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 Independent Auditors Report 11 7 Statement Of Comprehensive Income 14 8 Statement Of Financial Position 15 9 Statement Of Changes In Equity Statement Of Cash Flows Summary Of Significant Accounting Policies Notes To The Financial Statements Corporate Information 44 i

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4 MANULIFE INVESTMENT 1 GENERAL INFORMATION 1.1 THE TRUST The Fund commenced operations on 28 March 2006 and will continue its operations until terminated as provided under Clause 48.2 of the Deed. 1.2 FUND TYPE / CATEGORY Income / Equity 1.3 OBJECTIVE OF THE FUND To provide a steady recurring income that is potentially higher than the prevailing fixed deposit rates. At the same time, the Fund also attempts to attain medium- to long-term capital appreciation. Note: Any material change to the Fund s investment objective would require Unit Holders approval. 1.4 DISTRIBUTION POLICY Semi-annually, if any. Subject to the availability of income, the Manager has the discretion to declare distribution at a higher frequency. 1.5 PERFORMANCE BENCHMARK The performance of the Fund is measured against Manulife Investment Dividend Index (MDI) comprising 90% FTSE Bursa Malaysia Top 100 Index (FBM100) + 10% Maybank 12-month Fixed Deposit (FD) Rate. The selection of the benchmark is consistent with the Fund s choice of investments which consists of equities and money market instruments. 1.6 INVESTMENT STYLE AND STRATEGY The Fund invests in stocks which have good dividend pay-outs or have the potential to become dividend-yielding stocks and have reasonable medium- to long-term capital appreciation opportunities. Stocks with good dividend payouts are those that have been paying consistent dividends over the last three to five years, and are expected to be able to sustain this trend at least over the next one year. In addition, any active and frequent trading strategy will depend on investment opportunities. The Fund may invest up to 25% of the Fund s NAV in Asia-Pacific markets which include, but are not limited to China, Hong Kong, Indonesia, South Korea, the Philippines, Singapore, Taiwan, Thailand and Japan. During the financial year under review, the Fund remained guided by its investment objective to provide a steady recurring income that is potentially higher than the prevailing fixed deposit rates, and medium- to long-term capital appreciation. 1

5 2 MANAGER S REPORT 2.1 FUND PERFORMANCE For the financial year ended 30 April 2018, the Fund s return increased by 2.41%. The Fund underperformed its benchmark return, MDI, which increased by 4.68%. The underperformance was mainly due to the Fund s allocation in the Industrial Products sector and foreign stocks, and stock selection in the Trading and Services sector. However, some of the underperformance was mitigated by the Fund s stock selection in the Finance, Consumer Products, and Plantation sectors. The gross distribution of 1.60 sen per unit on 27 October 2017 and 0.91 sen per unit on 26 April 2018 had the effect of reducing the NAV per unit of the Fund, and the ex-distribution NAV per unit was RM and RM respectively. The graph below compares the 12-month performance of the Fund against its benchmark return: 7% 6% 5% 4% 3% 2% -1% 0% 1% -2% Apr 17 May 17 Fund Performance vs. Benchmark Index Return Jun 17 Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Manulife Investment Dividend Fund Return Source: Lipper, MorningStar & Bloomberg Fund Size Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 Benchmark Index Return The Fund s total NAV increased to RM214.01mil from RM198.01mil during the financial year under review. Fund s Returns a) The graph below compares the 5-year performance of the Fund against its benchmark return: 40% 35% 30% 25% 20% 15% 10% -10% -5% 0% 5% Apr 13 Aug Dec Fund Performance vs. Benchmark Index Return Apr Aug Dec Apr Aug Dec Manulife Investment Dividend Fund Return Source: Lipper, MorningStar & Bloomberg Apr Aug Dec Apr Aug Dec Apr 18 Benchmark Index Return 2

6 (b) Average Total Return of the Fund: For the financial year ended 30 April 2018 Fund (% p.a.) MDI (% p.a.) 1 year years years Commencement Date: 28 March 2006 Source: Lipper, MorningStar & Bloomberg (c) Annual Total Return of the Fund: For the financial year ended: Fund (% p.a.) MDI (% p.a.) 30 April April April 2016 (1.13) (6.20) 30 April (2.33) 30 April Commencement Date: 28 March 2006 Source: Lipper, MorningStar & Bloomberg The Fund has achieved its target of providing unit holders a steady recurring income that is potentially higher than the prevailing fixed deposit rates, and medium- to long-term capital appreciation. 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 years: Fund Data 30 April April April 2016 NAV (RM) 214,014, ,013, ,893,108 Units in Circulation ( 000) 635, , ,395 NAV (RM per unit) Highest / Lowest NAV (RM per unit) Total Fund Return (%) NAV Return (%) Income Return (%) Final Distribution Gross (RM) Net (RM) Ex-date Final Distribution Gross (RM) Net (RM) Ex-date / (4.72) / / (1.13) (8.07) 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 year is higher as compared to the previous financial year mainly due to the increase in expenses incurred. 4

8 (ii) Portfolio Turnover Ratio (PTR) PTR can be calculated based on the ratio of the average sum of acquisitions and disposals of Shariah-compliant 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 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 year is higher as compared to the previous financial year mainly due to the increase in trading activities. Impact On NAV Arising From Distribution Distributed For The Financial Year Ended 30 April 2018 Details Cum date 25 April 26 October April April 2017 NAV before distribution (RM per unit) Less: Distribution (RM per unit) (0.0091) (0.0160) (0.0270) (0.0265) NAV after distribution (RM per unit) 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 years: Sector Allocation % of Net Asset Value 30 April April April 2016 Trading/Services Finance Industrial Products Plantation Construction Infrastructure Project Companies Properties Real Estate Investment Trusts Consumer Products Technology Total Quoted Investments-Local Total Quoted Investments- Foreign Collective Investment Scheme Total Quoted Investments Deposits With Licensed Financial Institutions Other Assets & Liabilities

9 Country Allocation % of Net Asset Value 30 April April April 2016 Hong Kong/China Singapore Taiwan Indonesia South Korea Total Quoted Investments- Foreign As at 30 April 2018, the Fund was 81.03% invested in Malaysian equities, 9.67% in foreign equities and 9.30% in cash instruments and other assets and liabilities. The Fund s allocation, by sectors, saw notable increases in the Finance, Industrial Products, and Plantation sectors. Allocations were reduced in the Trading and Services, and Technology sectors. As for country allocation, the foreign portion was largely invested in Hong Kong/China and Singapore. 2.3 MARKET REVIEW During the financial year under review (1st May 2017 to 30th April 2018), global markets continued its uptrend in the first half of the period, supported by several major tailwinds. Economic data from the largest economies pointed towards a synchronised global growth, led by the US, which continued to post strong economic data and corporate earnings, and implementation of its tax reform. The US Federal Reserve (Fed) expanded on its tightening trajectory by announcing its intention to reduce its USD 4.5 tril balance sheet. The optimism spilled over to the Asia Pacific markets as sentiment was further supported by a rally in crude oil prices and accommodative statements from central banks. 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, Japan continued its economic revival, registering a sustained gross domestic product (GDP) growth and its central bank reassuring the markets that it intends to maintain its dovish stance, which added more to the bullish sentiment. However, this positive momentum snapped when the US reported stronger-than-expected wage growth in February 2018, raising fears that the Fed could tighten interest rates faster than expected. This triggered a return of volatility to the markets. It was soon followed by US and China threatening to enact protectionist measures on trade, raising fears of a trade war. The 10-year US Treasury yield temporarily breached the psychological 3.0% level in April 2018 for the first time since January 2014 as fears of a potential acceleration in inflation and interest rate hike returned. Malaysia however bucked the global trend, with its equity market subdued at the beginning of the period from a lack of fresh catalysts. The 2018 Budget announcement failed to excite as it came in generally in line with expectations. The Malaysian market only began to rally strongly in tandem with the region at the end of 2017 and into January This was predominantly led by the banking stocks on the back of Bank Negara raising the Overnight Policy Rate (OPR) by 25bps, and the improving economic outlook. At the end of the period, it saw the announcement of the 14th General Election (GE14), which saw the FBM KLCI soon reaching a record high of 1, on 19 April, before closing at 1, For the financial year, the FBM KLCI registered a positive return of 5.8% year-on-year (y-o-y). The broader market underperformed, with the FBM Mid 70, FBM Small Cap, and FBM EMAS Shariah index returning 2.5%, -17.5% and 1.5% respectively. Relative to the region, the FBM KLCI underperformed the MSCI Asia ex-japan Index, which recorded an increase of 21.3% y-o-y. 6

10 2.4 MARKET & ECONOMIC OUTLOOK AND INVESTMENT STRATEGY We believe the volatile environment in the markets can provide opportunities and any correction can be considered as healthy. Fundamentals in Asia have not changed 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 is likely to stay at reasonable levels. Domestically, for Malaysia, the unprecedented victory of Pakatan Harapan (PH) in GE14 could bring some uncertainty in the short to medium term. However, as the dust settles and there is greater clarity on PH s policies and implementation, investors should eventually return with a renewed and stronger buying appetite. We expect the economy to remain robust, underpinned by encouraging exports and commodity prices, and private consumption, with a synchronised global economic growth acting as a tailwind. As a consequence, corporate earnings growth momentum is expected to pick-up, as many are well-positioned to benefit from the anticipated recovery in global demand, following their capacity expansion over the past two years. Nonetheless, geopolitical tensions, such as a trade war between the US and China will negatively impact trade-dependent economies such as Malaysia. Our base case scenario is that a somewhat amiable agreement will be reached. Our strategy is to focus on companies that will benefit from cyclical opportunities arising from a robust economic backdrop, against which, corporate earnings are set to catch up with GDP growth and firm commodity prices. That said, we are cognisant of rising policy risks and the resulting volatility in currencies and fund flows. As such, we remain vigilant in our investments, focusing on valuations and earnings visibility with a more opportunistic approach. 2.5 BREAKDOWN OF UNIT HOLDINGS BY SIZE AS AT 30 APRIL 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 4, , ,001 to 500,000 2, , Above 500, , Manager s stock Total 9, ,

11 3 POLICY ON STOCKBROKING REBATES AND SOFT COMMISSIONS The Management Company did not retain any rebates. For the financial year ended 30 April 2018, the Manager and its Fund Manager 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 30 April 2018 and of its financial performance, changes in equity and cash flows of the Fund for the financial year ended 30 April 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 28 June

13 5 TRUSTEE S REPORT TO THE UNIT HOLDERS OF MANULIFE INVESTMENT We have acted as Trustee of Manulife Investment Dividend Fund ( the Fund ) for the financial year ended 30 April 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. During the financial year, a total distribution of 2.51sen per unit (gross) has been distributed to the unit holders of the Fund. We are of the view that the distribution is not inconsistent with the objective of the Fund. For HSBC (Malaysia) Trustee Berhad Tan Bee Nie Head,Trustee Operations Kuala Lumpur 28 June

14 6 INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF MANULIFE INVESTMENT REPORT ON THE AUDIT OF THE THE FINANCIAL STATEMENTS Our opinion In our opinion, the financial statements of Manulife Investment Dividend Fund ( the Fund ) give a true and fair view of the financial position of the Fund as at 30 April 2018, and of its financial performance and its cash flows for the financial year then ended in accordance with the Malaysian Financial Reporting Standards and the International Financial Reporting Standards. What we have audited We have audited the financial statements of the Fund which comprise the statement of financial position as at 30 April 2018 of the Fund, and the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Fund for the financial year then ended, and notes to the financial statements including a summary of significant accounting policies and other explanatory notes, as set out on pages 14 to 43. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the "Auditors' responsibilities for the audit of the financial statements" section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and other ethical responsibilities We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ("By-Laws") and the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants ("IESBA Code"), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Information other than the financial statements and auditors' report thereon The Manager of the Fund is responsible for the other information. The other information comprises Manager's report but does not include the financial statements of the Fund and our auditors' report thereon. Our opinion on the financial statements of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Fund or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 11

15 Responsibilities of the Manager for the financial statements The Manager of the Fund is responsible for the preparation of financial statements of the Fund that give a true and fair view in accordance with the Malaysian Financial Reporting Standards and the International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of financial statements of the Fund that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Fund, the Manager is responsible for assessing the Fund's ability to continue as a going concern, disclosing, as applicable, matters related to a going concern and using the going concern basis of accounting unless the Manager either intends to liquidate the Fund or has no realistic alternative but to do so. Auditors' responsibilities for the audit of the financial statements. Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issues and auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (a) Identify and assess the risks of material misstatement of the financial statements of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. (b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control. (c) (d) (e) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager. Conclude on the appropriateness of the Manager's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the Fund, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and siginificant audit findings, including any significant deficiencies in internal control that we identify during our audit. 12

16 OTHER MATTERS This report is made solely to the unit holders of the Fund and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS PLT (No.LLP LAC & AF 1146) Chartered Accountants Kuala Lumpur 28 June

17 7 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018 INVESTMENT INCOME Note Interest income 323, ,747 Gross dividend income 6,636,174 5,722,779 Net gain on financial assets at fair value through profit or loss 6 2,358,365 13,554,112 Net foreign currency exchange (loss)/gain (320,083) 258,534 RM RM 8,998,042 20,156,172 EXPENSES Manager s fee 3 3,099,863 2,784,313 Trustee s fee 4 123, ,469 Auditors remuneration 6,500 6,630 Tax agent s fee 2,700 2,700 Other expenses 363, ,292 Transaction costs 454, ,374 4,050,982 3,472,778 PROFIT BEFORE TAXATION 4,947,060 16,683,394 TAXATION 5 (251,866) (43,876) PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME 4,695,194 16,639,518 Profit after taxation is made up as follows: Realised 1,405,009 8,762,556 Unrealised 3,290,185 7,876,962 4,695,194 16,639,518 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 14

18 8 STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2018 MANULIFE INVESTMENT ASSETS Note RM RM Financial assets at fair value through profit or loss 6 194,112, ,324,629 Amount due from Manager 7,142,927 14,562,918 Amount due from stockbrokers 18,239 2,082,331 Dividends receivable 285, ,974 Tax recoverable - 230,231 Cash and cash equivalents 7 18,816,694 15,183,475 TOTAL ASSETS 220,375, ,685,558 LIABILITIES Amount due to Manager - Manager s fee 261, ,693 - Cancellation of units 458,816 64,770 Amount due to Trustee 10,451 9,667 Amount due to stockbrokers - 298,309 Other payables 8 43,430 48,405 Distribution payable 5,586,717 14,009,355 TOTAL LIABILITIES 6,360,704 14,672,199 NET ASSET VALUE ( NAV ) OF THE FUND 214,014, ,013,359 EQUITY Unit holders capital 169,968, ,915,891 Retained earnings 44,045,711 48,097, ,014, ,013,359 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 2 214,014, ,013,359 NUMBER OF UNITS IN CIRCULATION 9 635,285, ,005,000 NAV PER UNIT The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 15

19 9 STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 MAY ,915,891 48,097, ,013,359 Movement in unit holders contribution: Creation of units arising from applications 29,948,240-29,948,240 Creation of units arising from distribution 14,640,878-14,640,878 Cancellation of units (18,642,245) - (18,642,245) Total comprehensive income - 4,695,194 4,695,194 Distribution (Note 15) (5,893,927) (8,746,951) (14,640,878) BALANCE AS AT 30 APRIL ,968,837 44,045, ,014,548 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 MAY ,199,028 39,694, ,893,108. Movement in unit holders contribution: Creation of units arising from applications 35,607,775-35,607,775 Creation of units arising from distribution 14,009,355-14,009,355 Cancellation of units (32,127,042) - (32,127,042) Total comprehensive income - 16,639,518 16,639,518 Distribution (Note 15) (5,773,225) (8,236,130) (14,009,355) BALANCE AS AT 30 APRIL ,915,891 48,097, ,013,359 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 16

20 10 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 APRIL 2018 MANULIFE INVESTMENT Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Purchase of investments (84,473,568) (68,454,791) Sale of investments 74,355,906 51,812,657 Net realised foreign exchange loss (150,799) (92,840) Dividends received 6,653,002 5,521,050 Interest received 323, ,747 Manager s fee paid (3,080,266) (2,763,206) Trustee s fee paid (123,211) (110,634) Audit fee paid (7,020) (6,500) Payment for other fees and expenses (362,785) (252,683) Tax agent's fee paid (8,100) - Tax (receipt)/paid (21,635) 47,115 Net cash used in operating activities (6,894,890) (13,679,085) CASH FLOWS FROM FINANCING ACTIVITIES Distribution paid (23,063,517) (12,591,077) Proceeds from creation of units 52,009,108 48,435,568 Payments for cancellation of units (18,248,200) (32,201,862) Net cash generated from financing activities 10,697,391 3,642,629 Net increase/(decrease) in cash and cash equivalents 3,802,501 (10,036,456) Currency translation difference (169,282) 351,374 Cash and cash equivalents at the beginning of the financial year 15,183,475 24,868,557 Cash and cash equivalents at the end of the financial year 7 18,816,694 15,183,475 Cash and cash equivalents comprise: Deposit with licensed financial institution 2,125,764 13,989,846 Bank balances in a licensed bank 16,690,930 1,193, ,816,694 15,183,475 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 17

21 11 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 30 APRIL 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 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 financial year ended 30 April The Fund has applied the following amendments for the first time for the financial year beginning 1 May 2017: Amendments to MFRS 107 Statement of Cash Flows - Disclosure Initiatives (effective from 1 January 2017) introduce an additional disclosure of changes in liabilities arising from financing activities. The adoption of the Amendment 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 new standards, amendments to published standards and interpretations to existing standards that are applicable to the Fund but not yet effective and have not been early adopted are as follows: 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. 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. 18

22 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 ( ECL ) model on impairment that replaces the incurred loss impairment model used in MFRS 139.The ECL 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 stated 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 designed 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 provosions based on ECL rather than only incurred credit losses as is the case under MFRS 139. It applies to financial assets classfied at amotised cost. Based on the assessment undertaken to date, the Fund does not expect any loss allowance to be recognised upon adoption of MFRS 9. The Fund will apply the standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements. B (i) FINANCIAL ASSETS AND FINANCIAL LIABILITIES Classification The Fund classifies its financial assets in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial assets at fair value through profit or loss Financial assets are designated at fair value through profit or loss when they are managed principally for the 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 Manager, amount due from stockbrokers, dividends receivable and cash and cash equivalents in the statement of financial position. 19

23 Other financial liabilities The Fund classifies amount due to Manager, amount due to Trustee, amount due to stockbrokers, other payables and distribution payable 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. 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 year 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. 20

24 (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. 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 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 M 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. 21

25 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. 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 bank balances 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 DISTRIBUTION A distribution to the Fund s unit holders is accounted for as a deduction from realised reserve. A proposed distribution to unit holders is recognised in the statement of changes in equity upon approval by the Trustee. Distribution equalisation is the amount attributable to net realised income that is included in the price of units created or units cancelled by the Fund during the reporting period. I 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. J FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the 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. 22

26 A range of methodologies and assumptions has been used in deriving the fair values of the Fund s financial instruments as at the date of statement of financial position. The total fair value of each financial instrument is not materially different from the total carrying value. The fair values are based on the following methodologies and assumptions: (a) Short-term deposits with financial institutions For deposits and placements with financial institutions with maturities of less than three months, the carrying value is a reasonable estimate of fair value. For deposits and placements with maturities of three months and above, the estimated fair value is based on discounted cash flows by using prevailing interbank money market rates at which similar deposits and placements would be made with financial institutions of similar credit risk and remaining period to maturity. (b) Quoted investments The estimated fair value is based on quoted and observable market prices. (c) Other short-term financial instruments Other short-term financial instruments comprise amount due from/to Manager, amount due from/to stockbrokers, dividends receivable, tax receivables, amount due to Trustee, other payables and distribution payable. The carrying values of the assets and liabilities are assumed to approximate their fair values due to the short tenure of less than one year. K 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. 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. M 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. 23

27 12 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 APRIL INFORMATION ON THE FUND Manulife Investment Dividend Fund ( the Fund ) was established pursuant to a Master Deed date 31 January 2002, as amended and supplemented by subsequent Supplemental Deeds (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 28 March 2006 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 a steady recurring income that is potentially higher than prevailling fixed deposit rates. At the same time, the Fund also attempts to attain medium- to long-term capital appreciation. 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 28 June 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. 24