SHARIAH PRS-GROWTH FUND

Transcription

1

2 CONTENTS PAGE 1 General Information 1 2 PRS Provider s Report 3 3 Policy On Stockbroking Rebates And Soft Commissions 11 4 Statement By The PRS Provider 12 5 Scheme Trustee s Report 13 6 Shariah Adviser s Report 14 7 Statement Of Comprehensive Income 15 8 Statement Of Financial Position 16 9 Statement Of Changes In Net Assets Attributable To Members Statement Of Cash Flows Summary Of Significant Accounting Policies Notes To The Financial Statements Corporate Information 40 i

3

4 MANULIFE 1 GENERAL INFORMATION 1.1 THE FUND The Fund commenced operations on 14 August 2013 and will continue its operations until terminated as provided under Clause 14.4 of the Deed. 1.2 FUND CATEGORY Core (Growth) 1.3 OBJECTIVE OF THE FUND The Fund aims to facilitate accumulation of retirement savings* by providing capital growth over the long term. * Please note that this Fund is neither a capital guaranteed fund nor a capital protected fund, therefore, a Member s capital is neither guaranteed nor protected. 1.4 DISTRIBUTION POLICY Income distribution is incidental and if any, will be automatically reinvested and distributed as additional Units of the Fund. 1.5 PERFORMANCE BENCHMARK The performance of the Fund is measured against the 60% FTSE Bursa Malaysia EMAS Shariah Index + 40% Maybank 12-month Islamic fixed deposit-i rate Note: Members should be aware that the risk profile of the Fund is not the same as the risk profile of the benchmark. 1.6 INVESTMENT STYLE AND STRATEGY To achieve the objective of the Fund, the Provider will at all times invest a minimum of 30% up to a maximum of 70% of the Fund s NAV in Shariah-compliant equities and/or equity-related securities which would include the following: Shariah-compliant securities of companies listed on Bursa Malaysia and/or any other exchanges of countries regulated by an authority which is a member of the IOSCO; Shariah-compliant derivatives; and Shariah-compliant collective investment schemes which invest in Shariah-compliant equities and/or other equity-related securities. That part of the Fund s NAV not invested in Shariah-compliant equities and/or equity-related securities will be invested in the following: Sukuk and Islamic commercial papers carrying at least A3/P2 rating by RAM (or equivalent rating by MARC); Government sukuk, Islamic treasury bills and other government approved or guaranteed sukuk; Islamic deposits with financial institutions; Islamic money market instruments such as Islamic negotiable instruments and Islamic accepted bills; and Shariah-compliant collective investment schemes which invest in sukuk and/or Islamic money market instruments. 1

5 Further, the Fund may invest up to 30% of the Fund s NAV at any time in foreign markets such as the Asia Pacific region whenever opportunities arise. The Asia Pacific region would include but are not limited to Australia, Hong Kong, Indonesia, the Philippines, South Korea, India, Singapore, Taiwan and Thailand. Additionally, the Fund may, in the first 5 years from its launch or until its NAV has reached RM200 million (whichever is earlier), invest in Shariah-compliant Collective Investment Schemes (CISs) managed by the Provider up to a maximum of 70% of the Fund s NAV in any one Shariah-compliant CIS, provided that their objectives are consistent with the objective of the Fund. During the six months financial period under review, the Fund remained guided by its investment objective of facilitating accumulation of retirement savings by providing capital growth over the long term. 2

6 2 PRS PROVIDER S REPORT 2.1 FUND PERFORMANCE For the six months financial period ended 28 February 2018, the Fund s return increased by 0.82% and 1.23% for Class A and Class C respectively. The Fund underperformed its benchmark return, which increased by 3.82%. The under-performance of the Fund was mainly due to its underlying Shariah-compliant fund (Manulife Shariah Dana Ekuiti) having underperformed its benchmark. The distribution of 1.55 sen and 1.60 sen per unit for Class A and Class C on 26 December 2017 had the effect of reducing the NAV per unit of the Fund, and the ex-distribution NAV per unit was RM and RM respectively. The graph below compares the 6-month performance of the Fund against its benchmark return: (i) Class A 6% 5% 4% 3% 2% 1% 0% Aug 17 Fund Performance vs. Benchmark Index Return Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Manulife Shariah PRS-Growth Fund Return Benchmark Index Return Feb 18 Source: Lipper; Morningstar; (ii) Class C 6% 5% 4% 3% 2% 1% 0% Aug 17 Fund Performance vs. Benchmark Index Return Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Manulife Shariah PRS-Growth Fund Class C Return Benchmark Index Return Feb 18 Source: Lipper; Morningstar; Fund Size The Fund s total NAV increased to RM14.65mil from RM11.46mil during the six months financial period under review. 3

7 Fund s Returns (a) (i) The graph below compares the performance of the Fund against its benchmark return since the Fund s commencement: Class A 30% 25% 20% 15% 10% 5% 0% -5% Aug 13 Dec 13 Fund Performance vs. Benchmark Index Return Apr 14 Aug Dec Apr Aug Dec Apr Aug Dec Manulife Shariah PRS-Growth Fund Return Benchmark Index Return Source: Lipper; Morningstar; Apr 17 Aug 17 Dec 17 Feb 18 (ii) Class C 14% 12% 10% 8% 6% 4% 2% 0% -2% Apr 16 Jun 16 Fund Performance vs. Benchmark Index Return Aug 16 Oct 16 Dec 16 Feb 17 Apr 17 Jun 17 Aug 17 Oct 17 Dec 17 Feb 18 Manulife Shariah PRS-Growth Fund Class C Return Benchmark Index Return Source: Lipper; Morningstar; (b) (i) Average Total Return of the Fund: Class A For the financial period ended 28 February 2018 Fund (% p.a.) Benchmark (% p.a.) 1 year years Since commencement Commencement Date: 14 August 2013 Source: Lipper; Morningstar; 4

8 (ii) Class C For the financial period ended 28 February 2018 Fund (% p.a.) Benchmark (% p.a.) 1 year Since commencement Commencement Date: 28 April 2016 Source: Lipper; Morningstar; (c) (i) Annual Total Return of the Fund: Class A For the financial period ended: Fund (% p.a.) Benchmark (% p.a.) 28 February February February (2.58) 28 February Since commencement to 28 February Commencement Date: 14 August 2013 Source: Lipper; Morningstar; (ii) Class C For the financial period ended: Fund (% p.a.) Benchmark (% p.a.) 28 February Since commencement to 28 February Commencement Date: 28 April 2016 Source: Lipper; Morningstar; BASES OF CALCULATION 1. Net Asset Value (NAV) Net Asset Value of the Fund is determined by deducting the value of all the Fund s liabilities from the value of all the Fund s assets, at the valuation point. 2. Net Asset Value per unit Net Asset Value per unit is the net asset value of the Fund divided by the total number of units in circulation, at the valuation point. 3. Fund s Return Fund s return can be calculated based on the computation methods as follows: Daily Total Fund s Return = {[End NAV (Ex-distribution) - Beginning NAV + Dividend Distribution] / Beginning NAV} x 100% Total Fund s Return Average Total Return = Total Fund s return for the period is derived from geometrically linking together the daily total fund s returns. The linking formula is = [(1+ R 1 ) x (1+ R 2 ) x (1+ R n )] -1 where: R 1 is the first daily return for the period, R 2 is the second daily return for the period, and R n is the last daily return for the period. = Annualised Total Return (Actual number of days in a year/ [(1+ Total fund s return for the period) number of days during the period) -1] x 100% 5

9 The following table shows other financial and performance data of the Fund for the past three financial periods: Fund Data NAV (RM) - Class A - Class C Units in Circulation ('000) - Class A - Class C NAV (RM per unit) - Class A - Class C Highest / Lowest NAV (RM per unit) - Class A - Class C Total Fund Return (%) - Class A - NAV Return (%) - Income Return (%) 28 February ,433,424 1,218,667 23,533 2, / / (1.82) February ,335, ,504 16, / / (1.14) February ,282,308-9, / Total Fund Return (%) - Class C - NAV Return (%) - Income Return (%) Final Distribution - Class A Gross (RM) Net (RM) Ex-Date 1.23 (1.41) Final Distribution - Class C Gross (RM) Net (RM) Ex-Date Management Expenses Ratio (%) Portfolio Turnover Ratio (times)

10 NOTES (i) Management Expenses Ratio (MER) MER can be calculated based on the ratio of the sum of fees and the recovered expenses of the fund to the average value of the fund calculated on a daily basis. Fees of the fund + Recovered expenses of the fund Average value of the fund calculated on a daily basis x 100 Where: Fees Recovered expenses Average value of the fund = All ongoing fees deducted / deductible directly from the fund in respect of the period covered by the management expense ratio, expressed as a fixed amount, calculated on a daily basis. This would include the annual scheme management fee, the annual scheme trustee fee and any other fees deducted / deductible directly from the fund; = All expenses recovered from/ charged to the fund, as a result of the expenses incurred by the operation of the fund, expressed as a fixed amount. This should not include expenses that would otherwise be incurred by an individual investor (e.g. brokerage, taxes and levies); and = The NAV of the fund, including net income value of the fund, less expenses on an accrued basis, in respect of the period covered by the management expense ratio, calculated on a daily basis. The MER for financial period is higher as compared to the previous financial period mainly due to the increase in expenses incurred. (ii) Portfolio Turnover Ratio (PTR) PTR can be calculated based on the ratio of the average sum of acquisitions and disposals of the Shariah-compliant fund for the period to the average value of the fund for the period calculated on a daily basis. [Total acquisitions of the fund for the period + Total disposals of the fund for the period]/2 Average value of the fund calculated on a daily basis The PTR for the financial period is lower as compared to the previous financial period mainly due to the increase in average value of the fund. The table below shows the impact on NAV arising from distribution distributed for the last three financial periods: (i) Class A Cum date Details 22 December November November 2015 NAV before distribution (RM per unit) Less: Distribution (RM per unit) (0.0155) (0.0130) (0.0115) NAV after distribution (RM per unit)

11 (i) Class C Details Cum date 22 December 2017 NAV before distribution (RM per unit) Less: Distribution (RM per unit) (0.0160) NAV after distribution (RM per unit) The Provider wishes to highlight that past performance of the Fund is not an indication of future performance. The price of units and the investment returns may go down, as well as up. 2.2 ASSET ALLOCATION Asset allocation for the past three financial periods: Sector Allocation 28 February 2018 % of Net Asset Value 28 February February 2016 Consumer Products Industrial Products Infrastructure Project Companies Plantation Properties Trading / Services Total Quoted Investments Shariah-compliant Collective Investment Schemes Unquoted sukuk Total Investments Other Assets & liabilities As at 28 February 2018, the Fund was 97.75% invested, out of which 67.04% was in Shariahcompliant collective investment schemes, 13.83% in quoted Shariah-compliant investments and 16.88% in unquoted sukuk. 2.3 MARKET REVIEW Equity The six months financial period under review (1st September 2017 to 28th February 2018) started off with global markets continuing its uptrend, driven by the prospects of a synchronised global growth, accommodative central banks, and positive political developments. The US markets recorded new highs as it continued to post strong economic data. Its corporate sector had a very encouraging results season, particularly from its technology-based companies. In addition, its tax reform bill was successfully passed in the House of Representatives and the Senate, and signed into law. 8

12 For Asia, Japan continued its economic revival, registering its eighth consecutive quarter of gross domestic product (GDP) growth. In addition, the Bank of Japan continued to assure the markets that it intends to maintain its dovish stance, which added more to the bullish sentiment throughout the period. In Europe, the Eurozone recovery continues to gain traction, with consumer confidence and the composite purchasing managers index business survey close to record highs. Malaysia however bucked the global trend, with its equity market weak at the beginning of the period from a lack of fresh catalysts. The 2018 Budget announcement failed to excite as it came in generally in line with expectations. The Malaysian market only began to rally strongly in tandem with the region at the end of 2017 and into January It was led by the banking stocks on the back of Bank Negara raising the Overnight Policy Rate (OPR) by 25bps, and the improving economic outlook. Nonetheless, for the corporate sector, its 3Q and 4Q 2017 results reporting seasons were uninspiring, with the large caps coming generally in line with expectations. For the period under review, the FBM KLCI registered a return of 4.68%. The broader markets were mixed versus the FBM KLCI, with the FBM Mid 70, and FBM Small Cap index returning 7.00% and -0.16% respectively. The FBM Emas Shariah Index was up by 5.32%. Fixed Income During the interim period under review (1st September 2017 to 28th February 2018), US Treasuries (UST) yield curve bear flattened. The yields of 2-year, 5-year, 10-year and 30- year UST rose 92 bps, 94 bps, 74 bps and 40 bps, respectively. The rise in yields were precipitated by developments in relation to Trump s tax reform plan, which was expected to boost economy and inflation, and thus raised expectations of further tightening by the Federal Reserve. In Malaysia, the Malaysian Government Securities (MGS) yield curve bear steepened, with the 3-year 5-year, 7-year and 10-year MGS yields up 4 bps, 6 bps, 9 bps and 14 bps, respectively. The rise in yields was in line with the global bond rout during the period. Despite a 25 bps hike in Overnight Policy Rate (OPR) by Bank Negara Malaysia (BNM) in January 2018, short-term yields were suppressed by demand of short-term bonds by foreigners banking on MYR appreciation. On the corporate front, activities on MYR-denominated corporate bonds were relatively slower. Flows were driven by portfolio rebalancing activities and bargain-hunting. A slew of primary issuances emerged in 4Q 2017 as investors scrambled to issue in anticipation of a rate hike by BNM in early MARKET OUTLOOK AND INVESTMENT STRATEGY Equity The global growth trend is looking increasingly synchronised and is forecast to accelerate, with an impressive list of countries and sectors growing at the fastest pace in a decade. This recovery is backed by a broad based growth in corporate sales and earnings from all the major economies the US, China, Europe and Japan. Earnings forecast for the emerging and developed markets have been upgraded across the board, referencing a positive lift in the global growth cycle. Amid much talk of central bank tightening, global interest rates remain low and monetary policy still accommodative. Nonetheless, in the US, expectations of acceleration in inflation and subsequent tightening by the Federal Reserve have tempered investment sentiment. Markets may turn increasingly volatile in the near term, but over the mid- to-longer term, market conditions should remain encouraging, underpinned by improving global growth and corporate earnings. 9

13 We expect Malaysia s GDP growth to sustain in 2018, underpinned by strong exports, rebounding commodity prices, recovery in private consumption, and infrastructure spending. We expect corporate earnings growth momentum to pick up, as many are well-positioned to benefit from the anticipated recovery in global demand, following capacity expansion over the past two years. Our strategy is to focus on companies that will benefit from cyclical opportunities such as a robust economic backdrop, against which corporate earnings are set to catch up with GDP growth, and firm commodity prices. We continue to stay invested and focus on companies that demonstrate growth and consistent cash flows. Fixed Income We believe external factors will continue to be key drivers of the local bond market. These include monetary policies of major global and regional economies, and US fiscal policies. We also remain vigilant on geopolitical developments. The recent 25 bps hike in OPR is viewed as normalisation of rate; probability of further rate hikes in 2018 is very much data-dependent. Until a clearer picture emerges, yields should stay rangebound, driven by external market uncertainties. Foreign investors may also tread more cautiously as the 14th General Election (GE14) approaches, resulting in some market uncertainties. In the medium term we expect a flatter yield curve. Short term yields should rise following the recent hike but long term yields may not rise significantly given the still benign inflation outlook. 2.5 BREAKDOWN OF UNIT HOLDINGS BY SIZE AS AT 28 FEBRUARY 2018 The following table presents the distribution of the Fund s members according to size of unit holdings: Class A Size of Holdings No. of Members % No. of Units Held ( 000) % 5,000 and below 1, , ,001 to 10, , ,001 to 50, , ,001 to 500, , Above 500, , PRS Provider s stock Total 2, , Class C Size of Holdings No. of Members % No. of Units Held ( 000) % 5,000 and below ,001 to 10, ,001 to 50, ,001 to 500, Above 500, PRS Provider s stock Total ,

14 3 POLICY ON STOCKBROKING REBATES AND SOFT COMMISSIONS The PRS Provider did not retain any rebates. For the six months financial period ended 28 February 2018, the PRS Provider or its Fund Manager did not receive any rebates or soft commissions. 11

15 4 STATEMENT BY THE PRS PROVIDER We, Edmond Cheah Swee Leng and Chong Soon Min, being two of the Directors of Manulife Asset Management Services Berhad (the PRS Provider ), do hereby state that, in the opinion of the PRS Provider, the unaudited financial statements comprising the statement of comprehensive income, statement of financial position, statement of changes in net assets attributable to members, statement of cash flows, summary of significant accounting policies and notes to the financial statements, are drawn up in accordance with the provisions of the Deeds and give a true and fair view of the financial position of the Fund as at 28 February 2018 and of its financial performance, changes in net assets attributable to members and cash flows of the Fund for the six months financial period ended 28 February 2018 in accordance with the Malaysian Financial Reporting Standards ( MFRS ) and the International Financial Reporting Standards ( IFRS ). For and on behalf of the PRS Provider MANULIFE ASSET MANAGEMENT SERVICES BERHAD EDMOND CHEAH SWEE LENG Director CHONG SOON MIN Director Kuala Lumpur 23 April

16 5 SCHEME TRUSTEE S REPORT TO THE MEMBERS OF MANULIFE We, CIMB Islamic Trustee Berhad being the Scheme Trustee of Manulife Shariah PRS- Growth Fund ( the Fund ) are of the opinion that Manulife Asset Management Services Berhad ( the PRS Provider ), acting in the capacity of PRS Provider of the Fund, has fulfilled its duties in the following manner for the six months financial period ended 28 February a) The Fund has been managed in accordance with the limitations imposed on the investment powers of the PRS Provider under the Deed, the Securities Commission Malaysia s Guidelines on Private Retirement Schemes, the Capital Market and Services Act 2007 (as amended from time to time) and other applicable laws; b) Valuation and pricing of units of the Fund has been carried out in accordance with the Deed and relevant regulatory requirements; c) Creation and cancellation of units have been carried out in accordance with the Deed and relevant regulatory requirements; and d) Total distribution of returns by the Fund is relevant and reflect the investment objective of the Fund. For and on behalf of CIMB Islamic Trustee Berhad Lee Kooi Yoke Chief Operating Officer Kuala Lumpur 23 April

17 6 SHARIAH ADVISER S REPORT TO THE MEMBERS OF MANULIFE We have acted as the Shariah Adviser of Manulife Shariah PRS-Growth Fund. Our responsibility is to ensure that the procedures and processes employed by Manulife Asset Management Services Berhad are in accordance with Shariah principles. In our opinion, Manulife Asset Management Services Berhad has managed and administered Manulife Shariah PRS-Growth Fund in accordance with Shariah principles and complied with applicable guidelines, rulings and decisions issued by the Securities Commission pertaining to Shariah matters for the six months financial period ended 28 February In addition, we also confirm that the investment portfolio of Manulife Shariah PRS-Growth Fund comprises securities which have been classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission. As for the securities which are not certified by the Shariah Advisory Council of the Securities Commission, we have reviewed the said securities and opined that these securities are designated as Shariah-compliant. For and on behalf of the Shariah Adviser IBFIM MUHAMMAD KHAIRULNIZAM BIN ALIAS Consultant (Shariah)/Designated Person Responsible for Shariah Advisory Kuala Lumpur 23 April

18 7 STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018 INVESTMENT INCOME Note Dividend income 80, ,081 Profit income 61, Net gain on financial assets at fair value through profit or loss 7 53,935 81,691 RM RM 195, ,863 EXPENSES Management fee 3 81,896 41,741 Scheme Trustee s fee 4 1, Private Pension Administrator s administration fee 5 2,621 1,582 Other expenses 24,797 10, ,952 54,677 PROFIT BEFORE FINANCE COST AND TAXATION 85, ,186 FINANCE COST (EXCLUDING INCREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS) Distributions: - Class A , Class C 17 27, ,473 LOSS AFTER FINANCE COST AND BEFORE TAXATION (273,179) (18,287) TAXATION DECREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS (273,179) (18,287) Decrease in net assets attributable to members is made up of the following: Realised (216,225) (131,997) Unrealised (56,954) 113,710 (273,179) (18,287) The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 15

19 8 STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2018 Note RM RM ASSETS Financial assets at fair value through profit or loss 7 14,320,921 9,716,524 Amount due from PRS Provider - Creation of units 17,905 8,220 Dividends receivable 1,240 - Cash and cash equivalents 8 336,708 80,161 TOTAL ASSETS 14,676,774 9,804,905 LIABILITIES Amount due to PRS Provider - Management fee 14,303 7,240 Amount due to Scheme Trustee Amount due to Private Pension Administrator Other payables 9 9,652 7,390 TOTAL LIABILITIES (EXCLUDING NET ASSETS ATTRIBUTABLE TO MEMBERS) 24,683 15,115 NET ASSET VALUE ( NAV ) OF THE FUND 14,652,091 9,789,790 NET ASSETS ATTRIBUTABLE TO MEMBERS 14,652,091 9,789,790 REPRESENTED BY: FAIR VALUE OF OUTSTANDING UNITS - Class A 13,433,424 9,335,286 - Class C 1,218, ,504 14,652,091 9,789,790 UNITS IN CIRCULATION (UNITS) - Class A 11 23,532,662 16,798,613 - Class C 11 2,053, ,265 25,586,622 17,591,878 NET ASSET VALUE PER UNIT - Class A Class C The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 16

20 9 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO MEMBERS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018 Note NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE BEGINNING OF THE FINANCIAL PERIOD 11,464,574 6,717,755 Movements due to the units created and cancelled during the financial period: Creation of units arising during applications 3,182,367 3,052,377 Creation of units arising during distributions 358, ,473 Cancellation of units (79,862) (127,528) RM RM 14,925,270 9,808,077 DECREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS (273,179) (18,287) NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE END OF THE FINANCIAL PERIOD 14,652,091 9,789,790 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 17

21 10 STATEMENT OF CASH FLOWS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018 Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Purchase of Shariah-compliant investments (5,785,850) (5,987,970) Sale of Shariah-compliant investments 2,913,601 3,039,691 Dividend income received 80, ,081 Profit income received 61, ,172 PRS provider's s fee paid (127,437) (64,315) Scheme Trustee s fee paid (1,599) (943) Private Pension Administrator s fee (2,559) (1,582) Payment for other fees and expenses (26,296) (9,909) Net cash used in operating activities (2,888,110) (2,732,775) CASH FLOWS FROM FINANCING ACTIVITIES Distribution paid - (165,473) Proceeds from creation of units 3,205,602 3,052,377 Payments for cancellation of units (79,862) (127,528) Net cash generated from financing activities 3,125,740 2,759,376 Net increase in cash and cash equivalents 237,630 26,601 Cash and cash equivalents at beginning of the financial period 99,029 53,560 Cash and cash equivalents at end of the financial period 8 336,659 80,161 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 18

22 11 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018 The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements. The policies have been consistently applied to all the financial years presented, unless otherwise stated. A BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The unaudited financial statements of the Fund have been prepared in accordance with the Malaysian Financial Reporting Standards ( MFRS ) and the International Financial Reporting Standards ( IFRS ). The financial statements have been prepared under the historical cost convention as modified by financial assets at fair value through profit or loss. The preparation of financial statements in conformity with MFRS and IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires the PRS Provider to exercise judgement in the process of applying the Fund s accounting policies. Although these estimates and judgement are based on the PRS Provider s best knowledge of current events and actions, actual results may differ. There are no significant areas of judgement or complexity that have significant effect on the amounts recognised in the financial statements. There are no critical accounting estimates and assumptions used in the preparation of the financial statements of the Fund for the six months financial period ended 28 February The Fund has applied the following amendments for the first time for the financial year beginning 1 March 2017: Amendments to MFRS 107 Statement of Cash Flows - Disclosure Initiatives (effective from 1 January 2017) introduce an additional disclosure in changes in liabilities arising from financing activities. The adoption of these amendments did not have any impact on the current period or any prior period and is no likely to affect future periods. Financial year beginning on/after 1 March 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investment in equity¹ instruments is always measured at fair value through profit or loss with a irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument² is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest³. For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded Shariah-compliant derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in OCI rather than the income statement, unless this creates an accounting mismatch 1 For the purposes of the investments made by the Fund, equity instruments and derivatives refers to Shariah-compliant equity instruments and Shariah-compliant derivatives. 2 For the purposes of the investments made by the Fund, debt instruments refers to sukuk. 3 For the purposes of this Fund, interest refers to profits earned from Shariah-compliant investments. 19

23 MFRS 9 introduces an expected credit losses model on impairment that replaces the incurred loss impairment model used in MFRS 139.The expected credit losses model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements. B (i) FINANCIAL ASSETS AND FINANCIAL LIABILITIES Classification The Fund classifies its financial assets in the following categories: at fair value through profit or loss and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial assets at fair value through profit or loss Financial assets are designated at fair value through profit or loss when they are managed principally for the purpose of selling or repurchasing in the near term and their peformance evaluated on a fair value basis. The Fund designates its investment in Shariah-compliant collective investment schemes, quoted Shariah-compliant investment and unquoted sukuk as financial assets at fair value through profit or loss at inception. Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as noncurrent assets. The Fund s receivables comprise amount due from PRS Provider and cash and cash equivalents in the statement of financial position. Other financial liabilities The Fund classifies amount due to Provider, amount due to Scheme Trustee, amount due to Private Pension Administrator and other payables as other financial liabilities. (ii) Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade date, the date on which the Fund commits to purchase or sell the assets. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss. Receivables are initially recognised at fair value plus transaction costs. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. (iii) Subsequent measurement - gains and losses Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss are included in the profit or loss in the financial period which they arise. Receivables are subsequently carried at amortised cost using the effective profit rate method. 20

24 (iv) Subsequent measurement - impairment of financial assets The Fund assesses at the end of the reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the Fund uses to determine that there is objective evidence of an impairment loss include indications that the obligor is experiencing significant financial difficulty, high probability that the obligor will enter bankruptcy or other distressed financial reorganisation and events that would adversely affect the financial capability of the obligor. The amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective profit rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If receivables has a variable profit rate, the discount rate for measuring any impairment loss is the current effective profit rate determined under the contract. As a practical expedient, the Fund may measure impairment on the basis of an instrument s fair value by using an observable market price. 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 is recognised (such as an improvement in the debtor s/issuer s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss. When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined. (v) De-recognition Financial assets are de-recognised when the rights to receive cash flows from the Shariahcompliant investments have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership. Financial liabilities are de-recognised when they are extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or has expired. C CREATION AND CANCELLATION OF UNITS The members' contributions to the Fund meet the definition of the puttable instruments classified as financial liability under MFRS 32 Financial Instruments: Presentation. The Fund issues cancellable units, comprising three classes of units, known respectively as the Class A, Class B and Class C, which are cancelled at the member s option and do not have identical features subject to restrictions as stipulated in the Disclosure Document and SC Guidelines on PRS. The units are classified as financial liabilities. Cancellable units can be put back to the Fund at any time for cash equal to a proportionate share of the Fund s NAV of respective classes. The outstanding units are carried at the redemption amount that is payable at the date of the statement of financial position if the member exercises the right to put back the unit to the Fund. Units are created and cancelled at the member s option at prices based on the Fund s NAV per unit of respective classes at the close of business on the relevant dealing day. The Fund s NAV per unit of respective classes is calculated by dividing the net assets attributable to members of respective classes with the total number of outstanding units of respective classes. 21

25 D INCOME RECOGNITION Profit income from Islamic deposits placed with licensed Islamic financial institutions is recognised on a time proportionate and accrual basis using effective profit rate method. Dividend income on Shariah-compliant collective investment schemes is recognised on the ex-dividend date. Realised gains or losses on sale of Shariah-compliant investments are accounted for as the difference between the net disposal proceeds and the carrying amounts of Shariahcompliant investments, determined on a weighted average cost basis. E EXPENSES Expenses are accounted for on an accrual basis and charged to the statement of comprehensive income. F CASH AND CASH EQUIVALENTS For the purpose of statement of cash flows, cash and cash equivalents comprise cash at bank and Islamic deposits held in highly liquid investments that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value. G DISTRIBUTION A distribution to the Fund s members is accounted for as a deduction from realised reserve. A proposed distribution to members is recognised in the statement of changes in equity upon approval by the Scheme Trustee. Distribution equalisation is the amount attributable to net realised income that is included in the price of units created or units cancelled by the Fund during the reporting period. H FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants and the measurement date.the information presented herein represents the estimate of fair values as at the date of statement of financial position. Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the uncertainties and assumptions could materially affect these estimates and the resulting fair value estimates. A range of methodologies and assumptions has been used in deriving the fair values of the Fund s financial instruments as at the date of statement of financial position. The total fair value of each financial instrument is not materially different from the total carrying value. The fair values are based on the following methodologies and assumptions: (a) Short-term Islamic deposits with financial institutions For Islamic deposits and placements with financial institutions with maturities of less than three months, the carrying value is a reasonable estimate of fair value. For Islamic deposits and placements with maturities of three months and above, the estimated fair value is based on discounted cash flows by using prevailing Islamic interbank money market rates at which similar Islamic deposits and placements would be made with financial institutions of similar credit risk and remaining period to maturity. 22

26 (b) Quoted Shariah-compliant collective investment schemes The estimated fair value is based on the most recent published NAV per unit or share of such Shariah-compliant collective investment schemes or, if unavailable, on the last published selling price of such unit or share (excluding any sales charge included in such selling price). (c) Quoted Shariah-compliant investments The estimated fair value is based on quoted and observable market prices. (d) Unquoted sukuk The estimated fair value is based on price quoted by a Bond Pricing Agency ( BPA ) registered with the Securities Commission. Where such a quotation is not available or where the PRS Provider is of the view that the price quoted by the BPA for a specific unquoted sukuk differs from the market price by more than 20 basis points, the PRS Provider may use the market price, provided that the PRS Provider: (i) (ii) (iii) (e) records its basis for using non-bpa price; obtains necessary internal approvals to use the non-bpa price; and keeps an audit trail of all decisions and basis for adopting the market yield. Other short-term financial instruments Other short-term financial instruments comprise amount due from/to PRS Provider, amount due to Scheme Trustee, amount due to Private Pension Administrator and other payables. The carrying values of the assets and liabilities are assumed to approximate their fair values due to the short tenure of less than one year. I FUNCTIONAL AND PRESENTATION CURRENCY Items included in 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, which is the Fund s functional and presentation currency. J TAXATION Current tax expense is determined according to the tax laws in the jurisdictions of the taxable profit earned during the financial period from the financial assets in which the Fund invests and includes all taxes based upon the taxable profit. K SEGMENT REPORTING Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Investment Committee of the PRS Provider of the Fund that undertakes strategic decisions for the Fund. L INCREASE/DECREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS Income not distributed is included in net assets attributable to members. Movements in net assets attributable to members are recognised in the statement of comprehensive income as finance costs. M MANAGEMENT FEE REBATE Management fee rebate is derived from the Shariah-compliant collective investment schemes held by the Fund on an accruals basis to ensure no double charging of management fee. It is accrued daily based on the fair value of Shariah-compliant collective investment schemes held. 23

27 12 NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY INFORMATION ON THE FUND Manulife Shariah PRS-Growth Fund ( the Fund ) has been constitued by way of a Trust Deed entered into between Manulife Asset Management Services Berhad ( the PRS PRS Provider's ) and CIMB Islamic Trustee Berhad ( Scheme Trustee ) on 17 June 2013, Second Supplement Deed dated 6 March 2015 and Third Supplemented Deed dated 10 December Hereinafter, referred as the Trust Deed is known as the Deed. The Fund was launched on 24 July 2013 and will continue its operations until terminated as provided under Clause 14.4 of the Deed. The Fund is one of the core Funds of Manulife Shariah PRS NESTEGG Series ( the Scheme ), a voluntary investment scheme designed to facilitate accumulation of retirement savings by individuals for their retirement needs. The investment objective of the Fund is to facilitate accumulation of retirement savings through a combination of income and capital growth over the long term. The Fund has three classes of Units (Class A, Class B and Class C) and are distinguished by the amount of sales charge, redemption charge, switching fee, transfer fee and amount of management fee imposed by the PRS Provider on each of those classes of Units. On the 10th anniversary of the date the first contribution was made by or on behalf of a Member holding Class A Units of a Fund, the Class A Units of such Fund held by a Member will automatically be converted into Class B Units of such Fund at no cost to the Member. Accordingly, any subsequent contributions by or on behalf of the Member after the said 10th anniversary will be utilised towards the purchase of Class B Units of any of the Funds. For the avoidance of doubt, the date the first contribution was made shall be the earliest date the first contribution was made to the Scheme or to any other private retirement scheme operated by the PRS PRS Provider's. The investment policy and principal investment strategy of the Fund is to invest a minimum of 30% up to a maximum of 70% of the Fund s net asset value in Shariah-compliant equities and/ or equity-related securities which would include Shariah-compliant securities of companies listed on Bursa Malaysia, and/or any other exchanges of countries regulated by an authority which is a member of the International Organisation of Securities Commissions ( IOSCO ), Shariah-compliant derivatives and Shariah-compliant collective investment schemes which invest in Shariah-compliant equities and/or other equity-related securities. The remaining part of the Fund s net asset value not invested in Shariah-compliant equities and/or equity-related securities will be invested in sukuk, Islamic commercial papers carrying at least A3/P2 rating by RAM (or equivalent rating by MARC), government sukuk, Islamic treasury bills and other government approved or guaranteed sukuk, Islamic deposits with financial institutions, Islamic money market instruments such as Islamic negotiable instruments and Islamic accepted bills, and Shariah-compliant collective investment schemes which invest in sukuk and/or Islamic money market instruments. The PRS Provider, Manulife Asset Management Services Berhad (MAMSB), is a whollyowned subsidiary of Manulife Holdings Berhad and holds a Capital Markets Services Licence for fund management, dealing in securities restricted to unit trusts, dealing in private retirement schemes and financial planning under the Capital Markets and Services Act MAMSB operates under the brand name of Manulife Asset Management the asset management arm of Manulife Financial Corporation. The financial statements were authorised for issue by the Board of Directors of the PRS PRS Provider's in accordance with a resolution of the Directors on 23 April

28 2 MANAGEMENT FEE REBATE MANULIFE For the financial period ended the management fee rebate is recognised at the following rates: Fund Year 2018 Year 2017 Manulife Investment Al-Ma'mun 0.50% 0.50% Manulife Investment Al-Fauzan 1.50% 1.50% Manulife Investment Al-Faid 1.50% 1.50% Manulife Investment As-Saad 0.75% 0.75% Manulife Investment Shariah Asia-Pacific 1.75% - Manulife Shariah-Dana Ekuiti 1.55% 1.55% Manulife Shariah-Dana Sukuk % 3 MANAGEMENT FEE In accordance with the Deed, the PRS Provider is entitled to management fee at a rate not exceeding 3.00% and 2.00% per annum on the net asset value attributable to the respective class of units of the Fund for Class A and Class B respectively before deducting Scheme Trustee s fee and Provider s fee for the day calculated on a daily basis. For the six months financial period ended 28 February 2018 and 28 February 2017, the management fee is recognised at 2.25% for Class A and 1.50% for Class B and Class C per annum. * The rate disclosed is exclusive of Goods and Services Tax (GST) There will be no further liability to the PRS Provider in respect of management fee other than the amount recognised above. 4 SCHEME TRUSTEE S FEE In accordance with the Deed, the Scheme Trustee is entitled to an annual Scheme Trustee s fee (excluding foreign sub-custodian fees and charges) at a rate not exceeding 0.20% per annum of the net asset value of the Fund calculated on a daily basis. For the six months financial period ended 28 February 2018, the Scheme Trustee s fee is recognised at a rate of 0.025% per annum on the net asset value of the Fund calculated on a daily basis. There will be no further liability to the Scheme Trustee in respect of Scheme Trustee s fee other than the amount recognised above. 5 PRIVATE PENSION ADMINISTRATOR ( PPA ) S ADMINISTRATION FEE For the six months financial period ended 28 February 2018, the PPA s administration fee is recognised at a rate of 0.04% (2017: 0.04%) per annum on the net asset value of the Fund calculated on a daily basis. There will be no further liability to the PPA in respect of the PPA s administration fee other than the amount recognised above. 25