PHOENIX UNIT TRUST MANAGERS MANAGER S ANNUAL REPORT PUTM FAR EASTERN UNIT TRUST. For the year: 1 October 2017 to 30 September 2018

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1 PHOENIX UNIT TRUST MANAGERS MANAGER S ANNUAL REPORT For the year: 1 October 2017 to 30 September 2018 PUTM FAR EASTERN UNIT TRUST

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3 Contents Investment review* 2-3 Portfolio of investments* 4-6 Top ten purchases and sales 7 Statistical information* 8-11 Statements of total return & change in net assets attributable to unitholders 12 Balance sheet 13 Notes to the financial statements Distribution tables 24 Responsibilities of the manager and the trustee 25 Trustee s report and directors statement 26 Independent auditor s report Corporate information* *These collectively comprise the Authorised Fund Manager s Report. 1

4 Investment review Dear Investor Welcome to the PUTM Far East Unit Trust annual report for the 12 months to 30 September Performance Review Over the review period, the PUTM Far East Unit Trust returned 6.4% (Source: Standard Life Investments for 12 months to 30/09/18). This is compared to its benchmark index, which returned 5.2% (Source: Datastream, FTSE AW Asia Pacific ex Japan, Total Return, GBP for 12 months to 30/09/18). In the table below, you can see how the Fund performed against its benchmark index. Standardised Past Performance Sep Sep Sep Sep Sep % growth % growth % growth % growth % growth PUTM Far East Unit Trust Benchmark Source: Fund performance is Standard Life Investments for to 30 September for each year. Benchmark Index performance is Datastream, FTSE AW Asia Pacific ex Japan, Total Return, GBP to 30 September for each year. Past performance is not a guide to future performance. The value of units and the income from them can go down as well as up and is not guaranteed. You may not get back the full amount invested. Please note that all past performance figures are calculated without taking the initial charge into account. 2

5 Investment review Portfolio and Market Review Far East markets were up for the last 12 months, although trading conditions deteriorated as the period progressed. The initial robust showing was thanks to solid economic conditions (notably in China), heightened demand for commodities and positive corporate results. However, volatility returned with a vengeance in 2018, with Asian markets falling due to the resurgent US dollar (on the back of the strong US economy and subsequent rate hikes by the Federal Reserve), concerns around a China/US trade war and the knock-on effects this is having on the technology sector. The rising oil price, which hit a four-year high in September, also created winners and losers. Turning to Fund performance, chipmaker Taiwan Semiconductor Manufacturing Company boosted relative performance after it released positive forecasts for its 7- nanometre advanced node ramp-up, with demand sustained by high performance computing, Internet of Things and rising smartphone growth. BHP Billiton also boosted the Fund s returns, as our off-benchmark position in the UK line of the stock (which trades at a discount to the Australian line) was helpful given that the Australian miner benefited from recovering commodity prices. The self-help story continues to play out with BHP s management remaining fully committed to divesting noncore assets. The proceeds are expected to be returned to shareholders. Additional highlights included President Chain Store, China National Offshore Oil Corporation and Australian gambling machine firm Aristocrat Leisure. Technology stocks JD.com and Ctrip.com detracted, as the sector was pressured by heightened risk aversion and profit-taking. Not holding Indian conglomerate Reliance Industries also proved costly, as its refining, petrochemicals, telecoms and retail divisions exceeded expectations. Positions in mining firm Syrah Resources, Indonesian logistics and supply chain group AKR Corporindo and Orange Life Insurance also disappointed. As for activity, we increased our exposure to Metals X, a diversified miner with organic expansion opportunities and decent commodity exposure to tin and copper. Elsewhere, we topped up Syrah Resources, as the positive longer-term demand outlook for quality natural graphite, the main anode material in lithium-ion batteries, remains intact. Market Outlook and Fund Strategy Politics and policy will likely continue to hold sway over Asian markets. Given prevailing trade tensions, sentiment has turned more cautious, and concerns are mounting over a potential slowdown in consumer spending in China. This, in turn, could dampen near-term economic growth in the region. Investors are also grappling with issues closer to home. Beijing s delicate balance between financial de-risking and sustaining growth could have farreaching implications. Political risk may feature more prominently, given upcoming elections in India, Indonesia and Australia. Central banks in the region also have to wrestle with how to defend currencies and maintain price stability amid rising commodity prices, tightening US monetary policy and a still-strengthening US dollar. However, there are numerous silver linings. Many Asian economies are in better shape than before, with healthy external balances and foreign-currency reserves. Corporate fundamentals still appear resilient. Despite more cautious forecasts, many of our holdings are still seeing decent earnings growth. More broadly, companies remain well-positioned to benefit from several structural themes, including emerging technological trends, and growing demand for better-quality products and services by increasingly affluent populations. We remain focused on ensuring that our portfolios comprise quality holdings that can weather the current storms, and tap into Asia s rich potential to drive returns over the long term. 3

6 Portfolio of investments (unaudited) Investments held at 30 September 2018 Market Percentage of value total net assets Holding Investment % Australia (30/09/ %) Basic Materials 210,575 Metals X 68, ,136 Syrah Resources 135, Consumer Goods 55,130 Bapcor 231, ,840 Costa Group 137, ,568 Treasury Wine Estates 323, Consumer Services 30,468 Aristocrat Leisure 478, ,918 Woolworths 122, Financials 38,089 Australia & New Zealand Banking Group 591, ,909 Goodman 287, ,972 National Australia Bank 383, ,018 Scentre 133, ,222 Westpac Banking 450, Healthcare 4,413 CSL 490, Bermuda (30/09/ %) 0.80 Industrials 6,900 Jardine Strategic (Singapore registered) 192, Cayman Islands (30/09/ %) Consumer Goods 92,464 Anta Sports Products 339, Consumer Services 7,000 Alibaba Group Holding ADR~ 892, ,759 Ctrip ADR~ 256, ,124 Huazhu Group 278, Financials 222,976 China Resources Land 597, Technology 4,000 Autohome ADR~ 253, NetEase ADR~ 87, ,131 Tencent Holdings 1,112, China (30/09/ %) Financials 792,904 China Construction Bank 530, ,614 China Merchants Bank 449, ,334 Ping An Insurance 804, Industrials 85,000 Anhui Conch Cement 393, ,661 Weichai Power 251, Oil & Gas 325,250 China Petroleum & Chemical 249,

7 Portfolio of investments (unaudited) Investments held at 30 September 2018 Market Percentage of value total net assets Holding Investment % Hong Kong (30/09/ %) Financials 96,606 AIA Group 661, ,759 Hang Lung Properties 156, ,300 Hong Kong Exchanges and Clearing 291, ,174 Sun Hung Kai Properties 124, ,000 Swire Properties 307, Healthcare 243,309 Sino Biopharmaceutical 173, Oil & Gas 272,027 CNOOC 413, Technology 36,300 ASM Pacific Technology 283, Telecommunications 25,147 China Mobile (HK) 189, India (30/09/ %) 8.11 Consumer Goods 101,587 ITC 319, Financials 17,300 Housing Development Finance Corporation 321, ,900 Kotak Mahindra Bank 240, Industrials 21,269 Larsen & Toubro 286, ,570 UltraTech Cement 239, ,109 Voltas 214, Technology 14,000 Tata Consultancy Services 323, Indonesia (30/09/ %) 2.12 Consumer Goods 532,800 Astra International 201, Financials 181,500 Bank Central Asia 225, Industrials 431,746 AKR Corporindo 81, Malaysia (30/09/ %) 0.99 Financials 51,500 Public Bank 238, Papua New Guinea (30/09/ %) 0.64 Oil & Gas 30,794 Oil Search 153, Philippines (30/09/ %) 0.94 Industrials 17,200 Ayala 226,

8 Portfolio of investments (unaudited) Investments held at 30 September 2018 Market Percentage of value total net assets Holding Investment % Singapore (30/09/ %) 4.68 Financials 158,000 Capitaland 298, ,279 DBS Group 281, ,300 Overseas-Chinese Banking 296, ,284 United Overseas Bank 246, South Korea (30/09/ %) Basic Materials 1,016 LG Chem 256, Financials 8,181 ING Life Insurance Korea 192, ,096 KB Financial 265, Industrials 29,900 Samsung Electronics 959, ,850 Samsung Electronics Pref 283, Samsung SDI 174, Technology 6,833 SK Hynix 344, Taiwan (30/09/ %) 8.84 Consumer Services 39,719 President Chain Store 357, Industrials 174,038 Hon Hai Precision Industry 346, Technology 1,759 Macronix International 1, ,540 Taiwan Semiconductor Manufacturing 1,413, Thailand (30/09/ %) 3.47 Financials 23,676 Kasikornbank 120, ,443 Kasikornbank FB 145, Oil & Gas 163,250 PTT Public Company Limited 209, Telecommunications 74,343 Advanced Info Service 354, United Kingdom (30/09/ %) 3.13 Basic Materials 29,712 BHP Billiton 492, ,700 Rio Tinto 258, Portfolio of investments 23,496, Net other assets 474, Net assets 23,970, All investments are listed on recognised stock exchanges and are approved securities within the meaning of the FCA rules unless otherwise stated. ~ADR American Depositary Receipt 6

9 Top ten purchases and sales For the year ended 30 September 2018 Purchases Cost Anhui Conch Cement 372,921 Housing Development Finance Corporation 340,458 Swire Properties 313,798 CNOOC 293,892 Hong Kong Exchanges and Clearing 284,230 KB Financial 283,884 Overseas-Chinese Banking 283,406 CSL 279,926 ASM Pacific Technology 277,223 Kotak Mahindra Bank 255,941 Subtotal 2,985,679 Other purchases 4,281,068 Total purchases for the year 7,266,747 Sales Proceeds Baidu ADR 453,374 CK Asset Holdings 435,741 National Australia Bank 388,233 Bank of China (Hong Kong) Holdings 343,686 United Tractors 283,067 Woori Bank 276,390 QBE Insurance Group 267,092 JD Com ADR 266,056 Sands China 262,930 Samsung SDI 252,945 Subtotal 3,229,514 Other sales 5,618,201 Total sales for the year 8,847,715 7

10 Statistical information Comparative tables Income 30/09/18 30/09/17 30/09/16 pence pence pence Change in net assets per unit Opening net asset value per unit Return before operating charges* Operating charges (6.24) (6.18) (4.98) Return after operating charges* Distributions on income units (7.95) (6.15) (5.32) Closing net asset value per unit *after direct transaction costs of: Performance Return after charges 4.69% 17.90% 33.89% Other information Closing net asset value ( 000) Closing number of units Operating charges 1.14% 1.27% 1.37% Direct transaction costs 0.11% 0.24% 0.28% Prices + Highest unit price (pence) Lowest unit price (pence) High and low price disclosures are based on quoted unit prices. Therefore the opening and closing NAV prices may fall outside the high/low price threshold. 8

11 Statistical information Comparative tables Accumulation 30/09/18 30/09/17 30/09/16 pence pence pence Change in net assets per unit Opening net asset value per unit Return before operating charges* Operating charges (9.62) (9.38) (7.54) Return after operating charges* Distributions on accumulation units (12.27) (9.39) (8.81) Retained distributions on accumulation units Closing net asset value per unit *after direct transaction costs of: Performance Return after charges 4.72% 17.95% 33.93% Other information Closing net asset value ( 000) 23,967 25,014 23,108 Closing number of units 2,877,059 3,144,345 3,425,998 Operating charges 1.14% 1.27% 1.36% Direct transaction costs 0.11% 0.24% 0.28% Prices + Highest unit price (pence) Lowest unit price (pence) High and low price disclosures are based on quoted unit prices. Therefore the opening and closing NAV prices may fall outside the high/low price threshold. 9

12 Statistical information Investment objective The objective of the Fund is to maximise the long term return, mainly through capital growth, by investment in a broadly based portfolio of securities in Far Eastern markets, including Australasia. Investment policy The Fund will primarily invest in equity shares quoted in Far Eastern Markets, excluding Japan.The Fund may hold cash and near cash assets where reasonably necessary to fund redemption of units, for the efficient management of the Fund, or for purposes ancillary to the objectives of the Fund. It may borrow providing such borrowing is on a temporary basis, and does not exceed the limits applicable to the Fund. Revenue distribution and pricing Units of the Fund are available as either Income units (where revenue is distributed to unitholders) or Accumulation units (where revenue is reinvested to enhance the unit price). There will be two potential distributions in each accounting year: an interim distribution as at 31 March and a final distribution as at 30 September. At each distribution the net revenue after deduction of expenses, arising in the preceding six months from the investments of the Fund is apportioned amongst the unitholders. Unitholders receive a tax voucher giving details of the distribution and the Manager s Report no later than two months after these dates. 10

13 Statistical information Risk and reward profile The Risk and Reward Indicator table demonstrates where the Fund ranks in terms of its potential risk and reward. The higher the rank the greater the potential reward but the greater the risk of losing money. It is based on past data, may change over time and may not be a reliable indication of the future risk profile of the Fund. The shaded area in the table below shows the Fund s ranking on the Risk and Reward Indicator. fi Typically lower rewards, Typically higher rewards, lower risk higher risk fi This Fund is ranked at 5 (30/09/17: 6) because funds of this type have experienced medium to high rises and falls in value in the past. Although this is a high risk ranking it is not the highest. The above figure applies to the following unit classes: Income Accumulation Please note that even the lowest risk class can lose you money and that extreme market circumstances can mean you suffer severe losses in all cases. Please note the Fund s risk category may change in the future. The indicator does not take into account the following risks of investing in this Fund: Investing overseas can bring additional returns and spread risk to different markets. There are risks, however, that changes in currency rates will reduce the value of your investment. The Fund may use derivatives to reduce risk or cost or to generate additional capital or income at low risk, or to meet its investment objective. For more information on the Risk and Reward profiles of our Funds, please refer to the most up to date relevant fund and Unit Class Key Investor Information Documents (KIIDs). These are available online at 11

14 Annual financial statements For the year ended 30 September 2018 Statement of total return 30/09/18 30/09/17 Notes Income Net capital gains 4 846,121 3,762,323 Revenue 5 707, ,260 Expenses 6 (285,293) (289,180) Interest payable and similar charges (271) (169) Net revenue before taxation 422, ,911 Taxation 7 (64,956) (115,194) Net revenue after taxation 357, ,717 Total return before distributions 1,203,349 4,001,040 Distributions 8 (362,416) (304,241) Change in net assets attributable to unitholders from investment activities 840,933 3,696,799 Statement of change in net assets attributable to unitholders 30/09/18 30/09/17 Opening net assets attributable to unitholders 25,017,409 23,110,810 Amounts receivable on issue of units 51,300 47,495 Amounts payable on cancellation of units (2,293,121) (2,135,678) (2,241,821) (2,088,183) Change in net assets attributable to unitholders from investment activities 840,933 3,696,799 Retained distributions on accumulation units 354, ,983 Closing net assets attributable to unitholders 23,970,807 25,017,409 12

15 Annual financial statements As at 30 September 2018 Balance sheet 30/09/18 30/09/17 Notes Assets: Fixed assets: Investments 23,496,201 24,244,329 Current assets: Debtors 9 45, ,436 Cash and bank balances , ,262 Total current assets 727,669 1,081,698 Total assets 24,223,870 25,326,027 Liabilities: Creditors: Bank overdraft 11 (224,249) Other creditors 12 (28,766) (308,586) Distribution payable (48) (32) Total liabilities (253,063) (308,618) Net assets attributable to unitholders 23,970,807 25,017,409 13

16 Notes to the financial statements Note 1 (a) (b) (c) (d) (e) (f) (g) (h) Accounting policies Basis of preparation The financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in compliance with Financial Reporting Standard (FRS102) and in accordance with the Statement of Recommended Practice (SORP) for financial statements of Authorised Funds issued by The Investment Association in May 2014 (and amended in June 2017). The financial statements have been prepared on a going concern basis. Unless otherwise stated all accounting policies are consistent with those of the prior year. Valuation of investments The quoted investments of the Fund have been valued at bid dealing prices as at 12 noon, 28 September 2018, the last valuation point in the accounting year, in accordance with the Trust Deed. Foreign exchange Transactions in foreign currencies during the year are translated into Sterling (the functional currency of the Fund), at the rates of exchange ruling on the transaction date. Amounts held in foreign currencies have been translated at the rate of exchange ruling at 12 noon, 28 September 2018, the last valuation point in the accounting year. Revenue Dividends receivable from equity investments are credited to revenue when they are first quoted ex-dividend. Interest receivable on bank deposits is accounted for on an accruals basis. Special dividends Special dividends are treated either as revenue or repayments of capital depending on the facts of each particular case. It is likely that where the receipt of a special dividend results in a significant reduction in the capital value of the holding, then the special dividend should be treated as capital in nature so as to ensure the matching principle is applied to gains and losses. Otherwise, the special dividend should be treated as revenue. Stock dividends The ordinary element of stocks received in lieu of cash is recognised as revenue. Any excess in value of shares received over the amount of cash forgone would be treated as capital. Expenses Expenses are accounted for on an accruals basis. Expenses of the Fund are charged against revenue, except for costs associated with the purchase and sale of investments, which are charged to capital. Taxation The charge for taxation is based on taxable income for the year less allowable expenses. UK dividends and franked distributions from UK collective investment schemes are disclosed net of any related tax credit. Overseas dividends, unfranked distributions from UK collective investment schemes, and distributions from overseas collective investment schemes are disclosed gross of any tax suffered, the tax element being separately disclosed in the taxation note. 14

17 Notes to the financial statements Note 1 (i) Note 2 (a) (b) (c) (d) Note 3 (a) (b) Accounting policies (continued) Deferred taxation Deferred tax is provided at current rates of corporation tax on all timing differences which have originated but not reversed by the Balance sheet date. Deferred tax is not recognised on permanent differences. Deferred tax assets are recognised only to the extent that the Manager considers it is more likely than not that there will be taxable profits from which underlying timing differences can be deducted. Distribution policies Basis of distribution Revenue produced by the Fund s investments accumulates during each accounting period. If, at the end of each accounting period, revenue exceeds expenses, the net revenue of the Fund is available to be distributed/accumulated to unitholders. The Fund is not more than 60% invested in qualifying investments (as defined by SI 2006/964, Reg 20) and will pay a dividend distribution. Unclaimed distributions Distributions remaining unclaimed after six years are paid into the Fund as part of the capital property. Apportionment to multiple unit classes With the exception of the Manager s periodic charge, the allocation of revenue and expenses to each unit class is based upon the proportion of the Fund s assets attributable to each unit class on the day the revenue is earned or the expense is suffered. The Manager s periodic charge is specific to each unit class. Tax will be allocated between the unit classes according to income. Consequently, the revenue available to distribute for each unit class will differ. Stock dividends It is the policy of the Fund, where applicable, to distribute the revenue element of stock dividends. Risk management policies The risks arising from the Fund s financial instruments are market price risk, interest rate risk, foreign currency risk, liquidity risk, credit risk and counterparty risk. The Manager s policies for managing these risks are summarised below and have been applied throughout the year. Market price risk Market price risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potential loss the Fund might suffer through holding market positions in the face of price movements. The Fund s investment portfolio is exposed to market fluctuations which are monitored by the Manager in pursuit of the investment objectives and policies. Adherence to investment guidelines and to investment and borrowing powers set out in the Trust Deed, the Prospectus and in the Collective Investment Schemes Sourcebook ( the Sourcebook ) mitigates the risk of excessive exposure to any particular type of security or issuer. Interest rate risk The majority of the Fund s financial assets are equity shares and other investments which neither pay interest nor have a maturity date. Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interest rates. 15

18 Notes to the financial statements Note 3 (c) (d) (e) (f) Risk management policies (continued) Foreign currency risk All of the Fund s investment portfolio is invested in overseas securities and the Balance sheet can be significantly affected by movements in foreign exchange rates. The Fund may be subject to short term exposure to exchange rate movements between placing the purchase or sale of securities and agreeing a related currency transaction albeit usually the two transactions are agreed at the same time. Any such currency transactions must be used in accordance with the investment objective of the Fund and must be deemed by the Investment Manager to be economically appropriate. Regular production of portfolio risk reports highlight concentrations of risk, including currency risk, for the Fund. Liquidity risk The Fund s assets are comprised of mainly readily realisable securities. If insufficient cash is available to finance unitholder redemptions then securities held by the Fund may need to be sold. The risk of low market liquidity, through reduced trading volumes, may affect the ability of the Fund to trade financial instruments at values previously indicated by financial brokers. From time to time, liquidity may also be affected by stock specific or economic events. To manage these risks the Manager performs market research in order to achieve the best price for any transactions entered into on behalf of the Fund. All stocks are valued daily but those stocks identified as being less liquid are reviewed on a regular basis for pricing accuracy. Counterparty risk Certain transactions in securities that the Fund enters into expose it to the risk that the counterparty will not deliver the investment (purchase) or cash (sale) after the Fund has fulfilled its responsibilities. The Fund only buys and sells investments through brokers which have been approved by the Manager as an acceptable counterparty. This list is reviewed annually. Derivatives Derivative transactions may be used by the Fund for the purposes of meeting its investment objectives and also for hedging. In doing so the Manager may make use of a variety of derivative instruments in accordance with the Sourcebook. The use of derivatives for investment purposes means that the net asset value of the Fund may at times have high volatility, although derivatives will not be used with the intention of raising the risk profile of the Fund. Where derivatives are used for hedging this will not compromise the risk profile of the Fund. Use of derivatives will not knowingly contravene any relevant investment objective or limits. The Fund has used forward foreign currency contracts to hedge the portfolio where assets are denominated in foreign currency. The purpose of undertaking these contracts is to protect the portfolio as far as possible from a movement in the value of exchange rates. There are no derivatives held at the year end. 16

19 Notes to the financial statements Note 4 Net capital gains The net capital gains during the year comprise: 30/09/18 30/09/17 Gains on non-derivative securities 832,840 3,793,330 (Losses)/gains on derivative contracts (285) 214 Currency gains/(losses) 11,142 (12,335) Handling charges (4,084) (19,688) Capital special dividends 6, Net capital gains 846,121 3,762,323 Note 5 Revenue 30/09/18 30/09/17 UK dividends 26,298 30,001 Overseas dividends 680, ,209 Bank interest Total revenue 707, ,260 Note 6 Expenses 30/09/18 30/09/17 (a) Payable to the Manager or associates of the Manager and agents of either of them: Manager s periodic charge 257, ,918 (b) (c) Payable to the Trustee or associates of the Trustee and agents of either of them: Trustee s fees 1,825 8,492 Other expenses: Audit fee 6,780 6,780 Safe custody charges 9,328 8,820 Printing & stationery 1,902 2,346 FCA fee Revenue collection expenses 28 Professional fees 7,716 15,752 25,872 33,770 Total expenses 285, ,180 17

20 Notes to the financial statements Note 7 Taxation 30/09/18 30/09/17 (a) Analysis of tax charge for the year (b) (c) Overseas withholding tax 59,768 49,671 Overseas capital gains tax 5,188 65,523 Total taxation (Note 7(b)) 64, ,194 Factors affecting the tax charge for the year The tax assessed for the year is lower than that calculated when the standard rate of corporation tax for Authorised Unit Trusts is applied to total revenue return. The differences are explained below: Corporation tax at 20% (30/09/17: 20%) Net revenue before taxation 422, ,911 84,437 70,782 Effects of: Revenue not subject to taxation (138,341) (124,682) Overseas withholding tax 59,768 49,671 Excess management expenses unutilised 54,375 54,449 Tax relief on overseas tax suffered (471) (549) Overseas capital gains tax 5,188 65,523 Total tax charge for the year (Note 7(a)) 64, ,194 Authorised Unit Trusts are exempt from tax on capital gains in the UK. Provision for deferred taxation At 30 September 2018 the Fund had a potential deferred tax asset of 521,495 (30/09/17: 467,120) in relation to surplus management expenses of 2,607,476 (30/09/17: 2,335,602). It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise these expenses and, therefore, no deferred tax asset has been recognised in the year or the prior year. 18

21 Notes to the financial statements Note 8 Distributions The distributions take account of amounts added on the issue of units and amounts deducted on the cancellation of units, and comprise: 30/09/18 30/09/17 Interim 27,729 57,631 Final 326, , , ,023 Amounts deducted on cancellation of units 8,079 6,222 Amounts added on issue of units (4) Net distribution for the year 362, ,241 Net revenue after taxation 357, ,717 Capital tax balances 5,188 65,523 Movement of undistributed revenue 1 Net distribution for the year 362, ,241 Details of the distribution per unit are set out in the tables on page 24. Note 9 Debtors 30/09/18 30/09/17 Sales awaiting settlement 222,595 Accrued income 45,073 29,777 FCA fee prepaid Total debtors 45, ,436 Note 10 Cash and bank balances 30/09/18 30/09/17 Cash and bank balances 682, ,262 Note 11 Bank overdraft 30/09/18 30/09/17 Bank overdraft 224,249 Note 12 Other creditors 30/09/18 30/09/17 Cancellations awaiting settlement 16,500 Purchases awaiting settlement 259,853 Manager s periodic charge payable 19,886 21,287 Trustee s fees payable Safe custody charges payable 1,544 1,556 Audit fee payable 6,780 6,780 Handling charges payable 258 2,147 Total other creditors 28, ,586 19

22 Notes to the financial statements Note 13 Reconciliation of units Income Accumulation Opening units issued at 01/10/ ,144,345 Unit movements in year: Units issued 5,880 Units cancelled (273,166) Closing units at 30/09/ ,877,059 Note 14 Contingencies and commitments At 30 September 2018 the Fund had no outstanding calls on partly paid shares, no potential underwriting commitments or any other contingent liabilities (30/09/17: nil). Note 15 Unitholders funds There are two unit classes in issue within the Fund. These are income and accumulation. The Manager s periodic charge in respect of income and accumulation units is expressed as an annual percentage of the value of the property of the Fund attributable to each unit class and is currently 1.015% in respect of both income and accumulation units. Note 16 Related party transactions The Manager is a related party to the Fund by virtue of its controlling influence. The Manager is part of the Phoenix Group. Phoenix Life Limited which is also part of the Phoenix Group, is a material unitholder in the Fund and therefore a related party, holding 99.71% of the accumulation units at the year end (30/09/17: 99.73%). Manager s periodic charge paid to the Manager, Phoenix Unit Trust Managers Limited, (and registration fees paid to Standard Life Investments (Mutual Funds) Limited) or its associates are shown in Note 6(a) and details of the units issued and cancelled by the Manager are shown in the Statement of change in net assets attributable to unitholders and Note 8. Any balances due to/from the Manager or its associates at 30 September 2018 in respect of these transactions are shown in Notes 9 and 12. Note 17 Financial instruments In accordance with the investment objective, the Fund holds certain financial instruments. These comprise: securities held in accordance with the investment objective and policies; derivative transactions which the Fund may also enter into, the purpose of which is to manage the currency and market risks arising from the Fund s investment activities; and cash and short term debtors and creditors arising directly from operations. 20

23 Notes to the financial statements Note 17 Financial instruments (continued) Currency exposure An analysis of the monetary assets and liabilities at the year end is shown below: Net currency assets Net currency assets 30/09/18 30/09/17 Currency Monetary Non- Total Monetary Non- Total exposure monetary exposure exposure monetary exposure exposure exposure Sterling (252,999) 751, , , , ,163 Australian Dollar 17,405 3,988,370 4,005,775 31,766 4,788,605 4,820,371 Hong Kong Dollar 18,905 7,331,492 7,350,397 7,321 6,190,561 6,197,882 Indian Rupee 1,073 1,944,896 1,945, ,672,694 1,673,286 Korean Won 1 2,475,201 2,475,202 (40,338) 3,895,013 3,854,675 Singapore Dollar 1,123,004 1,123, , ,361 Taiwan Dollar 558,486 2,118,168 2,676, ,293 2,387,543 2,808,836 Indonesian Rupiah 508, , , ,035 US Dollar 125,059 1,960,194 2,085, ,957 2,714,299 2,851,256 Malaysian Ringgit 238, ,339 2,983 85,505 88,488 Other foreign currencies* 6,676 1,056,955 1,063,631 5, , , ,606 23,496,201 23,970, ,080 24,244,329 25,017,409 * foreign currencies included within other foreign currencies above amounts to less than 5% (30/09/17: 2%) of the net asset value of the Fund. Income received in other currencies is converted to Sterling on or near the date of receipt. The Fund does not hedge or otherwise seek to avoid, movement risk on accrued income. Interest profile At the year end date, 1.91% (30/09/17: 3.31%) of the Fund s net assets by value were interest bearing. Interest rates earned/paid on deposits are earned/paid at a rate linked to LIBOR (London Interbank Offered Rate) or international equivalent. Sensitivity analysis Interest rate risk sensitivity As the majority of the Fund s financial assets are non interest bearing, the Fund is only subject to limited exposure to fair value interest rate risk due to fluctuations in levels of market interest rates and therefore, no sensitivity analysis has been provided. Foreign currency risk sensitivity A five percent increase in the value of the Fund s foreign currency exposure would have the effect of increasing the return and net assets by 1,174,809 (30/09/17: 1,213,344). A five percent decrease would have an equal and opposite effect. Price risk sensitivity A five percent increase in the value of the Fund s portfolio would have the effect of increasing the return and net assets by 1,198,540 (30/09/17: 1,250,870). A five percent decrease would have an equal and opposite effect. 21

24 Notes to the financial statements Note 18 Fair value of investments The fair value of the Fund s investments has been determined using the hierarchy below. This complies with the Amendments to FRS102 Fair value hierarchy disclosures issued by the Financial Reporting Council in March Level 1 The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date. Level 2 Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly. Level 3 Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability. For the year ended 30/09/18 Level Total Investment assets Equities 23,496,201 23,496,201 23,496,201 23,496,201 For the year ended 30/09/17 Level Total Investment assets Equities 24,244,329 24,244,329 24,244,329 24,244,329 Note 19 Portfolio transaction costs For the year ended 30/09/18 Other Total Value Commission Taxes expenses costs Analysis of total purchases costs % % % Equity transactions 7,255,878 5, , , ,266,747 Total 7,255,878 5,216 3,827 1,826 7,266,747 Other Total Value Commission Taxes expenses costs Analysis of total sales costs % % % Equity transactions 8,865,602 (7,580) (0.09) (2,133) (0.02) (8,174) (0.09) 8,847,715 Total 8,865,602 (7,580) (2,133) (8,174) 8,847,715 Commission and taxes as % of average net assets: Commission 0.05% Taxes 0.02% Other expenses 0.04% 22

25 Notes to the financial statements Note 19 Portfolio transaction costs (continued) For the year ended 30/09/17 Other Total Value Commission Taxes Expenses costs Analysis of total purchases costs % % % Equity transactions 10,082,555 17, , , ,105,138 Total 10,082,555 17,144 3,920 1,519 10,105,138 Other Total Value Commission Taxes Expenses costs Analysis of total sales costs % % % Equity transactions 11,778,616 (20,104) (0.17) (3,147) (0.03) (12,767) (0.11) 11,742,598 Corporate actions 325, ,662 Total 12,104,278 (20,104) (3,147) (12,767) 12,068,260 Commission and taxes as % of average net assets: Commission 0.15% Taxes 0.03% Other expenses 0.06% Portfolio transaction costs are incurred by the Fund when buying and selling underlying investments. These costs vary depending on the class of investment, country of exchange and method of execution. These costs can be classified as either direct or indirect transaction costs: Direct transaction costs: Broker commissions, fees and taxes. Indirect transaction costs: Dealing spread the difference between buying and selling prices of the underlying investments. At the Balance sheet date the portfolio dealing spread was 0.27% (30/09/17: 0.30%) being the difference between the respective bid and offer prices for the Fund s investments. Note 20 Post Balance sheet events As indicated in the accounting policies in Note 1(b), the investments have been valued at 12 noon on 28 September Since that date the Fund s quoted bid prices have fallen from p to p for Accumulation units and from p to p for Income units as at 14 January 2019 (the latest applicable date before completion of the accounts), a fall of 6.53% and 6.54% for Accumulation and Income units respectively. 23

26 Distribution tables For the year ended 30 September 2018 Interim distribution in pence per unit Group 1: units purchased prior to 1 October 2017 Group 2: units purchased 1 October 2017 to 31 March pence pence per unit per unit Net paid paid income Equalisation 31 May 31 May Income Group Group Accumulation Group Group Final distribution in pence per unit Group 1: units purchased prior to 1 April 2018 Group 2: units purchased 1 April 2018 to 30 September pence pence per unit per unit Net payable paid income Equalisation 30 Nov 30 Nov Income Group Group Accumulation Group Group Equalisation This applies only to units purchased during the distribution period (Group 2 units). It is the average amount of revenue included in the purchase price of all Group 2 units and is refunded to the holders of these units as a return of capital. Being capital it is not liable to income tax but must be deducted from the cost of the units for capital gains tax purposes. 24

27 Responsibilities of the manager and the trustee a) The Manager of the Fund is required by the Financial Conduct Authority s Collective Investment Schemes Sourcebook ( the Sourcebook ) to prepare financial statements for each annual accounting period which give a true and fair view of the financial position of the Fund at the end of that period and the net revenue or expense and the net gains or losses on the property of the Fund for the period then ended. In preparing these financial statements, the Manager is required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are prudent and reasonable; state whether applicable accounting standards have been followed subject to any material departure disclosed and explained in the financial statements; and prepare the financial statements on the basis that the Fund will continue in operation unless it is inappropriate to presume this. The Manager is also required to manage the Fund in accordance with the Trust Deed, the Prospectus and the Sourcebook, maintain proper financial records to enable them to ensure that the financial statements comply with the Statement of Recommended Practice for Authorised Funds as issued by the IA in May 2014 (amended June 2017) and the Sourcebook and take reasonable steps for the prevention and detection of fraud and other irregularities. b) The Depositary in its capacity as Trustee of the PUTM Far Eastern Unit Trust must ensure that the Trust is managed in accordance with the Financial Conduct Authority s Collective Investment Schemes Sourcebook, the Financial Services and Markets Act 2000, as amended, (together the Regulations ), the Trust Deed and Prospectus (together the Scheme documents ) as detailed below. The Depositary must in the context of its role act honestly, fairly, professionally, independently and in the interests of the Trust and its investors. The Depositary is responsible for the safekeeping of all custodial assets and maintaining a record of all other assets of the Trust in accordance with the Regulations. The Depositary must ensure that: the Trust s cash flows are properly monitored and that cash of the Trust is booked in cash accounts in accordance with the Regulations; the sale, issue, repurchase, redemption and cancellation of units are carried out in accordance with the Regulations; the value of units of the Trust are calculated in accordance with the Regulations; any consideration relating to transactions in the Trust s assets is remitted to the Trust within the usual time limits; the Trust s income is applied in accordance with the Regulations; and the instructions of the Authorised Fund Manager ( the AFM ), which is the UCITS Management Company, are carried out (unless they conflict with the Regulations). The Depositary also has a duty to take reasonable care to ensure that the Trust is managed in accordance with the Regulations and the Scheme documents of the Trust in relation to the investment and borrowing powers applicable to the Trust. 25

28 Trustee s report and directors statement Report of the Trustee to the Unitholders of the PUTM Far Eastern Unit Trust for the year from 1 October 2017 to 30 September Having carried out such procedures as we considered necessary to discharge our responsibilities as Depositary of the Trust, it is our opinion, based on the information available to us and the explanations provided, that, in all material respects the Trust, acting through the AFM: i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Trust s units and the application of the Trust s income in accordance with the Regulations and the Scheme documents of the Trust; and ii) has observed the investment and borrowing powers and restrictions applicable to the Trust in accordance with the Regulations and the Scheme documents of the Trust. London 21 January 2019 HSBC Bank plc Directors statement In accordance with the requirements of the Collective Investment Schemes Sourcebook as issued and amended by the Financial Conduct Authority, we hereby certify the report on behalf of the Directors of Phoenix Unit Trust Managers Limited. Birmingham Craig Baker, Director 21 January 2019 Andrew Moss, Director 26

29 Independent auditor s report to the unitholders of the PUTM Far Eastern Unit Trust Opinion We have audited the financial statements of the PUTM Far Eastern Unit Trust ( the Fund ) for the year ended 30 September 2018 which comprise the Statement of Total Return, the Statement of Change in Net Assets attributable to Unitholders, the Balance Sheet, the Distribution Tables and the related Notes 1 to 20, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 The Financial Reporting Standard applicable to the UK and Republic of Ireland. In our opinion, the financial statements: give a true and fair view of the financial position of the Fund as at 30 September 2018 and of the net revenue and the net capital gains on the scheme property of the Fund for the year then ended; and have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice including FRS 102 The Financial Reporting Standard applicable to the UK and Republic of Ireland. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor s responsibilities for the audit of the financial statements section of our report below. We are independent of the Fund in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: the Manager s use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or the Manager has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Fund s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. 27

30 Independent auditor s report to the unitholders of the PUTM Far Eastern Unit Trust Other information The other information comprises the information included in the Annual Report other than the financial statements and our auditor s report thereon. The Manager is responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the rules of the Collective Investment Schemes Sourcebook of the Financial Conduct Authority In our opinion: the financial statements have been properly prepared in accordance with the Statement of Recommended Practice relating to Authorised Funds, the rules of the Collective Investment Schemes Sourcebook of the Financial Conduct Authority and the Trust Deed; the information given in the Manager s report for the financial year for which the financial statements are prepared is consistent with the financial statements; and there is nothing to indicate that proper accounting records have not been kept or that the financial statements are not in agreement with those records. Matters on which we are required to report by exception We have nothing to report in respect of the following matter in relation to which the Collective Investment Schemes Sourcebook of the Financial Conduct Authority rules requires us to report to you if, in our opinion: we have not received all the information and explanations which, to the best of our knowledge and belief, are necessary for the purposes of our audit. Responsibilities of the Manager As explained more fully in the Manager s responsibilities statement set out on page 25, the Manager is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and 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. In preparing the financial statements, the Manager is responsible for assessing the Fund s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so. 28

31 Independent auditor s report to the unitholders of the PUTM Far Eastern Unit Trust Auditor s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council s website at This description forms part of our auditor s report. Use of our report This report is made solely to the unitholders of the Fund, as a body, pursuant to Paragraph of the rules of the Collective Investment Schemes Sourcebook of the Financial Conduct Authority. Our audit work has been undertaken so that we might state to the unitholders of the Fund those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Fund and the unitholders of the Fund as a body, for our audit work, for this report, or for the opinions we have formed. Ernst & Young LLP Statutory Auditor Edinburgh 21 January 2019 Notes: 1. The maintenance and integrity of the Phoenix Unit Trust Managers Limited web site is the responsibility of the Manager; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site. 2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 29