1 General Information 1. 2 Manager s Report 2. 3 Policy On Stockbroking Rebates And Soft Commissions 8. 4 Statement By The Manager 9

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2 CONTENTS PAGE 1 General Information 1 2 Manager s Report 2 3 Policy On Stockbroking Rebates And Soft Commissions 8 4 Statement By The Manager 9 5 Trustee s Report 10 6 Statement Of Comprehensive Income 11 7 Statement Of Financial Position 12 8 Statement Of Changes In Equity 13 9 Statement Of Cash Flows Summary Of Significant Accounting Policies Notes To The Financial Statements Corporate Information 47 i

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4 MANULIFE INVESTMENT 1 GENERAL INFORMATION 1.1 THE TRUST The Fund commenced operations on 23 June 2005 and will continue its operations until terminated as provided under Clause 48.2 of the Deed. 1.2 FUND TYPE / CATEGORY Growth / Equity 1.3 OBJECTIVE OF THE FUND To provide long-term capital appreciation through investment in equities and equity-related instruments listed on the stock exchanges within the Pacific region. Note: Any material changes to the Fund s investment objective would require Unit Holders approval. 1.4 DISTRIBUTION POLICY Incidental 1.5 PERFORMANCE BENCHMARK The performance of the Fund is measured against Morgan Stanley Capital International All Countries Far East Ex-Japan Index (MXFEJ) which is one of the commonly used Pacific stock market benchmark index. MXFEJ is a free float adjusted market capitalisation index that covers 9 countries in the Pacific region such as China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand. The benchmark is available at the Manager s website. The risk profile of the Fund is different from the risk profile of the benchmark. 1.6 INVESTMENT STYLE AND STRATEGY The Fund invests in a diversified portfolio of equities, equity-related instruments and money market instruments, with emphasis on high growth potential and/or undervalued stocks relative to their assessed true values. The Fund Manager adopts an active strategy in meeting the investment objective of the Fund. In addition, any active and frequent trading strategy will depend on investment opportunities or valuations. The Fund Manager focuses on China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand. During the six months financial period under review, the Fund remained guided by its investment objective as it kept a close tab on investment opportunities in China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand. This was based on its assessment on the individual markets, sector and stock fundamentals, while taking into account the outlook of respective currencies. 1

5 2 MANAGER S REPORT 2.1 FUND PERFORMANCE For the six months financial period ended 31 March 2018, the Fund s return increased by 0.73%. The Fund outperformed its benchmark return, which decreased by 0.19%. The outperformance was mainly due to stock selection in China/Hong Kong and Taiwan. This was however partially offset by stock selection in Singapore, Thailand and Indonesia. From sector perspective, selection in Information Technology, Consumer Discretionary, Utilities and Financials were the main contributors. The graph below compares the 6-month performance of the Fund against its benchmark return: 8% 7% 6% 5% 4% 3% 2% -1% 0% 1% Sep 17 Fund Performance vs. Benchmark Index Return Oct 17 Nov 17 Dec 17 Manulife Investment Pacific Fund Return Source: Lipper & MorningStar Fund Size Jan 18 Feb 18 Benchmark Index Return The Fund s total NAV increased to RM153.12mil from RM116.90mil during the six months financial period under review. Fund s Returns (a) The graph below compares the 5-year performance of the Fund against its benchmark return: 90% 80% 70% 60% 50% 40% 30% 20% 10% -10% 0% Mar 13 Jul 13 Nov 13 Fund Performance vs. Benchmark Index Return Mar Jul Nov 14 Mar Jul Nov 15 Manulife Investment Pacific Fund Return Source: Lipper & MorningStar Mar Jul Nov 16 Mar Jul Nov 17 Mar 18 Mar 18 Benchmark Index Return 2

6 (b) Average Total Return of the Fund: For the financial period ended 31 March 2018 Fund (% p.a.) Benchmark (% p.a.) 1 year years years Commencement date: 23 June 2005 Source: Lipper & MorningStar (c) Annual Total Return of the Fund: For the financial period ended: Fund (% p.a.) Benchmark (% p.a.) 31 March March March (9.33) 31 March March 2014 (1.76) 5.42 Commencement date: 23 June 2005 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% 3

7 The following table shows other financial and performance data of the Fund for the past three financial periods: Fund Data 31 March March March 2016 NAV (RM) 153,119,455 87,305,458 23,505,909 Units in Circulation ( 000) 465, ,608 86,838 NAV (RM per unit) Highest / Lowest NAV (RM per unit) Total Fund Return (%) NAV Return (%) Income Return (%) / / / (2.45) (2.45) - Management Expenses Ratio (%) Portfolio Turnover Ratio (times) 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 unit trust fund to the average value of the unit trust fund calculated on a daily basis. Fees of the unit trust fund + Recovered expenses of the unit trust fund Average value of the unit trust fund calculated on a daily basis x 100 Where: Fees Recovered expenses Average value of the unit trust fund = All ongoing fees deducted / deductible directly from the unit trust 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 trustee fee and any other fees deducted / deductible directly from the unit trust fund; = All expenses recovered from/ charged to the unit trust fund, as a result of the expenses incurred by the operation of the unit trust 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 unit trust fund, including unit trust 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 the financial period remains fairly consistent with the previous financial period. 4

8 (ii) Portfolio Turnover Ratio (PTR) PTR can be calculated based on the ratio of the average sum of acquisitions and disposals of the unit trust fund for the year to the average value of the unit trust 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 unit trust fund calculated on a daily basis The PTR for the financial period is lower than the previous financial period mainly due to the increase in average NAV. The Manager 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 31 March 2018 % of Net Asset Value 31 March March 2016 Trading/Services Finance Technology Properties Quoted Investments - Local Quoted Investments - Foreign Total Quoted Investments Deposits With Licensed Financial Institutions Other Assets & Liabilities (4.56) Country Allocation 31 March 2018 % of Net Asset Value 31 March March 2016 Hong Kong/China South Korea Taiwan Singapore Indonesia Thailand Philippines Malaysia Total Quoted Investments As at 31 March 2018, the Fund was 95.17% invest in equities and 4.83% in cash instruments. The Fund was underweight in China, Hong Kong and Taiwan; overweight in South Korea, Indonesia and the Philippines, neutral in Malaysia, Thailand and Singapore. Sector wise, we were overweight in Consumer staples, Consumer discretionary and Materials. 5

9 2.3 MARKET REVIEW During the six months financial period under review (1st October 2017 to 31st March 2018), Asian equities posted positive returns with continuous strength in global growth and trades, alongside with USD weakness supporting performance. Global economic growth momentum continued to gather pace on the back of more synchronised, above trend expansion of the key economies. This recovery was driven by broad growth in sales and earnings from corporations in across all the major economies - US, China, Europe and Japan. Earnings forecast for the emerging and developed markets were upgraded across the board, referencing a positive lift in global growth cycle. Amid much signs of central banks tightening, global policy rates stayed historically low and monetary policy conditions continued to be accommodative. The MSCI Asia Pacific ex-japan and MSCI Far East ex-japan Indices registered a return of 6.5% and 8.9% respectively outperforming the MSCI World Index 3.31% (in USD term). Over the period for North Asian markets, China and Taiwan were the leading performing markets. China s strong rally was led by gains in technology and financial sectors. The macro economic data was more resilient than expected with gross domestic product (GDP) growth accelerated to 6.9% in The Caixin manufacturing Purchasing Managers Index (PMI) remained healthy at 51.6 in February and Industrial production growth rose to 7.2% yearon-year (y-o-y) in February 2018; while unemployment rate declined to 15-year low of 3.9%. Further regulation on deleveraging was positive to structural adjustment and banks re-rating. Its equity market continued to benefit from the stabilization of the Chinese economy, with growth still promising, supported by ongoing modest fiscal expansion. Taiwan was led by non-tech space with the technology sector, especially the smartphone supply chain, appeared vulnerable to disappointment in the underwhelming demand trend. South Korea equities showed strong performance as geopolitical tensions between the Korean and the Chinese government eased. Consumer and tourism equities surged to record high on earnings recovery. Macro data remained constructive with 1Q18 exports grew by 10.3% y/y (vs 8.4% in Q417) despite trade protectionism threats. Both South Korea and Taiwan markets posted positive returns amid the global sell off due to the strength of their respective currencies. Over in ASEAN, Thailand led in the strong outperformance relative to broader market, supported by upbeat GDP growth. Thailand s economy grew faster-than-expected and was on track for stronger 2018, underpinned by pick up in exports and booming tourism and consumer stocks. Thailand positive return was led by the energy sector, as higher oil prices and petrochemical spreads contributed to the strong performance. The Philippines was the regional laggard, on the back of inflation concerns and uncertainty around its monetary policy. Philippine currency weakness was facing headwinds amid rising inflation following the implementation of tax reform law. Asian ex-japan equities were not immune from the broad market volatility driven by the introduction of import tariffs from the US and the first rate hike in 2018 from the US Federal Reserve (Fed) with expectations of a faster than anticipated rate hike cycle. Potential US- China trade war tension continued to drive market volatility across the region. 2.4 MARKET OUTLOOK AND INVESTMENT STRATEGY Trump s policy uncertainties have come to the forefront. The strong global equities gains at the start of the year have given way to a volatility blow-up and a technology-led rout, amid increasing trade tensions between the US and China. The uncertainty in global trade flows will be the key in driving market volatility in the near term. This may be temporary as global growth momentum is expected to resume in the second half of the year with above-trend growth, on the back of still robust demand. In addition, solid labour income growths across the major economies remain supportive of consumption. 6

10 Fundamentals in Asia remain unchanged as earnings continue to be strong, as seen through earnings revisions and valuations are undemanding relative to developed market equities. Economic growth in the region will be supported by a relatively benign interest rate environment as inflation stays at reasonable levels. We are cognisant of rising policy risks and the resulting volatility in currencies and fund flows. As such, we are more vigilant in our investments, focusing on valuations and earnings visibility with a more opportunistic approach. We are positive on the North Asia markets with China/Hong Kong, Korea and Taiwan continuing to benefit from rising consumption and improving economic growth. Growth momentum in South East Asia is expected to gain pace in The run up to elections in Malaysia, Thailand and Indonesia should provide further support to domestic consumption in the near term. We remained positive on growth recovery in Indonesia and Thailand driven by favourable fiscal policies; neutral in Malaysia and Singapore and remain selective in the Philippines. 2.5 BREAKDOWN OF UNIT HOLDINGS BY SIZE AS AT 31 MARCH 2018 The following table presents the distribution of the Fund s unit holders according to size of unit holdings: Size of Holdings No. of Unit Holders % No. of Units Held ( 000) % 5,000 and below , ,001 to 10,000 1, , ,001 to 50,000 3, , ,001 to 500,000 2, , Above 500, , Manager s stock - - 2, Total 7, ,

11 3 POLICY ON STOCKBROKING REBATES AND SOFT COMMISSIONS The Management Company did not retain any rebates. For the six months financial period ended 31 March 2018, the Manager and its delegates did not receive any rebates or soft commissions. 8

12 4 STATEMENT BY THE MANAGER MANULIFE INVESTMENT We, Edmond Cheah Swee Leng and Chong Soon Min, being two of the Directors of Manulife Asset Management Services Berhad (the Manager ), do hereby state that, in the opinion of the Manager, the accompanying financial statements comprising the statement of comprehensive income, statement of financial position, statement of changes in equity, 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 31 March 2018 and of its financial performance, changes in equity and cash flows of the Fund for the six months financial period ended 31 March 2018 in accordance with the Malaysian Financial Reporting Standards ( MFRS ) and the International Financial Reporting Standards ( IFRS ). For and on behalf of the Manager MANULIFE ASSET MANAGEMENT SERVICES BERHAD EDMOND CHEAH SWEE LENG Director CHONG SOON MIN Director Kuala Lumpur 25 May

13 5 TRUSTEE S REPORT TO THE UNIT HOLDERS OF MANULIFE INVESTMENT We have acted as Trustee of Manulife Investment Pacific Fund ( the Fund ) for the financial period ended 31 March To the best of our knowledge, Manulife Asset Management Services Berhad ( the Management Company ), has operated and managed the Fund in accordance with the following:- a) limitations imposed on the investment powers of the Management Company and the Trustee under the Deeds, the Securities Commission s Guidelines on Unit Trust Funds, the Capital Markets 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. For HSBC (Malaysia) Trustee Berhad Tan Bee Nie Head,Trustee Operations Kuala Lumpur 25 May

14 6 STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2018 INVESTMENT INCOME Note Interest income 104,079 57,403 Gross dividend income 490, ,678 Net gain on financial assets at fair value through profit or loss 6 7,475,861 5,682,389 Net foreign currency exchange (loss)/gain (7,250,433) 747,460 RM RM 820,471 6,856,930 EXPENSES Manager s fee 3 1,061, ,819 Trustee s fee 4 42,464 18,793 Auditors remuneration 3,490 3,490 Tax agent s fee 1,346 1,346 Other expenses 174, ,521 Transaction costs 189, ,802 1,472, ,771 (LOSS)/PROFIT BEFORE TAXATION (652,196) 6,029,159 TAXATION 5 (78,355) (53,102) (LOSS)/PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE (LOSS)/INCOME (730,551) 5,976,057 (Loss)/profit after taxation is made up as follows: Realised (688,448) 1,728,557 Unrealised (42,103) 4,247,500 (730,551) 5,976,057 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 11

15 7 STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018 ASSETS Note RM RM Financial assets at fair value through profit or loss 6 145,716,826 80,266,609 Amount due from Manager 3,111, ,824 Dividends receivable 239, ,631 Cash and cash equivalents 7 4,357,105 6,742,302 TOTAL ASSETS 153,424,602 87,976,366 LIABILITIES Amount due to Manager - Manager s fee 199, ,555 Amount due to Trustee 7,985 4,221 Amount due to stockbrokers - 427,585 Other payables 8 97, ,750 Tax payable TOTAL LIABILITIES 305, ,908 NET ASSET VALUE ( NAV ) OF THE FUND 153,119,455 87,305,458 EQUITY Unit holders capital 131,061,632 70,442,020 Retained earnings 22,057,823 16,863, ,119,455 87,305,458 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 2 153,119,455 87,305,458 NUMBER OF UNITS IN CIRCULATION 9 465,058, ,608,000 NAV PER UNIT The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 12

16 8 STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2018 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 OCTOBER ,110,075 22,788, ,898,449 Movement in unit holders contribution: Creation of units 67,742,437-67,742,437 Cancellation of units (30,790,880) - (30,790,880) Total comprehensive loss - (730,551) (730,551) BALANCE AS AT 31 MARCH ,061,632 22,057, ,119,455 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 OCTOBER ,954,336 10,887,381 38,841,717 Movement in unit holders contribution: Creation of units 60,454,687-60,454,687 Cancellation of units (17,967,003) - (17,967,003) Total comprehensive income - 5,976,057 5,976,057 BALANCE AS AT 31 MARCH ,442,020 16,863,438 87,305,458 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 13

17 9 STATEMENT OF CASH FLOWS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2018 Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Purchase of investments (52,844,079) (58,010,857) Sale of investments 22,477,998 14,975,307 Net realised foreign exchange (loss)/gain (7,250,433) 616,263 Dividends received 521, ,834 Interest income received 104,079 57,403 Manager s fee paid (1,003,777) (427,370) Trustee s fee paid (40,152) (17,095) Audit fee paid (7,559) (7,420) Payment for other fees and expenses (384,355) (74,186) Tax refund received (78,355) - Net cash used in operating activities (38,505,161) (42,745,121) CASH FLOWS FROM FINANCING ACTIVITIES Distribution paid (7,471,080) (2,286,360) Proceeds from creation of units 74,512,261 66,437,499 Payments for cancellation of units (30,790,880) (17,967,003) Net cash generated from financing activities 36,250,301 46,184,136 Net (decrease)/increase in cash and cash equivalents (2,254,860) 3,439,015 Currency translation differences - 132,162 Cash and cash equivalents at the beginning of the financial period 6,611,965 3,171,125 Cash and cash equivalents at the end of the financial period 7 4,357,105 6,742,302 Cash and cash equivalents comprise: Deposits with licensed financial institutions 4,262,412 5,904,841 Bank balances in licensed banks 94, , ,357,105 6,742,302 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 14

18 10 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 MARCH 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 31 March The Fund has applied the following amendments for the first time for the financial year beginning 1 April 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 to MFRS 107 has required additional disclosure of changes in liabilities arising from financing activities. Other than that, 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. The Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund's financial statements. Financial period beginning on/after 1 April 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. 15

19 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 has reviewed its financial assets and liabilities and has assessed the following impacts from the adoption of the new standard as below: There will be no impact on the Fund s accounting for financial assets as the Fund s equity investments currently measured at fair value through profit or loss will continue to be measured on the same basis under MFRS 9. There will be no impact on the Fund s accounting for financial liabilities as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Fund does not have any such liabilities. The new impairment model requires the recognition of impairment provisions based on ECL rather than only incurred credit losses as is the case under MFRS 139. It applies to financial assets classified at amortised cost. Based on the assesments undertaken to date, the Fund does not expect any loss allowance to be recognised upon adoption of MFRS 9. 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 purposes of selling or repurchasing in the near term and their performance are evaluated on a fair value basis. The Fund designates its investment in quoted investments 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 stockbrokers, dividends receivable, tax recoverable and cash and cash equivalents in the statement of financial position. Other financial liabilities The Fund classifies amount due to Manager, amount due to Trustee, amount due to stockbrokers and other payables as other financial liabilities. 16

20 (ii) Recognition and initial 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. 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. 17

21 C CREATION AND CANCELLATION OF UNITS The Fund issues cancellable units, which are cancelled at the unit holder s option and are classified as equity. Cancellable units can be put back to the Fund at any time for cash equal to a proportionate share of the Fund s net asset value. The outstanding unit is carried at the redemption amount that is payable at the date of the statement of financial position if the unit holder exercises the right to put the unit back to the Fund. Units are created and cancelled at the unit holder s option at prices based on the Fund s net asset value per unit at the time of creation and cancellation. The Fund s net asset value is calculated by dividing the net assets attributable to unit holders with the total number of outstanding units. The net asset value per unit is computed each dealing day. The price at which units are created or cancelled is calculated by reference to the net asset value per unit as at the close of business on the relevant dealing day. Units in the Fund are classified as equity in the statement of financial position and are stated at fair value representing the price at which unit holders can redeem the units from the Fund. D INCOME RECOGNITION Interest income from deposits placed with licensed financial instituition is recognised on an accrual basis using the effective interest rate method. Dividend income on quoted investments is recognised on the ex-dividend date. Realised gains or losses on sale of quoted investments are accounted for as the difference between the net disposal proceeds and the carrying amount 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. Expenses arising from net disposal of investments are recognised as transaction costs (Note L to the financial statements). F AMOUNT DUE FROM/TO STOCKBROKERS Amounts due from and to stockbrokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the statement of financial position date respectively. These amounts are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment for amount due from stockbrokers. A provision for impairment of amount due from a stockbroker is established when there is objective evidence that the Fund will not be able to collect the amount due from the relevant stockbroker. Significant financial difficulties of the stockbroker, probability that the stockbroker will enter bankruptcy or financial reorganisation, and default in payments are considered indicators that the amount due from the stockbroker is impaired. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest to discount the future cash flows for the purpose of measuring the impairment loss. 18

22 The effective interest rate method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or, when appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Fund estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. G CASH AND CASH EQUIVALENTS For the purpose of statement cash flows, cash and cash equivalents comprise cash at banks and 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. H CURRENCY TRANSLATION The financial statements are presented in Ringgit Malaysia, which is the Fund s functional and presentation currency. Transactions in foreign currencies during the financial year are converted to Ringgit Malaysia at rate of exchange ruling at transaction dates. Assets and liabilities denominated in foreign currencies at the date of the statement of financial position are translated into Ringgit Malaysia at the rate of exchange approximating those ruling on that date. Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are included in the statement of comprehensive income. I 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 the 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 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. 19

23 (b) Quoted investments The estimated fair value is based on quoted and observable market prices. (c) Other short-term financial instruments Other short-term financial instruments comprise amount due to Manager, amount due to stockbrokers, dividends receivable, tax recoverable, other receivables, amount due to Trustee 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. J TAXATION Current tax expense is determined according to the tax laws in the jurisdictions of the taxable profit earned during the financial year 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 strategic asset allocation committee of the Manager that makes the strategic decisions. L TRANSACTION COSTS Transaction costs are costs incurred to acquire or dispose of financial assets or liabilities at fair value through profit or loss. They include fees and commissions paid to agents, advisors, brokers and dealers. Transaction costs, when incurred, are immediately recognised in the statement of comprehensive income as expenses. 20

24 11 NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 MARCH INFORMATION ON THE FUND Manulife Investment Pacific Fund ( the Fund ) was established pursuant to a Master Deed dated 31 January 2002, as amended and supplemented by subsequent Supplemental Deed (hereinafter referred to as the Deed ) between Manulife Asset Management Services Berhad ( the Manager ) and HSBC (Malaysia) Trustee Berhad ( the Trustee ). The principal activity of the Fund is to invest in Investments as defined under Clause 1 of the Deed, which includes stocks and securities of companies listed on Bursa Malaysia Berhad and foreign securities listed on any recognised Stock Exchange(s) subject to approval by Bank Negara Malaysia and the Securities Commission, unlisted securities of a Malaysian issuer, deposits with financial institutions, quoted and unquoted fixed income securities. The Fund commenced operations on 23 June 2005 and will continue its operations until terminated as provided under Clause 48.2 of the Deed. The main objective of the Fund is to provide unit holders with long-term capital appreciation through investment in equities and equity-related instruments listed on approved stock exchanges within the Pacific region. The Manager of the Fund, a company incorporated in Malaysia, is a wholly-owned subsidiary of Manulife Holdings Berhad, a public limited liability company, incorporated and domiciled in Malaysia, and listed on the main market of Bursa Malaysia. Its principal activities are the management of unit trusts, private retirement schemes, fund management activities and financial planning. The financial statements were authorised for issue by the Board of Directors of the Manager in accordance with a resolution of the Directors on 25 May NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS The net assets attributable to unit holders meet the definition of puttable instruments classified as equity instruments under MFRS 132 Financial Instruments: Presentation. The units in the Fund are puttable instruments which entitle the unit holders to a pro-rata share of the net assets of the Fund. The units are subordinated and have identical features. There is no contractual obligation to deliver cash or another financial asset other than the obligation on the Fund to repurchase the units. The total expected cash flows from the units in the Fund over the life of the units are based on the change in the net assets of the Fund. 3 MANAGER S FEE In accordance with the Deed, the Manager is entitled to Manager s fee at a rate of 1.50% per annum of the net asset value of the Fund before deducting Trustee s fee and Manager s fee for the day, calculated on a daily basis. There will be no further liability to the Manager in respect of Manager s fee other than the amount recognised above. 4 TRUSTEE'S FEE In accordance with the Deed, the Trustee is entitled to a fee of 0.06% per annum of the net asset value of the Fund before deducting Trustee s fee and Manager s fee for the day, calculated on a daily basis. There will be no further liability to the Trustee in respect of Trustee s fee other than the amount recognised above. 21

25 5 TAXATION RM RM Current taxation 78,355 53,102 Numerical reconciliation between (loss)/profit before taxation multiplied by the Malaysian statutory tax rate and tax expenses of the Fund is as follows: RM RM (Loss)/profit before taxation (652,196) 6,029,159 Tax calculated at Malaysian tax rate of 24% (2017: 24%) (156,527) 1,446,998 Tax effect in respect of: - Expenses not deductible for tax purposes 92,647 81,549 - Restriction on tax deductible expenses for unit trust funds 260, ,116 - Investment income not subject to tax (1,937,017) (1,645,663) - Investment income subject to different tax rate 78, Effect of foreign tax on foreign taxable income 1,740,104 53,102 Tax expenses 78,355 53,102 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS RM RM Designated at fair value through profit or loss - Quoted investments-local (Note 6(a)) 4,296,190 4,740,701 - Quoted investments-foreign (Note 6(b)) 141,420,636 75,525, ,716,826 80,266,609 Net gain on financial assets at fair value through profit or loss Realised 7,461,071 1,434,890 - Unrealised 14,790 4,247,499 RM RM 7,475,861 5,682,389 22

26 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (a) QUOTED INVESTMENTS - LOCAL QUOTED INVESTMENTS Quantity MAIN MARKET FINANCE Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % CIMB Group Holdings Berhad 97, , , TECHNOLOGY Globetronics Technology Berhad 26, , , TRADING/SERVICES Malaysia Airports Holdings Berhad 128,600 1,071,289 1,138, Genting Berhad 94, , , Tenaga Nasional Berhad 94,000 1,380,589 1,526, ,800 3,269,457 3,487, TOTAL QUOTED INVESTMENTS - LOCAL 440,875 3,916,077 4,296, (b) QUOTED INVESTMENTS - FOREIGN QUOTED INVESTMENTS Quantity HONG KONG/CHINA BASIC MATERIALS Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % Anhui Conch Cement Corporation Limited 70,500 1,474,555 1,482, Maanshan Iron & Steel Company Limited 1,176,000 2,398,791 1,944, ,246,500 3,873,346 3,426,

27 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) QUOTED INVESTMENTS - FOREIGN (CONTINUED) QUOTED INVESTMENTS Quantity Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % HONG KONG/CHINA (CONTINUED) CONSUMER DISCRETIONARY Brilliance China Automotive Holdings Limited 214,000 2,236,506 1,724, Crystal International Group Limited 206, , , Haier Electronics Group Company Limited 193,000 1,574,453 2,654, Sands China Limited 70,800 1,464,054 1,469, Shenzhou International Group Holdings Limited 50,000 1,652,691 2,033, Techtronic Industries Company Limited 36, , , Yue Yuen Industrial Holdings Limited 47, , , ,300 9,173,538 10,216, CONSUMER STAPLES Hengan International Group Company Limited 78,000 2,558,863 2,789, ENERGY China Oilfield Services Limited 168, , , China Petroleum & Chemical Corporation 144, , , CNOOC Limited 133, , , ,000 1,875,793 1,913, FINANCIALS AIA Group Limited 107,800 2,864,340 3,521, BOC Hong Kong Holdings Limited 97,000 1,774,714 1,823, China Construction Bank Corporation 968,000 3,240,850 3,838, New China Life Insurance Company Limited 317,000 4,210,085 3,368,

28 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) QUOTED INVESTMENTS - FOREIGN (CONTINUED) QUOTED INVESTMENTS Quantity HONG KONG/CHINA (CONTINUED) Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % FINANCIALS (CONTINUED) Hong Kong Exchanges & Clearing Limited 16,661 1,784,620 2,091, Industrial and Commercial Bank of China Limited 1,127,100 3,129,628 3,732, Ping An Insurance Group of China Insurance Limited 77,000 2,491,689 3,023, ,710,561 19,495,926 21,399, INDUSTRIALS CK Hutchison Holdings Limited 16, , , Kerry Logistics Network Limited 155, , , Shenzhen Expressway Company Limited 382,000 1,587,168 1,501, ,000 3,270,315 3,125, REAL ESTATE INVESTMENT TRUSTS (REITs) Cheung Kong Property Holdings Limited 34, ,052 1,101, China Resources Land Limited 75, ,352 1,061, ,555 1,468,404 2,162, TECHNOLOGY Sunny Optical Group Technology Company Limited 61,000 2,236,826 4,348, Tencent Holdings Limited 51,000 6,123,671 10,277, ZTE Corporation 167,800 2,506,379 2,109, ,800 10,866,876 16,735, TELECOMMUNICATIONS China Mobile Limited 18, , , China Unicom (Hong Kong) Limited 130, , , HKT Trust and HKT Limited 157, , , ,500 2,425,722 2,050,

29 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) QUOTED INVESTMENTS - FOREIGN (CONTINUED) QUOTED INVESTMENTS Quantity HONG KONG/CHINA (CONTINUED) UTILITIES Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % China Everbright Greentech Limited 377,000 1,314,070 1,456, China Gas Holdings Limited 145,400 1,736,428 2,042, ,400 3,050,498 3,498, INDONESIA ENERGY Indo Tambangraya Megah Tbk PT 360,100 2,722,530 2,875, FINANCIALS Bank Negara Indonesia Persero Tbk PT 254, , , INDUSTRIALS Total Bangun Persada Tbk PT 634, , , BASIC MATERIALS Wijaya Karya Persero Tbk PT 4,661, , , REAL ESTATE INVESTMENT TRUSTS (REITs) Ciputra Development Tbk PT 1,854, , , TELECOMMUNICATIONS Telekomunikasi Persero TBK PT 1,196,300 1,550,728 1,206, SOUTH KOREA BASIC MATERIALS LG Chem Limited 1,587 1,829,333 2,222, Posco Chemtech Company Limited 1,484 1,744,842 1,754, ,071 3,574,175 3,977,

30 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) QUOTED INVESTMENTS - FOREIGN (CONTINUED) QUOTED INVESTMENTS Quantity SOUTH KOREA (CONTINUED) CONSUMER DISCRETIONARY Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % Coway Company Limited 3,846 1,435,854 1,254, Mando Corporation 1,236 1,182,147 1,041, Shinsegae incorporated 2,748 2,699,912 3,569, ,830 5,317,913 5,865, CONSUMER STAPLES E-Mart Incorporated 1,846 1,688,883 1,834, Orion Corporation 7,506 2,882,703 3,490, ,352 4,571,586 5,324, INDUSTRIALS CJ Logistics 2,740 1,930,625 1,368, Hyundai Robotics Company Limited 1,913 3,021,237 3,033, ,653 4,951,862 4,402, TECHNOLOGY Advance Process System Corporation 7, , , Samsung Electronics Company Limited 947 6,339,008 8,466, Seoul Semiconductor Company Limited 18,175 2,013,747 1,307, Wonik IPS Company Limited 25,681 2,328,174 3,106, ,874 11,424,732 13,606, PHILIPPINES CONSUMER STAPLES Puregold Price Club Incorporated 365,000 1,456,338 1,416, FINANCIALS Metropoliton Bank & Trust 184,484 1,021, ,