1 General Information 1. 2 PRS Provider s Report 4. 3 Policy On Stockbroking Rebates And Soft Commissions Statement By The PRS Provider 13

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2 CONTENTS PAGE 1 General Information 1 2 PRS Provider s Report 4 3 Policy On Stockbroking Rebates And Soft Commissions 12 4 Statement By The PRS Provider 13 5 Scheme Trustee s Report 14 6 Statement Of Comprehensive Income 15 7 Statement Of Financial Position 16 8 Statement Of Net Assets Attributable To Members 17 9 Statement Of Cash Flows Summary Of Significant Accounting Policies Notes To The Financial Statements Corporate Information 42 i

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4 1 GENERAL INFORMATION 1.1 THE FUND MANULIFE The Fund commenced operations on 20 November 2012 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 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. 1.4 DISTRIBUTION POLICY Incidental 1.5 PERFORMANCE BENCHMARK The performance of the Fund is measured against 60% FTSE Bursa Malaysia KLCI (FBM KLCI) + 40% 12-Month Fixed Deposit (FD) Rate. 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 equities and/or equity-related securities which include the following: - 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); - Derivatives; and - Collective investment schemes which invest in equities and/or other equity-related securities. That part of the Fund s NAV not invested in equities and/or equity-related securities will be invested in fixed income instruments which would include the following: - Private debt securities, corporate bonds and commercial papers carrying at least BBB3/P2 rating by RAM (or equivalent rating by MARC); - Government bonds, treasury bills and other government approved or guaranteed bonds; - Deposits with financial institutions; - Money market instruments such as negotiable certificates of deposits and bankers acceptances; and - Collective investment schemes which invest in fixed income 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 and Thailand. As the Fund will be investing in foreign markets, the Provider intends to enter into derivative trades solely for hedging purposes to reduce the Fund s exposure to foreign exchange fluctuations. As such the derivative trades would not be considered as investments of the Fund but rather a risk-management device. Additionally, the Fund may, in the first five years from its launch or until its NAV has reached RM200 million (whichever is earlier), invest in collective investment schemes managed by the Provider up to a maximum of 70% of the Fund s NAV in any one collective investment scheme, provided that their objectives are consistent with the objective of the Fund as the Fund may not have raised sufficient capital to acquire and gain exposure to a wide enough range of investments. After the Fund has been launched for five years or once the Fund s NAV has reached RM200 million (whichever is earlier), the Fund may still invest in collective investment schemes (including collective investment schemes managed by the Provider), provided that the restrictions and limits set by the Securities Commission (SC) are complied with. The Fund s equity investment strategy is aimed at achieving superior long-term risk-adjusted returns by exploiting potential inefficiencies in the capital markets through intensive, disciplined and consistent research. The Fund adopts a combination of top-down and bottomup approaches. The top-down approach examines global and local macro-economic factors such as interest rate trends, inflation rates, supply demand trends, commodities trends, industry outlook and trends, competitiveness as well as country risk. As for the bottom-up approach, the Provider evaluates companies/stocks based on their individual attributes such as earnings/cash generation capabilities, growth drivers/opportunities, scalability of business models, management s strengths/track records and valuation gaps. Emphasis is also given to portfolio diversification and proper risk management overlay to maximise risk-adjusted returns over the long term. The Fund s maximum investment in equities and/or equity-related securities is capped at 70% of the Fund s NAV in keeping with the objective of the Fund to accumulate savings for retirement purposes. While this is an exposure to an asset class traditionally considered to be relatively more volatile, the 70% cap serves to reduce the risk of the objective of the Fund being jeopardised. The Fund s fixed income investment strategy focuses on seeking the best possible riskadjusted returns through in-depth market and proprietary credit research. This approach involves a combination of top-down and bottom-up approaches. Based on the top-down approach, the Provider examines macro-economic factors such as monetary policies, interest rate trends and inflation rate expectations to form broad portfolio strategy and duration management purposes. At the same time, a bottom-up approach is adopted for selection of individual securities whereby the underlying credit risks and structure of individual securities are assessed to identify investments with maximum risk-adjusted returns, while taking into account potential for capital appreciation due to improving credit or industry outlook. Although the Fund seeks to achieve capital appreciation, the exposure to fixed income instruments should provide some capital stability as investment in fixed income instruments is generally considered to be less volatile. The Provider will take an opportunistic approach and formulate its asset allocation strategy to ride on the economic cycle. For example, when the economy bottoms-up from recession, the Provider will search for a clearer evidence of sustainable economic recovery before overweighting on its equity asset allocation versus fixed income instruments. Likewise, when the economy has peaked and is heading towards a slow growth period, the Provider will then decide to underweight its equity asset allocation versus fixed income instruments. 2

6 If and when the Fund does invest in any of its other collective investment schemes, there will be no double-charging of management fees and sales charges as such fees and charges will be levied only at the Fund level. The management fee payable to the collective investment scheme being invested into will be rebated back to the Fund in the form of units; any sales charge usually paid for investment in the collective investment scheme being invested into will be waived. Growth is achieved from the appreciation in value of the investments of the Fund; this is why income #, if any, from the Fund will very likely not be distributed. # Income declared will be reinvested in the form of additional Units issued to Members. Temporary Defensive Measures The Provider may lower the equity exposure of the Fund if the Provider is of the opinion that the investment climate is deemed unfavourable or under adverse market conditions; as the Provider will then reallocate the Fund s investments into more defensive instruments such as deposits and/or money market instruments. For the six months financial period, the Fund remained guided by its investment objective of facilitating accumulation of retirement savings by providing capital growth over the long term. 3

7 2 PRS PROVIDER S REPORT 2.1 FUND PERFORMANCE For the six months financial period ended 28 February 2018, the Fund s return decreased by 0.57% and 0.15% for Class A and Class C respectively. The Fund underperformed its benchmark return, which increased by 3.46%. The under-performance was mainly due to its underlying Fund (Manulife Equity Plus Fund) having underperformed its benchmark during the period. The distribution of 1.40 sen per unit on Class A and 1.45 sen per unit on 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 5% 4% 3% 2% 1% 0% -1% -2% Aug 17 Fund Performance vs. Benchmark Index Return Sep 17 Oct 17 Nov 17 Dec 17 Manulife PRS-Growth Fund Return Benchmark Index Return Jan 18 Feb 18 Source: Lipper, Bloomberg & Morningstar (ii) Class C 5% 4% 3% 2% 1% 0% -1% -2% Aug 17 Fund Performance vs. Benchmark Index Return Sep 17 Oct 17 Nov 17 Dec 17 Manulife PRS-Growth Fund Class C Return Benchmark Index Return Jan 18 Feb 18 Source: Lipper, Bloomberg & Morningstar Fund Size The Fund s total NAV increased to RM27.12mil from RM22.89mil during the six months financial period under review. 4

8 Fund s Returns (a) The graph below compares the 5-year performance (for Class A) and since commencement performance (for Class C) of the Fund against its benchmark return: (i) Class A 30% 25% 20% 15% 10% 5% 0% Feb 13 Jun 13 Oct 13 Fund Performance vs. Benchmark Index Return Feb Jun Oct 14 Source: Lipper, Bloomberg & Morningstar Feb Jun Oct 15 Feb Jun Oct 16 Manulife PRS-Growth Fund Return Benchmark Index Return Feb Jun Oct Feb 18 (ii) Class C Fund Performance vs. Benchmark Index Return 14% 12% 10% 8% 6% 4% -2% 0% 2% -4% Apr 16 Jun 16 Aug 16 Oct 16 Dec 16 Feb 17 Apr 17 Jun 17 Aug 17 Oct 17 Dec 17 Feb 18 Manulife PRS-Growth Fund Class C Return Benchmark Index Return Source: Lipper, Bloomberg & 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 years Commencement Date: 20 November 2012 Source: Lipper, Bloomberg & Morningstar 5

9 (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, Bloomberg & 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 (4.25) 28 February February Commencement Date: 20 November 2012 Source: Lipper, Bloomberg & 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, Bloomberg & 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% 6

10 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 28 February ,769,757 2,349,525 49,134 4, / February ,866, ,873 40,158 1, / February ,816,417-32, / Class C Total Fund Return (%) - Class A NAV Return (%) Income Return (%) / (0.57) (3.24) / (0.06) Total Fund Return (%) - Class C NAV Return (%) Income Return (%) Final Distribution - Class A Gross (RM) Net (RM) Ex-Date (0.15) (2.83) Final Distribution - Class C Gross (RM) Net (RM) Ex-Date Management Expenses Ratio (%) Portfolio Turnover Ratio (times)

11 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 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 the 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 fund for the year to the average value of the fund for the year 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 decrease in trading activities. Impact on NAV Arising from Distribution 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) (0.0140) (0.0130) (0.0225) NAV after distribution (RM per unit)

12 (ii) Class C Details Cum date 22 December 2017 NAV before distribution (RM per unit) Less: Distribution (RM per unit) (0.0145) 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 Trading/Services Finance Industrial Products Plantation Properties Infrastructure Project Companies (IPCs) Quoted investments Collective Investment Schemes Fixed income securities Deposits with Licensed Financial Institutions Other Assets & Liabilities As at 28 February 2018, the Fund was 93.96% invested, out of which 56.72% was in collective investment schemes, 19.84% in quoted investments and 17.40% in fixed income securities. 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 their uptrends, driven by the prospects of a synchronised global growth, accommodative central banks, and positive political developments. The US market 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. 9

13 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 continued 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 - 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. 10

14 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 pickup, 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 range bound, driven by external market uncertainties. Foreign investors may also tread more cautiously as the national election 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 10,000 1, , ,001 to 50,000 1, , ,001 to 500, , Above 500, , Provider s stock Total 4, , 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, Provider s stock Total ,

15 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 Provider and its delegates did not receive any rebates or soft commissions. 12

16 4 STATEMENT BY THE PRS PROVIDER MANULIFE 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 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 equity 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

17 5 SCHEME TRUSTEE S REPORT TO THE MEMBERS OF MANULIFE We have acted as Scheme Trustee of Manulife PRS-Growth Fund ( the Fund ) for the financial period ended 28 February To the best of our knowledge, Manulife Asset Management Services Berhad ( the PRS Provider ), has operated and managed the Fund in accordance with the following:- a) limitations imposed on the investment powers of the PRS Provider and the Scheme Trustee under the Deeds, the Securities Commission's Guidelines on Private Retirement Schemes, the Capital Market and Services Act 2007 and other applicable laws; b) valuation/pricing is carried out in accordance with the Deeds and any regulatory requirements; and c) creation and cancellation of units are carried out in accordance with the Deeds and any regulatory requirements. During the financial period, a total distribution of 1.40 sen per unit (gross) Class A and 1.45 sen per unit (gross) Class C has been distributed to the members of the Fund. We are of the view that the distribution is not inconsistent with the objective of the Fund. For HSBC (Malaysia) Trustee Berhad Tan Bee Nie Head, Trustee Operations Kuala Lumpur 23 April

18 6 STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018 INVESTMENT INCOME Note Interest income 115, Gross dividend income 970, ,057 Net loss on financial assets at fair value through profit or loss 7 (997,733) (225,955) RM RM 88, ,939 EXPENSES Management fee 3 162, ,354 Scheme Trustee s fee 4 4,950 3,659 Auditors remuneration 2,728 2,728 Tax agent s fee 1,339 1,339 Private Pension Administrator s fee 5 4,949 3,659 Transaction costs 15,356 - Other expenses 31,566 19, , ,540 (LOSS)/PROFIT BEFORE FINANCE COST AND TAXATION (134,431) 549,399 FINANCE COST (EXCLUDING MOVEMENT IN NET ASSETS ATTRIBUTABLE TO MEMBERS) Distributions: - Class A 16 (639,392) (452,119) - Class C 16 (53,302) - (LOSS)/PROFIT AFTER FINANCE COST AND BEFORE TAXATION (827,125) 97,280 TAXATION (DECREASE)/INCREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS (827,125) 97,280 (Decrease)/increase in net assets attributable to members is made up of the following : Realised (226,831) 258,843 Unrealised (600,294) (161,563) (827,125) 97,280 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 15

19 7 STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2018 Note RM RM ASSETS Financial assets at fair value through profit or loss 7 25,478,279 20,669,827 Amount due from PRS Provider - Creation of units 1,918 5,756 Amount due from stockbrokers 2,701,128 - Tax recoverable - 8,774 Dividends receivable 1,993 - Cash and cash equivalents 8 329,683 34,664 TOTAL ASSETS 28,513,001 20,719,021 LIABILITIES Amount due to PRS Provider - Management fee 28,444 17,862 Amount due to Scheme Trustee Amount due to stockbrokers 1,348,409 - Amount due to Private Pension Administrator Other payables 9 15,204 16,627 TOTAL LIABILITIES (EXCLUDING NET ASSET ATTRIBUTABLE TO MEMBERS) 1,393,719 35,755 NET ASSET VALUE ( NAV ) OF THE FUND 27,119,282 20,683,266 NET ASSETS ATTRIBUTABLE TO MEMBERS 27,119,282 20,683,266 REPRESENTED BY: FAIR VALUE OF OUTSTANDING UNITS - CLASS A 24,769,757 19,866,393 - CLASS C 2,349, ,873 27,119,282 20,683,266 UNITS IN CIRCULATION (UNITS) - CLASS A 10 49,134,483 40,158,426 - CLASS C 10 4,471,425 1,597,071 53,605,908 41,755,497 NET ASSET VALUE PER UNIT - CLASS A NET ASSET VALUE PER UNIT - 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 8 STATEMENT OF NET ASSETS ATTRIBUTABLE TO MEMBERS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018 NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE BEGINNING OF FINANCIAL PERIOD Movement due to units created and cancelled during the financial period: 22,890,288 16,851,114 - Creation of units arising from applications 4,616,016 3,567,424 - Creation of units arising from distribution 692, ,119 - Cancellation of units (252,591) (284,671) RM RM 27,946,407 20,585,986 INCREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS DURING FINANCIAL PERIOD (827,125) 97,280 NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE END OF THE FINANCIAL PERIOD 27,119,282 20,683,266 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 17

21 9 STATEMENT OF CASH FLOWS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY 2018 Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Purchase of investments (4,466,309) (15,508,519) Sale of investments 111,073 11,342,604 Dividends received 970, ,057 Interest income received 115, Management fee paid (834,593) (110,923) Scheme Trustee s fee paid (4,892) (3,601) Private Pension Administrator s fee (4,892) (3,601) Audit fee paid (5,500) (5,501) Payment for other fees and expenses (46,646) (18,116) Tax paid 5,116 - Net cash used in operating activities (4,160,037) (3,389,763) CASH FLOWS FROM FINANCING ACTIVITIES Distribution paid (692,693) (452,119) Proceeds from creation of units 5,308,710 4,044,607 Payments for cancellation of units (262,621) (284,671) Net cash generated from financing activities 4,353,396 3,307,817 Net increase/(decrease) in cash and cash equivalents 193,359 (81,946) Cash and cash equivalents at beginning of the financial period 136, ,610 Cash and cash equivalents at end of the financial period 8 329,683 34,664 Cash and cash equivalents comprise: Deposits with licensed financial institutions 220,890 - Bank balance in a licensed bank 108,793 34, ,683 34,664 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 18

22 10 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 Manager to exercise judgement in the process of applying the Fund s accounting policies. Although these estimates and judgement are based on the Manager 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 period 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 not likely to affect future periods. Financial period 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 equity 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 instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. 19

23 For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded 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. 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 loans 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 quoted investments, fixed income securities and collective investment schemes as financial assets at fair value through profit or loss at inception. Loans and receivables Loans and 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 non-current assets. The Fund s loans and receivables comprise amount due from PRS Provider (creation of units), amount due from stockbrokers, tax recoverable and cash and cash equivalents in the statement of financial position. The Fund classifies amount due to Provider (management fee), amount due to Scheme Trustee, amount due to Private Pension Administrator, other payables and distribution payable as other financial liabilities. 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 asset. 20

24 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. Loans and 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. Loans and receivables are subsequently carried at amortised cost using the effective interest rate method. (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 interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If loans and receivables has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest 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 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. 21

25 C CREATION AND CANCELLATION OF UNITS The members' contributions to the Fund meet the definition of puttable instruments classified as financial liability under MFRS 132 "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 which 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 the 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 the respective classes at the close of business on the relevant dealing day. The Fund s NAV per unit of the respective classes is calculated by dividing the net assets attributable to members of the respective classes with the total number of outstanding units of the respective classes. D INCOME RECOGNITION Interest income from deposits placed with licensed financial institutions and unquoted fixed income securities is recognised on an accrual basis using the effective interest rate method. Dividend income from collective investment schemes is recognised on the ex-dividend date. Realised gains or losses on sale of collective investment schemes are accounted for as the difference between the net disposal proceeds and the carrying amounts of the 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 that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value. G DISTRIBUTION Distribution to the Fund s members is accounted for as a finance cost in the statement of comprehensive income. A proposed distribution to members is recognised as a liability in the period in which it is approved 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 estimates of fair value as at the date of statement of financial position. 22

26 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 deposits with financial institutions For deposits and placements with financial institutions with maturities of less than three months, the carrying value is a reasonable estimate of fair value. For deposits and placements with maturities of three months and above, the estimated fair value is based on discounted cash flows by using prevailing interbank money market rates at which similar deposits and placements would be made with financial institutions of similar credit risk and remaining period to maturity. (b) Quoted investments The estimated fair value is based on quoted and observable market prices. (c) Unquoted fixed income securities The estimated fair value is based on price quoted by a Bond Pricing Agency ( BPA ) registered with the Securities Commission ( SC ). 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 fixed income security 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) (d) 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, other payables and distribution payable. 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. 23

27 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 Provider of the Fund that undertakes strategic decisions for the Fund. 24

28 11 NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 28 FEBRUARY INFORMATION ON THE FUND Manulife PRS-Growth Fund has been constituted by way of a Trust Deed entered into between Manulife Asset Management Services Berhad ( the Provider ) and HSBC (Malaysia) Trustee Berhad ( Scheme Trustee ) on 8 November 2012, Supplemental Deed dated 16 May 2013 and Second Supplemental Deed dated 24 January Hereinafter, the Trust Deed is known as the Deed and Manulife PRS-Growth Fund is referred to as the Fund. The Fund was launched on 20 November 2012 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 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 is to facilitate accumulation of retirement savings by providing 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 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 schemes operated by the Provider. 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 equities and/or equityrelated securities which would include 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 ), derivatives and collective investment schemes which invest in equities and/or other equity-related securities. The remaining part of the Fund s net asset value not invested in equities and/or equityrelated securities will be invested in private debt securities, corporate bonds and commercial papers carrying at least BBB3/P2 rating by RAM (or equivalent rating by MARC), government bonds, treasury bills and other government approved or guaranteed bonds, deposits with financial institutions, money market instruments such as negotiable certificates or deposits and bankers acceptances, and collective investment schemes which invest in fixed income instruments. The Provider, Manulife Asset Management Services Berhad (MAMSB), is a wholly-owned 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 Provider in accordance with a resolution of the Directors on 23 April

29 2 MANAGEMENT FEE REBATE As the Fund invests in the collective investment scheme, the management fee charged by the collective investment scheme is fully refunded to the Fund. In accordance with SC Guidelines, there is no double charging of management fee to the Fund. For the financial period ended the management fee rebate is recognised at the folowing rates: Fund Year 2018 Year 2017 Manulife Bond Plus Fund 0.80% 0.80% Manulife Investment Al-Ma'mun 0.50% 0.50% Manulife Investment Bond Fund 0.75% 0.75% Manulife Shariah-Dana Sukuk % Manulife Progress Fund 1.50% 1.50% Manulife Investment Value Fund % Manulife Investment Pacific Fund 1.50% - Manulife Investment Growth Fund 1.50% - Manulife Investment Regular Savings Fund 1.50% 1.50% Manulife Equity Plus Fund 1.55% 1.55% Manulife Shariah-Dana Ekuiti % Manulife Investment As-Saad 0.75% 0.75% 3 MANAGEMENT FEE In accordance with the Deed, the 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 and Class C respectively, before deducting Trustee's fee and Management fee for the day, calculated on a daily basis. For the six months financial period ended 28 February 2018, 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 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 0.04% 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. 26