1 General Information 1. 2 Manager s Report 3. 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 3 3 Policy On Stockbroking Rebates And Soft Commissions 8 4 Statement By The Manager 9 5 Trustee s Report 10 6 Shariah Adviser s Report 11 7 Statement Of Comprehensive Income 12 8 Statement Of Financial Position 13 9 Statement Of Changes In Equity Statement Of Cash Flows Summary Of Significant Accounting Policies Notes To The Financial Statements Corporate Information 42 i

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4 MANULIFE 1 GENERAL INFORMATION 1.1 THE TRUST The Fund commenced operations on 17 June 2013 and will continue its operations until terminated as provided under Clause 12 of the Deed. 1.2 FUND TYPE / CATEGORY Growth / Equity (Shariah) 1.3 OBJECTIVE OF THE FUND The Fund aims to achieve capital growth over the medium- to long-term by investing primarily in Shariah-compliant equities and/or equity-related securities. 1.4 DISTRIBUTION POLICY Incidental 1.5 PERFORMANCE BENCHMARK The performance of the Fund is measured against FTSE Bursa Malaysia EMAS Shariah Index (FBMSHA). 1.6 INVESTMENT STYLE AND STRATEGY The Fund aims to achieve its objective by investing a minimum of 70% up to a maximum of 98% of its NAV in Shariah-compliant equities and/or equity-related securities. The balance of the Fund s NAV will be invested in sukuk, Islamic money market instruments or placed in Islamic deposits. The Fund s investment strategy aims at achieving 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 bottom-up approaches. The topdown 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 Manager evaluates Shariah-compliant securities of companies based on those companies 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 using proper risk management to maximise long term risk adjusted returns. In addition, any active and frequent trading strategy will depend on investment opportunities. The Fund may invest up to 30% of the Fund s NAV in Shariah-compliant equities issued in foreign markets which include but not limited to 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. The Manager may also invest in Shariah-compliant collective investment schemes provided it is consistent with the Fund s investment objective. 1

5 Temporary defensive measures As a temporary defensive measure, the Manager may lower the Fund s Shariah-compliant equity exposure to below the minimum 70% (of the Fund s NAV) limit if the Manager is of the opinion that the investment climate is deemed to be unfavourable or under adverse market conditions. The Manager will then decide on the best appropriate asset allocation strategy and reallocate the Fund s investment into more defensive investments such as sukuk, Islamic money market instruments and/or placement in Islamic deposits. During the six months financial period under review, the Fund remained guided by its investment objective by focusing in Shariah-compliant equities and/or equity-related securities. 2

6 2 MANAGER S REPORT 2.1 FUND PERFORMANCE MANULIFE For the six months financial period ended 31 October 2017, the Fund s return increased by 4.13%. The Fund outperformed its benchmark return, FBMSHA, which increased by 0.85%. The outperformance was mainly due to overweight position in technology and Shariah-compliant stock selection in construction and infrastructure project companies (IPCs). Foreign Shariah-compliant stocks also contributed positively to the performance. The graph below compares the 6-month performance of the Fund against its benchmark return: 5% 4% 3% 2% 1% 0% -1% -2% -3% Apr 17 Fund Performance vs. Benchmark Index Return May 17 Jun 17 Jul 17 Manulife Shariah-Dana Ekuiti Return Source: Lipper & MorningStar Fund Size Aug 17 Sep 17 Oct 17 Benchmark Index Return The Fund s total NAV increased to RM45.97mil from RM36.06mil during the financial period under review. Fund s Returns (a) The graph below compares the since commencement date performance of the Fund against its benchmark return: Fund Performance vs. Benchmark Index Return 50% 40% 30% 20% 10% 0% -10% Jun 13 Oct 13 Feb 14 Jun 14 Oct 14 Feb 15 Jun 15 Oct 15 Manulife Shariah-Dana Ekuiti Return Source: Lipper & MorningStar Feb 16 Jun 16 Oct 16 Feb 17 Jun 17 Oct 17 Benchmark Index Return 3

7 (b) Average Total Return of the Fund: For the financial period ended 31 October 2017 Fund (% p.a.) Benchmark (% p.a.) 1 year years 6.66 (0.66) Since Commencement Date Commencement date: 17 June 2013 Source: Lipper & MorningStar (c) Annual Total Return of the Fund: For the financial period ended: Fund (% p.a.) Benchmark (% p.a.) 31 October October (0.07) 31 October (7.14) 31 October Since commencement Commencement date: 17 June 2013 Source: Lipper & MorningStar The Fund has achieved its target of providing its unit holders capital growth over the medium to long term with a return of 8.44% p.a. since fund s inception, by investing primarily in Shariah-compliant equities and/or equity-related securities. 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% 4

8 The following table shows other financial and performance data of the Fund for the past three financial periods: Fund Data 31 October October October 2015 NAV (RM) 45,971,014 19,142,719 15,889,298 Units in Circulation ( 000) 70,925 32,305 27,835 NAV (RM per unit) Highest / Lowest NAV (RM per unit) Total Fund Return (%) NAV Return (%) Income Return (%) / / / 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 lower than the previous financial period, mainly due to increase in average NAV. 5

9 (ii) Portfolio Turnover Ratio (PTR) PTR can be calculated based on the ratio of the average sum of acquisitions and disposals of the Shariah-compliant 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 year + Total disposals of the fund for the year]/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 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 October 2017 % of Net Asset Value 31 October October 2015 Trading / Services Industrial Products Construction Consumer Products Technology Plantation Properties Infrastructure Project Companies Islamic REITS Foreign Shariah-compliant investments Total Shariah-compliant Investments Islamic deposits with Licensed Financial Institutions Other Assets & Liabilities As at 31 October 2017, the Fund was 92.64% invested in Shariah-compliant equities, with 84.01% in Malaysian Shariah-compliant equities and 8.6% in foreign Shariah-compliant equities; and 7.4% in Islamic deposits. The Fund s allocation, by sectors, saw notable increases in the trading & services, industrial products and property. Allocations were reduced in the consumer products, technology, plantation and infrastructure project companies (IPCs). As for foreign investments, it was mainly in Hong Kong/China and South Korea. 2.3 MARKET REVIEW During the six months financial period under review (1st May 2017 to 31st October 2017), global markets were affected by geopolitical tensions, starting with Syria and North Korea, and uncertainties from the French elections. However, these concerns were later shrugged off as the French elections concluded favourably. The optimism continued with encouraging gross domestic product (GDP) growth numbers from the major economies, which was soon followed by the US Federal Reserve hiking its interest rate target for the second time in June 2017 by 25bp to 1.25%, and announcing its intention to reduce its USD4.5t balance sheet. 6

10 Market volatility spiked in July on escalating tensions between the US and North Korea. However, each pullback was met with a strong rebound as positive global economic data, the European Central Bank s (ECB) increasing confidence in the European economy, and expectations of President Donald Trump s tax plan helped to bolster investor sentiment. For Malaysia, it saw the cancellation of RHB Bank and AMMB s proposed merger. This was followed by an uninspiring 2Q 2017 results reporting season, with the large caps generally in line with expectations. The later part of the financial period saw several tailwinds emerging, which helped to further support global markets. The ECB continued to issue positive statements on the European economy, while the US posted a strong 3Q GDP growth and favourable corporate earnings results, along with increasing hype on Trump s tax reform. From Asia, China s Communist Party Congress concluded with President Xi Jinping strengthening his position at the top as General Secretary of the Party for another term. In addition, Shinzo Abe s victory in the Japanese elections added more to the bullish sentiment. Malaysia however bucked the global trend, with its equity market down from a lack of fresh catalysts. The 2018 Budget announcement failed to excite as it came in generally in line with expectations. For the period under review, the FBM KLCI registered a negative return of 1.14%. The broader markets were mixed versus the FBM KLCI, with the FBM Mid 70 and Small Cap index returning 2.61%, and -1.29% respectively. 2.4 MARKET OUTLOOK AND INVESTMENT STRATEGY The global upswing in economic activity is turning more favourable, with increasingly more robust organisation for economic cooperation and development (OECD) world manufacturing and consumer confidence. The US economic growth remains resilient despite the ongoing political noise. US activity surprise index surge with better-than-expected unemployment rate and higher Institute of supply management (ISM) Non-Manufacturing. Growth in manufacturing remains steady, fuelled by consumer spending and business environment. Eurozone continues to expand at a solid pace with robust Purchasing Managers Index (PMI) surveys and consistent with higher GDP growth. Political jitters may set in again in 2018 as Italian elections must be held before May Similarly in China, the overall macro trend remains stable despite soft exports and industrial production data. Equities continue to benefit from the stabilisation of the Chinese economy, with growth remains promising supported by ongoing modest fiscal expansion. The Malaysian economy will continue to see strong external demand and infrastructure spending to support growth. Current market valuations seem undemanding, and earnings forecast are likely at the end of the downgrade cycle. Stronger economic growth and turning around in earnings momentum are key catalysts for potential market re-rating. Our preference for Shariah-compliant equities is driven by earnings growth revisions as most global economies are in expansion mode. We will maintain our focus on companies that demonstrates growth and consistent cash flows, and at the same time still trade at attractive valuations. 2.5 BREAKDOWN OF UNIT HOLDINGS BY SIZE AS AT 31 OCTOBER 2017 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, , ,001 to 50, , ,001 to 500, , Above 500, , Manager s stock Total 1, ,

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 October 2017, the Manager and its delegates did not receive any rebates or soft commissions. 8

12 4 STATEMENT BY THE MANAGER MANULIFE We, Chong Soon Min and Wong Boon Choy, being two of the Directors of Manulife Asset Management Services Berhad ( the Manager ), do hereby state that, in the opinion of the Manager, the unaudited 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 October 2017 and of its financial performance, changes in equity and cash flows of the Fund for the six months financial period ended 31 October 2017 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 CHONG SOON MIN Director WONG BOON CHOY Director Kuala Lumpur 18 December

13 5 TRUSTEE S REPORT TO THE UNIT HOLDERS OF MANULIFE We, CIMB Islamic Trustee Berhad, being the Trustee for Manulife Shariah-Dana Ekuiti ( the Fund ), are of the opinion that Manulife Asset Management Services Berhad ("the Manager"), acting in the capacity as Manager of the Fund, has fulfilled its duties in the following manner for the six months financial period ended 31 October a) The Fund has been managed in accordance with the limitations imposed on the investment powers of the Manager under the Deed, the Securities Commission Malaysia s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 (as amended from time to time) and other applicable laws; b) Valuation and pricing for the Fund has been carried out in accordance with the Deeds and relevant regulatory requirements; and c) Creation and cancellation of units have been carried out in accordance with the Deed and relevant regulatory requirements. For and on behalf of CIMB Islamic Trustee Berhad Lee Kooi Yoke Chief Operating Officer Kuala Lumpur,Malaysia 18 December

14 6 SHARIAH ADVISER S REPORT TO THE UNIT HOLDERS OF MANULIFE MANULIFE We have acted as the Shariah Adviser of Manulife Shariah-Dana Ekuiti. Our responsibility is to ensure that the procedures and processes employed by Manulife Asset Management Services Berhad are in accordance with Shariah principles. In our opinion, Manulife Asset Management Services Berhad has managed and administered Manulife Shariah-Dana Ekuiti in accordance with Shariah principles and complied with applicable guidelines, rulings and decisions issued by the Securities Commission pertaining to Shariah matters for the financial period ended 31 October In addition, we also confirm that the investment portfolio of Manulife Shariah-Dana Ekuiti comprises securities which have been classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission ( SACSC ) and/or Shariah Supervisory Board of FTSE Shariah Asia Pacific Index. As for the securities which are not certified by the SACSC and/or Shariah Supervisory Board of FTSE Shariah Asia Pacific Index, we have reviewed the said securities and opined that these securities are designated as Shariahcompliant. For and on behalf of the Shariah Adviser IBFIM MUHAMMAD KHAIRULNIZAM BIN ALIAS Consultant (Shariah)/Designated Person Responsible for Shariah Advisory Kuala Lumpur 18 December

15 7 STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2017 INVESTMENT INCOME Note Profit income 86,567 28,704 Gross dividend income 517, ,586 Net gain on financial assets at fair value through profit or loss 6 1,764, ,943 Net foreign currency exchange (loss)/gain (71,794) 69,849 RM RM 2,296, ,082 EXPENSES Manager s fee 3 345, ,483 Trustee s fee 4 8,912 3,419 Auditors remuneration 3,025 3,016 Tax agent s fee 1,361 1,358 Other expenses 30,872 18,845 Transaction costs 101,351 62, , ,630 PROFIT BEFORE TAXATION 1,805, ,452 TAXATION 5 (19,753) (753) PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME 1,785, ,699 Profit after taxation is made up as follows: Realised 508, ,984 Unrealised 1,277, ,715 1,785, ,699 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 FINANCIAL POSITION AS AT 31 OCTOBER 2017 ASSETS Note RM RM Financial assets at fair value through profit or loss 6 42,586,879 16,721,780 Amount due from Manager 122,949 - Amount due from stockbrokers 772, ,703 Dividends receivable 23,879 10,534 Tax recoverable 1,841 1,502 Cash and cash equivalents 7 3,337,006 2,224,165 TOTAL ASSETS 46,845,359 19,199,684 LIABILITIES Amount due to Manager - Manager s fee 61,811 24,889 - Cancellation of units 154,944 - Amount due to Trustee 1, Amount due to stockbrokers 635,073 12,217 Other payables 8 20,922 19,217 TOTAL LIABILITIES 874,345 56,965 NET ASSETS VALUE ( NAV ) OF THE FUND 45,971,014 19,142,719 EQUITY Unit holders capital 40,638,839 17,038,105 Retained earnings 5,332,175 2,104,614 45,971,014 19,142,719 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 2 45,971,014 19,142,719 NUMBER OF UNITS IN CIRCULATION 10 70,925,479 32,305,479 NAV PER UNIT 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 CHANGES IN EQUITY FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2017 Unit holders capital Retained earnings Total RM RM RM BALANCE AS AT 1 MAY ,508,346 3,546,655 36,055,001 Movement in unit holders contribution: Creation of units 13,127,010-13,127,010 Cancellation of units (4,996,517) - (4,996,517) Total comprehensive income - 1,785,520 1,785,520 BALANCE AS AT 31 OCTOBER ,638,839 5,332,175 45,971,014 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 MAY ,897,833 1,454,915 15,352,748 Movement in unit holders contribution: Creation of units 3,925,784-3,925,784 Cancellation of units (785,512) - (785,512) Total comprehensive income - 649, ,699 BALANCE AS AT 31 OCTOBER ,038,105 2,104,614 19,142,719 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 14

18 10 STATEMENT OF CASH FLOWS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2017 Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Purchase of Shariah-compliant investments (22,376,181) (22,629,237) Sale of Shariah-compliant investments 10,252,179 20,867,345 Net realised foreign exchange gain (71,794) 69,849 Dividends received 511, ,270 Profit income received - 28,704 Manager s fee paid (325,073) (129,053) Trustee s fee paid (8,389) (3,330) Audit fee paid (5,001) (5,000) Payment for other fees and expenses (131,496) (17,728) (Tax paid)/tax fund received (19,879) (895) Net cash used in operating activities (12,174,417) (1,578,075) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from creation of units 14,384,193 3,925,784 Payments for cancellation of units (4,842,245) (785,512) Net cash generated from financing activities 9,541,948 3,140,272 Net (decrease)/increase in cash and cash equivalents (2,632,469) 1,562,197 Cash and cash equivalents at beginning of the financial period 5,969, ,968 Cash and cash equivalents at end of the financial period 7 3,337,006 2,224,165 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 15

19 11 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2017 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 6 months financial period ended 31 October The Fund has applied the following amendments for the first time for the financial year beginning 1 August 2016: Amendments to MFRS 101 Presentation of financial statements - Disclosure initiative Amendments to MFRS 10, 12 & 128 Investment entities - Applying the consolidation exception Annual improvements to MFRSs Cycle There were no significant impact to other accounting policies of the Fund as a result of the above mentioned. The following are standards, amendments to published standards and interpretations to the existing standards that are applicable to the Fund but not yet effective and have not been early adopted by the Fund. Financial year beginning on/after 1 May 2018 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 Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund's financial statements. Financial year beginning on/after 1 May 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. 16

20 MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investment in equity¹ instruments is always measured at fair value through profit or loss with a irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument² is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest³. For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded Shariahcompliant 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 for all financial assets 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 the standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements 1 For the purposes of the investments made by the Fund, equity instruments and derivatives refers to Shariah-compliant equity instruments and Shariah-compliant derivatives. 2 For the purposes of the investments made by the Fund, debt instruments refers to sukuk. 3 For the purposes of this Fund, interest refers to profits earned from Shariah-compliant investments. B (i) FINANCIAL ASSETS AND FINANCIAL LIABILITIES Classification The Fund classifies its financial assets in the following categories: at fair value through profit or loss and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial assets at fair value through profit or loss Financial assets are designated at fair value through profit or loss when they are managed principally for the purpose of selling or repurchasing in the near term and their performance evaluate on a fair value basis. The Fund designates its investment in Shariah-compliant investments as financial assets at fair value through profit or loss at inception. Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as noncurrent assets. The Fund s receivables comprise amount due from Manager, amount due from stockbrokers, dividends receivable, cash and cash equivalents in the statement of financial position. 17

21 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. (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. Receivables are initially recognised at fair value plus transaction costs. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. (iii) Subsequent measurement - gains and losses Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss are included in the profit or loss in the financial period which they arise. Receivables are subsequently carried at amortised cost using the effective profit rate method. (iv) Subsequent measurement - impairment of financial assets The Fund assesses at the end of the reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the Fund uses to determine that there is objective evidence of an impairment loss include indications that the obligor is experiencing significant financial difficulty, high probability that the obligor will enter bankruptcy or other distressed financial reorganisation and events that would adversely affect the financial capability of the obligor. The amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective profit rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If receivables has a variable profit rate, the discount rate for measuring any impairment loss is the current effective profit rate determined under the contract. As a practical expedient, the Fund may measure impairment on the basis of an instrument s fair value 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. 18

22 (v) De-recognition Financial assets are de-recognised when the rights to receive cash flows from the Shariahcompliant investments have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership. Financial liabilities are de-recognised when they are extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or has expired. C CREATION AND CANCELLATION OF UNITS The 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 Profit income from Islamic deposits with licensed financial instituitions is recognised on an accrual basis using the effective profit rate method. Dividend income from quoted Shariah-compliant investments is recognised on the exdividend date. Realised gains or losses on sale of quoted Shariah-compliant investments are accounted for as the difference between the net disposal proceeds and the carrying amount of Shariahcompliant investments, determined on a weighted average cost basis. E EXPENSES Expenses are accounted for on an accrual basis and charged to the statement of comprehensive income. Expenses arising from the disposal of Shariah-compliant investments are recognised as transaction costs (Note K to the financial statements). F AMOUNT DUE FROM/TO STOCKBROKERS Amounts due from and to stockbrokers represent receivables for Shariah-compliant securities sold and payables for Shariah-compliant 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 profit rate method, less provision for impairment for amounts 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 ther 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, profit income is recognised using the rate of profit to discount the future cash flows for the purpose of measuring the impairment loss. 19

23 The effective profit rate method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the profit income or profit expense over the relevant period. The effective profit 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 profit 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 profit rate, transaction costs and all other premiums or discounts. G CASH AND CASH EQUIVALENTS For the purpose of statement of cash flows, cash and cash equivalents comprise cash at banks and Islamic deposits held in highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 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 at the measurement date. The information presented herein represents the estimates of fair value as the date of statement of financial position. Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the uncertainties and assumptions could materially affect these estimates and the resulting fair value estimates. A range of methodologies and assumptions has been used in deriving the fair values of the Fund s financial instruments as at the date of statement of financial position. The total fair value of each financial instrument is not materially different from the total carrying value. The fair values are based on the following methodologies and assumptions: (a) Short-term Islamic deposits with licensed financial institutions For Islamic deposits and placements with licensed financial institutions with maturities of less than three months, the carrying value is a reasonable estimate of fair value. For Islamic deposits and placements with maturities of three months and above, the estimated fair value is based on discounted cash flows using prevailing Islamic interbank money market rates at which similar Islamic deposits and placements would be made with financial institutions of similar credit risk and remaining period to maturity. 20

24 (b) Quoted Shariah-compliant 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 from/to Manager, amount due from/to stockbrokers, dividends receivable, 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 period from the financial assets in which the Fund invests and includes all taxes based upon the taxable profit. K 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. L 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. 21

25 12 NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER INFORMATION ON THE FUND Manulife Shariah-Dana Ekuiti ( the Fund ) was established pursuant to a Master Deed dated 6 February 2013, as amended and supplemented by subsequent Supplemental Deeds (hereinafter referred to as the Deed ) between Manulife Asset Management Services Berhad ( the Manager ) and CIMB Islamic Trustee Berhad ( the Trustee ). The principal activity of the Fund is to invest in Investments as mentioned in the seventh schedule of the Deed. The Fund commenced operations on 17 June 2013 and will continue its operations until terminated as provided under Clause 12 of the Deed. The main objective of the Fund is to aim to maximise return through a combination of income and capital appreciaion by investing a minimum of 70% up to maximum 98% of its net asset value in Shariah-compliant equities and in equity-related securities. 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 18 December NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS The net assets attributable to unit holders meet the definition of puttable instruments classified as equity instruments under the revised 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 1.55% 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 0.04% 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. 22

26 5 TAXATION RM RM Current taxation 19, Numerical reconciliation between profit before taxation multiplied by the Malaysian statutory tax rate and tax expenses of the Fund is as follows: RM RM Profit before taxation 1,805, ,452 Tax calculated at Malaysian tax rate of 24% (2016: 24%) 433, ,108 Tax effect in respect of: - Expenses not deductible for tax purposes 33,692 19,930 - Restriction on tax deductible expenses for unit trust funds 84,116 33,262 - Investment income not subject to tax (548,551) (191,783) - Effect of foreign tax on foreign taxable income 17,231 (16,764) Tax expenses 19, FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Designated at fair value through profit or loss Quoted Shariah-compliant investments - Local (Note 6 (a)) 38,613,379 14,915,444 - Quoted Shariah-compliant investments - Foreign (Note 6 (b)) 3,973,500 1,806,336 RM RM 42,586,879 16,721,780 Net gain/(loss) on financial assets at fair value through profit or loss Realised 3,038, ,247 - Unrealised (1,274,281) 346,696 RM RM 1,764, ,943 23

27 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (a) QUOTED SHARIAH-COMPLIANT INVESTMENTS - LOCAL QUOTED SHARIAH- COMPLIANT INVESTMENTS Quantity MAIN MARKET Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % CONSUMER PRODUCTS Kawan Food Berhad 187, , , Nestle Malaysia Berhad 2, , , Oriental Food Industries Holdings Berhad 71, , , PPB Group Berhad 54, , , Salutica Berhad 366, , , ,166 2,173,116 2,382, CONSTRUCTION Econpile Holdings Berhad 306, , , Gadang Holdings Bhd 565, , , Gamuda Berhad 132, , , IJM Corporation Berhad 337,800 1,149,919 1,077, Protasco Berhad 586, , , WCT Holdings Berhad 349, , , ,277,490 4,530,454 4,685, INFRASTRUCTURE PROJECT COMPANIES Time Dotcom Berhad 130, ,985 1,196, INDUSTRIAL PRODUCTS Chemical Company Malaysia Berhad 302, , , Daibochi Plastic & Packaging Industrial Berhad 233, , , Favelle Favco Berhad 41, , , Hartalega Holdings Berhad 159,700 1,058,303 1,216, Kossan Rubber Industries Berhad 126, , ,

28 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (a) QUOTED SHARIAH-COMPLIANT INVESTMENTS - LOCAL (CONTINUED) QUOTED SHARIAH- COMPLIANT INVESTMENTS Quantity INDUSTRIAL PRODUCTS (CONTINUED) Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % Lafarge Malaysia Berhad 86, , , Petronas Chemicals Group Berhad 97, , , Petronas Gas Berhad 19, , , SAM Engineering & Equipment Berhad 58, , , SCGM Berhad 241, , , SLP Resources Berhad 565, ,357 1,057, Scientex Incorporated Berhad 113, ,287 1,006, Uchi Technologies Berhad 540, ,522 1,578, V.S. Industry Berhad 90, , , ,674,836 8,488,583 9,948, PLANTATION Genting Plantations Berhad 93, ,679 1,000, IOI Corporation Berhad 52, , , Kim Loong Resources Berhad 61, , , Kuala Lumpur Kepong Berhad 14, , , ,000 1,784,967 1,879, PROPERTY SP Setia Berhad 343,616 1,210,187 1,123, UEM Sunrise Berhad 277, , , ,116 1,518,040 1,431, ISLAMIC REAL ESTATE INVESTMENT TRUST (i-reits) KLCC Property Holdings Berhad 10,300 77,401 82,

29 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (a) QUOTED SHARIAH-COMPLIANT INVESTMENTS - LOCAL (CONTINUED) QUOTED SHARIAH- COMPLIANT INVESTMENTS Quantity TECHNOLOGY Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % Globetronics Technology Berhad 149, , , Inari Amerton Berhad 245, , , Vitrox Corporation Berhad 110, , , ,450 1,154,407 2,230, TRADING/SERVICES Aeon Company (M) Berhad 140, , , Axiata Group Berhad 317,600 1,569,659 1,711, Bermaz Auto Berhad 306, , , Cypark Resources Berhad 301, , , Dialog Group Berhad 192, , , EITA Resources Berhad 40,400 73,264 73, Malakoff Corporation Berhad 171, , , MISC Berhad 175,900 1,339,795 1,222, Pestech International Berhad 400, , , Petronas Dagangan Berhad 31, , , Telekom Malaysia Berhad 356,333 2,310,331 2,262, Tenaga Nasional Berhad 156,500 2,203,642 2,347, Sime Darby Berhad 229,161 2,013,821 2,108, Uzma Berhad 163, , , Xin Hwa Holdings Berhad 283, , , Yong Tai Berhad 445, , , ,711,458 14,084,530 14,761, WARRANTS Daibochi Plastic & Packaging Industrial Berhad 12,790-6, SCGM Berhad 24,306-9, ,096-15, TOTAL QUOTED SHARIAH-COMPLIANT INVESTMENTS-LOCAL 10,873,212 34,551,483 38,613,

30 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) QUOTED SHARIAH-COMPLIANT - FOREIGN Fair value as Fair value at expressed as QUOTED SHARIAH- Cost of as at percentage of COMPLIANT INVESTMENTS Quantity shares value of Fund Units RM RM % CHINA ENERGY China Oilfield Services Limited (9(b)) 50, , , HONG KONG CONSUMER DISCRETIONARY Shenzhou International Group Holdings Limited 33,000 1,063,697 1,192, Yue Yuen Industrial Holding Limited 29, , , ,000 1,563,244 1,662, TECHNOLOGY Tencent Holdings Berhad 3, , , TELECOMMUNICATIONS China Mobile Limited 11, , , China Unicom (Hong Kong) Limited 74, , , , , , SOUTH KOREA BASIC MATERIALS LG Chemical Limited , , TOTAL QUOTED SHARIAH- COMPLIANT INVESTMENTS - FOREIGN 201,520 3,638,996 3,973, TOTAL QUOTED SHARIAH- COMPLIANT INVESTMENTS 11,074,732 38,190,479 42,586, ACCUMULATED UNREALISED GAIN ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 4,396,400 TOTAL FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 42,586,879 27