 32.73 30,620 49.9833,724,386 100.00 61,263 100.00
16. MANAGEMENT EXPENSE RATIO
2014 2013
Management expense ratio 1.78% 1.85%
This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other professional
fees) and other administrative expenses of the Fund to the average NAV of the Fund calculated on a
daily basis. The average NAV of the Fund for the year ended 31 December 2014 was RM 19,908,620
(2013: RM17,381,207).
Details of transactions with stockbroking companies and other investment banks for the financial yearended 31 December 2014 are as follows:
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17. PORTFOLIO TURNOVER RATIO
2014 2013
Portfolio turnover (times) 0.65 0.56
18. SEGMENT INFORMATION
This is the ratio of average acquisitions and disposals of the Fund for the financial year
to the average NAV of the Fund calculated on a daily basis.
The Manager and Investment Committee of the Fund are responsible for allocating resources availableto the Fund in accordance with the overall investment strategies as set out in the Investment Guidelinesof the Fund. The Fund is managed by two segments:
A portfolio of equity instruments A portfolio of fixed income portfolio, including debt securities and deposits with financialinstitutions.
The investment objective of each segment is to achieve consistent returns from the investments in eachsegment while safeguarding capital by investing in diversified portfolios. There have been no changes inreportable segments in the current financial year. The segment information provided is presented to the
2014 2013
Fixed Fixed
Equity Income Equity Income
Portfolio Portfolio Total Portfolio Portfolio TotalRM RM RM RM RM RM
Gross dividend income 260,848 - 260,848 343,723 - 343,723
Interest income - 295,633 295,633 - 226,155 226,155
Net gain on financial
assets at FVTPL 644,137 - 644,137 1,522,826 - 1,522,826
Accretion of discounts, net of
amortisation of premiums
on AFS financial assets - (4,316) (4,316) - 33,613 33,613
Net realised loss on
foreign exchange (1,428) - (1,428) (20,072) - (20,072)
Total segment operatingincome for the year 903,557 291,317 1,194,874 1,846,477 259,768 2,106,245
Deposits with financial
institutions - 6,842,964 6,842,964 - 3,947,113 3,947,113
Financial assets at FVTPL 8,164,318 - 8,164,318 10,410,878 - 10,410,878
AFS financial assets - 5,696,150 5,696,150 - 3,402,890 3,402,890Other assets 19,581 35,708 55,289 340,829 40,451 381,280
Total segment assets 8,183,899 12,574,822 20,758,721 10,751,707 7,390,454 18,142,161
During the year, there were no transactions between operating segments.
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18. SEGMENT INFORMATION (CONTD.)
2014 2013
RM RM
Net reportable segment operating income 1,194,874 2,106,245
Expenses (355,203) (320,888)
Net income before tax 839,671 1,785,357
Tax income/(expense) 39,808 (17,383)Net income for the year 879,479 1,767,974
2014 2013
RM RM
Total segment assets 20,758,721 18,142,161
Cash at bank 115,244 420,940
Total assets of the Fund 20,873,965 18,563,101
Total segment liabilities - -
Tax payable - 26,068
Other payables and accruals 16,000 15,600
Amount due to Manager 28,450 22,720
Amount due to Trustee 1,627 1,578
Total liabilities of the Fund 46,077 65,966
19. FINANCIAL INSTRUMENTS
(a) Classification of financial instruments
Expenses of the Fund are not considered part of the performance of any operating segment. Thefollowing table provides a reconciliation between reportable segment income and operating profits:
In addition, certain assets and liabilities are not considered to be part of the assets or liabilities of anindividual segment. The following table provides reconciliation between the total reportable segmentassets and liabilities and total assets and liabilities of the Fund.
The Fund’s financial assets and financial liabilities are measured on an ongoing basis at eitherfair value or at amortised cost based on their respective classification. The significant accountingpolicies in Note 3 describe how the classes of financial instruments are measured, and howincome and expenses, including fair value gains and losses are recognised. The following tableanalyses the financial assets and liabilities of the Fund in the statement of financial position bythe class of financial instrument to which they are assigned, and therefore by the measurementbasis.
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19. FINANCIAL INSTRUMENTS (CONTD.)
(a) Classification of financial instruments (Contd.)Financial
liabilities
Financial AFS at
assets at financial Loans and amortised
FVTPL assets receivables cost Total
RM RM RM RM RM
2014
Assets
Investments 8,164,318 5,696,150 - - 13,860,468
Deposits with licensed
financial institutions - - 6,842,964 - 6,842,964
Other receivables - - 55,289 - 55,289
Cash at bank - - 115,244 - 115,244
Total financial assets 8,164,318 5,696,150 7,013,497 - 20,873,965
Total non-financial assets -
20,873,965
Liabilities
Amount due to Manager - - - 28,450 28,450
Amount due to Trustee - - - 1,627 1,627
Other payables - - - 16,000 16,000
Total financial liabilities - - - 46,077 46,077
Total non-financial liabilities -
46,077
2013
Assets
Investments 10,410,878 3,402,890 - - 13,813,768
Deposits with licensed
financial institutions - - 3,947,113 - 3,947,113
Other receivables - - 91,492 - 91,492
Amount due from Brokers - - 289,788 - 289,788
Cash at bank - - 420,940 - 420,940
Total financial assets 10,410,878 3,402,890 4,749,333 - 18,563,101
Total non-financial assets -
18,563,101
Liabilities
Amount due to Manager - - - 22,720 22,720
Amount due to Trustee - - - 1,578 1,578
Other payables - - - 15,600 15,600
Total financial liabilities - - - 39,898 39,898
Total non-financial liabilities 26,068
65,966
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19. FINANCIAL INSTRUMENTS (CONTD.)
(b) Fair Value
(i) Financial instruments that are carried at fair value
Level 1 Level 2 TotalRM RM RM
2014
Financial assets at FVTPL- Quoted equities 8,164,318 - 8,164,318
AFS financial assets- Fixed income securities - 5,696,150 5,696,150
8,164,318 5,696,150 13,860,468
2013
Financial assets at FVTPL- Quoted equities 10,410,878 - 10,410,878
AFS financial assets- Fixed income securities - 3,402,890 3,402,890
10,410,878 3,402,890 13,813,768
The Fund uses the following level of fair value hierarchy for determining and disclosing thefair value of financial instruments carried at fair value in the statement of financial position:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices included within Level 1 that are observable forthe asset or liability either directly or indirectly
Level 3: Inputs for the asset or liability that are not based on observable market data
The Fund’s financial assets at FVTPL and AFS financial assets are carried at fair value. Thefair values of these financial assets were determined using prices in active markets foridentical assets.
Quoted equity instrumentsFair value is determined directly by reference to their published market bid prices on therelevant stock exchanges at the reporting date.
Unquoted fixed income securitiesThe published market prices for RM-denominated unquoted bonds are based on informationprovided by Bond Pricing Agency Malaysia Sdn Bhd.
The Fund held the following financial instruments carried at fair value on the statement offinancial position as at the end of the financial year :
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19. FINANCIAL INSTRUMENTS (CONTD.)
(b) Fair Value (Contd.)
(i) Financial instruments not carried at fair value
20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES
(i) Market Risk
(a) Equity Price Risk
The Fund maintains investment portfolios in a variety of quoted and unquoted financial instruments asdictated by its Trust Deed and investment management strategy.
The Fund is exposed to a variety of risks including market risk (which includes interest rate risk, equityprice risk and currency risk), credit risk, and liquidity risk. Whilst these are the most important types offinancial risks inherent in each type of financial instruments, the Manager and the Trustee would like tohighlight that this list does not purport to constitute an exhaustive list of all the risks inherent in aninvestment in the Fund.
The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk isinherent in the Fund’s activities, but it is managed through a process of ongoing identification,measurement and monitoring of risks. Financial risk management is also carried out through soundinternal control systems and adherence to the investment restrictions as stipulated in the Trust Deed, theSecurities Commission’s Guidelines on Unit Trust Funds and the Capital Market and Services Act,2007.
Equity price risk is the risk of unfavourable changes in the fair value of equities as the resultof changes in the levels of equity indices and the value of individual shares. The equityprice risk exposure arises from the Fund’s investments in equity securities.
The Fund's principal exposure to market risk arises primarily due to changes or developments inthe market environment and typically includes changes in regulations, politics and the economyof the country. Market risk is also influenced by global economics and geopolitical developments.The Fund seeks to diversify away some of this risk by investing into different sectors to mitigaterisk exposure to any single asset class.
The Fund’s market risk is affected primarily due to changes in market prices, interest rates andforeign curency exchange rates.
Financial instruments not carried at fair value comprise financial assets and financialliabilities classified as loans and receivables and financial liabilities at amortised costrespectively.The carrying amount of these financial instruments at the end of the financialyear approximated their fair values due to their short term to maturity.
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(i) Market Risk (Contd.)
(a) Equity Price Risk (Contd.)
Effect on profit
or loss and equity
Change in equity price (%) Increase/ (Decrease)
RM
2014
+6/-6 489,859 /(489,859)
2013
+6/-6 624,653 /(624,653)
(b) Interest Rate Risk
Effect on profit
or loss and equity
Change in basis points * Increase/ (Decrease)
RM
2014+25/-25 6,784/(6,784)
2013+25/-25 3,215/(3,215)
* The assumed movement in basis points for interest rate sensitivity analysis is based on the
currently observable market environment.
The table below summarises the effect of sensitivity from the Fund’s underlyinginvestments in quoted equities on the profit or loss and equity of the Fund due to possiblechanges in equity prices, with all other variables held constant:
This risk refers to the effect of interest rate changes on the market value of fixed incomesecurities and deposits with financial institutions. In the event of rising interest rates, thereturn on deposits with financial institutions will rise while prices of bond will decrease andvice versa, thus affecting the net asset value of the Fund. This risk will be minimized via themanagement of the duration structure of the portfolio of bond and deposits with financialinstitutions.
The following table demonstrates the sensitivity of the profit or loss and equity of the Fundto a reasonably possible change in interest rates, with all other variables held constant:
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(i) Market Risk (Contd.)
(c) Currency risk
2014 2013
RM RM
Singapore Dollar 86,493 67,025
South Korean Won 44,553 57,853
Thai Baht 28,676 32,009
Philippines Peso 28,239 25,841
Indonesian Rupiah 182,782 26,623
Hong Kong Dollar 123,874 312,799494,617 522,150
(ii) Credit Risk
or loss and equity
Effect on profit
The Fund’s principal exposure to credit risk arises primarily due to changes in the financial
conditions of companies issuing debt securities and stockbroking companies, which may affect
their creditworthiness. This in turn may lead to default in the payment. Such events can lead to
loss of capital or delayed or reduced income for the Fund resulting in a reduction in the Fund’s
asset value and thus unit price. This risk is mitigated by vigorous credit analysis and
diversification of the bond portfolio of the Fund and to engage different stockbroking companies
with good reputation.
The Fund is exposed to currency risk primarily through its investment in overseas quotedequities that are denominated in foreign currencies. The Fund's foreign currency exposureprofile of its investment in quoted equities has been disclosed under Note 8.
A 10% strenghtening or weakening of the RM against the following foreign currencies as atthe end of the financial year would have decreased or increased respectively the profit orloss and equity of the Fund by the amount shown below. This analysis assumes all othervariables are held constant.
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(iii) Liquidity Risk
1 month - 3 Above 3
months months Total
RM RM RM
Financial Assets
Financial assets at FVTPL 8,164,318 - 8,164,318
AFS financial assets - 5,696,150 5,696,150
Deposits with financial institutions 6,842,964 - 6,842,964
Other assets 170,533 - 170,533
Total undiscounted
financial assets 15,177,815 5,696,150 20,873,965
Non-Financial Assets - - -
Total Assets 15,177,815 5,696,150 20,873,965
Financial Liabilitites
Other liablities 46,077 - 46,077
Total undiscounted
financial liabilities 46,077 - 46,077
Unitholders' NAV 20,827,888 - 20,827,888
Liquidity gap (5,696,150) 5,696,150 -
2014
This risk occurs in thinly traded or illiquid equity securities. Should the Fund need to sell arelatively large amount of such securities, the act itself may significantly depress the sellingprice. As the Fund is exposed to daily redemption of units, the risk is minimized by placing aprudent level of funds in short-term deposits and by investing in stocks whose liquidity isadjudged to be commensurate with the expected exposure level of the Funds.
The following table summarises the maturity profile of the Fund’s financial liabilities and thecorresponding assets available to meet commitments associated with those financial liabilitiesand redemption by the unitholders.
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(iii) Liquidity Risk (Contd.)
1 month - 3 Above 3
months months TotalRM RM RM
Financial Assets:
Financial assets at FVTPL 10,410,878 - 10,410,878
AFS financial assets - 3,402,890 3,402,890Deposits with financial institutions 3,947,113 - 3,947,113
Other assets 802,220 - 802,220Total undiscounted
financial assets 15,160,211 3,402,890 18,563,101
Financial LiabilitiesOther liabilities 39,898 - 39,898
Total undiscounted
financial liabilities 39,898 - 39,898
Non-Financial LiabilitiesTax Payable - 26,068 26,068
Total Assets 39,898 26,068 65,966
Unitholders' NAV 18,497,135 - 18,497,135
Liquidity gap (3,376,822) 3,376,822 -
(iv) Stock Specific Risk
(v) Single Issuer Risk
2013
The Fund’s exposure to securities issued by any issuer is limited to not more than a certainpercentage of its net asset value. Under such restriction, the risk exposure to the securities of anyissuer is minimised.
The Fund is exposed to the individual risk of the respective companies issuing securities whichincludes changes to the business performance of the company, consumer tastes and demand,lawsuits and management practices. This risk is minimised through the well diversified nature ofthe Fund.
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(vi) Capital Management
The capital is represented by unitholders’ subscription to the Fund. The amount of capital canchange significantly on a daily basis as the Fund is subject to daily redemption and subscriptionat the discretion of unitholders. The Manager manages the Fund’s capital with the objective ofmaximising unitholders' value, while maintaining sufficient liquidity to meet unitholders'redemption as explained in Note 20 (iii) above.
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PHEIM Annual Report 31.12.2014
DMP
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PHEIM Annual Report 31.12.2014
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PHEIM Annual Report 31.12.2014
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STATEMENT BY MANAGER TO THE UNITHOLDERS OFDANA MAKMUR PHEIM
We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Dana Makmur Pheim are drawn up in accordancewith the Deed, Malaysian Financial Reporting Standards, International FinancialReporting Standards and Securities Commission's Guidelines on Unit Trust Funds inMalaysia so as to give a true and fair view of the financial position of Dana MakmurPheim as at 31 December 2014 and of its financial performance and cash flows for thefinancial year then ended.
For and on behalf of the Manager,PHEIM UNIT TRUSTS BERHAD
AZMI MALEK MERICANDirector
HOI WENG KONGDirector
Kuala Lumpur, Malaysia23 FEB 2015
DMP
INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF
DANA MAKMUR PHEIM
Report on the financial statements
We have audited the financial statements of Dana Makmur Pheim ("the Fund"), which comprisestatement of financial position as at 31 December 2014, and statement of comprehensive income,statement of changes in equity and statement of cash flows for the year then ended, and asummary of significant accounting policies and other explanatory information, as set out on pages83 to 96.
Manager’s and Trustee’s responsibility for the financial statements
The Manager of the Fund, Pheim Unit Trusts Berhad, is responsible for the preparation offinancial statements so as to give a true and fair view in accordance with Malaysian FinancialReporting Standards, International Financial Reporting Standards and the requirements of theSecurities Commission's Guidelines on Unit Trust Funds in Malaysia. The Manager is alsoresponsible for such internal control as the Manager determines is necessary to enable thepreparation of financial statements that are free from material misstatement, whether due to fraudor error. The Trustee is responsible for ensuring that the Manager maintains proper accountingand other records as are necessary to enable fair presentation of these financial statements.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with approved standards on auditing in Malaysia. Thosestandards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on our judgment,including the assessment of risks of material misstatement of the financial statements, whetherdue to fraud or error. In making those risk assessments, we consider internal control relevant tothe entity’s preparation of financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the entity’s internal control. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of accountingestimates made by the Manager, as well as evaluating the overall presentation of the financialstatements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.
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INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF
DANA MAKMUR PHEIM (CONTD.)
Opinion
Other Matters
FOLKS DFK & CO. KHOO PEK LING
AF: 0502 No. 900/03/16(J/PH)
CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT
Kuala Lumpur
Date: 23 February 2015
In our opinion, the financial statements give a true and fair view of the financial position of theFund as at 31 December 2014 and of its financial performance and cash flows for the year thenended in accordance with Malaysian Financial Reporting Standards, International FinancialReporting Standards and the requirements of the Securities Commission's Guidelines on UnitTrust Funds in Malaysia.
This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. Wedo not assume responsibility to any other person for the content of this report.
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DANA MAKMUR PHEIM
STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Note 2014 2013
RM RM
INVESTMENT INCOME
Gross dividend income 168,597 165,293
Profit from Shariah compliant investments :
- receivables 153,224 135,572
- available-for-sale ("AFS") financial assets 111,450 21,360
Net gain on financial assets at fair value through
profit or loss("FVTPL") 8 461,818 2,333,783
Amortisation of premiums, net of accretion of
discounts on AFS financial assets 9 (2,530) (2,764)
892,559 2,653,244
EXPENSES
Manager's fee 4 232,592 156,175
Trustee's fee 5 18,000 18,000
Auditor's remuneration 9,100 11,670
Tax agent's fee 3,000 2,925
Administrative expenses 25,939 24,848
288,631 213,618
Net income before tax 603,928 2,439,626
Tax income/(expense) 6 24,796 (6,719)
Net income for the year 628,724 2,432,907
Other comprehensive loss
Net loss on change in fair value of AFS financial assets 9 (11,181) (3,535)
Total comprehensive income for the year 617,543 2,429,372
Net income after tax is made up of the following:
Net realised income 2,050,815 1,587,755
Net unrealised (loss)/income (1,422,091) 845,152628,724 2,432,907
Distribution for the year:
Net distribution (RM) 13 493,000 324,295
Net distribution per unit (sen) 13 6.5 6
Gross distribution per unit (sen) 13 6.5 6
The accompanying notes form an integral part of the financial statements.
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DANA MAKMUR PHEIM
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
Note 2014 2013
RM RM
ASSETS
Shariah-compliant investments 7 8,650,588 6,381,943
Islamic deposit with licensed
financial institutions 10 5,319,912 6,517,041
Tax recoverable - 7,435
Amount due from Brokers - 344,224
Other receivables 72,012 75,784
Cash at bank 47,455 107,442TOTAL ASSETS 14,089,967 13,433,869
LIABILITIES
Amount due to Broker 543,143 -
Other payables and accruals 17,500 16,700
Amount due to Manager 12 4,194 16,517
Amount due to Trustee 1,627 1,578
TOTAL LIABILITIES 566,464 34,795
EQUITY
Unitholders' capital 8,495,870 8,495,984
Retained earnings 5,038,347 4,902,623
Available-for-sale reserve (10,714) 467
TOTAL EQUITY 14 13,523,503 13,399,074
TOTAL EQUITY AND LIABILITIES 14,089,967 13,433,869
UNITS IN CIRCULATION 14 (a) 6,976,355 7,032,637
NET ASSET VALUE ("NAV") PER UNIT 15 1.9385 1.9053
The accompanying notes form an integral part of the financial statements.
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DANA MAKMUR PHEIM
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Unitholders' Retained AFS Total
capital earnings reserve Equity
RM RM RM RM
At 1 January 2013 5,863,028 2,794,011 4,002 8,661,041
Total comprehensive income for
the year - 2,432,907 (3,535) 2,429,372
Creation of units 2,554,875 - - 2,554,875
Cancellation of units (704,009) - - (704,009)
Distribution equalisation 782,090 - - 782,090
Income distribution (Note 13) - (324,295) - (324,295)
Balance at 31 December 2013 8,495,984 4,902,623 467 13,399,074
Total comprehensive income for
the year - 628,724 (11,181) 617,543
Creation of units 4,558,612 - - 4,558,612
Cancellation of units (4,160,371) - - (4,160,371)
Distribution equalisation (398,355) - - (398,355)
Income distribution (Note 13) - (493,000) - (493,000)Balance at 31 December 2014 8,495,870 5,038,347 (10,714) 13,523,503
The accompanying notes form an integral part of the financial statements.
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DMP
DANA MAKMUR PHEIM
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
2014 2013
RM RM
CASH FLOWS FROM OPERATING AND
INVESTING ACTIVITIES
Proceeds from sale of Shariah-compliant investments 6,876,795 5,828,298
Purchase of Shariah-compliant investments (7,790,612) (4,722,039)
Dividends received 196,654 134,336
Proceeds received from sukuk on maturity - -
Profit received from Islamic deposits with licensed
financial institutions and sukuk 240,389 156,178
Tax refunded 32,231 2,821.00
Management fee paid (230,519) (149,460)
Trustee's fee paid (17,951) (17,947)
Payments for other fees and expenses (37,239) (55,523)
Payment to baitumal (19,354) -
Income distribution paid (55) (50)
Net cash (used in)/generated from operating
and investing activities (749,661) 1,176,614
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from creation of units 6,385,442 3,376,513
Payment for cancellation of units (6,892,898) (1,119,094)
Net cash (used in)/generated from financing activities (507,456) 2,257,419
NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS (1,257,117) 3,434,033
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE YEAR 6,624,484 3,190,450
CASH AND CASH EQUIVALENTS AT THE END OFTHE YEAR 5,367,367 6,624,483
Cash and cash equivalents comprise the following:
Islamic deposits with licensed financial institutions (Note 10) 5,319,912 6,517,041
Cash at bank 47,455 107,4425,367,367 6,624,483
The accompanying notes form an integral part of the financial statements.
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DMP
DANA MAKMUR PHEIM
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES
2. BASIS OF PREPARATION
2.1 Statement of Compliance
2.2 Basis of Measurement
The financial statements of the Fund are prepared under the historical cost convention unless
otherwise indicated in the summary of significant accounting policies.
The accounting policies applied by the Fund are consistent with those applied in the previous
financial year other than the application of the new and revised MFRSs, Issues Committee
("IC") Interpretations and amendments to MFRSs and IC Interpretations as disclosed in Note 2.3
below.
Dana Makmur Pheim ("the Fund") was established pursuant to a Master Deed dated 11 January 2002as amended by a Second Supplemental Master Deed dated 29 April 2013 between the Manager;Pheim Unit Trusts Berhad, the Trustee; Maybank Trustees Berhad and the registered unitholders ofthe Fund.
The principal activity of the Fund is to invest in "Permitted Investments" in compliance with Shariahrequirements as defined under Article 7 of the Master Deed, which includes quoted Shariah-compliant securities on the Bursa Malaysia Securities Berhad ("Bursa Malaysia") or any othermarkets, Shariah compliant collective investment schemes, sukuk, and other Shariah-compliantinvestments. The activities of the Fund shall be conducted strictly in compliance with Shariahrequirements and as approved by the Shariah Advisory Council of the Securities Commission and/orthe Shariah Adviser of Dana Makmur Pheim. The Fund commenced operations on 28 January 2002and will continue its operations until terminated according to the conditions in the Master Deed.
The Manager, Pheim Unit Trusts Berhad, is a public company incorporated in Malaysia. It is awholly owned subsidiary of Pheim Asset Management Sdn Bhd, a private company incorporated inMalaysia. Its principal activity is the management of unit trust funds. Pheim Asset Management SdnBhd has been appointed by the Manager as the External Investment Manager of the Fund withresponsibility for the provision of investment management services to the Fund.
The principal place of business of the Fund is located at 7th Floor, Menara Hap Seng, Jalan P.Ramlee, 50250 Kuala Lumpur.
The financial statements are presented in Ringgit Malaysia (RM).
The financial statements were authorised for issue by the Board of Directors of the Manager inaccordance with the resolution of the directors on 23 February 2015.
The financial statements of the Fund have been prepared in accordance with MalaysianFinancial Reporting Standards ("MFRSs"), International Financial Reporting Standards("IFRSs") and the Securities Commission's Guidelines on Unit Trust Funds in Malaysia.
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2. BASIS OF PREPARATION (CONT'D.)
2.3
Amendments to MFRS 132 - Offsetting Financial Assets and Financial LiabilitiesAmendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge Accounting
(a) Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities
(b)
The Amendments have been applied retrospectively and the application has no impact on
the disclosures or the amounts recognised in the Fund's financial statements.
The Amendments introduce a narrow-scope exception to the requirement for the
discontinuation of hedge accounting in MFRS 139, Financial Instruments : Recognition
and Measurement. Specifically, the Amendments provide relief from discontinuing hedge
accounting when a novation of a derivative as a hedging instrument meets certain criteria.
Application of Amendments to MFRSs and new IC Interpretation
During the financial year, the Fund has applied the following amendments to MFRSs issued by
the Malaysian Accounting Standards Board ("MASB") which are effective for accounting period
beginning on or after 1 January 2014 :-
The Amendments clarify the requirements relating to the offset of financial assets and
financial liabilities. Specifically, the Amendments clarify the meaning of 'currently has a
legally enforceable right of set-off' and 'simultaneous realisation and settlement.
Amendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge
Accounting
The Amendments have been applied retrospectively and the application has no impact on
the disclosures or the amounts recognised in the Fund's financial statements.
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DMP
2. BASIS OF PREPARATION (CONT'D.)
2.4
Effective for annual periods beginning on or after 1 July 2014
Amendments to MFRS 119, Defined Benefit Plans: Employee ContributionsAmendments to MFRSs Classified as "Annual Improvements to MFRSs 2010 - 2012 Cycle"Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2011 - 2013 Cycle"
Effective for annual periods beginning on or after 1 January 2016
MFRS 14, Regulatory Deferral AccountsAmendments to MFRS 10 and MFRS 128 - Sale or Contribution of Assets between an Investor and
its Associate or Joint VentureAmendments to MFRS 10, MFRS 12 and MFRS 128 - Investment Entities: Applying the
Consideration ExceptionAmendments to MFRS 11 - Accounting for Acquisitions of Interests in Joint OperationsAmendments to MFRS 101 - Disclosure Initiative
Amendments to MFRS 116 and MFRS 138 - Clarification of Acceptable Methods ofDepreciation and Amortisation
Amendments to MFRS 116 and MFRS 141 - Agriculture : Bearer PlantsAmendments to MFRS 127 - Equity Method in Separate Financial StatementsAmendments to MFRSs Classified as "Annual Improvements to MFRSs 2012 - 2014 Cycle"
Effective for annual periods beginning on or after 1 January 2017
Effective for annual periods beginning on or after 1 January 2018
MFRS 9 - Financial Instruments (IFRS 9 issued in July 2014)
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)
The Fund has not early adopted the following new MFRSs and amendments to MFRSs that have
been issued by the MASB but are not yet effective :-
The Fund will apply the above new MFRSs and amendments to MFRSs that are applicable once
they become effective. The main features of the new applicable standards and amendments to
standards are summarised below :-
New MFRSs and Amendments to MFRSs That Are In Issue But 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.
MFRS 15 -Revenue from Contracts with Customers
89
DMP
2. BASIS OF PREPARATION (CONT'D.)
2.4
The key enhancements of MFRS 9 are :
New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective
• 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.
• In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss
model, as opposed to an incurred credit loss model under MFRS 139. Under MFRS 9, it is no
longer necessary for a credit event to have occurred before credit losses are recognised. Instead,
an entity always accounts for expected credit losses and changes in those expected credit losses
at each reporting date to reflect changes in credit risk since initial recognition.
• 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.
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)(Cont'd.)
• Most of the requirements in MFRS 139 for classification and measurement of financial
liabilities were carried forward unchanged to MFRS 9, except for the measurement of financial
liabilities designated as at FVTPL. Under MFRS 139, the entire amount of the change in the fair
value of the financial liability designated as FVTPL is presented in profit or loss. However,
MFRS 9 requires that the amount of change in the fair value of the financial liability that is
attributable to changes in the credit risk of that liability is presented in other comprehensive
income, unless the recognition of the effects of changes in the liability's own credit risk in other
comprehensive income would create or enlarge an accounting mismatch in profit or loss.
Changes in fair value attributable to a financial liability's credit risk are not subsequently
reclassified to profit or loss.
90
DMP
2. BASIS OF PREPARATION (CONT'D.)
2.4
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 Financial Assets
(a) Financial assets at fair value through profit or loss ("FVTPL")
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)(Cont'd.)
The initial application of MFRS 9 in the future may have an impact on the financial statements
of the Fund. However, it is not practicable to provide a reasonable estimate of the effect until a
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.
New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective
Financial assets are classified as financial assets at FVTPL if they are held for trading orare designated as such by the Manager upon initial recognition. Financial assets held fortrading include Shariah-compliant securities and sukuk acquired principally for thepurpose of selling them in near term.
Subsequent to initial recognition, financial assets at FVTPL are measured at fair value atthe date of the statement of financial position. Changes in the fair value of those financialinstruments are recorded in "Net gain or loss on financial assets at FVTPL". Profitearned and dividend revenue elements of such instruments are recorded separately in"Profit income" and "Dividend income", respectively. Foreign exchange differences onfinancial assets at FVTPL are not recognised separately in profit or loss but included innet gains or net losses on changes in fair value of financial assets at FVTPL.
Financial assets are recognised in the statement of financial position when, and only when, theFund becomes a party to the contractual provisions of the financial instruments. Regular way ofpurchase and sale of investments in financial instruments are recognised on trade dates. Whenfinancial assets are recognised initially, they are measured at fair value, plus attributabletransaction cost, for investment not at fair value through profit or loss.
The Fund determines the classification of its financial assets at the initial recognition, and thecategories include financial assets at fair value through profit or loss, available-for-salefinancial assets and receivables.
The accounting policies set out below have been applied consistently to the periods, presented inthese financial statements and have been applied consistently by the Fund, unless otherwise stated.
91
DMP
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.1 Financial Assets
(b) Available-for-sale ("AFS") financial assets
(c) Receivables
Financial assets with fixed or determinable payments that are not quoted in an activemarket are classified as receivables. The Fund includes short term receivables such asbalances due from broker, Manager and other receivables in the classification.Receivables are recognised initially at fair value including transaction costs.
Subsequent to initial recognition, receivables are measured at amortised cost usingeffective profit method. Gains and losses are recognised in profit or loss when thereceivables are derecognised or impaired, and through the amortisation process.
Regular way purchases or sales are purchases or sales of financial assets that requiredelivery of assets within the period generally established by regulation or convention inthe market place concerned. All regular way purchases and sales of financial assets arerecognised or derecognised on trade date, i.e. the date that the Fund commit to purchaseor sell the asset.
A financial asset is derecognised when the asset is disposed and the contractual right toreceive cash flows from the asset has expired. On derecognition of a financial asset in itsentirety, the difference between the carrying amount and the sum of the considerationreceived and any cumulative gain or loss that had been recognised in othercomprehensive income is recognised in profit or loss.
Fair value is the amount for which an asset could be exchanged, or liability settled,between knowledgeable, willing parties in an arm's length transaction. The fair value forfinancial instruments traded in active markets at the reporting date is based on theirquoted price or binding dealer price quotations, without deduction for transaction costs.
AFS financial assets are financial assets that are designated as available for sale or are notclassified as financial assets at FVTPL or receivables.
After initial recognition, AFS financial assets are measured at fair value. Gains or losseson changes in fair value of the AFS financial assets are recognised in othercomprehensive income, except that impairment losses, foreign exchange gains and losseson monetary instruments, dividend income and profit income calculated using effectiveprofit method are recognised in profit or loss.
The cumulative gain or loss previously recognised in other comprehensive income isreclassified from equity to profit or loss as a reclassification adjustment when thefinancial asset is derecognised. Profit income calculated using the effective profit methodis recognised in profit or loss. Dividends on an AFS Shariah-compliant equity instrumentare recognised in profit or loss when the Fund's right to receive payment is established.
92
DMP
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.2 Impairment of Financial Assets
(a) AFS financial assets
(b) Trade and other receivables and other financial assets carried at amortised cost
The Fund assesses at each reporting date whether there is any objective evidence that a financialasset is impaired.
Significant or prolonged decline in fair value below cost, significant financial difficultiesof the issuer or obligor, and the disappearance of an active trading market areconsiderations to determine whether there is objective evidence that investment securitiesclassified as AFS financial assets are impaired.
If an AFS financial asset is impaired, an amount comprising the difference between itscost (net of any principal payment and amortisation) and its current fair value, less anyimpairment loss previously recognised in profit or loss, is transferred from equity toprofit or loss.
Impairment losses on AFS equity investments are not reversed in profit or loss in thesubsequent periods. Increase in fair value, if any, subsequent to impairment loss isrecognised in other comprehensive income. For AFS sukuk investments, impairmentlosses are subsequently reversed in profit or loss, up to the amount previously recognisedas impairment loss, if an increase in the fair value of the investment can be objectivelyrelated to an event occurring after the recognition of the impairment loss in profit or loss.
To determine whether there is objective evidence that an impairment loss on financialassets has been incurred, the Fund considers factors such as the probability of insolvencyor significant financial difficulties of the debtor and default or significant delay inpayments.
If any such evidence exists, the amount of impairment loss is measured as the differencebetween the asset's carrying amount and the present value of estimated future cash flowsdiscounted at the financial asset's original effective profit rate. The impairment loss isrecognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly forall financial assets with the exception of trade receivables, where the amount is reducedthrough the use of an allowance account. When a trade receivable becomes uncollectible,it is written off against the allowance account.
93
DMP
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.2 Impairment of Financial Assets
(b) Trade and other receivables and other financial assets carried at amortised cost (Cont'd)
3.3 Classification of Realised and Unrealised Gain and Losses
3.4 Financial Liabilities
If in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed to the extent that the carrying amount
of the asset does not exceed its amortised cost at the reversal date. The amount of reversal
is recognised in profit or loss.
Financial liabilities are classified according to the substance of the contractual arrangementsentered into and the definition of a financial liability.
Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financialposition when, and only when, the Fund becomes a party to the contractual provisions of thefinancial instrument. Financial liabilities are classified as other financial liabilities.
The Fund's financial liabilities which include amount due to broker, Manager and otherpayables are recognised initially at fair value plus directly attributable transaction costs andsubsequently measured at the amortised cost using effective profit method.
A financial liability is derecognised when the obligation under the liability is extinguished.Gains and losses are recognised in profit or loss when the liabilities are derecognised, andthrough the amortisation process.
Unrealised gains and losses comprise changes in fair value of financial instruments for theperiod from reversal of prior period's unrealised gains and losses for financial instrumentswhich were realised (i.e. sold, redeemed or matured) during the reporting period.
Realised gains and losses on disposals of financial instruments classified as part of "at fair valuethrough profit or loss" are calculated using weighted average method. They represent thedifference between an instrument's initial carrying amount and disposal amount, or cashpayment or receipts made of Shariah-compliant derivative contracts (excluding payments orreceipts on collateral margin accounts for such investments).
94
DMP
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.5 Functional and Presentation Currency
3.6 Unitholders' Capital
3.7 Income Distribution
3.8 Cash and Cash Equivalents
3.9 Income Recognition
Income is recognised to the extent that is probable that the economic benefits will flow to theFund and the income can be reliably measured. Income is measured at fair value ofconsideration received or receivable.
Dividend income is recognised when the Fund's right to receive payment is established.
Profit income, which includes the accretion of discount and amortisation of premium on sukuk,is recognised using effective profit method.
Cash and cash equivalents comprise cash at bank and Islamic deposits with financial institutionswhich have insignificant risk of changes in value.
Income distributions are at the discretion of the Manager. Income distribution to the Fund'sunitholders is accounted for as a deduction from realised reserves except where distribution issourced out of distribution equalisation which is accounted for as deduction from unitholders'capital.
The unitholders' contributions to the Fund meet the definition of puttable instruments classifiedas equity instruments under MFRS 132.
Distribution equalisation represents the average distributable amount included in the creationand cancellation prices of units. This amount is either refunded to unitholders by way ofdistribution and/or adjusted accordingly when units are cancelled.
The financial statements of the Fund are measured using the currency of the primary economicenvironment in which the Fund operates ("the functional currency"). The financial statementsare presented in Ringgit Malaysia (RM), which is also the Fund's functional currency.
95
DMP
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.10 Income Tax
3.11 Segment Reporting
3.12 Significant Accounting Estimates and Judgements
4. MANAGER'S FEE
5. TRUSTEE'S FEE
The preparation of financial statements in accordance with MFRS and IFRS requires the use ofcertain accounting estimates and exercise of judgements. Estimates and judgements arecontinually evaluated and are based on past experience, reasonable expectations of futureevents and other factors.
No major judgements have been made by the Manager in applying the Fund's accountingpolicies. There are no key assumptions concerning the future and other key sources ofestimation uncertainty at the reporting date, that have significant risk of causing materialadjustment to the carrying amounts of assets and liabilities within next year.
The Manager is entitled to an annual management fee of 1.5% p.a. of net asset value of the Fund(before deducting the Manager's and Trustee's fees for the day) calculated and accrued on a dailybasis.
The Trustee is entitled to a fee of 0.07% p.a. based on net asset value of the Fund (before deductingthe Manager's and Trustee's fees for the day) calculated and accrued on a daily basis, subject to aminimum of RM18,000 p.a.
For management purposes, the Fund is managed by 2 main portfolios, namely (1) Shariah-compliant equity securities and (2) sukuk and Islamic deposits. Each segment engages inseparate business activities and the operating results are regularly reviewed by the Manager,External Investment Manager and the Fund's Investment Committee. The External InvestmentManager and the Fund Investment Committee jointly assumes the role of chief operationdecision maker, for performance assessment purposes and to make decision about resourcesallocated to each investment segment.
Current tax assets and liabilities are measured at the amount expected to be recovered from orpaid to the tax authorities. The tax rates and tax laws used to compute the amount are those thatare enacted or substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to itemsrecognised outside profit or loss, either in other comprehensive income or directly in equity.
No deferred tax is recognised as there are no material temporary differences.
96
DMP
6. TAXATION
2014 2013
RM RM
Current year Malaysian tax - 10,191
Overprovision in prior year (24,796) (3,472)Malaysian tax (income)/expense based on results for the year (24,796) 6,719
2014 2013
RM RM
Net income before tax 603,928 2,439,626
Tax at Malaysian statutory rate of 25% (2013: 25%) 150,982 609,906
Tax effects of:
Income not subject to tax (223,140) (653,120)
Expenses not deductible for tax purposes 10,960 11,077
Restriction on tax deductible expenses for unit trust funds 61,198 42,328
Overprovision in prior year (24,796) (3,472)Tax (income)/expense for the financial year (24,796) 6,719
7. SHARIAH-COMPLIANT INVESTMENTS2014 2013
Financial assets at fair value through RM RMprofit or loss (Note 8)
Quoted Shariah-compliant equities
in Malaysia 5,052,458 5,881,143
Available-for-sale financial assets
(Note 9)
Unquoted sukuk 3,598,130 500,800Total Shariah-compliant investments 8,650,588 6,381,943
Income tax is calculated at Malaysian statutory tax rate of 25% of the estimated assessable netincome for the financial year.
The tax charge for the financial year is in relation to the taxable income earned by the Fund afterdeducting allowable expenses. In accordance with Schedule 6 of Income Tax Act 1967, profitincome earned by the Fund is exempted from tax.
A reconciliation of income tax expense applicable to net income before tax at the statutory incometax rate to tax (income)/expense at the effective income tax rate of the Fund is as follows:
97
DMP
8. FINANCIAL ASSETS AT FVTPL
2014 2013
RM RM
Financial assets at FVTPL:Quoted Shariah-compliant equities 5,052,458 5,881,143
Net gain on financial assets at FVTPL comprised:
Realised gain on disposals 1,883,909 1,488,631
Unrealised (loss)/gain on changes in fair values (1,422,091) 845,152461,818 2,333,783
Financial assets at FVTPL as at 31 December 2014 are as detailed below:
QUOTED SHARIAH-COMPLIANT EQUITIES
- IN MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Main Market
Construction
Ho Hup Construction Co.Berhad 296,000 399,601 370,000 2.74
Muhibbah Engineering (M) Berhad 136,000 303,714 252,960 1.87
432,000 703,315 622,960 4.61
Consumer Product
Yee Lee Corporation Berhad 205,000 279,036 287,000 2.12
98
DMP
8. FINANCIAL ASSETS AT FVTPL (CONTD.)
QUOTED SHARIAH-COMPLIANT EQUITIES
- IN MALAYSIA (CONTD.)
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Industrial Products
Can-One Berhad 142,000 478,223 302,460 2.24
Jaya Tiasa Holdings Berhad 176,050 385,672 343,298 2.54
Inari Amertron Berhad 73,000 129,257 185,420 1.37
Kian Joo Can Factory Berhad 58,000 171,469 169,360 1.25
Malaysia Steel Works KL Berhad 100,000 102,286 86,500 0.64
Scientex Berhad 14,200 77,155 99,684 0.74
Supermax Corp Bhd 50,000 137,010 84,000 0.62
Ta Ann Holdings Berhad 84,000 365,648 317,520 2.35
Thong Guan Industries Berhad 55,000 163,102 102,300 0.76
752,250 2,009,822 1,690,542 12.50
Plantation
Hap Seng Plantations Holdings Bhd 104,000 286,571 261,040 1.93
Sarawak Oil Palms Berhad 94,000 542,466 484,100 3.58
198,000 829,037 745,140 5.51
Properties
Hua Yang Berhad 180,333 404,307 360,666 2.67
Land & General Berhad 240,000 155,477 121,200 0.90
Matrix Concepts Holdings Berhad 137,500 201,667 371,250 2.75
Metro Kajang Holdings Berhad 128,500 476,846 334,100 2.47
686,333 1,238,297 1,187,216 8.79
Technology
Malaysian Pacific Industries 60,000 212,525 271,800 2.01
Notion Vtec Berhad 120,000 102,555 50,400 0.37
180,000 315,080 322,200 2.38
Trading/ Services
Berjaya Auto Berhad 60,000 198,598 197,400 1.46
TOTAL FINANCIAL ASSETSAT FVTPL 2,513,583 5,573,185 5,052,458 37.37
EXCESS OF COST OVERFAIR VALUE (520,727)
99
DMP
9. AFS FINANCIAL ASSETS
2014 2013
RM RM
Unquoted sukuk 3,598,130 500,800
Amortisation of premiums, net of accretionof discounts on AFS financial assets (2,530) (2,764)
Unrealised loss on changes in fair values (11,181) (3,535)
AFS financial assets as at 31 December 2014 are as detailed below :
Nominal
Name of Counter Amount Cost* Fair value % of
RM RM RM NAV
UNQUOTED SUKUK
SME Bank IMTN 3.7% 1,300,000 1,300,000 1,296,750 9.59
- 03/17
Poh Kong IMTN 2,300,000 2,308,844 2,301,380 17.02
-10/17
3,600,000 3,608,844 3,598,130 26.61
EXCESS OF COST OVERFAIR VALUE (10,714)
* Cost of sukuk includes amortisation of premium.
10. ISLAMIC DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS
2014 2013
RM RM
Licensed investment banks 5,319,912 6,517,041
2014 2013 2014 2013
% % Days Days
Licensed investment banks 2.91 4.16 8 12
Average
remaining
maturitiesWAERR
The weighted average effective rate of return per annum and the average remaining maturities ofIslamic deposits and placement are as follows:
100
DMP
11. SHARIAH INFORMATION OF THE FUND
(a)
(i)
(ii)
(iii)
(b)
12. AMOUNT DUE TO MANAGER2014 2013
RM RM
Amount arising from (creation)/release of units (15,631) (1,235)
Management fee 19,825 17,7524,194 16,517
13. INCOME DISTRIBUTION
Distribution declared and paid on 29 April 2014 was 6.50 sen net per unit.
Distribution to unitholders are from the following sources:
2014 2013
RM RM
Dividend from local quoted Shariah-compliant securitites 2,029 4,161
Profit from corporate sukuk 950 804
Profit from Islamic deposit 5,152 3,724
Amortisation of premium on corporate sukuk (38) (106)
Net realised gain from sale of Shariah-compliant investment 52,945 7,862
61,038 16,445
Less:
Expenses 8,317 7,427
Taxation - -
Current year's realised income 52,721 9,018
Distribution out of previous year's realised reserves 440,278 315,277Distribution for the year 493,000 324,295
Units in circulation at book closing date 7,584,611 5,404,915
Gross distribution per unit (sen) 6.5 6
Net distribution per unit (sen) 6.5 6Date of distribution 29.04.2014 26.4.2013
The Shariah Adviser confirmed that the investments portfolio of the Fund is Shariah-compliant,which comprises:
Sukuk as per the list of sukuk available at Bond Info Hub and Fully Automated System ForIssuing/Tendering of Bank Negara Malaysia; and
Liquid assets in local market, which are placed in Shariah-compliant investments and/orinstruments.
Equity securities listed on Bursa Malaysia which have been classified as Shariah-compliant bythe Shariah Advisory Council of the Securities Commission ("SACSC");
Payment to baitumal comprises the net gain amounting to RM19,354.34 from the disposal of theIrredeemable Convertible Unsecured Loan Stock of Thong Guan Industries Berhad, a Shariah non-compliant instrument.
101
DMP
14. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY)
Note 2014 2013
RM RM
Unitholders' capital (a) 8,495,870 8,495,984
Retained earnings
- Realised (b) 5,566,623 4,008,808
- Unrealised (c ) (528,276) 893,815
5,038,347 4,902,623
AFS reserve (10,714) 467Total equity / Net asset value 13,523,503 13,399,074
(a) Unitholders' Capital
Number Number
of units RM of units RM
Balance at beginning
of the year 7,032,637 8,495,984 5,574,487 5,863,028
Add: Creation of units 3,470,111 4,558,612 2,061,777 2,554,875
Less: Cancellation of units (3,526,393) (4,160,371) (603,627) (704,009)
Distribution equalisation - (398,355) - 782,090
Balance at end
of the year 6,976,355 8,495,870 7,032,637 8,495,983
(b) Realised - Distributable
2014 2013
RM RM
Balance at the beginning of the year 4,008,808 2,745,348
Net income after taxation 628,724 2,432,907
Net unrealised loss/(gain) attributable to
Shariah-compliant investments held
transferred to unrealised reserve 1,422,091 (845,152)
Distribution out of realised reserve (493,000) (324,295)Balance at the end of the year 5,566,623 4,008,808
20132014
In accordance with Article 6.1.1 of the Deed and Securities Commision's approval letter dated 19December 2001, the maximum number of units that can issued for circulation is 100 million units.As at 31 December 2014, the number of units not in issue is 93,023,645 (2013: 92,967,363) units.
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DMP
14. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY) [CONTD.]
(c) Unrealised - Non-distributable
2014 2013
RM RM
Balance at the beginning of the year 893,815 48,663
Net unrealised (loss)/gain attributable to
Shariah-compliant investment held
transferred from realised reserve (1,422,091) 845,152Balance at the end of year (528,276) 893,815
15. NET ASSET VALUE PER UNIT
RM RM/Unit RM RM/Unit
Net asset value attributable
to unitholders for
issuing/redeeming units 13,579,513 1.9465 13,410,320 1.9069
Effect from adopting bid
prices as fair value (56,010) (0.0080) (11,246) (0.0016)
Net asset value attributable
to unitholders perfinancial statements 13,523,503 1.9385 13,399,074 1.9053
16. UNITS HELD BY RELATED PARTIES
2014 2013
Number of Valued at Number of Valued at
units NAV units NAV
RM RM
Directors of the Manager 409,414 793,640 290,680 553,823
The Directors of the Manager are legal and beneficial owner of the units.
2014 2013
Net asset value attributable to unitholders is classified as equity in the statement of financialposition.
Quoted financial assets in the financial statements have been valued at the bid prices at the close ofbusiness in accordance with the provisions of MFRS 139. For the purpose of calculation of net assetvalue attributable to unitholders per unit for the issuance and redemption of units in accordance withthe Deed, quoted financial assets are stated at the last done market price.
A reconciliation of net asset value attributable to unitholders for issuing/redeeming units and the netasset value attributable to unitholders per the financial statements is as follows:-
103
DMP
17. TRANSACTIONS WITH BROKERS
% of Total
Value of % of Total Brokerage Brokerage
Trade Trade Fees Fees
RM % RM %
MIDF Amanah Investment
Bank Bhd 5,855,856 23.10 - -
RHB Investment Bank Bhd 3,785,679 14.93 2,141 7.99
Maybank Investment Bank
Bhd 3,609,760 14.24 3,087 11.52
Kenanga Investment Bank
Bhd 2,879,952 11.36 6,375 23.78
KAF Investment Bank Bhd 2,764,489 10.91 - -
CIMB Investment Bank
Bank 1,328,767 5.24 3,182 11.87
TA Securities Bhd 1,105,875 4.36 2,489 9.28
Hong Leong Investment
Bank Bhd 926,645 3.66 2,091 7.80
Affin Investment Bank Bhd 672,991 2.65 1,993 7.43
JP Morgan Securities (M)
Bhd 578,192 2.28 1,301 4.85
Other brokers 1,843,196 7.27 4,150 15.4825,351,402 100.00 26,809 100.00
18. MANAGEMENT EXPENSE RATIO
2014 2013
Management expense ratio 1.86% 2.05%
19. PORTFOLIO TURNOVER RATIO
2014 2013
Portfolio turnover (times) 0.47 0.51
This is the ratio of the average of acquisitions and disposals of Shariah-compliant investments for theyear to average NAV of the Fund for the year calculated on daily basis.
This is the ratio of the sum of the fees (inclusive of manager's, trustee's, audit and other professionalfees) and other administrative expenses of the Fund to the average NAV of the Fund calculated on adaily basis. The average NAV of the Fund for the year ended 31 December 2014 was RM15,539,000(2013: RM10,434,847).
Details of transactions with stockbroking companies and other investment banks for the financialyear ended 31 December 2014 are as follows:
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DMP
20. SEGMENT INFORMATION
The Manager, the appointed External Investment Manager and Investment Committee of the Fundare responsible for allocating resources available to the Fund in accordance with the overallinvestment strategies as set out in the investment Guidelines of the Fund. The Fund is managed bytwo segments:
A portfolio of Shariah-compliant equity instruments A portfolio of sukuk and Islamic deposits with financial institutions.
The investment objective of each segment is to achieve consistent returns from the investments ineach segment while safeguarding capital by investing in diversified portfolios. There have been nochanges in reportable segments in the current financial year. The segment information provided ispresented to the Manager, the appointed External Investment Manager and Investment Committee ofthe Fund.
2014 2013
Shariah- Islamic Shariah- Islamiccompliant Deposit Total compliant Deposit Total
Equity and Sukuk Equity and Sukuk
Portfolio Portfolio Portfolio PortfolioRM RM RM RM RM RM
Gross dividend income 168,597 - 168,597 165,293 - 165,293
Profit from Islamic
deposits with licensed
fiancial institutions and
sukuk - 264,674 264,674 - 156,932 156,932
Net gain on financial assets
at FVTPL 461,818 - 461,818 2,333,783 - 2,333,783
Amortisation of premium,net of accretion of
discount on AFS
financial assets - (2,530) (2,530) - (2,764) (2,764)
Total segment operatingincome for the year 630,415 262,144 892,559 2,499,076 154,168 2,653,244
Islamic deposits with
financial institutions - 5,319,912 5,319,912 - 6,517,041 6,517,041
Financial assets at FVTPL 5,052,458 - 5,052,458 5,881,143 - 5,881,143
AFS financial assets - 3,598,130 3,598,130 - 500,800 500,800Other assets 19,526 33,904 53,430 391,807 9,619 401,426
Total segment assets 5,071,984 8,951,946 14,023,930 6,272,950 7,027,460 13,300,410
Other liabilities 543,143 - 543,143Total segment liabilities 543,143 - 543,143
During the year, there were no transactions between operating segments.
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DMP
20. SEGMENT INFORMATION (CONTD.)
2014 2013
RM RM
Net reportable segment operating income 892,559 2,653,244
Expenses (288,631) (213,618)
Net income before tax 603,928 2,439,626
Tax income/(expense) 24,796 (6,719)Net income for the year 628,724 2,432,907
2014 2013
RM RM
Total segment assets 14,023,930 13,300,410
Tax recoverable - 7,435
Other receivable 18,582 18,582
Cash at bank 47,455 107,442Total assets of the Fund 14,089,967 13,433,869
Total segment liabilities - -
Other payables and accruals 17,500 16,700
Amount due to Manager 4,194 -
Amount due to Trustee 1,627 1,578Total liabilities of the Fund 23,321 18,278
21. FINANCIAL INSTRUMENTS
(a) Classification of financial instruments
In addition, certain assets and liabilities are not considered to be part of the assets or liabilities of anindividual segment. The following table provides a reconciliation between the total reportablesegment assets and liabilities and total assets and liabilities of the Fund.
Expenses of the Fund are not considered part of the performance of any operating segment. Thefollowing table provides a reconciliation between the net reportable segment income and operatingprofits.
The Fund’s financial assets and financial liabilities are measured on an ongoing basis at eitherfair value or at amortised cost based on their respective classification. The significantaccounting policies in Note 3 describe how the classes of financial instruments are measured,and how income and expenses, including fair value gains and losses, are recognised. Thefollowing table analyses the financial assets and liabilities of the Fund in the statement offinancial position by the class of financial instrument to which they are assigned, and thereforeby the measurement basis.
106
DMP
21. FINANCIAL INSTRUMENTS (CONTD.)
(a) Classification of financial instruments (Contd.)
Financial
liabilities
Financial AFS at
assets at financial amortised
FVTPL assets Receivables cost Total
RM RM RM RM RM
2014
AssetsQuoted Shariah-compliant
investments 5,052,458 3,598,130 - - 8,650,588
Islamic deposits with
licensed financial institutions - - 5,319,912 - 5,319,912
Other receivables - - 72,012 - 72,012
Cash at bank - - 47,455 - 47,455Total financial assets 5,052,458 3,598,130 5,439,379 - 14,089,967
Total non-financial assets -14,089,967
Liabilities
Other payables and accruals - - - 17,500 17,500
Amount due to Brokers - - - 543,143 543,143
Amount due to Manager - - - 4,194 4,194Amount due to Trustee - - - 1,627 1,627
Total financial liabilities - - - 566,464 566,464
2013
Assets
Quoted Shariah-compliant
investments 5,881,143 500,800 - - 6,381,943
Islamic deposits with -
licensed financial institutions - - 6,517,041 - 6,517,041
Amount due from Brokers - - 344,224 - 344,224
Other receivables - - 75,784 - 75,784
Cash at bank - - 107,442 - 107,442Total financial assets 5,881,143 500,800 7,044,491 - 13,426,434
Total non-financial assets 7,43513,433,869
Liabilities
Other payables and accruals - - - 16,700 16,700
Amount due to Manager - - - 16,517 16,517Amount due to Trustee - - - 1,578 1,578
Total financial liabilities - - - 34,795 34,795
107
DMP
21. FINANCIAL INSTRUMENTS (CONTD.)
(b) Fair Value
(i) Financial instruments that are carried at fair value
Level 1 Level 2 Total
RM RM RM
2014
Financial assets at FVTPL
- Quoted Shariah-compliant
equities 5,052,458 - 5,052,458
AFS financial assets
- Sukuk - 3,598,130 3,598,1305,052,458 3,598,130 8,650,588
2013
Financial assets at FVTPL
- Quoted Shariah-compliant
equities 5,881,143 - 5,881,143
AFS financial assets
- Sukuk - 500,800 500,8005,881,143 500,800 6,381,943
The Fund uses the following level of fair value hierarchy for determining and disclosingthe fair value of financial instruments carried at fair value in the statement of financialposition :
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices included within Level 1 that are observable forthe asset or liability either directly or indirectly
Level 3: Inputs for the asset or liability that are not based on observable market data
The Fund’s financial assets at FVTPL and AFS financial assets are carried at fair value.The fair values of these financial assets were determined using prices in active marketsfor identical assets.
Quoted Shariah-compliant equity instrumentsFair value is determined directly by reference to their published market bid price on BursaMalaysia at the reporting date.
Unquoted sukukThe published market prices for RM-denominated unquoted sukuk are based oninformation provided by Bond Pricing Agency Malaysia Sdn Bhd.
The Fund held the following financial instruments carried at fair value on the statement offinancial position as at the end of the financial year :
108
DMP
21. FINANCIAL INSTRUMENTS (CONTD.)
(b) Fair Value (Contd.)
(ii) Financial instruments not carried at fair value
22. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES
(i) Market Risk
(a) Equity Price Risk
The Fund maintains investment portfolios in a variety of quoted and unquoted financial instrumentsas dictated by its Deed and investment management strategy.
The Fund is exposed to a variety of risks including market risk (which includes interest rate risk andequity price risk), credit risk, stock specific risk, liquidity risk and reclassification of Shariah statusrisk. Whilst these are the most important types of financial risks inherent in each type of financialinstruments, the Manager and the Trustee would like to highlight that this list does not purport toconstitute an exhaustive list of all the risks inherent in an investment in the Fund.
The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk isinherent in the Fund’s activities, but it is managed through a process of ongoing identification,measurement and monitoring of risks. Financial risk management is also carried out through soundinternal control systems and adherence to the investment restrictions as stipulated in the Trust Deed,the Securities Commission’s Guidelines on Unit Trust Funds and the Capital Market and ServicesAct, 2007.
Equity price risk is the adverse changes in the fair value of Shariah-compliant equities asa result of changes in the levels of Shariah-compliant equity indices and the value ofindividual Shariah-compliant shares. The equity price risk exposure arises from theFund’s investments in quoted Shariah-compliant equity securities.
The Fund's principal exposure to market risk arises primarily due to changes or developments inthe market environment and typically includes changes in regulations, politics and the economyof the country. Market risk is also influenced by global economics and geopoliticaldevelopments. The Fund seeks to diversify away some of this risk by investing into differentsectors to mitigate risk exposure to any single asset class.
The Fund’s market risk is affected primarily due to changes in market prices and interest rates.
Financial instruments not carried at fair value comprise financial assets and financialliabilities classified as receivables and financial liabilities at amortised cost respectively.The carrying amount of these financial instruments at the end of the financial yearapproximated their fair values due to their short term to maturity.
109
DMP
22. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(i) Market Risk (Contd.)
(a) Equity Price Risk (Contd.)
Effect on profit
or loss and equity
Change in Shariah-compliant Increase/(Decrease)
equity price (%) RM
2014+6/-6 303,147 /(303,147)
2013+6/-6 352,869 /(352,869)
(b) Interest Rate Risk
Effect on profit
or loss and equity
Increase/(Decrease)
Change in basis points * RM
2014+25/-25 5,138/ (5,138)
2013+25/-25 3,755 / (3,755)
*
This risk refers to the effect of interest rate changes on the valuation for sukuk andIslamic deposits with financial institutions. In the event of rising interest rates, the returnon Islamic deposits with financial institutions will rise while valuation for sukuk willdecrease and vice versa, thus affecting the net asset value of the Fund. This risk will beminimized via the management of the duration structure of the portfolio of sukuk andIslamic deposits with financial institutions.
Interest rate is a general economic indicator that will have an impact on the managementof fund regardless of whether it is a Shariah-compliant fund or otherwise. It does not inany way suggest that this fund will invest in conventional financial instruments. Allinvestments carried out for this fund are in accordance with requirement of the Shariah.
The following table demonstrates the sensitivity of the profit or loss and equity of theFund to a reasonably possible change in interest rates, with all other variables heldconstant:
The assumed movement in basis points for interest rate sensitivity analysis is based onthe currently observable market environment.
The table below summarises the effect of sensitivity from the Fund’s underlyinginvestments in quoted Shariah-compliant equities on the profit or loss and equity of theFund due to possible changes in Shariah-compliant equity prices, with all other variablesheld constant:
110
DMP
22. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(ii) Credit Risk
(iii) Liquidity Risk
1 month - 32014 months Total
RM RM RMFinancial Assets
Financial assets at FVTPL 5,052,458 - 5,052,458AFS financial assets - 3,598,130 3,598,130Islamic deposits
with financial institutions 5,319,912 - 5,319,912Other assets 119,467 - 119,467Total undiscounted
financial assets 10,491,837 3,598,130 14,089,967
Non-Financial Assets - - -
Total Assets 10,491,837 3,598,130 14,089,967
Financial LiabilititesOther liablities 566,464 - 566,464Total undiscounted
financial liabilities 566,464 - 566,464
Unitholders' NAV 13,523,503 - 13,523,503
Liquidity gap (3,598,130) 3,598,130 -
Above 3
months
The Fund’s principal exposure to credit risk arises primarily due to changes in the financialconditions of companies issuing sukuk, which may affect their creditworthiness. This in turnmay lead to default in the payment of principal and profit. Such events can lead to loss ofcapital or delayed or reduced income for the Fund resulting in a reduction in the Fund’s assetvalue and thus unit price. This risk is mitigated by vigorous credit analysis and diversification ofthe sukuk portfolio of the Fund.
As at the end of the financial year, the Fund only invested in a relatively stable sukuk issued bythe Government of Malaysia.
This risk occurs in thinly traded or illiquid Shariah-compliant securities. Should the Fund needto sell a relatively large amount of such securities, the act itself may significantly depress theselling price. As the Fund is exposed to daily redemption of units, the risk is minimized byplacing a prudent level of funds in short-term Islamic deposits and by investing in Shariah-compliant stocks whose liquidity is adjudged to be commensurate with the expected exposurelevel of the Fund.
The following table summarises the maturity profile of the Fund’s financial liabilities and thecorresponding assets available to meet commitments associated with those financial liabilitiesand redemption by unitholders.
the currently observable market environment.
111
DMP
22. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(iii) Liquidity Risk (Contd.)
1 month - 3
2013 months Total
RM RM RM
Financial assets:
Financial assets at FVTPL 5,881,143 - 5,881,143
AFS financial assets - 500,800 500,800
Islamic deposits
with financial institutions 6,517,041 - 6,517,041
Other assets 527,450 - 527,450
Total undiscounted
financial assets 12,925,634 500,800 13,426,434
Non-Financial Assets - 7,435 7,435
Total Assets 12,925,634 508,235 13,433,869
Financial Liabilitites
Other liablities 34,795 - 34,795
Total undiscounted
financial liabilities 34,795 - 34,795
Unitholders' NAV 13,399,074 - 13,399,074
Liquidity gap (508,235) 508,235 -
(iv) Stock Specific Risk
(v) Single Issuer Risk
Above 3
months
The Fund’s exposure to Shariah-compliant securities issued by any issuer is limited to not morethan a certain percentage of its net asset value. Under such restriction, the risk exposure to thesecurities of any issuer is minimised.
The Fund is exposed to the individual risk of the respective companies issuing Shariah-compliant securities which includes changes to the business performance of the company,consumer tastes and demand, lawsuits and management practices. This risk is minimisedthrough the well diversified nature of the Fund.
112
DMP
22. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(vi) Reclassification of Shariah Status Risk
(vii) Capital Management
This risk refers to the risk that the currently held Shariah-compliant securities in the portfolio ofShariah-compliant funds may be reclassified to be Shariah non-compliant upon review of thesecurities by the Shariah Advisory Council of the Securities Commission ("SACSC") performedtwice yearly. If this occurs, the Manager will take the necessary steps to dispose of suchsecurities.
The capital is represented by unitholders’ subscription to the Fund. The amount of capital canchange significantly on a daily basis as the Fund is subject to daily redemption and subscriptionat the discretion of unitholders. The Manager manages the Fund’s capital with the objective ofmaximising unitholders' value, while maintaining sufficient liquidity to meet unitholders'redemption as explained in Note 22 (iii) above.
113
PHEIM Annual Report 31.12.2014
PIF
www.pheimunittrusts.comsupport@pheimunittrusts.com
114Your Need
is our Focus
23 February 2015
PHEIM Annual Report 31.12.2014
PIF
www.pheimunittrusts.comsupport@pheimunittrusts.com
115Your Need
is our Focus
STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM INCOME FUND
We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Pheim Income Fund are drawn up in accordancewith the Deed, Malaysian Financial Reporting Standards, International FinancialReporting Standards and Securities Commission's Guidelines on Unit Trust Funds inMalaysia so as to give a true and fair view of the financial position of Pheim IncomeFund as at 31 December 2014 and of its financial performance and cash flows for thefinancial year then ended.
For and on behalf of the Manager,PHEIM UNIT TRUSTS BERHAD
AZMI MALEK MERICANDirector
HOI WENG KONGDirector
Kuala Lumpur, Malaysia23 FEB 2015
PIF
INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF
PHEIM INCOME FUND
Report on the financial statements
Manager’s and Trustee’s responsibility for the financial statements
Auditors’ responsibility
We have audited the financial statements of Pheim Income Fund ("the Fund"), which comprise
statement of financial position as at 31 December 2014, and statement of comprehensive income,
statement of changes in equity and statement of cash flows for the year then ended, and a summary
of significant accounting policies and other explanatory information, as set out on pages 118 to 131.
The Manager of the Fund, Pheim Unit Trusts Berhad, is responsible for the preparation of financial
statements so as to give a true and fair view in accordance with Malaysian Financial Reporting
Standards, International Financial Reporting Standards and the requirements of the Securities
Commission's Guidelines on Unit Trust Funds in Malaysia. The Manager is also responsible for such
internal control as the Manager determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error. The Trustee is
responsible for ensuring that the Manager maintains proper accounting and other records as are
necessary to enable fair presentation of these financial statements.
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on our judgment, including the
assessment of risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, we consider internal control relevant to the entity’s
preparation of financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
the accounting policies used and the reasonableness of accounting estimates made by the Manager,
as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
116
PIF
INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF
PHEIM INCOME FUND (CONTD.)
Opinion
Other Matters
FOLKS DFK & CO. KHOO PEK LING
AF: 0502 No. 900/03/16(J/PH)
CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT
Kuala Lumpur
This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We do
not assume responsibility to any other person for the content of this report.
Date: 23 February 2015
In our opinion, the financial statements give a true and fair view of the financial position of the Fund
as at 31 December 2014 and of its financial performance and cash flows for the year then ended in
accordance with Malaysian Financial Reporting Standards, International Financial Reporting
Standards and the requirements of the Securities Commission's Guidelines on Unit Trust Funds in
Malaysia.
117
PIF
PHEIM INCOME FUND
STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Note 2014 2013
RM RM
INVESTMENT INCOME
Gross dividend income 65,450 95,925
Interest income :
- loans and receivables 174,925 133,208
- available-for-sale ("AFS") financial assets 222,675 223,688
Net gain on financial assets at fair value through
profit or loss ("FVTPL") 8 89,838 202,228
Accretion of discounts, net of amortisation of
premiums on AFS financial assets 9 (6,931) 27,971
Net realised (loss)/gain on foreign exchange (568) 1,060
545,389 684,080
EXPENSES
Manager's fee 4 141,511 144,815
Trustee's fee 5 18,000 18,000
Auditor's remuneration 9,085 11,670
Tax agent's fee 3,000 3,064
Administrative expenses 19,966 17,787
191,562 195,336
Net income before tax 353,827 488,744
Tax income/(expense) 6 10,357 (4,363)
Net income for the year 364,184 484,381
Other comprehensive loss
Net loss on change in fair value of AFS financial assets 9 (16,919) (40,011)
Total comprehensive income for the year 347,265 444,370
Net income after tax is made up of the following:
Net realised income 649,411 907,441
Net unrealised loss (285,227) (423,060)364,184 484,381
Distribution for the year:
Net distribution 12 879,526 649,280
Net distribution per unit (sen) 12 7.0 5.0
Gross distribution per unit (sen) 12 7.0 5.0
The accompanying notes form an integral part of the financial statements.
118
PIF
PHEIM INCOME FUND
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
Note 2014 2013
RM RM
ASSETS
Investments 7 11,331,307 6,797,329
Deposits with licensed financial institutions 10 5,563,949 7,483,917
Tax recoverable 3,969 9,778
Other receivables 69,952 75,604
Cash at bank 198,079 134,024TOTAL ASSETS 17,167,256 14,500,652
LIABILITIES
Amount due to Broker 390,764 -
Amount due to Manager 11 14,978 8,136
Amount due to Trustee 1,627 1,578
Other payables and accruals 15,400 15,400
TOTAL LIABILITIES 422,769 25,114
EQUITY
Unitholders' capital 16,779,408 13,978,198
(Accumulated losses)/retained earnings (16,388) 498,954
Available-for-sale reserve (18,533) (1,614)
TOTAL EQUITY 13 16,744,487 14,475,538
TOTAL EQUITY AND LIABILITIES 17,167,256 14,500,652
UNITS IN CIRCULATION 13 (a) 15,645,726 12,989,978
NET ASSET VALUE ("NAV") PER UNIT 14 1.0702 1.1144
The accompanying notes form an integral part of the financial statements.
119
PIF
PHEIM INCOME FUND
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Unitholders' Retained AFS Total
capital earnings/ reserve Equity
(Accumulated
losses)
RM RM RM RM
At 1 January 2013 13,599,529 663,853 38,397 14,301,779
Total comprehensive income for
the year - 484,381 (40,011) 444,370
Creation of units 2,351,098 - - 2,351,098
Cancellation of units (1,966,598) - - (1,966,598)
Distribution equalisation (5,831) - - (5,831)
Income distribution (Note 12) - (649,280) - (649,280)
Balance at 31 December 2013 13,978,198 498,954 (1,614) 14,475,538
-
Total comprehensive income for
the year - 364,184 (16,919) 347,265
Creation of units 4,821,369 - - 4,821,369
Cancellation of units (2,124,897) - - (2,124,897)
Distribution equalisation 104,738 - - 104,738
Income distribution (Note 12) - (879,526) - (879,526)Balance at 31 December 2014 16,779,408 (16,388) (18,533) 16,744,487
The accompanying notes form an integral part of the financial statements.
120
PIF
PHEIM INCOME FUND
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
2014 2013
RM RM
CASH FLOWS FROM OPERATING AND
INVESTING ACTIVITIES
Proceeds from sale of investments 3,634,195 6,057,057
Purchase of investments (10,511,422) (5,838,436)
Proceeds received from bonds on maturity 2,800,000 2,500,000
Dividends received 79,336 85,658
Interest received 388,798 356,829
Management fee paid (140,493) (144,139)
Trustee's fee paid (17,951) (17,947)
Tax refunded 23,151 -
Tax paid (6,985) -
Payment for other fees and expenses (32,050) (29,521)
Income distribution paid (3,328) (18,247)
Net cash (used in) / generated from operating
and investing activities (3,786,749) 2,951,254
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from creation of units 4,129,802 1,811,753
Payment for cancellation of units (2,198,966) (2,081,949)
Net cash used in financing activities 1,930,836 (270,196)
NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS (1,855,913) 2,681,058
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE YEAR 7,617,941 4,936,883
CASH AND CASH EQUIVALENTS AT THE END OFTHE YEAR 5,762,028 7,617,941
Cash and cash equivalents comprise the following:
Deposits with licensed financial institutions (Note 10) 5,563,949 7,483,917Cash at bank 198,079 134,024
5,762,028 7,617,941
The accompanying notes form an integral part of the financial statements.
121
PIF
PHEIM INCOME FUND
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES
2. BASIS OF PREPARATION
2.1 Statement of Compliance
2.2 Basis of Measurement
Pheim Income Fund ("the Fund") was constituted pursuant to a Master Deed dated 11 January 2002 as
amended by a Second Supplemental Master Deed dated 29 April 2013 between the Manager; Pheim
Unit Trusts Berhad, the Trustee; Maybank Trustees Berhad and the registered unitholders of the Fund.
The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 of
the Master Deed, which includes investments in equities and fixed income securities traded on Bursa
Malaysia Securities Berhad ("Bursa Malaysia") or any other market considered as an Eligible Market.
The Fund commenced operations on 28 January 2002 and will continue its operations until terminated
by the Trustee as provided under Part 12 of the Master Deed.
The Manager, Pheim Unit Trusts Berhad, is a public company incorporated in Malaysia. It is a wholly
owned subsidiary of Pheim Asset Management Sdn Bhd, a private company incorporated in Malaysia.
Its principal activity is the management of unit trust funds. Pheim Asset Management Sdn Bhd has
been appointed by the Manager as the External Investment Manager of the Fund with responsibility
for the provision of investment management services to the Fund.
The principal place of business of the Fund is located at 7th Floor, Menara Hap Seng, Jalan P.
Ramlee, 50250 Kuala Lumpur.
The financial statements are presented in Ringgit Malaysia (RM).
The financial statements were authorised for issue by the Board of Directors of the Manager in
accordance with the resolution of the directors on 23 February 2015.
The financial statements of the Fund have been prepared in accordance with Malaysian Financial
Reporting Standards ("MFRSs"), International Financial Reporting Standards ("IFRSs") and the
Securities Commission's Guidelines on Unit Trust Funds in Malaysia.
The financial statements of the Fund is prepared under the historical cost convention unless
otherwise indicated in the summary of significant accounting policies.
The accounting policies applied by the Fund is consistent with those applied in the previous
financial year other than the application of the new and revised MFRSs, Issues Committee ("IC")
Interpretations and amendments to MFRSs and IC Interpretations as disclosed in Note 2.3 below.
122
PIF
2. BASIS OF PREPARATION (CONT'D.)
2.3
Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities
Amendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge Accounting
(a) Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities
(b)
The Amendments introduce a narrow-scope exception to the requirement for the
discontinuation of hedge accounting in MFRS 139, Financial Instruments : Recognition and
Measurement. Specifically, the Amendments provide relief from discontinuing hedge
accounting when a novation of a derivative as a hedging instrument meets certain criteria.
The Amendments have been applied retrospectively and the application has no impact on
the disclosures or the amounts recognised in the Fund's financial statements.
During the financial year, the Fund has applied the following amendments to MFRSs issued by
the Malaysian Accounting Standards Board ("MASB") which are effective for accounting period
beginning on or after 1 January 2014 :-
Amendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge
Accounting
Application of Amendments to MFRSs and a new IC Interpretation
The Amendments have been applied retrospectively and the application has no impact on
the disclosures or the amounts recognised in the Fund's financial statements.
The Amendments clarify the requirements relating to the offset of financial assets and
financial liabilities. Specifically, the Amendments clarify the meaning of 'currently has a
legally enforceable right of set-off' and 'simultaneous realisation and settlement'.
123
PIF
2. BASIS OF PREPARATION (CONT'D.)
2.4
Effective for annual periods beginning on or after 1 July 2014
Amendments to MFRS 119, Defined Benefit Plans : Employee Contributions
Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2010 - 2012 Cycle"
Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2011 - 2013 Cycle"
Effective for annual periods beginning on or after 1 January 2016
MFRS 14, Regulatory Deferral Accounts
Amendments to MFRS 10 and MFRS 128 - Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture
Amendments to MFRS 10, MFRS 12 and MFRS 128 - Investment Entities: Applying the
Consideration Exception
Amendments to MFRS 11 - Accounting for Acquisitions of Interests in Joint Operations
Amendments to MFRS 101 - Disclosure Initiative
Amendments to MFRS 116 and MFRS 138 - Clarification of Acceptable Methods of
Depreciation and Amortisation
Amendments to MFRS 116 and MFRS 141 - Agriculture : Bearer Plants
Amendments to MFRS 127 - Equity Method in Separate Financial Statements
Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2012 - 2014 Cycle"
Effective for annual periods beginning on or after 1 January 2017
MFRS 15 - Revenue from Contracts with Customers
Effective for annual periods beginning on or after 1 January 2018
MFRS 9 - Financial Instruments (IFRS 9 issued in July 2014)
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 but are not yet effective :-
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)
The Standard replaces earlier versions of MFRS 9 and introduces a package of improvements
which includes a classification and measurement model, a single forward-looking ‘expected
loss’ impairment model and a substantially-reformed approach to hedge accounting.
The Fund will apply the above new MFRSs and amendments to MFRSs that are applicable once
they become effective. The main features of the new applicable standard is summaried below :-
124
PIF
2. BASIS OF PREPARATION (CONT'D.)
2.4
The key enhancements of MFRS 9 are :
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.
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.]
• Under MFRS 9, all recognised financial assets are required to be subsequently measured at
either amortised cost, fair value through other comprehensive income ("FVTOCI") or fair value
through profit or loss ("FVTPL") on the basis of both an entity's business model for managing the
financial assets and the contractual cash flow characteristics of the financial assets. These
requirements improve and simplify the approach for classification and measurement of financial
assets as the numerous categories of financial assets under MFRS 139 had been replaced.
• Most of the requirements in MFRS 139 for classification and measurement of financial
liabilities were carried forward unchanged to MFRS 9, except for the measurement of financial
liabilities designated as at FVTPL. Under MFRS 139, the entire amount of the change in the fair
value of the financial liability designated as FVTPL is presented in profit or loss. However,
MFRS 9 requires that the amount of change in the fair value of the financial liability that is
attributable to changes in the credit risk of that liability is presented in other comprehensive
income, unless the recognition of the effects of changes in the liability's own credit risk in other
comprehensive income would create or enlarge an accounting mismatch in profit or loss.
Changes in fair value attributable to a financial liability's credit risk are not subsequently
reclassified to profit or loss.
• In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss
model, as opposed to an incurred credit loss model under MFRS 139. Under MFRS 9, it is no
longer necessary for a credit event to have occurred before credit losses are recognised. Instead,
an entity always accounts for expected credit losses and changes in those expected credit losses
at each reporting date to reflect changes in credit risk since initial recognition.
• The new general hedge accounting requirements retain the three types of hedge accounting
mechanisms currently available in MFRS 139 i.e. fair value hedges, cash flow hedges and hedges
of a net investment in a foreign operation. MFRS 9 incorporates a new hedge accounting model
that aligns the hedge accounting more closely with an entity's risk management activities. The
new hedge accounting model has also expanded the scope of eligibility of hedge items and
hedging instruments respectively.
125
PIF
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 Financial Assets
(a) Financial assets at fair value through profit or loss ("FVTPL")
(b) Available-for-sale ("AFS") financial assets
Financial assets are recognised in the statement of financial position when, and only when, the
Fund becomes a party to the contractual provisions of the financial instruments. Regular way of
purchase and sale of investments in financial instruments are recognised on trade dates. When
financial assets are recognised initially, they are measured at fair value, plus attributable
transaction cost, for investment not at fair value through profit or loss.
The Fund determines the classification of its financial assets at the initial recognition, and the
categories include financial assets at fair value through profit or loss, available-for-sale financial
assets and loans and receivables.
Financial assets are classified as financial assets at FVTPL if they are held for trading or are
designated as such by the Manager upon initial recognition. Financial assets held for
trading include securities and fixed income securities acquired principally for the purpose
of selling them in near term.
Subsequent to initial recognition, financial assets at FVTPL are measured at fair value at
the date of the statement of financial position. Changes in the fair value of those financial
instruments are recorded in "Net gain or loss on financial assets at FVTPL". Interest earned
and dividend revenue elements of such instruments are recorded separately in "Interest
income" and "Dividend income", respectively. Foreign exchange differences on financial
assets at FVTPL are not recognised separately in profit or loss but included in net gains or
net losses on changes in fair value of financial assets at FVTPL.
The accounting policies set out below have been applied consistently to the periods, presented in
these financial statements and have been applied consistently by the Fund, unless otherwise stated.
After initial recognition, AFS financial assets are measured at fair value. Gains or losses
from changes in fair value of the AFS financial assets are recognised in other
comprehensive income, except that impairment losses, foreign exchange gains and losses
on monetary instruments, dividend income and interest calculated using effective interest
method are recognised in profit or loss.
The cumulative gain or loss previously recognised in other comprehensive income is
reclassified from equity to profit or loss as a reclassification adjustment when the financial
asset is derecognised. Interest income calculated using the effective interest method is
recognised in profit or loss. Dividends on an AFS equity instrument are recognised in profit
or loss when the Fund's right to receive payment is established.
AFS financial assets are financial assets that are designated as available for sale or are not
classified as financial assets at FVTPL or loans and receivables.
126
PIF
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)
3.1 Financial Assets (Cont'd.)
(b) Available-for-sale ("AFS") financial assets (Cont'd.)
(c) Loans and receivables
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 are classified as loans and receivables. The Fund includes short term receivables
such as balances due from broker, Manager and other receivables in the classification.
Loans and receivables are recognised initially at fair value including transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortised cost
using effective interest method. Gains and losses are recognised in profit or loss when the
loans and receivables are derecognised or impaired, and through the amortisation process.
The Fund assesses at each reporting date whether there is any objective evidence that a financial
asset is impaired.
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.
Fair value is the amount for which an asset could be exchanged, or liability settled, between
knowledgeable, willing parties in an arm's length transaction. The fair value for financial
instruments traded in active markets at the reporting date is based on their quoted price or
binding dealer price quotations, without deduction for transaction costs.
A financial asset is derecognised when the asset is disposed and the contractual right to
receive cash flows from the asset has expired. On derecognition of a financial asset in its
entirety, the difference between the carrying amount and the sum of the consideration
received and any cumulative gain or loss that had been recognised in other comprehensive
income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require
delivery of assets within the period generally established by regulation or convention in the
market place concerned. All regular way purchases and sales of financial assets are
recognised or derecognised on trade date, i.e. the date that the Fund commits to purchase or
sell the asset.
127
PIF
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)
3.2 Impairment of Financial Assets (Cont'd)
(b) Trade and other receivables and other financial assets carried at amortised cost
3.3 Classification of Realised and Unrealised Gain and Losses
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the amount is reduced
through the use of an allowance account. When a trade receivable becomes uncollectible, it
is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed to the extent that the carrying amount of
the asset does not exceed its amortised cost at the reversal date. The amount of reversal is
recognised in profit or loss.
If an AFS asset is impaired, an amount comprising the difference between its cost (net of
any principal payment and amortisation) and its current fair value, less any impairment loss
previously recognised in profit or loss, is transferred from equity to profit or loss.
Impairment losses on AFS equity investments are not reversed in profit or loss in the
subsequent period. Increase in fair value, if any, subsequent to impairment loss is
recognised in other comprehensive income. For AFS debt investments, impairment losses
are subsequently reversed in profit or loss, up to the amount previously recognised as
impairment loss, if an increase in the fair value of the investment can be objectively
related to an event occurring after the recognition of the impairment loss in profit or loss.
To determine whether there is objective evidence that an impairment loss on financial
assets has been incurred, the Fund considers factors such as the probability of insolvency or
significant financial difficulties of the debtor and default or significant delay in payments.
If any such evidence exists, the amount of impairment loss is measured as the difference
between the asset's carrying amount and the present value of estimated future cash flows
discounted at the financial asset's original effective interest rate. The impairment loss is
recognised in profit or loss.
Unrealised gain and losses comprise changes in fair value of financial instruments for the period
from reversal of prior period's unrealised gain and losses for financial instruments which were
realised (i.e. sold, redeemed or matured) during the reporting period.
Realised gains and losses on disposals of financial instruments classified as part of "at fair value
through profit or loss" are calculated using weighted average method. They represent the
difference between an instrument's initial carrying amount and disposal amount, or cash
payment or receipts made of derivative contracts (excluding payments or receipts on collateral
margin accounts for such investments).
128
PIF
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)
3.4 Financial Liabilities
3.5 Foreign Currencies
3.6 Unitholders' Capital
Exchange differences arising from the translation of non-monetary items carried at fair value are
included in profit or loss for the period except for the differences arising on the translation of
non-monetary items in respect of which gains or losses are recognised directly in equity.
Exchange differences arising from such non-monetary items are recognised directly to equity.
In preparing the financial statements, transactions in currencies other than the Fund's functional
currency (foreign currencies) are recorded in the functional currency using the exchange rates
prevailing at the dates of the transactions. At the end of each reporting period, foreign currency
monetary assets and liabilities are translated at exchange rates prevailing at the end of the
reporting period. Non-monetary items that are measured at fair value in a foreign currency are
translated using exchange rates at the date when the fair value was determined.
Exchange differences arising from the settlement of foreign currency transactions and from the
translation of foreign currency monetary assets and liabilities are recognised in profit or loss.
A financial liability is derecognised when the obligation under the liability is extinguished. Gains
and losses are recognised in profit or loss when the liabilities are derecognised, and through the
amortisation process.
The financial statements of the Fund are measured using the currency of the primary economic
environment in which the Fund operates ("the functional currency"). The financial statements are
presented in Ringgit Malaysia (RM), which is also the Fund's functional currency.
The unitholders' contributions to the Fund meet the definition of puttable instruments classified
as equity instruments under MFRS 132.
Distribution equalisation represents the average distributable amount included in the creation
and cancellation prices of units. This amount is either refunded to unitholders by way of
distribution and/or adjusted accordingly when units are cancelled.
Financial liabilities are classified according to the substance of the contractual arrangements
entered into and the definition of a financial liability.
Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial
position when, only when, the Fund becomes a party to the contractual provisions of the
financial instrument. Financial liabilities are classified as other financial liabilities.
The Fund's financial liabilities which include trade and other payables are recognised initially at
fair value plus directly attributable transaction costs and subsequently measured at the amortised
cost using effective interest method.
129
PIF
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)
3.7 Income Distribution
3.8 Cash and Cash Equivalents
3.9 Income Recognition
3.10 Income Tax
3.11 Segment Reporting
No deferred tax is recognised as there are no material temporary differences.
For management purposes, the Fund is managed by 2 main portfolios, namely (1) equity
securities and (2) fixed income instruments. Each segment engages in separate business activities
and the operating results are regularly reviewed by the Manager, External Investment Manager
and the Fund's Investment Committee. The External Investment Manager and the Fund
Investment Committee jointly assumes the role of chief operation decision maker, for
performance assessment purposes and to make decision about resources allocated to each
investment segment.
Cash and cash equivalents comprise cash at bank and deposits with financial institutions which
have insignificant risk of changes in value.
Income is recognised to the extent that is probable that the economic benefits will flow to the
Fund and the income can be reliably measured. Income is measured at fair value of consideration
received or receivable.
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
income securities, is recognised using effective interest method.
Current tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted by the reporting date.
Income distributions are at the discretion of the Manager. Income distribution to the Fund's
unitholders is accounted for as a deduction from realised reserves except where distribution is
sourced out of distribution equalisation which is accounted for as deduction from unitholders'
capital.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items
recognised outside profit or loss, either in other comprehensive income or directly in equity.
130
PIF
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.12 Significant Accounting Estimates and Judgements
4. MANAGER'S FEE
5. TRUSTEE' S FEE
6. TAXATION
2014 2013
RM RM
Current year Malaysian tax - 5,063
Overprovision in prior year (10,357) (700)
Malaysian tax (income)/expense based onresults for the year (10,357) 4,363
The preparation of financial statements in accordance with MFRS and IFRS requires the use of
certain accounting estimates and exercise of judgements. Estimates and judgements are
continually evaluated and are based on past experience, reasonable expectations of future events
and other factors.
The tax charge for the period is in relation to the taxable income earned by the Fund after deducting
allowable expenses. In accordance with Schedule 6 of Income Tax Act 1967, interest income earned
by the Fund is exempted from tax.
Income tax is calculated at Malaysian statutory tax rate of 25% (2013: 25%) of the estimated
assessable net income for the year.
The Manager is entitled to an annual management fee of 1.0% p.a. of net asset value of the Fund
(before deducting Manager's and Trustee's fees for the day) calculated and accrued on a daily basis.
The Trustee is entitled to a fee of 0.07% p.a. based on net asset value of the Fund (before deducting
Manager's and Trustee's fees for the day) calculated and accrued on a daily basis subject to a
minimum of RM18,000 p.a.
No major judgements have been made by the Manager in applying the Fund's accounting
policies. There are no key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have significant risk of causing material adjustment to the
carrying amounts of assets and liabilities within next year.
131
PIF
6. TAXATION (CONT'D)
2014 2013
RM RM
Net income before tax 353,827 488,744
Taxation at Malaysian statutory rate of 25 % (2013: 25%) 88,457 122,186
Tax effects of:
Income not subject to tax (136,348) (165,957)
Expenses not deductible for tax purposes 9,679 9,148
Restriction on tax deductible expenses
for unit trust funds 38,212 39,686
Overprovision in prior year (10,357) (700)Tax (income)/expense for the financial year (10,357) 4,363
7. INVESTMENTS
2014 2013
RM RM
Financial assets at fair value through
profit or loss (Note 8)
Quoted equities
- in Malaysia 1,510,210 1,027,490
- outside Malaysia 1,127,377 1,665,229
2,637,587 2,692,719
Available-for-sale financial assets
(Note 9)
Unquoted fixed income
securities in Malaysia 8,693,720 4,104,610Total investments 11,331,307 6,797,329
8. FINANCIAL ASSETS AT FVTPL2014 2013
RM RM
Financial assets at FVTPL:Quoted equity investments 2,637,587 2,692,719
A reconciliation of income tax expense applicable to income before tax at the statutory income tax
rate to tax (income)/expense at the effective income tax rate of the Fund is as follows:
132
PIF
8. FINANCIAL ASSETS AT FVTPL (CONT'D)2014 2013
RM RM
Net gain on financial assets at FVTPL comprised:
Realised gain on disposals 375,065 618,440Unrealised loss on changes in fair values (285,227) (416,212)
89,838 202,228
The currency exposure profile of financial assets at
FVTPL is as follows :
- Ringgit Malaysia 1,510,210 1,027,490
- Hong Kong Dollar 669,343 1,045,403
- Singapore Dollar 250,599 298,363
- Indonesian Rupiah 135,783 219,232
- Phillipines Peso 71,652 102,2312,637,587 2,692,719
Financial assets at FVTPL as at 31 December 2014 are as detailed below :
QUOTED EQUITY INVESTMENTS
- IN MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Main Market
Construction
Muhibbah Engineering (M) Berhad 105,000 205,665 195,300 1.17
Consumer
Padini Holdings Berhad 70,000 138,987 102,200 0.61
Yee Lee Corporation Berhad 120,000 168,697 168,000 1.00
190,000 307,684 270,200 1.61
Industrial Products
Can-One Berhad 30,000 101,056 63,900 0.38
Jaya Tiasa Holdings Berhad 66,000 146,842 128,700 0.77
Kian Joo Can Factory Berhad 125,000 395,613 365,000 2.18
Malaysia Steel Works KL Berhad 40,000 40,914 34,600 0.21
261,000 684,425 592,200 3.54
133
PIF
8. FINANCIAL ASSETS AT FVTPL (CONT'D.)
Financial assets at FVTPL as at 31 December 2014 are as detailed below : (cont'd)
QUOTED EQUITY INVESTMENTS
- IN MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Properties
Land & General Berhad 102,000 67,560 51,510 0.31
Metro Kajang Holdings Berhad 57,500 170,165 149,500 0.89
159,500 237,725 201,010 1.20
Trading & Services
Berjaya Corp Berhad 148,000 73,743 60,680 0.36Berjaya Auto Berhad 58,000 192,158 190,820 1.14
206,000 265,901 251,500 1.50
TOTAL QUOTED
EQUITY INVESTMENTS
- IN MALAYSIA 921,500 1,701,400 1,510,210 9.02
QUOTED EQUITY INVESTMENTS
- OUTSIDE MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Hong Kong Stock Exchange
("HKSE")
China Gas Holdings Ltd 34,000 193,634 187,257 1.12
China Huishan Dairy
Holdings Co. Limited 172,000 177,448 103,877 0.62
Ind & Comm Bank of China-H 52,000 122,208 132,650 0.79
Dongfeng Motor Group Co.Ltd 34,000 168,382 168,255 1.00
Goldpac Group Ltd 32,000 108,952 77,304 0.46
324,000 770,624 669,343 3.99
134
PIF
8. FINANCIAL ASSETS AT FVTPL (CONT'D.)
QUOTED EQUITY INVESTMENTS
- OUTSIDE MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Jakarta Stock Exchange ("JSX")
J Resources Asia Pacific TBK PT 900,000 177,645 135,783 0.81
Philippines Stock Exchange
("PSE")
8990 Holdings Inc 130,000 70,856 71,652 0.43
Singapore Exchange("SGX")
Golden Agri Resources Ltd 80,000 140,575 96,303 0.58
Indofood Agri Resources Ltd 81,000 265,488 154,296 0.92
161,000 406,063 250,599 1.50
TOTAL QUOTED
EQUITY INVESTMENTS
- OUTSIDE MALAYSIA 1,515,000 1,425,188 1,127,377 6.73
TOTAL FINANCIAL ASSETSAT FVTPL 3,126,588 2,637,587 15.75
EXCESS OF COST OVERFAIR VALUE (489,001)
9. AFS FINANCIAL ASSETS
2014 2013
RM RM
Unquoted fixed income securities 8,693,720 4,104,610
Accretion of discounts, net of amortisationof premiums on AFS financial assets (6,931) 27,971
Unrealised loss on changes in fair values (16,919) (40,011)
135
PIF
9. AFS FINANCIAL ASSETS (CONT'D)
AFS financial assets as at 31 December 2014 are as detailed below :
Nominal
Name of Counter Amount Cost * Fair value % of
RM RM NAV
UNQUOTED FIXED INCOME SECURITIES
SME Bank IMTN 3.7%
- 03/17 2,700,000 2,700,000 2,693,250 16.08
Malaysian Government Securities
- 10/15 1,300,000 1,301,871 1,298,050 7.75
Poh Kong IMTN
-10/17 2,700,000 2,710,382 2,701,620 16.13
SABH 4.275%
-12/19 2,000,000 2,000,000 2,000,800 11.95
8,700,000 8,712,253 8,693,720 51.91
EXCESS OF OVER COSTFAIR VALUE (18,533)
* Cost of fixed income security includes accretion of discount and/or amortisation of premium.
10. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS
2014 2013
RM RM
Licensed investment banks 5,563,949 7,483,917
2014 2013 2014 2013
% % Days DaysLicensed investment banks 3.04 2.94 8 8
The weighted average effective interest rate ("WAEIR") per annum and the average remaining
maturities of deposits and placement are as follows:
Average
remaining
WAEIR maturities
136
PIF
11. AMOUNT DUE TO MANAGER
2014 2013
RM RM
Amount arising from creation of units 1,176 (4,648)
Management fee 13,802 12,78414,978 8,136
12. INCOME DISTRIBUTION
Distribution to unitholders are from the following sources:
2014 2013
RM RM
Dividend income 8,145 867
Interest income 103,605 64,515
Net realised (loss)/gain from sale of investment (1,116) 182,205
Net accretion of discount on corporate bond (2,453) 5,631
Other income - 133
108,181 253,351
Less:
Expenses 54,624 39,764
Current year's realised income 53,557 213,587
Distribution out of previous year's realised reserves 825,969 435,693Distribution for the year 879,526 649,280
Units in circulation at book closing date 12,564,660 12,985,601
Gross distribution per unit (sen) 7.0 5.0
Net distribution per unit (sen) 7.0 5.0Date of distribution 29.04.2014 26.4.2013
13. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY)
Note 2014 2013
RM RM
Unitholders' capital (a) 16,779,408 13,978,198
Retained earnings
- Realised earnings (b) 420,328 650,443
- Unrealised losses (c) (436,716) (151,489)
(16,388) 498,954
AFS reserve (18,533) (1,614)Total equity / Net asset value 16,744,487 14,475,538
137
PIF
13. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY) (CONTD.)
(a) Unitholders' Capital
Number Number
of units RM of units RM
Balance at beginning
of the year 12,989,978 13,978,198 12,665,752 13,599,529
Add: Creation of units 4,673,518 4,821,369 2,184,998 2,351,098
Less: Cancellation of units (2,017,770) (2,124,897) (1,860,772) (1,966,598)
Distribution equalisation - 104,738 - (5,831)
Balance at endof year 15,645,726 16,779,408 12,989,978 13,978,198
(b) Realised - Distributable
2014 2013
RM RM
Balance at the beginning of the year 650,443 392,282
Net income after taxation 364,184 484,381
Net unrealised loss attributable to
investments held transferred to
unrealised reserve 285,227 416,213
Net unrealised foreign exchange loss
attributable to foreign currency monetary
items transferred to unrealised reserve - 6,847
Distribution out of realised reserve (879,526) (649,280)Balance at the end of the year 420,328 650,443
(c) Unrealised - Non-distributable
2014 2013
RM RM
Balance at the beginning of the year (151,489) 271,571
Net unrealised loss attributable to
investments held transferred from
realised reserve (285,227) (416,213)
Net unrealised foreign exchange loss
attributable to foreign currency monetary
items transferred from realised reserve - (6,847)Balance at the end of the year (436,716) (151,489)
In accordance with Article 6.1.1 of the Deed and Securities Commission's approval letter dated 19
December 2001, the maximum number of units that can be issued for circulation is 100,000,000
units. As at 31 December 2014, the number of units not in issue is 84,354,274 (31 December 2013:
87,010,022) units.
2014 2013
138
PIF
14. NET ASSET VALUE PER UNIT
Net asset value attributable to unitholders is classified as equity in the statement of financial position.
RM RM/Unit RM RM/Unit
Net asset value attributable
to unitholders for
issuing/redeeming units 16,777,468 1.0723 14,492,678 1.1157
Effect from adopting bid
prices as fair value (32,981) (0.0021) (17,140) (0.0013)
Net asset value attributable
to unitholders perfinancial statements 16,744,487 1.0702 14,475,538 1.1144
15. UNITS HELD BY RELATED PARTIES
2014 2013
Number of Valued at Number of Valued at
units NAV units NAV
RM RM
Directors of the Manager 4,419,604 4,729,982 465,338 518,555
The Directors of the Manager are legal and beneficial owners of the units.
Quoted financial assets in the financial statements have been valued at the bid prices at the close of
business in accordance with the provisions of MFRS 139. For the purpose of calculation of net asset
value attributable to unitholders per unit for the issuance and redemption of units in accordance with
the Deed, quoted financial assets are stated at the last done market price.
2013
A reconciliation of net asset value attributable to unitholders for issuing/redeeming units and the net
asset value attributable to unitholders per the financial statements is as follows:-
2014
139
PIF
16. TRANSACTIONS WITH BROKERS
Trading % of total Brokerage % of total
value trading fees brokerage
RM value RM fees
5,371,139 26.77 818 3.43
CIMB Investment Bank Bhd 2,764,264 13.78 974 4.09
Hwang-DBS Investment Bank Bhd 2,732,896 13.62 566 2.37
KAF Investment Bank Berhad 2,700,000 13.45 1,274 5.35
RHB OSK Securities Hong Kong 654,354 3.26 818 3.43
Limited
CIMB-GK Securities Ltd - 508,259 2.53 1,274 5.35
Hong Kong
PT Bahana Securities 505,526 2.52 2,799 11.74
DBS Vicker Securities Pte Ltd - 501,909 2.50 1,253 5.26
Hong Kong
RHB Investment Bank Bhd 476,437 2.37 1,457 6.11
Affin Investment Bank 378,646 1.89 1,300 5.45
Others 3,474,013 17.31 11,304 47.4220,067,443 100.00 23,837 100.00
17. MANAGEMENT EXPENSE RATIO
2014 2013
Management expense ratio 1.35% 1.35%
18. PORTFOLIO TURNOVER RATIO
2014 2013
Portfolio turnover (times) 0.50 0.41
Details of transactions with stockbroking companies and other investment banks for the financial year
ended 31 December 2014 are as follows:
This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other
professional fees) and other administrative expenses of the Fund to the average NAV of the Fund
calculated on a daily basis. The average NAV of the Fund for the year ended 31 December 2014 was
RM 14,157,778 (2013: RM14,485,858).
This is the ratio of the average of acquisitions and disposals of the Fund for the year to average NAV
of the Fund for the year calculated on daily basis.
MIDF Amanah Investment Bank Bhd
140
PIF
19. SEGMENT INFORMATION
The Manager, the appointed External Investment Manager and Investment Committee of the Fundare responsible for allocating resources available to the Fund in accordance with the overallinvestment strategies as set out in the investment Guidelines of the Fund. The Fund is managed bytwo segments:
A portfolio of equity instruments A portfolio of fixed income portfolio, including debt securities and deposits with financial
institutions.
The investment objective of each segment is to achieve consistent returns from the investments ineach segment while safeguarding capital by investing in diversified portfolios. There have been nochanges in reportable segments in the current financial year. The segment information provided ispresented to the Manager, the appointed External Investment Manager and Investment Committee ofthe Fund.
2014 2013
Fixed Fixed
Equity income Equity income
Portfolio Portfolio Total Portfolio Portfolio TotalRM RM RM RM RM RM
Gross dividend income 65,450 - 65,450 95,925 - 95,925
Interest income - 397,600 397,600 - 356,896 356,896
Net gain on financial assets at FVTPL 89,838 - 89,838 202,228 - 202,228
Accretion of discounts, net of amortisation - - -
of premiums on AFS financial assets - (6,931) (6,931) - 27,971 27,971
Net realised gain/(loss) on - - -
foreign exchange (568) - (568) 1,060 - 1,060Total segment operating income for the year 154,721 390,670 545,390 299,213 384,867 684,080
Deposits with financial institutions - 5,563,949 5,563,949 - 7,483,917 7,483,917
Financial assets at FVTPL 2,637,587 - 2,637,587 2,692,719 - 2,692,719
AFS financial assets - 8,693,720 8,693,720 - 4,104,610 4,104,610
Other assets 3,230 66,722 69,952 17,684 57,920 75,604Total segment assets 2,640,817 14,324,391 16,965,208 2,710,403 11,646,447 14,356,850
Other liabilities 390,764 - 390,764 - - -
Total segment liabilities 390,764 - 390,764 - - -
141
PIF
19. SEGMENT INFORMATION (CONT'D.)
2014 2013
RM RM
Net reportable segment operating income 545,389 684,080
Expenses (191,562) (195,336)
Net income before tax 353,827 488,745
Tax income/(expense) 10,357 (4,363)Net income for the year 364,184 484,382
2014 2013
RM RM
Total segment assets 16,965,208 14,356,850
Tax recoverable 3,969 9,778
Cash at bank 198,079 134,024Total assets of the Fund 17,167,256 14,500,652
Total segment liabilities 390,764 -
Other payables and accruals 15,400 15,400
Amount due to Manager 14,978 8,136
Amount due to Trustee 1,627 1,578Total liabilities of the Fund 422,769 25,114
20. FINANCIAL INSTRUMENTS
(a) Classification of financial instruments
Expenses of the Fund are not considered part of the performance of any operating segment. The
following table provides a reconciliation between reportable segment income and operating profits.
In addition, certain assets and liabilities are not considered to be part of the assets and liabilities of an
individual segment. The following table provides reconciliation between total reportable segment
assets and liabilities and total assets and liabilities of the Fund.
The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either
fair value or at amortised cost based on their respective classification. The significant accounting
policies in Note 3 describe how the classes of financial instruments are measured, and how
income and expenses, including fair value gains and losses are recognised. The following table
analyses the financial assets and liabilities of the Fund in the statement of financial position, by
the class of financial instrument to which they are assigned, and therefore by the measurement
basis.
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20. FINANCIAL INSTRUMENTS (CONT'D.)
(a) Classification of financial instruments (Cont'd.)
Financial
liabilities
Financial AFS at
assets at financial Loans and amortised
FVTPL assets receivables cost Total
RM RM RM RM RM
2014
Assets
Investments 2,637,587 8,693,720 - - 11,331,307
Deposits with licensed
financial institutions - - 5,563,949 - 5,563,949
Other receivables - - 69,952 - 69,952
Cash at bank - - 198,079 - 198,079Total financial assets 2,637,587 8,693,720 5,831,980 - 17,163,287
Total non-financial assets 3,96917,167,256
Liabilities
Amount due to Broker - - - 390,764 390,764
Amount due to Manager - - - 14,978 14,978
Amount due to Trustee - - - 1,627 1,627
Other payables and accruals - - - 15,400 15,400Total financial liabilities - - - 422,769 422,769
2013
Assets
Investments 2,692,719 4,104,610 - - 6,797,329
Deposits with licensed
financial institutions - - 7,483,917 - 7,483,917
Other receivables - - 75,604 - 75,604
Cash at bank - - 134,024 - 134,024Total financial assets 2,692,719 4,104,610 7,693,545 - 14,490,874
Total non-financial assets 9,77814,500,652
Liabilities
Amount due to Manager - - - 8,136 8,136
Amount due to Trustee - - - 1,578 1,578
Other payables and accruals - - - 15,400 15,400
Total financial liabilities - - - 25,114 25,114
143
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20. FINANCIAL INSTRUMENTS (CONT'D.)
(b) Fair value
(i) Financial instruments that are carried at fair value
Quoted equity instruments
Unquoted fixed income securities
Level 1 Level 2 Total
RM RM RM
2014
Financial assets at FVTPL
- Quoted equities 2,637,587 - 2,637,587
AFS financial assets
- Fixed income securities - 8,693,720 8,693,7202,637,587 8,693,720 11,331,307
2013
Financial assets at FVTPL
- Quoted equities 2,692,719 - 2,692,719
AFS financial assets
- Fixed income securities - 4,104,610 4,104,6102,692,719 4,104,610 6,797,329
asset or liability either directly or indirectly
Level 3: Inputs for the asset or liability that are not based on observable market data.
The Fund’s financial assets at FVTPL and AFS financial assets are carried at fair value. The
fair values of these financial assets were determined using prices in active markets for
identical assets.
Fair value is determined directly by reference to their published market bid prices on the
relevant stock exchanges at the reporting date.
Level 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
The Fund uses the following level of fair value hierarchy for determining and disclosing the
fair value of financial instruments carried at fair value in the statement of financial
position :
The published market prices for RM-denominated unquoted bonds are based on
information provided by Bond Pricing Agency Malaysia Sdn Bhd.
The Fund held the following financial instruments carried at fair value on the statement of
financial position as at the end of the financial year :
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20. FINANCIAL INSTRUMENTS (CONT'D.)
(b) Fair Value (Cont'd.)
(ii) Financial instruments not carried at fair value
21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES
(i) Market Risk
(a) Equity Price Risk
The Fund's principal exposure to market risk arises primarily due to changes or developments in
the market environment and typically includes changes in regulations, politics and the economy
of the country. Market risk is also influenced by global economics and geopolitical
developments. The Fund seeks to diversify away some of this risk by investing into different
sectors to mitigate risk exposure to any single asset class.
The Fund’s market risk is affected primarily due to changes in market prices, interest rates and
foreign currency exchange rates.
Equity price risk is the adverse changes in the fair value of equities as a result of changes in
the levels of equity indices and the value of individual shares. The equity price risk
exposure arises from the Fund’s investments in quoted equity securities.
Financial instruments not carried at fair value comprise financial assets and financial
liabilities classified as loans and receivables and financial liabilities at amortised cost
respectively.The carrying amount of these financial instruments at the end of the financial
year approximated their fair values due to their short term to maturity.
The Fund maintains investment portfolios in a variety of quoted and unquoted financial instruments as
dictated by its Trust Deed and investment management strategy.
The Fund is exposed to a variety of risks including market risk (which includes interest rate risk,
equity price risk and currency risk), credit risk, and liquidity risk. Whilst these are the most important
types of financial risks inherent in each type of financial instruments, the Manager and the Trustee
would like to highlight that this list does not purport to constitute an exhaustive list of all the risks
inherent in an investment in the Fund.
The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk is
inherent in the Fund’s activities, but it is managed through a process of ongoing identification,
measurement and monitoring of risks. Financial risk management is also carried out through sound
internal control systems and adherence to the investment restrictions as stipulated in the Trust Deed,
the Securities Commission’s Guidelines on Unit Trust Funds and the Capital Market and Services
Act, 2007.
145
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21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONT'D.)
(i) Market Risk (Cont'd.)
(a) Equity Price Risk (Cont'd.)
Effect on profit
or loss and equity
Change in equity price (%) Increase/(Decrease)
RM
2014+6/-6 158,255 /(158,255)
2013+6/-6 161,563 /(161,563)
(b) Interest Rate Risk
Effect on profit
or loss and equity
Change in basis points * Increase/(Decrease)RM
2014+25/-25 13,910 / (13,910)
2013+25/-25 5,053 / (5,053)
*
The following table demonstrates the sensitivity of the profit or loss and equity of the Fund
to a reasonably possible change in interest rates, with all other variables held constant:
This risk refers to the effect of interest rate changes on the market value of fixed income
securities and deposits with financial institutions. In the event of rising interest rates, the
return on deposits with financial institutions will rise while prices of fixed income
securities will decrease and vice versa, thus affecting the net asset value of the Fund. This
risk will be minimized via the management of the duration structure of the portfolio of
fixed income securities and deposits with financial institutions.
The table below summarises the effect of sensitivity from the Fund’s underlying
investments in quoted equities on the profit or loss and equity of the Fund due to possible
changes in equity prices, with all other variables held constant:
The assumed movement in basis points for interest rate sensitivity analysis is based onthe currently observable market environment.
146
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21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(i) Market Risk (Contd.)
(c) Currency Risk
2014 2013
RM RM
Indonesian Rupiah 13,578 21,923
Hong Kong Dollar 66,934 104,540
Singapore Dollar 25,060 29,836
Phillipines Peso 7,165 10,223112,737 166,522
(ii) Credit Risk
or loss and equity
Effect on profit
The Fund is exposed to currency risk primarily through its investment in overseas quoted
equities that are denominated in foreign currencies. The Fund's foreign currency exposure
profile of its investment in quoted equities has been disclosed under Note 8.
A 10% strenghtening or weakening of the RM against the following foreign currencies as at
the end of the financial year would have decreased or increased respectively the profit or
loss and equity of the Fund by the amount shown below. This analysis assumes all other
variables are held constant.
The Fund’s principal exposure to credit risk arises primarily due to changes in the financial
conditions of companies issuing debt securities and stockbroking companies, which may affect
their creditworthiness. This in turn may lead to default in the payment. Such events can lead to
loss of capital or delayed or reduced income for the Fund resulting in a reduction in the Fund’s
asset value and thus unit price. This risk is mitigated by vigorous credit analyses and
diversification of the bond portfolio of the Fund and to engage different stockbroking companies
with good reputation.
147
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21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONT'D.)
(iii) Liquidity Risk
1 month - 3 3 months - 5
2014 months years Total
RM RM RM
Financial Assets
Financial assets at FVTPL 2,637,587 - 2,637,587
AFS financial assets - 8,693,720 8,693,720
Deposits with financial
institutions 5,563,949 5,563,949
Other assets 268,031 - 268,031
Total undiscounted
financial assets 8,469,567 8,693,720 17,163,287
Non-Financial Asset - 3,969 3,969
Total Assets 8,469,567 8,697,689 17,167,256
Financial Liabilitites
Other liablities 422,769 - 422,769
Total undiscounted
financial liabilities 422,769 - 422,769
Unitholders' NAV 16,744,487 - 16,744,487
Liquidity gap (8,697,689) 8,697,689 -
This risk occurs in thinly traded or illiquid equity securities. Should the Fund need to sell a
relatively large amount of such securities, the act itself may significantly depress the selling
price. As the Fund is exposed to daily redemption of units, the risk is minimized by placing a
prudent level of funds in short-term deposits and by investing in stocks whose liquidity is
adjudged to be commensurate with the expected exposure level of the Fund.
The following table summarises the maturity profile of the Fund’s financial liabilities and the
corresponding assets available to meet commitments associated with those financial liabilities
and redemption by unitholders.
148
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21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(iii) Liquidity Risk (Contd.)
1 month - 3 3 months - 5
2013 months years Total
RM RM RM
Financial Assets
Financial assets at FVTPL 2,692,719 - 2,692,719
AFS financial assets - 4,104,610 4,104,610
Deposits with financial
institutions 7,483,917 7,483,917
Other assets 209,628 - 209,628
Total undiscounted
financial assets 10,386,264 4,104,610 14,490,874
Non-Financial Asset - 9,778 9,778
Total Assets 10,386,264 4,114,388 14,500,652
Financial Liabilitites
Other liablities 25,114 - 25,114
Total undiscounted
financial liabilities 25,114 - 25,114
Unitholders' NAV 14,475,538 - 14,475,538
Liquidity gap (4,114,388) 4,114,388 -
(iv) Stock Specific Risk
(v) Single Issuer Risk
The Fund’s exposure to securities issued by any issuer is limited to not more than a certain
percentage of its net asset value. Under such restriction, the risk exposure to the securities of any
issuer is minimised.
The Fund is exposed to the individual risk of the respective companies issuing securities which
includes changes to the business performance of the company, consumer tastes and demand,
lawsuits and management practices. This risk is minimised through the well diversified nature of
the Fund.
149
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21. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(vi) Capital Management
The capital is represented by unitholders' subscription to the Fund. The amount of capital can
change significantly on a daily basis as the Fund is subject to a daily redemption and subscription
at the discretion of unitholders. The Manager manages the Fund's capital with the objective of
maximising unitholders' value, while maintaining sufficient liquidity to meet unitholders'
redemption as explained in Note 21 (iii) above.
150
PHEIM Annual Report 31.12.2014
PAXJ
www.pheimunittrusts.comsupport@pheimunittrusts.com
151Your Need
is our Focus
23 February 2015
PHEIM Annual Report 31.12.2014
PAXJ
www.pheimunittrusts.comsupport@pheimunittrusts.com
152Your Need
is our Focus
STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM ASIA EX-JAPAN FUND
We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Pheim Asia Ex-Japan Fund are drawn up inaccordance with the Deed, Malaysian Financial Reporting Standards, InternationalFinancial Reporting Standards and Securities Commission's Guidelines on Unit TrustFunds in Malaysia so as to give a true and fair view of the financial position of PheimAsia Ex-Japan Fund as at 31 December 2014 and of its financial performance and cashflows for the financial year then ended.
For and on behalf of the Manager,PHEIM UNIT TRUSTS BERHAD
AZMI MALEK MERICANDirector
HOI WENG KONGDirector
Kuala Lumpur, Malaysia23 FEB 2015
PAXJ
INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF
PHEIM ASIA EX-JAPAN FUND
Report on the financial statements
Auditors’ responsibility
We have audited the financial statements of Pheim Asia Ex-Japan Fund ("the Fund"), which
comprise statement of financial position as at 31 December 2014, and statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory information, as set out on pages
155 to 170 .
Manager’s and Trustee’s responsibility for the financial statements
The Manager of the Fund, Pheim Unit Trusts Berhad, is responsible for the preparation of
financial statements so as to give a true and fair view in accordance with Malaysian Financial
Reporting Standards, International Financial Reporting Standards and the requirements of the
Securities Commission's Guidelines on Unit Trust Funds in Malaysia. The Manager is also
responsible for such internal control as the Manager determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error. The Trustee is responsible for ensuring that the Manager maintains proper accounting and
other records as are necessary to enable fair presentation of these financial statements.
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with approved standards on auditing in Malaysia. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on our judgment,
including the assessment of risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, we consider internal control relevant to the
entity’s preparation of financial statements that give a true and fair view in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness of accounting estimates
made by the Manager, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
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INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF
PHEIM ASIA EX-JAPAN FUND (CONTD.)
Opinion
Other Matters
FOLKS DFK & CO. KHOO PEK LING
AF: 0502 No. 900/03/16(J/PH)
CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT
Kuala Lumpur
In our opinion, the financial statements give a true and fair view of the financial position of the
Fund as at 31 December 2014 and of its financial performance and cash flows for the year then
ended in accordance with Malaysian Financial Reporting Standards, International Financial
Reporting Standards and the requirements of the Securities Commission's Guidelines on Unit
Trust Funds in Malaysia.
This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We
do not assume responsibility to any other person for the content of this report.
Date: 23 February 2015
154
PAXJ
PHEIM ASIA EX-JAPAN FUND
STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Note 2014 2013
RM RM
INVESTMENT INCOME
Gross dividend income 682,035 827,364
Interest income :
- loans and receivables 79,307 121,571
Net gain on financial assets at fair value through
profit or loss ("FVTPL") 8 277,800 812,582
Net realised (loss)/gain on foreign exchange (6,236) 4,263
1,032,906 1,765,780
EXPENSES
Manager's fee 4 415,540 423,733
Trustee's fee 5 19,392 19,774
Auditor's remuneration 9,085 10,460
Tax agent's fee 87,928 2,925
Administrative expenses 42,791 26,309
574,736 483,201
Net income before tax 458,170 1,282,579
Tax income/(expense) 6 11,001 (27,642)Total comprehensive income for the year 469,171 1,254,937
Net income after tax is made up of the following:
Net realised income/(loss) 1,028,527 (843,720)
Net unrealised (loss)/income (559,356) 2,098,657469,171 1,254,937
The accompanying notes form an integral part of the financial statements.
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PHEIM ASIA EX-JAPAN FUND
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
Note 2014 2013
RM RM
ASSETS
Investments 7 18,001,637 24,902,367
Deposits with licensed financial institutions 9 7,103,656 2,941,886
Tax recoverable - 26,987
Other receivables 27,705 69,542
Amount due from Brokers 987,892 190,705
Cash at bank 437,453 19,853TOTAL ASSETS 26,558,343 28,151,340
LIABILITIES
Amount due to Manager 10 37,360 62,194
Amount due to Trustee 1,698 1,723
Other payables and accruals 36,619 16,300
TOTAL LIABILITIES 75,677 80,218
EQUITY
Unitholders' capital 30,086,824 32,144,451
Accumulated losses (3,604,158) (4,073,329)
TOTAL EQUITY 12 26,482,666 28,071,122
TOTAL EQUITY AND LIABILITIES 26,558,343 28,151,340
UNITS IN CIRCULATION 12 (a) 30,737,234 33,120,887
NET ASSET VALUE ("NAV") PER UNIT 13 0.8616 0.8475
The accompanying notes form an integral part of the financial statements.
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PHEIM ASIA EX-JAPAN FUND
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Unitholders' Accumulated Total
capital losses Equity
RM RM RM
At 1 January 2013 35,335,187 (5,328,266) 30,006,921
Total comprehensive income for
the year - 1,254,937 1,254,937
Creation of units 634,438 - 634,438
Cancellation of units (3,847,489) - (3,847,489)
Distribution equalisation 22,315 - 22,315
Balance at 31 December 2013 32,144,451 (4,073,329) 28,071,122
Total comprehensive income for
the year - 469,171 469,171
Creation of units 276,184 - 276,184
Cancellation of units (2,379,832) - (2,379,832)
Distribution equalisation 46,021 - 46,021Balance at 31 December 2014 30,086,824 (3,604,158) 26,482,666
The accompanying notes form an integral part of the financial statements.
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PHEIM ASIA EX-JAPAN FUND
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
2014 2013
RM RM
CASH FLOWS FROM OPERATING AND
INVESTING ACTIVITIES
Proceeds from sale of investments 29,858,502 27,791,432
Purchase of investments (23,477,157) (25,936,796)
Dividends received 718,459 783,368
Interest received 78,484 122,695
Management fee paid (416,085) (500,521)
Trustee's fee paid (19,417) (19,803)
Payment for other fees and expenses (119,485) (37,294)
Tax refunded 37,988 -
Net cash generated from operating and investing activities 6,661,289 2,203,081
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from creation of units 269,515 652,025
Payment for cancellation of units (2,351,434) (3,793,920)
Net cash used in financing activities (2,081,919) (3,141,895)
NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 4,579,370 (938,814)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF THE YEAR 2,961,739 3,900,553
CASH AND CASH EQUIVALENTS AT END OFTHE YEAR 7,541,109 2,961,739
Cash and cash equivalents comprise the following:
Deposits with licensed financial institutions (Note 9) 7,103,656 2,941,887
Cash at bank 437,453 19,8527,541,109 2,961,739
The accompanying notes form an integral part of the financial statements.
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PHEIM ASIA EX-JAPAN FUND
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES
The financial statements are presented in Ringgit Malaysia (RM).
2. BASIS OF PREPARATION
2.1 Statement of Compliance
2.2 Basis of Measurement
The accounting policies applied by the Fund is consistent with those applied in the previous
financial year other than the application of the new and revised MFRSs, Issues Committee ("IC")
Interpretations and amendments to MFRSs and IC Interpretations as disclosed in Note 2.3 below.
The financial statements of the Fund have been prepared on the historical cost convention unless
otherwise indicated in the summary of accounting policies below.
Pheim Asia Ex-Japan Fund ("the Fund") was constituted pursuant to a Deed dated 26 May 2006 as
amended by the Supplemental Deed dated 3 December 2008 between the Manager; Pheim Unit Trusts
Berhad, the Trustee; Maybank Trustees Berhad and the registered unitholders of the Fund.
The principal activity of the Fund is to invest in "Permitted Investments" as defined under Part 7 of the
Deed, which includes investments in equities and fixed income securities traded on the Bursa
Malaysia Securities Berhad ("Bursa Malaysia") or any other markets considered as an Eligible Market.
The Fund commenced operations on 30 June 2006 and will continue its operations until terminated by
Trustee as provided under Part 12 of the Deed.
The Manager, Pheim Unit Trusts Berhad, is a public company incorporated in Malaysia. It is a wholly
owned subsidiary of Pheim Asset Management Sdn Bhd, a private company incorporated in Malaysia.
Its principal activity is the management of unit trust funds. Pheim Asset Management Sdn Bhd has
been appointed by the Manager as the External Investment Manager of the Fund with responsibility
for the provision of investment management services to the Fund.
The principal place of business of the Fund is located at 7th Floor, Menara Hap Seng, Jalan P.
Ramlee, 50250 Kuala Lumpur.
The financial statements were authorised for issue by the Board of Directors of the Manager in
accordance with the resolution of the directors on 23 February 2015.
The financial statements of the Fund have been prepared in accordance with Malaysian Financial
Reporting Standards ("MFRSs"), International Financial Reporting Standards ("IFRSs") and the
Securities Commission's Guidelines on Unit Trust Funds in Malaysia.
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2. BASIS OF PREPARATION (CONT'D.)
2.3
Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities
Amendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge Accounting
(a) Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities
2. BASIS OF PREPARATION (CONT'D.)
2.3
(b)
2.4
Effective for annual periods beginning on or after 1 July 2014
Amendments to MFRS 119, Defined Benefit Plans : Employee Contributions
Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2010 - 2012 Cycle"
Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2011 - 2013 Cycle"
The Amendments clarify the requirements relating to the offset of financial assets and
financial liabilities. Specifically, the Amendments clarify the meaning of 'currently has a
legally enforceable right of set-off' and 'simultaneous realisation and settlement'.
The Amendments have been applied retrospectively and the application has no impact on the
disclosures or the amounts recognised in the Fund's financial statements.
Application of Amendments to MFRSs and new IC Interpretation
During the financial year, the Fund has applied the following amendments to MFRSs issued by
the Malaysian Accounting Standards Board ("MASB") which are effective for accounting period
beginning on or after 1 January 2014 :-
Application of Amendments to MFRSs and new IC Interpretation (Cont'd)
Amendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge
Accounting
The Amendments introduce a narrow-scope exception to the requirement for the
discontinuation of hedge accounting in MFRS 139, Financial Instruments : Recognition and
Measurement. Specifically, the Amendments provide relief from discontinuing hedge
accounting when a novation of a derivative as a hedging instrument meets certain criteria.
The Amendments have been applied retrospectively and the application has no impact on the
disclosures or the amounts recognised in the Fund's financial statements.
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 but are not yet effective :-
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2. BASIS OF PREPARATION (CONT'D.)
2.4
Effective for annual periods beginning on or after 1 January 2016
MFRS 14, Regulatory Deferral Accounts
Amendments to MFRS 10, MFRS 12 and MFRS 128 - Investment Entities: Applying the
Consideration Exception
Amendments to MFRS 10 and MFRS 128 - Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture
Amendments to MFRS 11 - Accounting for Acquisitions of Interests in Joint Operations
Amendments to MFRS 101 - Disclosure Initiative
Amendments to MFRS 116 and MFRS 138 - Clarification of Acceptable Methods of
Depreciation and Amortisation
Amendments to MFRS 116 and MFRS 141 - Agriculture : Bearer Plants
Amendments to MFRS 127 - Equity Method in Separate Financial Statements
Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2012 - 2014 Cycle"
Effective for annual periods beginning on or after 1 January 2017
MFRS 15 - Revenue from Contracts with Customers
Effective for annual periods beginning on or after 1 January 2018
MFRS 9 - Financial Instruments (IFRS 9 issued in July 2014)
The key enhancements of MFRS 9 are :
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)
The Standard replaces earlier versions of MFRS 9 and introduces a package of improvements
which includes a classification and measurement model, a single forward-looking ‘expected loss’
impairment model and a substantially-reformed approach to hedge accounting.
• 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.
The Fund will apply the above new MFRSs and amendments to MFRSs that are applicable once
they become effective. The main features of the new applicable standard is summarised below :-
New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective (Cont'd.)
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2. BASIS OF PREPARATION (CONT'D.)
2.4
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 Financial Assets
(a) Financial assets at fair value through profit or loss ("FVTPL")
The accounting policies set out below have been applied consistently to the periods, presented in these
financial statements and have been applied consistently by the Fund, unless otherwise stated.
Financial assets are recognised in the statement of financial position when, and only when, the
Fund becomes a party to the contractual provisions of the financial instruments. Regular way of
purchase and sale of investments in financial instruments are recognised on trade dates. When
financial assets are recognised initially, they are measured at fair value, plus attributable
transaction cost, for investment not at fair value through profit or loss.
The Fund determines the classification of its financial assets at the initial recognition, and the
categories include financial assets at fair value through profit or loss, available-for-sale financial
assets and loans and receivables.
Financial assets are classified as financial assets at FVTPL if they are held for trading or are
designated as such by the Manager upon initial recognition. Financial assets held for trading
include securities and fixed income securities acquired principally for the purpose of selling
them in near term.
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.
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014) [cont'd.]
• In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss
model, as opposed to an incurred credit loss model under MFRS 139. Under MFRS 9, it is no
longer necessary for a credit event to have occurred before credit losses are recognised. Instead,
an entity always accounts for expected credit losses and changes in those expected credit losses
at each reporting date to reflect changes in credit risk since initial recognition.
• The new general hedge accounting requirements retain the three types of hedge accounting
mechanisms currently available in MFRS 139 i.e. fair value hedges, cash flow hedges and hedges
of a net investment in a foreign operation. MFRS 9 incorporates a new hedge accounting model
that aligns the hedge accounting more closely with an entity's risk management activities. The
new hedge accounting model has also expanded the scope of eligibility of hedge items and
hedging instruments respectively.
New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective (Cont'd)
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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 or loss ("FVTPL") [Cont'd.]
(b) Available-for-sale ("AFS") financial assets
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.
A financial asset is derecognised when the asset is disposed and the contractual right to
receive cash flows from the asset has expired. On derecognition of a financial asset in its
entirety, the difference between the carrying amount and the sum of the consideration
received and any cumulative gain or loss that had been recognised in other comprehensive
income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery
of assets within the period generally established by regulation or convention in the market
place concerned. All regular way purchases and sales of financial assets are recognised or
derecognised on trade date, i.e. the date that the Fund commits to purchase or sell the asset.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.1 Financial Assets (Contd.)
(c) Loans and receivables
3.2 Impairment of Financial Assets
(a) AFS financial assets
(b) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets
has been incurred, the Fund considers factors such as the probability of insolvency or
significant financial difficulties of the debtor and default or significant delay in payments.
If any such evidence exists, the amount of impairment loss is measured as the difference
between the asset's carrying amount and the present value of estimated future cash flows
discounted at the financial asset's original effective interest rate. The impairment loss is
recognised in profit or loss.
Impairment losses on AFS equity investments are not reversed in profit or loss in the
subsequent period. Increase in fair value, if any, subsequent to impairment loss is recognised
in other comprehensive income. For AFS debt investments, impairment losses are
subsequently reversed in profit or loss, up to the amount previously recognised as impairment
loss, if an increase in the fair value of the investment can be objectively related to an event
occurring after the recognition of the impairment loss in profit or loss.
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.
The Fund assesses at each reporting date whether there is any objective evidence that a financial
asset is impaired.
Financial assets with fixed or determinable payments that are not quoted in an active market
are classified as loans and receivables. The Fund includes short term receivables such as
balances due from broker, Manager and other receivables in the classification. Loans and
receivables are recognised initially at fair value including transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using
effective interest method. Gains and losses are recognised in profit or loss when the loans
and receivables are derecognised or impaired, and through the amortisation process.
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.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.2 Impairment of Financial Assets (Cont'd.)
(b) Trade and other receivables and other financial assets carried at amortised cost (cont'd)
3.3 Classification of Realised and Unrealised Gain and Losses
3.4 Financial Liabilities
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 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.
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the amount is reduced through
the use of an allowance account. When a trade receivable becomes uncollectible, it is written
off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed to the extent that the carrying amount of
the asset does not exceed its amortised cost at the reversal date. The amount of reversal is
recognised in profit or loss.
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).
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.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.5 Foreign Currencies
3.6 Unitholders' Capital
3.7 Income Distribution
3.8 Cash and Cash Equivalents
3.9 Income Recognition
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.
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.
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.
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 which
have insignificant risk of changes in value.
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.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.9 Income Recognition (Cont'd.)
3.10 Income Tax
No deferred tax is recognised as there are no material temporary differences.
3.11 Segment Reporting
3.12 Significant Accounting Estimates and Judgements
4. MANAGER'S FEE
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
income securities, is recognised using effective interest method.
Current tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted by the reporting date.
For management purposes, the Fund is managed by 2 main portfolios, namely (1) equity
securities and (2) fixed income instruments. Each segment engages in separate business activities
and the operating results are regularly reviewed by the Manager, External Investment Manager
and the Fund's Investment Committee. The External Investment Manager and the Fund
Investment Committee jointly assumes the role of chief operation decision maker, for
performance assessment purposes and to make decision about resources allocated to each
investment segment.
The preparation of financial statements in accordance with MFRS and IFRS requires the use of
certain accounting estimates and exercise of judgements. Estimates and judgements are
continually evaluated and are based on past experience, reasonable expectations of future events
and other factors.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items
recognised outside profit or loss, either in other comprehensive income or directly in equity.
policies. There are no key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have significant risk of causing material adjustment to the
carrying amounts of assets and liabilities within next year.
The Manager is entitled to an annual management fee of 1.5% per annum of the NAV of the Fund
(before deducting the Manager's and Trustee's fees for the day) calculated and accrued on a daily
basis.
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5. TRUSTEE'S FEE
6. TAXATION
2014 2013
RM RM
Current year Malaysian tax based on result for the year (11,001) 27,642
2014 2013
RM RM
Net income before tax 458,170 1,282,579
Taxation at Malaysian statutory rate of 25% (2013: 25%) 114,543 320,645
Tax effects of :
Income not subject to tax (258,227) (413,803)
Expenses not deductible for tax purposes 36,427 10,791
Restriction on tax deductible expenses
for unit trust funds 107,257 110,009
Overprovision of prior year's taxation (11,001) -Tax (income)/expense for the financial year (11,001) 27,642
7. INVESTMENTS
2014 2013
RM RM
Financial assets at fair value through
profit or loss (Note 8)
Quoted equities
- in Malaysia 5,337,000 5,913,750
- outside Malaysia 12,664,637 18,988,61718,001,637 24,902,367
The Trustee is entitled to a fee of 0.07% per annum of the NAV of the Fund (before deducting the
Manager's and Trustee's fees for the day) calculated and accrued on a daily basis, subject to a
minimum of RM18,000 per annum.
Income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimated
assessable income for the financial year.
The tax charge for the financial year is in relation to the taxable income earned by the Fund after
deducting tax allowable expenses. In accordance with Schedule 6 of the Income Tax Act 1967,
interest income earned by the Fund is exempted from tax.
A reconciliation of income tax expense applicable to net income before tax at the statutory income tax
rate to tax (income)/ expense at the effective income tax rate of the Fund is as follows:
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8. FINANCIAL ASSETS AT FVTPL
2014 2013
RM RM
Financial assets at FVTPL:Quoted equities 18,001,637 24,902,367
Net gain on financial assets at FVTPL comprised:Realised (loss)/gain on disposals 837,156 (1,286,074)
Unrealised (loss)/gain on changes in fair values (559,356) 2,098,656277,800 812,582
The currency exposure profile of financial assets at
FVTPL is as follows :
- Ringgit Malaysia 5,337,000 5,913,750
- Hong Kong Dollar 5,178,851 10,159,036
- Indonesian Rupiah 2,415,810 720,452
- South Korean Won 1,099,977 2,791,747
- Thai Baht 737,975 1,889,998
- Philippine Peso 475,620 567,229
- Singapore Dollar 2,422,239 1,846,114
- New Taiwan Dollar 334,165 1,014,04018,001,637 24,902,366
Financial assets at FVTPL as at 31 December 2014 are as detailed below :
QUOTED EQUITIES
- IN MALAYSIA
Name of Counter Quantity Cost Fair value % ofRM RM NAV
Main Market
Construction
Ho Hup Construction Co. Bhd 200,000 246,827 250,000 0.94
Consumer
Padini Holdings Berhad 145,000 290,580 211,700 0.80
Yee Lee Corporation Berhad 98,500 134,756 137,900 0.52
243,500 425,336 349,600 1.32
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8. FINANCIAL ASSETS AT FVTPL (CONTD.)
QUOTED EQUITIES
- IN MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Industrial Product
Can-One Berhad 175,000 592,785 372,750 1.41
Kian Joo Can Factory Berhad 263,000 845,796 767,960 2.90
Malaysia Steel Works KL Bhd 130,000 132,972 112,450 0.42
Supermax Corp Bhd 134,000 287,033 225,120 0.85
Ta Ann Holdings Bhd 131,000 568,631 495,180 1.87
833,000 2,427,217 1,973,460 7.45
Plantation
Sarawak Oil Palms Berhad 138,000 813,903 710,700 2.68
Properties
Land & General Bhd 218,000 140,169 110,090 0.42
Matrix Concepts Holdings Bhd 203,000 303,943 548,100 2.07
Metro Kajang Holdings Berhad 131,000 501,907 340,600 1.29
552,000 946,019 998,790 3.78
Technology
Malaysian Pacific Industries 62,000 230,790 280,860 1.06
Vitrox Corp Bhd 40,000 59,305 90,400 0.33
102,000 290,095 371,260 1.39
Trading/Services
Berjaya Corp Bhd 843,000 425,268 345,630 1.31
Berjaya Auto Bhd 34,000 109,486 111,860 0.42
Fitters Diversified Bhd 370,000 277,221 225,700 0.85
1,247,000 811,975 683,190 2.58
TOTAL QUOTED EQUITIES
- IN MALAYSIA 3,315,500 5,961,372 5,337,000 20.14
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8. FINANCIAL ASSETS AT FVTPL (CONTD.)
QUOTED EQUITIES
- OUTSIDE MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Hong Kong Stock Exchange
("HKSE")
Agricultural Bank of China 422,000 651,241 745,566 2.82
China Fiber Optic Network SY 470,000 419,233 442,722 1.67
China Gas Holdings Ltd 68,000 406,411 374,514 1.41
China Huishan Diary Holdings
Co.Ltd 627,000 677,019 378,669 1.43
China Meidong Auto Holdings 466,000 349,844 336,042 1.27
Consun Pharmaceutical Group 100,000 270,351 263,659 1.00
Dongfeng Motor Group Co. Ltd 58,000 294,701 287,024 1.08
Goldpac Group Ltd 133,000 432,501 321,295 1.21
Ind & Comm Bank of China 187,000 428,583 477,030 1.80
Jintian Pharmaceutical Group 152,000 211,917 180,857 0.68
Real Gold Mining Ltd * 191,000 904,283 130,443 0.49
SPT Energy Group Inc 210,000 208,114 134,399 0.51
82,000 286,987 266,463 1.01
Termbray Petro King Oilfield 340,000 562,682 165,497 0.62
Tianneng Power International Ltd 280,000 454,757 259,964 0.98
Trigiant Group Ltd 286,000 280,850 163,703 0.62
Tongda Group Holdings Ltd 612,000 282,559 251,004 0.95
4,684,000 7,122,033 5,178,851 19.55
Jakarta Stock Exchange
("JSX")
Alam Sutera Realty TBK PT 4,290,000 597,781 677,477 2.56
Indomobil Sukses Internasional 256,000 442,847 288,768 1.09
Lippo Karawaci TBK PT 465,000 146,037 133,097 0.50
Metropolitan Land TBK PT 2,000,000 232,084 245,340 0.93Modernland Realty TBK PT 4,770,000 617,717 692,747 2.62Total Bangun Persada 790,000 161,683 248,400 0.94Tunas Baru Lampung TBK PT 610,500 101,505 129,981 0.49
13,181,500 2,299,654 2,415,810 9.13
Philippines Stock Exchange
("PSE")
8990 Holdings Inc 550,000 308,683 303,143 1.14EEI Corporation 202,400 155,111 172,477 0.65
752,400 463,794 475,620 1.79
TCL Communication Tech Holdings
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8. FINANCIAL ASSETS AT FVTPL (CONTD.)
QUOTED EQUITIES
- OUTSIDE MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Korea Stock Exchange
(''KE'')
Hana Financial Group 2,000 235,303 204,806 0.77Kia Motors Corporation 2,045 424,969 341,607 1.29KT&G Corp 1,000 302,473 243,208 0.92LG Electronics Inc 1,641 482,761 310,356 1.17
6,686 1,445,506 1,099,977 4.15
Stock Exchange of Thailand
("SET")
Malee Sampran Public Co-NVDR 116,000 420,897 338,555 1.2839,000 421,404 399,420 1.51
155,000 842,301 737,975 2.79
Singapore Exchange
("SGX")
Centurion Corp Ltd 120,000 178,818 158,741 0.60
China Environment Ltd 568,000 332,944 202,871 0.77
Ezion Holdings Ltd 36,000 164,598 106,674 0.40
Indofood Agri Resources Ltd 356,000 1,396,542 678,141 2.56
Midas Holdings Ltd 564,000 709,254 373,041 1.41
SBI Offshore Limited 885,000 285,413 667,306 2.52
Sino Grandness Food Industry 200,000 242,716 235,465 0.89
2,729,000 3,310,285 2,422,239 9.15
Taiwan Stock Exchange
("TWSE")
Ginko International Co Ltd 9,000 387,204 334,165 1.26
TOTAL QUOTEDEQUITIES
- OUTSIDE MALAYSIA 21,517,586 15,870,777 12,664,637 47.82
TOTAL FINANCIAL ASSETSAT FVTPL 21,832,149 18,001,637 67.96
EXCESS OF COST OVERFAIR VALUE (3,830,512)
* This security has been suspended since 27 May 2011 and its fair value has been determined by the
Manager with the consent of the Trustee.
Total Access Communication-NVDR
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9. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS
2014 2013
RM RM
Licensed investment banks 7,103,656 2,941,886
2014 2013 2014 2013
% % Days Days
Licensed investment banks 3.03 2.91 8 2
10. AMOUNT DUE TO MANAGER
2014 2013
RM RM
Amount arising from release of units 983 25,274
Management fee 36,377 36,92137,360 62,195
11. INCOME DISTRIBUTION
There is no distribution to unitholders for the financial year ended 31 December 2014.
12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY)
Note 2014 2013
RM RM
Unitholders' capital (a) 30,086,824 32,144,451
Accumulated losses
- Realised earnings (b) 1,855,385 826,859
- Unrealised losses (c) (5,459,544) (4,900,188)
(3,604,159) (4,073,329)Total equity/ Net asset value 26,482,666 28,071,122
The weighted average effective interest rate ("WAEIR") per annum and the average remaining
maturities of deposits and placement are as follows:
Average
remaining
maturitiesWAEIR
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12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY) (CONTD.)
(a) Unitholders' Capital
Number Number
of units RM of units RM
Balance at beginning
of the year 33,120,887 32,144,451 37,047,399 35,335,187
Add: Creation of units 301,911 276,184 753,634 634,438
Less: Cancellation of units (2,685,564) (2,379,832) (4,680,146) (3,847,489)
Distribution equalisation - 46,021 - 22,315
Balance at endof the year 30,737,234 30,086,824 33,120,887 32,144,451
(b) Realised - Distributable
2014 2013
RM RM
Balance at the beginning of the year 826,859 1,670,579
Net income after taxation 469,171 1,254,937
Net unrealised loss/(gain) attributable to
investments held transferred to
unrealised reserve 559,356 (2,098,657)Balance at the end of the year 1,855,386 826,859
(c) Unrealised - Non-distributable
2014 2013
RM RM
Balance at the beginning of the year (4,900,188) (6,998,845)
Net unrealised (loss)/gain attributable to investment
held transferred from realised reserve (559,356) 2,098,657Balance at the end of the year (5,459,544) (4,900,188)
2014
The Fund has an approved fund size of 200 million units. As at 31 December 2014, the number of
units not in issue is 169,262,766 (2013: 166,879,113) units.
2013
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13. NET ASSET VALUE PER UNIT
Net asset value attributable to unitholders is classified as equity in the statement of financial position.
RM RM/Unit RM RM/Unit
Net asset value attributable
to unitholders for
issuing/redeeming units 26,596,559 0.8653 28,160,636 0.8502
Effect from adopting bid
prices as fair value (113,893) (0.0037) (89,514) (0.0027)
Net asset value attributable
to unitholders perfinancial statements 26,482,666 0.8616 28,071,122 0.8475
14. UNITS HELD BY RELATED PARTIES
2014 2013
Number of Valued at Number of Valued at
units NAV units NAV
RM RM
Directors of the Manager 60,868 52,442 153,568 130,154
2014 2013
Quoted financial assets in the financial statements have been valued at the bid prices at the close of
business in accordance with the provisions of MFRS 139. For the purpose of calculation of net asset
value attributable to unitholders per unit for the issuance and redemption of units in accordance with
the Deed, quoted financial assets are stated at the last done market price.
A reconciliation of net asset value attributable to unitholders for issuing/redeeming units to the net
asset 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.
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15. TRANSACTIONS WITH BROKERS
% of Total
Value of % of Total Brokerage Brokerage
Trade Trade Fees Fees
RM % RM %
MIDF Amanah Investment
Bank Bhd 19,700,329 25.74 -
DBS Vickers Securites Pte Ltd -
- Hong Kong 7,009,884 9.16 17,529 11.27
CIMB-GK Securities Pte Ltd
-Hong Kong 5,956,649 7.78 14,914 9.59
Oriental Patron Securities Ltd
-Hong Kong 4,581,854 5.99 13,200 8.48
Hwang-DBS Investment Bank Bhd 3,271,142 4.27 1,295 0.83
PT Danareksa-Indonesia 2,737,494 3.58 14,359 9.23
Maybank Investment Bank Bhd 2,291,867 2.99 7,075 4.55
DBS Vickers Securites Pte Ltd
- Korea 2,166,906 2.83 5,430 3.49
CIMB-GK Securities- Indonesia 2,141,013 2.80 6,419 4.13
PT Mandiri Sekuritas 1,902,217 2.48 7,329 4.71
Other brokers 24,780,960 32.38 68,023 43.7276,540,315 100.00 155,573 100.00
16. MANAGEMENT EXPENSE RATIO
2014 2013
Management expense ratio 2.07% 1.71%
17. PORTFOLIO TURNOVER RATIO
2014 2013
Portfolio turnover (times) 0.96 0.95
This is the ratio of the average of acquisitions and disposals of the Fund for the year to the average
NAV of the Fund for the year calculated on a daily basis.
This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other
professional fees) and other administrative expenses of the Fund to the average NAV of the Fund
calculated on a daily basis. The average NAV of the Fund for the year ended 31 December 2014 was
RM27,701,762 (2013: RM28,220,093).
Details of transactions with stockbroking companies and other investment banks for the financial yearended 31 December 2014 are as follows:
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18. SEGMENT INFORMATION
2014 2013
Fixed Fixed
Equity income Equity income
Portfolio Portfolio Total Portfolio Portfolio TotalRM RM RM RM RM RM
Gross dividend income 682,035 - 682,035 827,364 - 827,364
Interest income - 79,307 79,307 - 121,571 121,571
Net gain on financial
assets at FVTPL 277,800 - 277,800 812,582 - 812,582
Net realised gain/(loss) on
foreign exchange (6,236) - (6,236) 4,263 - 4,263
Total segment operatingincome for the year 953,599 79,307 1,032,906 1,644,209 121,571 1,765,780
Deposits with financial - 7,103,656 7,103,656 - 2,941,886 2,941,886
institutions
Financial assets at FVTPL 18,001,637 - 18,001,637 24,902,367 - 24,902,367Other assets 1,014,539 1,058 1,015,597 260,013 234 260,247
Total segment assets 19,016,176 7,104,714 26,120,890 25,162,380 2,942,120 28,104,500
The Manager, the appointed External Investment Manager and Investment Committee of the Fund areresponsible for allocating resources available to the Fund in accordance with the overall investmentstrategies as set out in the investment Guidelines of the Fund. The Fund is managed by two segments:
A portfolio of equity instruments A portfolio of fixed income portfolio, including debt securities and deposits with financialinstitutions.
The investment objective of each segment is to achieve consistent returns from the investments ineach segment while safeguarding capital by investing in diversified portfolios. There have been nochanges in reportable segments in the current financial year. The segment information provided ispresented to the Manager, the appointed External Investment Manager and Investment Committee ofthe Fund.
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18. SEGMENT INFORMATION (CONTD.)
2014 2013
RM RM
Net reportable segment operating income 1,032,906 1,765,780
Expenses (574,736) (483,201)
Net income before tax 458,170 1,282,579
Tax expenses 11,001 (27,642)Net income for the year 469,171 1,254,937
2014 2013
RM RM
Total segment assets 26,120,890 28,104,500
Tax recoverable - 26,987
Cash at bank 437,453 19,853Total assets of the Fund 26,558,343 28,151,340
Total segment liabilities - -
Other payables and accruals 36,619 16,300
Amount due to Manager 37,360 62,194
Amount due to Trustee 1,698 1,723Total liabilities of the Fund 75,677 80,218
19. FINANCIAL INSTRUMENTS
(a) Classification of financial instruments
Expenses of the Fund are not considered part of the performance of any operating segment. The
following table provides a reconciliation between reportable segment income/(loss) and operating
profit/(loss).
In addition, certain assets and liabilities are not considered to be part of the assets and liabilities of an
individual segment. The following table provides reconciliation between total reportable segment
assets and liabilities and total assets and liabilities of the Fund.
The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either
fair value or at amortised cost based on their respective classification. The significant accounting
policies in Note 2 describe how the classes of financial instruments are measured, and how
income and expenses, including fair value gains and losses are recognized. The following table
analyses the financial assets and liabilities of the Fund in the statement of financial position by
the class of financial instrument to which they are assigned, and therefore by the measurement
basis.
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19. FINANCIAL INSTRUMENTS (CONTD.)
(a) Classification of financial instruments (Contd.)
Financial
liabilities
Financial AFS at
assets at financial Loans and amortised
FVTPL assets receivables cost Total
RM RM RM RM RM
2014
Assets
Quoted equities 18,001,637 - - - 18,001,637
Deposits with licensed
financial institutions - - 7,103,656 - 7,103,656
Amount due from Brokers - - 987,892 - 987,892
Other receivables - - 27,705 - 27,705
Cash at bank - - 437,453 - 437,453Total financial assets 18,001,637 - 8,556,706 - 26,558,343
Total non-financial assets -26,558,343
Liabilities
Amount due to Manager - - - 37,360 37,360Amount due to Trustee - - - 1,698 1,698
Other payables - - - 36,619 36,619Total financial liabilities - - - 75,677 75,677
2013
Assets
Quoted equities 24,902,367 - - - 24,902,367
Deposits with licensed
financial institutions - - 2,941,886 - 2,941,886
- - 190,705 - 190,705
Other receivables - - 69,542 - 69,542
Cash at bank - - 19,853 - 19,853
Total financial assets 24,902,367 - 3,221,986 - 28,124,353
Total non-financial assets 26,98728,151,340
Liabilities
Amount due to Manager - - - 62,195 62,195Amount due to Trustee - - - 1,723 1,723
Other payables - - - 16,300 16,300Total financial liabilities - - - 80,218 80,218
Amount due from Brokers
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19. FINANCIAL INSTRUMENTS (CONTD.)
(b) Fair Value
(i) Financial instruments that are carried at fair value
Quoted equity
Level 1 Level 2 Level 3 Total
RM RM RM RM
2014
Financial assets
at FVTPL-Quoted securities 17,871,194 - 130,443 18,001,637
2013
Financial assets
at FVTPL-Quoted securities 24,780,164 - 122,203 24,902,367
The Fund uses the following level of fair value hierarchy for determining and disclosing the
fair value of financial instruments carried at fair value in the statement of financial position:
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’s financial assets at FVTPL and AFS financial assets are carried at fair value. The
fair values of these financial assets were determined using prices in active markets for
identical assets.
Fair value of quoted equity instruments is determined directly by reference to their published
market bid prices on the relevant stock exchanges at the reporting date. The fair value of
quoted equity instruments which have lost active trading market due to suspension in their
trading, is determined by reference to their published net tangible assets.
The Fund held the following financial instruments carried at fair value on the statement of
financial position as at the end of financial year:
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19. FINANCIAL INSTRUMENTS (CONTD.)
(b) Fair Value (Contd.)
(i) Financial instruments that are carried at fair value (Contd.)
2014 2013
RM RM
Financial assets at FVTPL
Balance at 1 January 122,203 114,168
Total gain recognised in profit or loss :
- Net gain on financial assets at FVTPL 8,240 8,035
Balance at 31 December 130,443 122,203
(ii) Financial instruments not carried at fair value
20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES
(i) Market Risk
The Fund's principal exposure to market risk arises primarly due to changes or developments in
the market environment and typically includes changes in regulations, politics and the economy
of the country. Market risk is also influenced by global economics and geopolitical
developments. The Fund seeks to diversify away some of this risk by investing into different
sectors to mitigate risk exposure to any single asset class.
The following table shows a reconciliation from the beginning balance to the ending balance
for the fair value measurement under Level 3 of the fair value hierarchy :
Financial instruments not carried at fair value comprise financial assets and financial
liabilities classified as loans and receivables and financial liabilities at amortised cost
respectively.The carrying amount of these financial instruments at the end of the financial
year approximated their fair values due to their short term to maturity.
The Fund maintains investment portfolios in a variety of quoted and unquoted financial instruments as
dictated by its Trust Deed and investment management strategy.
The Fund is exposed to a variety of risks including market risk (which includes interest rate risk,
equity price risk and currency risk), credit risk, and liquidity risk Whilst these are the most important
types of financial risks inherent in each type of financial instruments, the Manager and the Trustee
would like to highlight that this list does not purport to constitute an exhaustive list of all the risks
inherent in an investment in the Fund.
The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk is
inherent in the Fund’s activities, but it is managed through a process of ongoing identification,
measurement and monitoring of risks. Financial risk management is also carried out through sound
internal control systems and adherence to the investment restrictions as stipulated in the Trust Deed,
the Securities Commission’s Guidelines on Unit Trust Funds and the Capital Market and Services Act,
2007.
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(i) Market Risk (Contd.)
(a) Equity Price Risk
Effect on profit
or loss and equity
Change in equity price (%) Increase/(Decrease)
RM
2014
+6/-6 1,080,099 /(1,080,099)
2013
+6/-6 1,494,142 /(1,494,142)
(b) Interest Rate Risk
Effect on profit
or loss and equity
Change in basis points * Increase/(Decrease)
RM
2014+25/-25 4,521/(4,521)
2013+25/-25 7,008/(7,008)
*
The Fund's market risk arises primarily due to changes in market prices, interest rates and foreign
currency exchange rates.
Equity price risk is the adverse changes in the fair value of equities as a result of changes in
the levels of equity indices and the value of individual shares. The equity price risk exposure
arises from the Fund’s investments in quoted equity securities.
The table below summarises the effect of sensitivity from the Fund's underlying investments
in quoted equities on the profit or loss and equity of the Fund due to possible changes in
equity prices, with all other variables held constant:
This risk refers to the effect of interest rate changes on the market value of fixed income
securities and deposits with financial institutions. In the event of rising interest rates, the
return on deposits with financial institutions will rise while prices of fixed income securities
will decrease and vice versa, thus affecting the net asset value of the Fund. This risk will be
minimized via the management of the duration structure of the portfolio of fixed income
securities and deposits with financial institutions.
The following table demonstates the sensitivity of the profit and loss and equity of the Fund
to a reasonably possible change in interest rates, with all other variables held constant:
The assumed movement in basis points for interest rate sensitivity analysis is based onthe currently observable market environment.
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(i) Market Risk (Contd.)
(c) Currency Risk
2014 2013
RM RM
Hong Kong Dollar 517,885 1,015,904
Indonesian Rupiah 241,581 72,045
South Korean Won 109,998 279,175
Thai Baht 73,798 189,000
Philippine Peso 47,562 56,723
Singapore Dollar 242,224 184,611
New Taiwan Dollar 33,417 101,404
1,266,465 1,898,862
(ii) Credit Risk
Effect on profit
or loss and equity
The Fund’s principal exposure to credit risk arises primarily due to changes in the financial
conditions of companies issuing debt securities and stockbroking companies, which may affect
their creditworthiness. This in turn may lead to default in the payment. Such events can lead to
loss of capital or delayed or reduced income for the Fund resulting in a reduction in the Fund’s
asset value and thus unit price. This risk is mitigated by vigorous credit analysis and
diversification of the bond portfolio of the Fund and to engage different stockbroking companies
with good reputation.
The Fund is exposed to currency risk primarily through its investment in overseas quoted
equities that are denominated in foreign currencies. The Fund's foreign currency exposure
profile of its investment in quoted equities has been disclosed under Note 7. The currency
risk is minimised by proper portfolio allocation and to avoid concentration in a single
country.
A 10% strenghtening or weakening of the RM against the following foreign currencies as at
the end of the financial year would have decreased or increased respectively the profit or loss
and equity of the Fund by the amount shown below. This analysis assumes all other variables
are held constant.
the currently observable market environment.
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(iii) Liquidity Risk
1 month 3 months
- 3 months - 5 years Total
2014 RM RM RM
Financial Assets
Financial assets at FVTPL 18,001,637 - 18,001,637
Deposits with financial institutions 7,103,656 - 7,103,656
Other assets 1,453,050 - 1,453,050
Total undiscounted
financial assets 26,558,343 - 26,558,343
Non-Financial Assets - - -
Total Assets 26,558,343 - 26,558,343
Financial Liabilitites
Other liablities 75,677 - 75,677
Total undiscounted
financial liabilities 75,677 - 75,677
Unitholders' NAV 26,482,666 - 26,482,666
Liquidity gap - - -
This risk occurs in thinly traded or illiquid equity securities. Should the Fund needs to sell a
relatively large amount of such securities, the act itself may significantly depress the selling
price. As the Fund is exposed to daily redemption of units, the risk is minimized by placing a
prudent level of funds in short-term deposits and by investing in stocks whose liquidity is
adjudged to be commensurate with the expected exposure level of the Fund.
The following table summarises the maturity profile of the Fund’s financial liabilities and the
corresponding assets available to meet commitments associated with those financial liabilities
and redemption by unitholders.
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PAXJ
20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(iii) Liquidity Risk (Contd.)
1 month 3 months
2013 - 3 months - 5 years Total
RM RM RM
Financial Assets
Financial assets at FVTPL 24,902,367 - 24,902,367
Deposits with financial institutions 2,941,886 - 2,941,886
Other assets 280,100 - 280,100
Total undiscounted
financial assets 28,124,353 - 28,124,353
Non-Financial Assets
Tax recoverable - 26,987 26,987
Total Assets 28,124,353 26,987 28,151,340
Financial Liabilitites
Other liablities 80,218 - 80,218
Total undiscounted
financial liabilities 80,218 - 80,218
Unitholders' NAV 28,071,122 - 28,071,122
Liquidity gap (26,987) 26,987 -
(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
includes changes to the business performance of the company, consumer tastes and demand,
lawsuits and management practices. This risk is minimised through the well diversified nature of
the Fund.
The Fund’s exposure to securities issued by any issuer is limited to not more than a certain
percentage of its net asset value. Under such restriction, the risk exposure to the securities of any
issuer is minimised.
The capital is represented by unitholders’ subscription to the Fund. The amount of capital can
change significantly on a daily basis as the Fund is subject to daily redemption and subscription
at the discretion of unitholders. The Manager manages the Fund’s capital with the objective of
maximising unitholders' value while maintaining sufficient liquidity to meet unitholders'
redemption as explained in Note 20 (iii) above.
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PHEIM Annual Report 31.12.2014
PAXJI
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186Your Need
is our Focus
23 February 2015
PHEIM Annual Report 31.12.2014
PAXJI
www.pheimunittrusts.comsupport@pheimunittrusts.com
187Your Need
is our Focus
23 February 2015
PHEIM Annual Report 31.12.2014
PAXJI
www.pheimunittrusts.comsupport@pheimunittrusts.com
188Your Need
is our Focus
STATEMENT BY MANAGER TO THE UNITHOLDERS OFPHEIM ASIA EX-JAPAN ISLAMIC FUND
We, Azmi Malek Merican and Hoi Weng Kong, being two of the directors of PheimUnit Trusts Berhad, do hereby state that, in the opinion of the Manager, theaccompanying financial statements of Pheim Asia Ex-Japan Islamic Fund are drawn upin accordance with the Deed, Malaysian Financial Reporting Standards, InternationalFinancial Reporting Standards and Securities Commission's Guidelines on Unit TrustFunds in Malaysia so as to give a true and fair view of the financial position of PheimAsia Ex-Japan Islamic Fund as at 31 December 2014 and of its financial performanceand cash flows for the financial year then ended.
For and on behalf of the Manager,PHEIM UNIT TRUSTS BERHAD
AZMI MALEK MERICANDirector
HOI WENG KONGDirector
Kuala Lumpur, Malaysia23 FEB 2015
PAXJI
INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF
PHEIM ASIA EX-JAPAN ISLAMIC FUND
Report on the financial statements
We have audited the financial statements of Pheim Asia Ex-Japan Islamic Fund ("the Fund"), which
comprise statement of financial position as at 31 December 2014, and statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory information, as set out on pages
191 to 204.
Manager’s and Trustee’s responsibility for the financial statements
The Manager of the Fund, Pheim Unit Trusts Berhad, is responsible for the preparation of financial
statements so as to give a true and fair view in accordance with Malaysian Financial Reporting
Standards, International Financial Reporting Standards and the requirements of the Securities
Commission's Guidelines on Unit Trust Funds in Malaysia. The Manager is also responsible for
such internal control as the Manager determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error. The Trustee is
responsible for ensuring that the Manager maintains proper accounting and other records as are
necessary to enable fair presentation of these financial statements.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with approved standards on auditing in Malaysia. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on our judgment, including
the assessment of risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, we consider internal control relevant to the entity’s
preparation of financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness
of the accounting policies used and the reasonableness of accounting estimates made by the
Manager, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
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PAXJI
INDEPENDENT AUDITORS' REPORT TO THE UNITHOLDERS OF
PHEIM ASIA EX-JAPAN ISLAMIC FUND (CONTD.)
Opinion
Other Matters
FOLKS DFK & CO. KHOO PEK LING
AF: 0502 No. 900/03/16(J/PH)
CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT
Kuala Lumpur
This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We
do not assume responsibility to any other person for the content of this report.
Date: 23 February 2015
In our opinion, the financial statements give a true and fair view of the financial position of the
Fund as at 31 December 2014 and of its financial performance and cash flows for the year then
ended in accordance with Malaysian Financial Reporting Standards, International Financial
Reporting Standards and the requirements of the Securities Commission's Guidelines on Unit Trust
Funds in Malaysia.
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PHEIM ASIA EX-JAPAN ISLAMIC FUND
STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Note 2014 2013
RM RM
INVESTMENT INCOME
Gross dividend income 157,507 243,652
Profit from Shariah-based deposits with licensed financial
institutions 57,326 49,171
Net gain on financial assets at fair value through
profit or loss ("FVTPL") 8 304,652 1,116,726
Net realised (loss)/gain on foreign exchange (1,179) 385
518,306 1,409,934
EXPENSES
Manager's fee 4 149,562 133,759
Trustee's fee 5 18,000 18,000
Auditor's remuneration 9,110 10,475
Tax agent's fee 2,928 2,925
Administrative expenses 41,291 36,665
220,891 201,824
Net income before tax 297,415 1,208,110
Tax income/(expense) 6 14,728 (8,060)Net income for the year 312,143 1,200,050
Total comprehensive income for the year 312,143 1,200,050
Net income after tax is made up of the following:
Net realised income 399,509 1,159,402
Net unrealised (loss)/income (87,366) 40,648312,143 1,200,050
The accompanying notes form an integral part of the financial statements.
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PAXJI
PHEIM ASIA EX-JAPAN ISLAMIC FUND
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
Note 2014 2013
RM RM
ASSETS
Quoted Shariah-compliant investments 7 6,032,557 6,381,426
Shariah-based deposits with licensed financial
institutions 9 3,601,223 1,645,327
Tax recoverable - 2,356
Other receivables 12,346 32,095
Amount due from Broker - 67,824
Cash at bank 38,527 78,209TOTAL ASSETS 9,684,653 8,207,237
LIABILITIES
Other payables and accruals 21,569 21,569
Amount due to Manager 10 12,104 8,493
Amount due to Trustee 1,627 1,578
TOTAL LIABILITIES 35,300 31,640
EQUITY
Unitholders' capital 12,254,512 11,092,899
Accumulated losses (2,605,159) (2,917,302)
TOTAL EQUITY 12 9,649,353 8,175,597
TOTAL EQUITY AND LIABILITIES 9,684,653 8,207,237
UNITS IN CIRCULATION 12(a) 9,786,315 8,595,137
NET ASSET VALUE ("NAV") PER UNIT 13 0.9860 0.9512
The accompanying notes form an integral part of the financial statements.
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PAXJI
PHEIM ASIA EX-JAPAN ISLAMIC FUND
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Unitholders' Accumulated Total
capital losses Equity
RM RM RM
At 1 January 2013 14,110,426 (4,117,352) 9,993,074
Total comprehensive income for
the year - 1,200,050 1,200,050
Creation of units 1,299,609 - 1,299,609
Cancellation of units (5,007,121) - (5,007,121)
Distribution equalisation 689,985 - 689,985
Balance at 31 December 2013 11,092,899 (2,917,302) 8,175,597
Total comprehensive income for
the year - 312,143 312,143
Creation of units 4,505,742 - 4,505,742
Cancellation of units (3,174,383) - (3,174,383)
Distribution equalisation (169,746) - (169,746)Balance at 31 December 2014 12,254,512 (2,605,159) 9,649,353
The accompanying notes form an integral part of the financial statements.
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PAXJI
PHEIM ASIA EX-JAPAN ISLAMIC FUND
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
2014 2013RM RM
CASH FLOWS FROM OPERATING AND
INVESTING ACTIVITIES
Proceeds from sale of Shariah-compliant investments 8,352,656 8,272,675
Purchase of Shariah-compliant investments (7,631,312) (4,229,282)
Dividends received 157,507 243,652
Profits received from Shariah-based deposits with licensed
financial institutions 57,022 48,886
Management fee paid (147,416) (158,891)
Trustee's fee paid (17,951) (17,947)
Payment for other fees and expenses (34,454) (57,704)
Tax refunded 17,086 -
Net cash generated from operating and investing activities 753,138 4,101,389
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from creation of units 3,965,459 1,091,891
Payment for cancellation of units (2,802,383) (4,102,316)
Net cash used in financing activities 1,163,076 (3,010,425)
NET INCREASE IN CASH
AND CASH EQUIVALENTS 1,916,214 1,090,964
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE YEAR 1,723,536 632,572
CASH AND CASH EQUIVALENTS AT THE END OFTHE YEAR 3,639,750 1,723,536
Cash and cash equivalents comprise the following:
Shariah-based deposits with licensed financial institutions (Note 9) 3,601,223 1,645,327
Cash at bank 38,527 78,2093,639,750 1,723,536
The accompanying notes form an integral part of the financial statements.
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PAXJI
PHEIM ASIA EX-JAPAN ISLAMIC FUND
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES
2. BASIS OF PREPARATION
2.1 Statement of Compliance
2.2 Basis of Measurement
The financial statements of the Fund have been prepared in accordance with Malaysian Financial
Reporting Standards ("MFRSs"), International Financial Reporting Standards ("IFRSs") and the
Securities Commission's Guidelines on Unit Trust Funds in Malaysia.
Pheim Asia Ex-Japan Islamic Fund ("the Fund") was established pursuant to a Deed dated 12 September
2006 as amended by the Supplemental Deed dated 3 December 2008 between the Manager; Pheim Unit
Trusts Berhad, the Trustee; Maybank Trustees Berhad and the registered unitholders of the Fund.
The principal activity of the Fund is to invest in "Permitted Investments" in compliance with Shariah
requirements as defined under Part 7 of the Deed, which includes quoted Shariah-compliant stocks and
shares of companies quoted on the Bursa Malaysia Securities Berhad ("Bursa Malaysia") or any other
markets considered as an Eligible Market. The activities of the Fund shall be conducted strictly in
compliance with Shariah requirements and as approved by the Shariah Advisory Council of the
Securities Commission of Malaysia and/or the Shariah Adviser of the Fund. The Fund commenced
operations on 1 November 2006 and will continue its operations until terminated by the Trustee as
provided under Part 12 of the Deed.
The Manager, Pheim Unit Trusts Berhad, is a public company incorporated in Malaysia. It is a wholly
owned subsidiary of Pheim Asset Management Sdn Bhd, a private company incorporated in Malaysia.
Its principal activity is the management of unit trust funds. Pheim Asset Management Sdn Bhd has been
appointed by the Manager as the External Investment Manager of the Fund with responsibility for the
provision of investment management services to the Fund.
The principal place of business of the Fund is located at 7th Floor, Menara Hap Seng, Jalan P. Ramlee,
50250 Kuala Lumpur.
The financial statements are presented in Ringgit Malaysia (RM).
The financial statements were authorised for issue by the Board of Directors of the Manager in
accordance with the resolution of the directors on 23 February 2015.
The financial statements of the Fund are prepared under the historical cost convention unless
otherwise indicated in the summary of significant accounting policies.
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PAXJI
2. BASIS OF PREPARATION (CONT'D.)
2.2 Basis of Measurement (Cont'd)
2.3
Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities
Amendments to MFRS 139 - Novation of Derivatives and Continuation of Hedge Accounting
(a) Amendments to MFRS 132 - Offsetting Financial Assets and Financial Liabilities
(b)
The Amendments introduce a narrow-scope exception to the requirement for the
discontinuation of hedge accounting in MFRS 139, Financial Instruments: Recognition and
Measurement. Specifically, the Amendments provide relief from discontinuing hedge
accounting when a novation of a derivative as a hedging instrument meets certain criteria.
The Amendments have been applied retrospectively and the application has no impact on the
disclosures or the amounts recognised in the Fund's financial statements.
The accounting policies applied by the Fund are consistent with those applied in the previous
financial year other than the application of the new and revised MFRSs, Issues Committee ("IC")
Interpretations and amendments to MFRSs and IC Interpretations as disclosed in Note 2.3 below.
Application of Amendments to MFRSs and new IC Interpretation
During the financial year, the Fund has applied the following amendments to MFRSs issued by the
Malaysian Accounting Standards Board ("MASB") which are effective for accounting period
beginning on or after 1 January 2014 :-
Amendments to MFRS 139, Novation of Derivatives and Continuation of Hedge
Accounting
The Amendments clarify the requirements relating to the offset of financial assets and
financial liabilities. Specifically, the Amendments clarify the meaning of 'currently has a
legally enforceable right of set-off' and 'simultaneous realisation and settlement'.
The Amendments have been applied retrospectively and the application has no impact on the
disclosures or the amounts recognised in the Fund's financial statements.
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PAXJI
2.4
Effective for annual periods beginning on or after 1 July 2014
Amendments to MFRS 119, Defined Benefit Plans : Employee Contributions
Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2010 - 2012 Cycle"
Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2011 - 2013 Cycle"
Effective for annual periods beginning on or after 1 January 2016
MFRS 14, Regulatory Deferral Accounts
Amendments to MFRS 10 and MFRS 128 - Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture
Amendments to MFRS 10, MFRS 12 and MFRS 128 - Investment Entities: Applying the Consideration
Exception
Amendments to MFRS 11 - Accounting for Acquisitions of Interests in Joint Operations
Amendments to MFRS 101 - Disclosure Initiative
Amendments to MFRS 116 and MFRS 138 - Clarification of Acceptable Methods of Depreciation
and Amortisation
Amendments to MFRS 116 and MFRS 141 - Agriculture : Bearer Plants
Amendments to MFRS 127 - Equity Method in Separate Financial Statements
Amendments to MFRSs Classified as "Annual Improvements to MFRSs 2012 - 2014 Cycle"
Effective for annual periods beginning on or after 1 January 2017
MFRS 15, Revenue from Contracts with Customers
Effective for annual periods beginning on or after 1 January 2018
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014)
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.
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 but are not yet effective :-
The Fund will apply the above new MFRSs and amendments to MFRSs that are applicable once
they become effective. The main features of the new applicable standards and amendments to
standards are summarised below :-
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.
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2. BASIS OF PREPARATION (CONT'D.)
2.4
MFRS 9, Financial Instruments (IFRS 9 issued in July 2014) (Cont'd.)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 Financial Assets
● Most of the requirements in MFRS 139 for classification and measurement of financial liabilities
were carried forward unchanged to MFRS 9, except for the measurement of financial liabilities
designated as at FVTPL. Under MFRS 139, the entire amount of the change in the fair value of the
financial liability designated as FVTPL is presented in profit or loss. However, MFRS 9 requires
that the amount of change in the fair value of the financial liability that is attributable to changes in
the credit risk of that liability is presented in other comprehensive income, unless the recognition of
the effects of changes in the liability's own credit risk in other comprehensive income would create
or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial
liability's credit risk are not subsequently reclassified to profit or loss.
New MFRSs and Amendments to MFRSs That Are In Issue But Not Yet Effective (Cont'd.)
The initial application of MFRS 9 may have an impact on the financial statements of the Fund.
However, it is not practicable to provide a reasonable estimate of the effect until a detailed review
has been completed. The initial application of other new MFRSs and amendments to MFRSs is not
expected to have any significant impact on the financial statements of the Fund.
The accounting policies set out below have been applied consistently to the periods, presented in these
financial statements and have been applied consistently by the Fund, unless otherwise stated.
Financial assets are recognised 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.
● In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss model,
as opposed to an incurred credit loss model under MFRS 139. Under MFRS 9, it is no longer
necessary for a credit event to have occurred before credit losses are recognised. Instead, an entity
always accounts for expected credit losses and changes in those expected credit losses at each
reporting date to reflect changes in credit risk since initial recognition.
● The new general hedge accounting requirements retain the three types of hedge accounting
mechanisms currently available in MFRS 139 i.e. fair value hedges, cash flow hedges and hedges
of a net investment in a foreign operation. MFRS 9 incorporates a new hedge accounting model
that aligns the hedge accounting more closely with an entity's risk management activities. The new
hedge accounting model has also expanded the scope of eligibility of hedge items and hedging
instruments respectively.
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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 or loss ("FVTPL")
(b) Available-for-sale ("AFS") financial assets
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.
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.
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.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.1 Financial Assets (Contd.)
(b) Available-for-sale ("AFS") financial assets (Cont'd)
(c) Loans and receivables
3.2 Impairment of Financial Assets
(a) AFS financial assets
A financial asset is derecognised when the asset is disposed and the contractual right to
receive cash flows from the asset has expired. On derecognition of a financial asset in its
entirety, the difference between the carrying amount and the sum of the consideration
received and any cumulative gain or loss that had been recognised in other comprehensive
income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery
of assets within the period generally established by regulation or convention in the market
place concerned. All regular way purchases and sales of financial assets are recognised or
derecognised on trade date, i.e. the date that the Fund commits to purchase or sell the asset.
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.
Financial assets with fixed or determinable payments that are not quoted in an active market
are classified as loans and receivables. The Fund includes short term receivables such as
balances due from broker, Manager and other receivables in the classification. Loans and
receivables are recognised initially at fair value including transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using
effective interest method. Gains and losses are recognised in profit or loss when the loans
and receivables are derecognised or impaired, and through the amortisation process.
The Fund assesses at each reporting date whether there is any objective evidence that a financial
asset is impaired.
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.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.2 Impairment of Financial Assets (Contd.)
(a) AFS financial assets (Cont'd)
(b) Trade and other receivables and other financial assets carried at amortised cost
3.3 Classification of Realised and Unrealised Gain and Losses
Impairment losses on AFS equity investments are not reversed in profit or loss in the
subsequent period. Increase in fair value, if any, subsequent to impairment loss is recognised
in other comprehensive income. For AFS debt investments, impairment losses are
subsequently reversed in profit or loss, up to the amount previously recognised as impairment
loss, if an increase in the fair value of the investment can be objectively related to an event
occurring after the recognition of the impairment loss in profit or loss.
To determine whether there is objective evidence that an impairment loss on financial assets
has been incurred, the Fund considers factors such as the probability of insolvency or
significant financial difficulties of the debtor and default or significant delay in payments.
If any such evidence exists, the amount of impairment loss is measured as the difference
between the asset's carrying amount and the present value of estimated future cash flows
discounted at the financial asset's original effective interest rate. The impairment loss is
recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the amount is reduced through
the use of an allowance account. When a trade receivable becomes uncollectible, it is written
off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed to the extent that the carrying amount of
the asset does not exceed its amortised cost at the reversal date. The amount of reversal is
recognised in profit or loss.
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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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.4 Financial Liabilities
3.5 Foreign Currencies
3.6 Unitholders' Capital
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.
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 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.
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.
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.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.7 Income Distribution
3.8 Cash and Cash Equivalents
3.9 Income Recognition
3.10 Income Tax
3.11 Segment Reporting
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 which
have insignificant risk of changes in value.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items
recognised outside profit or loss, either in other comprehensive income or directly in equity.
No deferred tax is recognised as there are no material temporary differences.
For management purposes, the Fund is managed by 2 main portfolios, namely (1) equity securities
and (2) fixed income instruments. Each segment engages in separate business activities and the
operating results are regularly reviewed by the Manager, External Investment Manager and the
Fund's Investment Committee. The External Investment Manager and the Fund Investment
Committee jointly assumes the role of chief operation decision maker, for performance assessment
purposes and to make decision about resources allocated to each investment segment.
Income is recognised to the extent that is probable that the economic benefits will flow to the Fund
and the income can be reliably measured. Income is measured at fair value of consideration
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
income securities, is recognised using effective interest method.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the tax authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted by the reporting date.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
3.12 Significant Accounting Estimates and Judgements
4. MANAGER'S FEE
5. TRUSTEE' S FEE
6. TAXATION
2014 2013
RM RM
Current year Malaysian tax - 10,416
Overprovision in prior year (14,728) (2,356)
Malaysian tax (income)/expense based onresults for the year (14,728) 8,060
The preparation of financial statements in accordance with MFRS and IFRS requires the use of
certain accounting estimates and exercise of judgements. Estimates and judgements are continually
evaluated and are based on past experience, reasonable expectations of future events and other
factors.
The tax charge for the financial year is in relation to the taxable income earned by the Fund after
deducting tax allowable expenses. In accordance with Schedule 6 of the Income Tax Act 1967, profit
income earned by the Fund is exempted from tax.
No major judgements have been made by the Manager in applying the Fund's accounting policies.
There are no key assumptions concerning the future and other key sources of estimation uncertainty
at the reporting date, that have significant risk of causing material adjustment to the carrying
amounts of assets and liabilities within next year.
The Manager is entitled to an annual management fee of 1.50% per annum of the NAV of the Fund
(before deducting the Manager's and Trustee's fees for the day) calculated and accrued on a daily basis.
The Trustee is entitled to a fee of 0.07% per annum of the NAV of the Fund (before deducting the
Manager's and Trustee's fee for the day) calculated and accrued on a daily basis, subject to a minimim of
RM18,000 per annum.
Income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimated
assessable income for the financial year.
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6. TAXATION (CONT'D.)
2014 2013
RM RM
Net income before tax 297,415 1,208,110
Tax at Malaysian statutory rate of 25% (2013: 25%) 74,354 302,028
Tax effects of:
Income not subject to tax (129,577) (342,069)
Expenses not deductible for tax purposes 15,196 13,963
Restriction on tax deductible expenses for unit trust funds 40,027 36,494
Overprovision in prior year (14,728) (2,356)Tax (income)/expense for the financial year (14,728) 8,060
7. QUOTED SHARIAH-COMPLIANT INVESTMENTS
2014 2013
RM RM
Financial assets at fair value through
profit or loss (Note 8)
Quoted Shariah-compliant equities
- in Malaysia 2,680,188 2,035,795
- outside Malaysia 3,352,369 4,345,6316,032,557 6,381,426
8. FINANCIAL ASSETS AT FVTPL
Financial assets at FVTPL:Quoted Shariah-compliant equities 6,032,557 6,381,426
Net gain on financial assets at FVTPL comprised:
Realised gain on disposals 392,018 1,076,078Unrealised (loss)/gain on changes in fair values (87,366) 40,648
304,652 1,116,726
A reconciliation of tax expense applicable to income before tax at the statutory income tax rate to tax
(income)/expense at the effective income tax rate of the Fund is as follows:
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8. FINANCIAL ASSETS AT FVTPL (CONT'D)
The currency exposure profile of financial assets at
FVTPL is as follows :
- Ringgit Malaysia 2,680,188 2,035,795
- Hong Kong Dollar 703,938 2,086,838
- Indonesian Rupiah 1,205,330 535,270
- South Korean Won 164,317 319,949
- Thai Baht 339,085 295,861
- Singapore Dollar 96,303 206,836
- New Taiwan Dollar 672,964 900,877
- Philippines Peso 170,432 -6,032,557 6,381,426
Financial assets at FVTPL as at 31 December 2014 are as detailed below:
QUOTED SHARIAH-COMPLIANT EQUITIES
- IN MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Main Market
Construction
Ho Hup Construction Co. Bhd 260,000 370,776 325,000 3.37
Muhibbah Engineering (M) Bhd 36,000 111,220 66,960 0.69
296,000 481,996 391,960 4.06
Consumer
Yee Lee Corporation Berhad 130,000 179,213 182,000 1.89
Industrial Products
Can-One Berhad 52,000 174,321 110,760 1.15
Jaya Tiasa Holdings Berhad 120,000 317,580 234,000 2.43
Malaysia Steel Works KL Berhad 66,000 67,509 57,090 0.59
Supermax Corp Berhad 50,000 106,728 84,000 0.87
Ta Ann Holdings Berhad 47,000 205,572 177,660 1.84
Thong Guan Industries Bhd 38,000 112,689 70,680 0.73
Thong Guan Industries Bhd-ICULS 19,000 19,000 30,970 0.32
Thong Guan Industries Bhd-WT19 9,500 - 6,935 0.07
401,500 1,003,399 772,095 8.00
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8. FINANCIAL ASSETS AT FVTPL (CONT'D)
QUOTED SHARIAH-COMPLIANT EQUITIES
- IN MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Plantation
Hap Seng Plantations Holdings Bhd 75,000 206,279 188,250 1.95
Sarawak Oil Palms Berhad 52,000 309,949 267,800 2.78
127,000 516,228 456,050 4.73
Properties
Hua Yang Berhad 48,000 101,144 96,000 0.99
Land & General Berhad 165,000 107,351 83,325 0.86
Matrix Concepts Holdings Berhad 81,500 123,814 220,050 2.28
Metro Kajang Holdings Berhad 48,000 185,326 124,800 1.29
342,500 517,635 524,175 5.42
Technology
Malaysian Pacific Industries 36,600 131,914 165,798 1.72
Notion Vtec Berhad 190,000 147,621 79,800 0.83
Vitrox Corp Bhd 29,000 41,692 65,540 0.68
255,600 321,227 311,138 3.23
Trading/Services
Berjaya Auto Berhad 13,000 41,862 42,770 0.44
TOTAL QUOTED SHARIAH-
COMPLIANT EQUITIES
- IN MALAYSIA 1,565,600 3,061,560 2,680,188 27.77
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8. FINANCIAL ASSETS AT FVTPL (CONT'D)
QUOTED SHARIAH-COMPLIANT EQUITIES
- OUTSIDE MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
1.3786
Hong Kong Stock Exchange 4.8081
("HKSE")
China Fiber Optic Network SY 284,000 285,604 267,517 2.77
China National Offshore Oil Corp 30,000 191,582 141,159 1.46
Goldpac Group Ltd 70,000 224,056 169,103 1.75
Real Gold Mining Ltd * 60,000 368,936 40,977 0.42
Termbray Petro King Oilfield 175,000 277,571 85,182 0.88
619,000 1,347,749 703,938 7.28
Jakarta Stock Exchange
("JSX")
Bekasi Fajar Industrial Esta 1,531,900 228,079 313,197 3.25
Kawasan Industri Jababeka TBK PT 2,500,000 222,542 207,270 2.15
Sampoerna Agro TBK PT 710,200 472,371 417,576 4.33
Tambang Batubara Bukit Asam 19,000 133,281 66,975 0.69
United Tractor TBK PT 41,000 326,811 200,312 2.08
4,802,100 1,383,084 1,205,330 12.50
Korea Stock Exchange
(''KE'')
Kia Motors Corporation 327 61,168 54,624 0.57
LG Electronics Inc 580 170,601 109,693 1.14
907 231,769 164,317 1.71
Thailand Stock Exchange
("SET")
Malee Sampran Public Co-NVDR 46,000 167,746 134,254 1.39
20,000 210,156 204,831 2.12
66,000 377,902 339,085 3.51
Philippine Stock Exchange
EEI Corporation 200,000 157,094 170,432 1.77
Total Access Communication-NVDR
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8. FINANCIAL ASSETS AT FVTPL (CONTD.)
QUOTED SHARIAH-COMPLIANT EQUITIES
- OUTSIDE MALAYSIA
Name of Counter Quantity Cost Fair value % of
RM RM NAV
Singapore Stock Exchange
("SGX")
CNMC Goldmine Holdings Ltd 140,000 109,805 96,303 1.00
Taiwan Stock Exchange
("TWSE")
AIC Inc 16,000 309,379 210,970 2.19
Ginko International Co. Ltd 6,000 274,472 222,777 2.31
Power Tech Technology Inc 40,000 274,032 239,217 2.48
62,000 857,883 672,964 6.98
TOTAL QUOTED SHARIAH-
COMPLIANT EQUITIES
- OUTSIDE MALAYSIA 5,890,007 4,465,286 3,352,369 34.75
TOTAL FINANCIAL ASSETSAT FVTPL 7,526,846 6,032,557 62.52
EXCESS OF COST OVERFAIR VALUE (1,494,289)
*
9. SHARIAH-BASED DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS
2014 2013
RM RM
Licensed investment banks 3,601,223 1,645,327
This security has been suspended since 27 May 2011 and its fair value has been determined by the
Manager with the consent of the Trustee.
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9. SHARIAH-BASED DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS (CONT'D)
2014 2013 2014 2013
% % Days Days
Licensed investment banks 2.93 2.81 8 5
10. AMOUNT DUE TO MANAGER
2014 2013
RM RM
Amount arising from creation of units (1,088) (2,553)
Management fee 13,192 11,04612,104 8,493
11. INCOME DISTRIBUTION
There is no distribution to unitholders for the financial year ended 31 December 2014.
12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY)
Note 2014 2013
RM RM
Unitholders' capital (a) 12,254,512 11,092,899
Accumulated losses
- Realised earnings (b) 706,635 307,126- Unrealised losses (c) (3,311,794) (3,224,428)
(2,605,159) (2,917,302)Total equity / Net asset value 9,649,353 8,175,597
The weighted average effective profit rate ("WAEPR") per annum and the average remaining maturities
of deposits and placement are as follows:
Average
remaining
WAEPR maturities
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12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (TOTAL EQUITY) (CONT'D)
(a) Unitholders' Capital
Number Number
of units RM of units RM
Balance at beginning
of the year 8,595,137 11,092,899 12,128,436 14,110,426
Add: Creation of units 3,968,723 4,505,742 1,195,044 1,299,609
Less: Cancellation of units (2,777,545) (3,174,383) (4,728,343) (5,007,121)
Distribution equalisation - (169,746) - 689,985Balance at end of the year 9,786,315 12,254,512 8,595,137 11,092,899
(b) Realised - Distributable
2014 2013
RM RM
Balance at the beginning of the year 307,126 (852,276)
Net income after tax 312,143 1,200,050
Net unrealised loss/(gain) attributable to
Shariah-compliant investments held
transferred to unrealised reserve 87,366 (40,648)Balance at the end of the year 706,635 307,126
(c) Unrealised - Non-distributable
Balance at the beginning of the year (3,224,428) (3,265,076)
Net unrealised (loss)/gain attributable to
Shariah-compliant investments held
transferred to unrealised reserve (87,366) 40,648Balance at the end of the year (3,311,794) (3,224,428)
2014 2013
In accordance with Article 6.1.1 of the Deed and Securities Commision's approval letter dated 14 August
2006, the maximum number of units that can be issued for circulation is 200 million units. As at 31
December 2014, the number of units not in issue is 190,213,685 (2013: 191,404,863) units.
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13. NET ASSET VALUE PER UNIT
RM RM/Unit RM RM/Unit
Net asset value attributable
to unitholders for
issuing/redeeming units 9,697,219 0.9909 8,189,393 0.9528
Effect from adopting bid
prices as fair value (47,866) (0.0049) (13,796) (0.0016)
Net asset value attributable
to unitholders perfinancial statements 9,649,353 0.9860 8,175,597 0.9512
14. UNITS HELD BY RELATED PARTIES
2014 2013
Number of Valued at Number of Valued at
units NAV units NAV
RM RM
Directors of the Manager 394,621 389,099 - -
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 in the financial statements have been valued at the bid prices at the close of
business in accordance with the provisions of MFRS 139. For the purpose of calculation of net asset
value attributable to unitholders per unit for the issuance and redemption of units in accordance with the
Deed, quoted financial assets are stated at the last done market price.
A reconciliation of net asset value attributable to unitholders for issuing/redeeming units and the net
asset value attributable to unitholders per the financial statements is as follows:-
2014 2013
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15. TRANSACTIONS WITH BROKERS
% of Total
Value of % of Total Brokerage Brokerage
Trade Trade Fees Fees
RM % RM %
MIDF Amanah Investment Bank
Bhd 7,056,579 27.56 - -
KAF Investment Bank Bhd 3,042,447 11.88 - -
Fubon Securities Companies Ltd 1,280,262 5.00 3,122 8.01
DBS Vickers Securites Pte Ltd
- Hong Kong 1,166,155 4.55 2,918 7.48
Kenanga Investment Bank Bhd 1,113,470 4.35 2,504 6.42
CIMB Investment Bank Bhd 1,111,483 4.34 2,613 6.70
CIMB-GK Securities Pte Ltd
- Hong Kong 1,076,940 4.20 2,699 6.92
RHB OSK Securities (Hong Kong)
Limited 902,049 3.52 1,191 3.06
RHB OSK Securities (Thailand) PCL 839,338 3.28 1,679 4.31
PT Mandiri Sekuritas Indonesia 817,465 3.19 3,148 8.08
Other brokers 7,202,564 28.13 19,111 49.0225,608,752 100.00 38,985 100.00
16. MANAGEMENT EXPENSE RATIO till here 14/02 @ 8.30pm
2014 2013
Management expense ratio 2.21% 2.27%
17. PORTFOLIO TURNOVER RATIO
2014 2013
Portfolio turnover (times) 0.80 0.70
Details of transactions with stockbroking companies and other investment banks for the financial year
ended 31 December 2014 are as follows:
This is the ratio of the sum of the fees (inclusive of the manager's, trustee's, audit and other professional
fees) and other administrative expenses of the Fund to the average NAV of the Fund calculated on a
daily basis. The average NAV of the Fund for the year ended 31 December 2014 was RM 9,987,081
(2013: RM8,907,120).
This is the ratio of the average of acquisitions and disposals of Shariah-compliant investments for the
year to average NAV of the Fund for the year calculated on daily basis.
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18. SEGMENT INFORMATION
A portfolio of Shariah-compliant equity instruments.
During the year, there were no transactions between operating segments.
The Manager and Investment Committee of the Fund are responsible for allocating resources available
to the Fund in accordance with the overall investment strategies as set out in the investment Guidelines
of the Fund. The Fund is managed by two segments:
A portfolio of Shariah-based financial instruments, i.e.Shariah-based deposits with financial
The investment objective of each segment is to achieve consistent returns from the investments in each
segment while safeguarding capital by investing in diversified portfolios. There have been no changes in
reportable segments in the current financial year. The segment information provided is presented to the
Manager, the appointed External Investment Manager and Investment Committee of the Fund.
2014 2013
Shariah- Shariah-
based based
Deposits Deposits
Equity and Sukuk Equity and Sukuk
Portfolio Portfolio Total Portfolio Portfolio TotalRM RM RM RM RM RM
Gross dividend income 157,507 - 157,507 243,652 - 243,652
Profit from Shariah-based
deposits with licensed financial institutions - 57,326 57,326 - 49,171 49,171
Net gain from Shariah-compliant investments:
- financial assets at FVTPL 304,652 - 304,652 1,116,726 - 1,116,726
Net realised gain/(loss) on foreign exchange (1,179) - (1,179) 385 - 385
Total segment operatingincome for the year 460,981 57,326 518,306 1,360,763 49,171 1,409,934
Shariah-based deposits with financial institutions - 3,601,223 3,601,223 - 1,645,327 1,645,327
Financial assets at FVTPL 6,032,557 - 6,032,557 6,381,426 - 6,381,426
Other assets 11,711 634 12,345 99,589 330 99,919Total segment assets 6,044,268 3,601,857 9,646,125 6,481,015 1,645,657 8,126,672
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18. SEGMENT INFORMATION (CONTD.)
2014 2013
RM RM
Net reportable segment operating income 518,306 1,409,934
Expenses (220,891) (201,824)
Net income before tax 297,415 1,208,110
Tax income/(expense) 14,728 (8,060)Net income for the year 312,143 1,200,050
2014 2013
RM RM
Total segment assets 9,646,125 8,126,672
Tax recoverable - 2,356
Cash at bank 38,527 78,209
Total assets of the Fund 9,684,652 8,207,237
Total segment liabilities - -
Other payables and accruals 21,569 21,569
Amount due to Manager 12,104 8,493
Amount due to Trustee 1,627 1,578
Total liabilities of the Fund 35,300 31,640
19. FINANCIAL INSTRUMENTS
(a) Classification of financial instruments
The Fund’s financial assets and financial liabilities are measured on an ongoing basis at either fair
value or at amortised cost based on their respective classification. The significant accounting
policies in Note 3 describe how the classes of financial instruments are measured, and how income
and expenses, including fair value gains and losses are recognised. The following table analyses the
financial assets and liabilities of the Fund in the statement of financial position, by the class of
financial instrument to which they are assigned, and therefore by the measurement basis.
Expenses of the Fund are not considered part of the performance of any operating segment. The
following table provides a reconciliation between reportable segment income/(loss) and operating
profit/(loss).
In addition, certain assets and liabilities are not considered to be part of the assets or liabilities of an
individual segment. The following table provides reconciliation between the total reportable segment
assets and liabilities and total assets and liabilities of the Fund.
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19. FINANCIAL INSTRUMENTS (CONTD.)
(a) Classification of financial instruments (Contd.)
Financial
liabilities
Financial at
assets at Loans and amortised
FVTPL receivables cost Total
RM RM RM RM
2014
AssetsQuoted Shariah-compliant
equities 6,032,557 - - 6,032,557
Shariah-based deposits with
licensed financial institutions - 3,601,223 - 3,601,223
Amount due from Brokers - - - -
Other receivables - 12,346 - 12,346
Cash at bank - 38,527 - 38,527Total financial assets 6,032,557 3,652,096 - 9,684,653
Total non-financial assets -9,684,653
Liabilities
Amount due to Manager - - 12,104 12,104Amount due to Trustee - - 1,627 1,627
Other payables - - 21,569 21,569Total financial liabilities - - 35,300 35,300
2013
AssetsQuoted Shariah-compliant
equities 6,381,426 - - 6,381,426
Shariah-based deposits with
licensed financial institutions - 1,645,327 - 1,645,327
Amount due from Brokers - 67,824 - 67,824
Other receivables - 32,095 - 32,095
Cash at bank - 78,209 - 78,209Total financial assets 6,381,426 1,823,455 - 8,204,881
Total non-financial assets 2,3568,207,237
Liabilities
Amount due to Manager - - 8,493 8,493Amount due to Trustee - - 1,578 1,578
Other payables - - 21,569 21,569Total financial liabilities - - 31,640 31,640
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19. FINANCIAL INSTRUMENTS (CONTD.)
(b) Fair Value
(i) Financial instruments that are carried at fair value
Level 1 Level 2 Level 3 Total
RM RM RM RM
2014
Financial assets
at FVTPL
- Quoted securities 5,991,580 - 40,977 6,032,557
2013
Financial assets
at FVTPL
- Quoted securities 6,343,038 - 38,388 6,381,426
The Fund uses the following level of fair value hierarchy for determining and disclosing the
fair value of financial instruments carried at fair value in the statement of financial position.
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
Quoted equity instruments
Fair value of quoted equity instruments is determined directly by reference to their published
market bid prices on the relevant stock exchanges at the reporting date. The fair value of
quoted equity instruments which have lost active trading market due to suspension in their
trading, is determined by reference to their published net tangible assets.
The Fund held the following financial instruments carried at fair value on the statement of
financial position as at the end of financial year :
liability either directly or indirectly
Level 3: Inputs for the asset or liability that are not based on observable market data
The Fund’s financial assets at FVTPL and AFS financial assets are carried at fair value. The
fair values of these financial assets were determined using prices in active markets for
identical assets.
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PAXJI
19. FINANCIAL INSTRUMENTS (CONTD.)
(b) Fair Value (Contd.)
(i) Financial instruments that are carried at fair value (Contd.)
2014 2013
RM RM
Financial assets at FVTPL
Balance at 1 January 38,388 35,864
Total loss recognised in profit or loss :
- Net loss on financial assets at FVTPL 2,589 2,524
Balance at 31 December 40,977 38,388
(ii) Financial instruments not carried at fair value
20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES
The following table shows a reconciliation from the beginning balance to the ending balance
for the fair value measurement under Level 3 of the fair value hierarchy:
The Fund maintains investment portfolios in a variety of quoted and unquoted financial instruments as
dictated by its Deed and investment management strategy.
The Fund is exposed to a variety of risks including market risk (which includes interest rate risk, equity
price risk and currency risk), credit risk, liquidity risk and reclassification of Shariah status risk. Whilst
these are the most important types of financial risks inherent in each type of financial instruments, the
Manager and the Trustee would like to highlight that this list does not purport to constitute an exhaustive
list of all the risks inherent in an investment in the Fund.
The Fund’s objective in managing risk is the creation and protection of unitholders’ value. Risk is
inherent in the Fund’s activities, but it is managed through a process of ongoing identification,
measurement and monitoring of risks. Financial risk management is also carried out through sound
internal control systems and adherence to the investment restrictions as stipulated in the Trust Deed, the
Securities Commission’s Guidelines on Unit Trust Funds and the Capital Market and Services Act,
2007.
Financial instruments not carried at fair value comprise financial assets and financial
liabilities classified as loans and receivables and financial liabilities at amortised cost
respectively. The carrying amount of these financial instruments at the end of the financial
year approximated their fair values due to their short term to maturity.
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PAXJI
20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(i) Market Risk
(a) Equity Price Risk
Effect on profit
Change in Shariah-compliant or loss and equity
equity price (%) Increase/(Decrease)
RM
2014
+6/-6 361,953 /(361,953)
2013
+6/-6 382,885 /(382,885)
(b) Interest Rate Risk
The Fund's principal exposure to market risk arises primarily due to changes or developments in the
market environment and typically includes changes in regulations, politics and the economy of the
country. Market risk is also influenced by global economics and geopolitical developments. The
Fund seeks to diversify away some of this risk by investing into different sectors to mitigate risk
exposure to any single asset class.
This risk refers to the effect of interest rate changes on the demand for sukuk and Shariah-
based deposits with financial institutions. In the event of rising interest rates, the return on
Shariah-based deposits with financial institutions will rise while demand for sukuk will
decrease and vice versa, thus affecting the net asset value of the Fund. This risk will be
minimized via the management of the duration structure of the portfolio of sukuk and Shariah-
based deposits with financial institutions.
Interest rate is a general economic indicator that will have an impact on the management of
fund regardless of whether it is a Shariah-based fund or otherwise. It does not in any way
suggest that this fund will invest in conventional financial instruments. All investments
carried out for this fund are in accordance with requirement of the Shariah.
The Fund’s market risk is affected primarily due to changes in market prices, interest rates and
foreign currency exchange rates.
Equity price risk is the adverse changes in the fair value of Shariah-compliant equities as a
result of changes in the levels of Shariah-compliant equity indices and the value of individual
Shariah-compliant shares. The equity price risk exposure arises from the Fund’s investments
in quoted Shariah-compliant equity securities.
The table below summarises the effect of sensitivity from the Fund’s underlying investments
in quoted Shariah-compliant equities on the profit or loss and equity of the Fund due to
possible changes in Shariah-compliant equity prices, with all other variables held constant:
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PAXJI
20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(i) Market Risk (Contd.)
(b) Interest Rate Risk (Contd.)
Effect on profit
or loss and equity
Change in basis point * Increase/(Decrease)
RM
2014+25/-25 3,432/(3,432)
2013+25/-25 3,000/(3,000)
(c) Currency Risk
2014 2013
RM RM
Hong Kong Dollar 70,394 208,684
Indonesian Rupiah 120,533 53,527
South Korean Won 16,432 31,995
Thai Baht 33,909 29,586
Singapore Dollar 9,630 20,684
New Taiwan Dollar 67,296 90,088
Philiipines Peso 17,043 -335,237 434,564
The following table demonstrates the sensitivity of the profit or loss and equity of the Fund to
a reasonably possible change in interest rates, with all other variables held constant:
* The assumed movement in basis points for interest rate sensitivity analysis is based on the
currently observable market environment.
The Fund is exposed to currency risk primarily through its investment in overseas Shariah-
compliant quoted equities that are denominated in foreign currencies. The Fund's foreign
currency exposure profile of its investment in Shariah-compliant quoted equities has been
disclosed under Note 8. The currency risk is minimised by proper portfolio allocation and to
avoid concentration in a single country.
A 10% strenghtening or weakening of the RM against the following foreign currencies as at
the end of the financial year would have decreased or increased respectively the profit or loss
and equity of the Fund by the amount shown below. This analysis assumes all other variables
are held constant.
Effect on profit
or loss and equity
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(ii) Credit Risk
(iii) Liquidity Risk
1 month - 3 Above
2014 months 3 months Total
RM RM RM
Financial Assets
Financial assets at FVTPL 6,032,557 - 6,032,557
Deposits with financial institutions 3,601,223 - 3,601,223
Other assets 50,873 - 50,873
Total undiscounted
financial assets: 9,684,653 - 9,684,653
Non-Financial Assets - - -
Total Assets 9,684,653 - 9,684,653
Financial Liabilitites
Other liablities 13,731 21,569 35,300
Total undiscounted
financial liabilities 13,731 21,569 35,300
Unitholders' NAV 9,649,353 - 9,649,353
Liquidity gap 21,569 (21,569) -
The Fund’s principal exposure to credit risk arises primarily due to changes in the financial
conditions of companies issuing sukuk, which may affect their creditworthiness. This in turn may
lead to default in the payment of principal and profit. Such events can lead to loss of capital or
delayed or reduced income for the Fund resulting in a reduction in the Fund’s asset value and thus
unit price. This risk is mitigated by vigorous credit analysis and diversification of the sukuk
portfolio of the Fund.
As at the end of financial year, the Fund do not have any investment in sukuk.
This risk occurs in thinly traded or illiquid Shariah-compliant securities. Should the Fund need to
sell a relatively large amount of such securities, the act itself may significantly depress the selling
price. As the Fund is exposed to daily redemption of units, the risk is minimized by placing a
prudent level of funds in short-term Shariah-based deposits and by investing in Shariah-compliant
stocks whose liquidity is adjudged to be commensurate with the expected exposure level of the
Funds.
The following table summarises the maturity profile of the Fund’s financial liabilities and the
corresponding assets available to meet commitments associated with those financial liabilities and
redemption by the unitholders.
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(iii) Liquidity Risk (Contd.)
1 month - 3 Above
2013 months 3 months Total
RM RM RM
Financial Assets
Financial assets at FVTPL 6,381,426 - 6,381,426
Deposits with financial institutions 1,645,327 - 1,645,327
Other assets 178,128 - 178,128
Total undiscounted
financial assets: 8,204,881 - 8,204,881
Non-Financial Assets - 2,356 2,356
Total Assets 8,204,881 2,356 8,207,237
Financial Liabilitites
Other liablities 10,071 21,569 31,640
Total undiscounted
financial liabilities 10,071 21,569 31,640
Unitholders' NAV 8,175,597 - 8,175,597
Liquidity gap 19,213 (19,213) -
(iv) Stock Specific Risk
(v) Single Issuer Risk
(vi) Reclassification of Shariah Status Risk
This risk refers to the risk that the currently held Shariah-compliant securities in the portfolio of
Shariah-based funds may be reclassified to be Shariah non-compliant upon review of the securities
by the Shariah Advisory Council of the Securities Commission of Malaysia ("SACSC") performed
twice yearly. If this occurs, the value of the Fund may be adversely affected where the Manager
will take the necessary steps to dispose of such securities.
The Fund is exposed to the individual risk of the respective companies issuing Shariah-compliant
securities which includes changes to the business performance of the company, consumer tastes
and demand, lawsuits and management practices. This risk is minimised through the well
diversified nature of the Fund.
The Fund’s exposure to Shariah-compliant securities issued by any issuer is limited to not more
than a certain percentage of its net asset value. Under such restriction, the risk exposure to the
securities of any issuer is minimised.
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20. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
(vii) Capital Management
The capital is represented by unitholders’ subscription to the Fund. The amount of capital can
change significantly on a daily basis as the Fund is subject to daily redemption and subscription at
the discretion of unitholders. The Manager manages the Fund’s capital with the objective of
maximising unitholders' value, while maintaining sufficient liquidity to meet unitholders'
redemption as explained in Note 20 (iii) above.
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