1 General Information 1. 2 Manager s Report 2. 3 Policy On Stockbroking Rebates And Soft Commissions 7. 4 Statement By The Manager 8

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2 CONTENTS PAGE 1 General Information 1 2 Manager s Report 2 3 Policy On Stockbroking Rebates And Soft Commissions 7 4 Statement By The Manager 8 5 Trustee s Report 9 6 Shariah Adviser s Report 10 7 Statement Of Comprehensive Income 11 8 Statement Of Financial Position 12 9 Statement Of Changes In Equity Statement Of Cash Flows Summary Of Significant Accounting Policies Notes To The Financial Statements Corporate Information 34 i

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4 MANULIFE INVESTMENT 1 GENERAL INFORMATION 1.1 THE TRUST The Fund commenced operations on 30 June 2003 and will continue its operations until terminated as provided under Clause 48.2 of the Deed. 1.2 FUND TYPE / CATEGORY Income / Islamic Bond 1.3 OBJECTIVE OF THE FUND To provide Unit Holders with higher than average returns compared to fixed deposits in medium- to long-term periods by investing in bonds and other fixed income securities which are Shariah-compliant. 1.4 DISTRIBUTION POLICY Annually 1.5 PERFORMANCE BENCHMARK The performance of the Fund is measured against the 5-year Malaysian Government Securities (MGS) Bond Index returns. 1.6 INVESTMENT STYLE AND STRATEGY The Fund seeks to achieve its objective by investing in government sukuk (including quasisovereign), corporate sukuk and Islamic money market instruments. The Fund may also invest in Shariah-compliant collective investment schemes provided it is consistent with the investment objective of the Fund. The Fund is actively managed. The trading strategy will depend on market opportunities and interest rate expectations. The Fund adopts both a bottom-up and top-down approach, with particular emphasis on fundamental analysis. The Manager analyses general economic and market conditions and forms a view on market themes, opportunities and risks. Sukuk selected for investment undergo a credit evaluation process that entails an assessment of credit risk factors of the issuer and also the structure of the security. The Manager will also perform duration management (i.e. taking into account the profit and time to maturity of the security), and select securities that may deliver better returns by comparing parameters such as credit rating and duration. When selecting sukuk, the Fund Manager seeks quality investment grade issues with a minimum BBB rating (or equivalent) and above for long-term sukuk, or short-term rating of P2 (or equivalent) and above by RAM Rating Services Berhad ( RAM ) or MARC-2 by Malaysian Rating Corporation Berhad ( MARC ) and/or investment grade rating by a recognised credit rating agency for investment in local and foreign sukuk. During the six months financial period under review, active management of the portfolio was adopted depending on the market conditions, interest rate expectations and credit conditions. 1

5 2 MANAGER S REPORT 2.1 FUND PERFORMANCE For the six months financial period ended 30 April 2018, the Fund s return increased by 1.53%. The Fund underperformed its benchmark return, 5-year MGS Bond Index, which increased by 1.77%. The underperformance was due to capital loss of Sukuk holdings during the recent interest rate hike cycle. The graph below compares the 6-month performance of the Fund against its benchmark return: 3% Fund Performance vs. Benchmark Index Return 2% 1% 0% -1% Oct 17 Nov 17 Dec 17 Jan 18 Manulife Investment As-Saad Return Feb 18 Mar 18 Benchmark Index Return Apr 18 Source: Lipper & Bloomberg L.P. Fund Size The Fund s total NAV decreased to RM64.68mil from RM69.66mil during the six months financial period under review Fund s Returns (a) The graph below compares the 5-year performance of the Fund against its benchmark return: 25% 20% 15% 10% 5% 0% -5% Apr 13 Aug Dec Fund Performance vs. Benchmark Index Return Apr Aug Dec Apr Aug Dec Manulife Investment As-Saad Return Source: Lipper & Bloomberg L.P. Apr Aug Dec Apr Aug Dec Apr 18 Benchmark Index Return 2

6 (b) Average Total Return of the Fund: For the financial period ended 30 April 2018 Fund (% p.a.) 5-year MGS Bond Index (% p.a.) 1 year years years Commencement date: 30 June 2003 Source: Lipper & Bloomberg L.P. (c) Annual Total Return of the Fund: For the financial period ended: Fund (% p.a.) 5-year MGS Bond Index (% p.a.) 30 April April April April April Commencement date: 30 June 2003 Source: Lipper & Bloomberg L.P. BASES OF CALCULATION 1. Net Asset Value (NAV) Net Asset Value of the Fund is determined by deducting the value of all the Fund s liabilities from the value of all the Fund s assets, at the valuation point. 2. Net Asset Value per unit Net Asset Value per unit is the net asset value of the Fund divided by the total number of units in circulation, at the valuation point. 3. Fund s Return Fund s return can be calculated based on the computation methods as follows: Daily Total Fund s Return = {[End NAV (Ex-distribution) - Beginning NAV + Dividend Distribution] / Beginning NAV} x 100% Total Fund s Return Average Total Return = Total Fund s return for the period is derived from geometrically linking together the daily total fund s returns. The linking formula is = [(1+ R 1 ) x (1+ R 2 ) x (1+ R n )] -1 where: R 1 is the first daily return for the period, R 2 is the second daily return for the period, and R n is the last daily return for the period. = Annualised Total Return (Actual number of days in a year/ [(1+ Total fund s return for the period) number of days during the period) -1] x 100% 3

7 The following table shows other financial and performance data of the Fund for the past three financial periods: Fund Data 30 April April April 2016 NAV (RM) 64,680,686 85,064,701 95,974,133 Units in Circulation ( 000) 57,873 75,733 84,753 NAV (RM per unit) Highest / Lowest NAV (RM per unit) Total Fund Return (%) NAV Return (%) Income Return (%) / / (0.49) (0.49) / Management Expenses Ratio (%) Portfolio Turnover Ratio (times) NOTES (i) Management Expenses Ratio (MER) MER can be calculated based on the ratio of the sum of fees and the recovered expenses of the unit trust fund to the average value of the unit trust fund calculated on a daily basis. Fees of the unit trust fund + Recovered expenses of the unit trust fund Average value of the unit trust fund calculated on a daily basis x 100 Where: Fees Recovered expenses Average value of the unit trust fund = All ongoing fees deducted / deductible directly from the unit trust fund in respect of the period covered by the management expense ratio, expressed as a fixed amount, calculated on a daily basis. This would include the annual management fee, the annual trustee fee and any other fees deducted / deductible directly from the unit trust fund; = All expenses recovered from/ charged to the unit trust fund, as a result of the expenses incurred by the operation of the unit trust fund, expressed as a fixed amount. This should not include expenses that would otherwise be incurred by an individual investor (e.g. brokerage, taxes and levies); and = The NAV of the unit trust fund, including unit trust net income value of the fund, less expenses on an accrued basis, in respect of the period covered by the management expense ratio, calculated on a daily basis. The MER for the financial period remains fairly consistent with previous financial period. 4

8 (ii) Portfolio Turnover Ratio (PTR) PTR can be calculated based on the ratio of the average sum of acquisitions and disposals of Shariah-compliant the unit trust fund for the period to the average value of the unit trust fund for the period calculated on a daily basis. [Total acquisitions of the fund for the period + Total disposals of the fund for the period]/2 Average value of the unit trust fund calculated on a daily basis The PTR for the financial period is lower than the previous financial period mainly due to the decrease 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 % of Net Asset Value 30 April April April 2016 Unquoted Sukuk Total Shariah-compliant Investments Islamic Deposits With Licensed Financial Institutions Other Assets & Liabilities (0.13) (0.64) 0.69 As at 30 April 2018, the Fund was 90.78% invested in unquoted sukuk. Another 9.35% was placed as Islamic deposits with licensed financial institutions. 2.3 MARKET REVIEW During the financial period under review (1st November 2017 to 30th April 2018), the US Treasury (UST) yield curve bear flattened. The 2-year, 5-year and 10-year UST yields went up 87 bps, 78 bps and 58 bps respectively. Short-term yields rose throughout the year amid expectation of rate hikes in year UST market was bearish in 4Q 2017 as market anticipated stronger economic growth as a result of a newly passed tax bill. The selloff in UST intensified in early 2018 as the market was worried about ballooning US budget deficit and higher inflation pressure as a result of the tax cut plan. Positive economic data coming out of the US contributed to the rise in yields. To a certain extent, rise in yields were tempered by global growth concerns, arising from potential trade conflict between US and China, and geopolitical risks in Syria. As these risks dissipated in April 2018, we saw another round of UST selloff; the 10-year UST yield peaked at 3.03% highest since December 2013 before settling at levels slightly below 3% by the end of the financial year under review. The Malaysian Government Securities (MGS) yield curve also shifted up in the period under review. The 3-year, 5-year and 10-year MGS yields went up 18 bps, 9 bps and 18 bps, respectively. 5

9 MGS yields were largely influenced by external factors and generally tracked UST as well as global bond market movements. Local bond market turn bearish the end of 2017 amid a global bond selloff sparked by renewed anticipation of a US Federal Reserve (Fed) rate hike in December and caution ahead of Trump s tax reform plan. Geopolitical risks relating to North Korea also weighed on the market. In early 2018, MYR bonds came under pressure as sentiment turned guarded ahead of the Monetary Policy Committee (MPC) meeting as well as from rise in UST yields. MGS did not change much after Bank Negara Malaysia s first Overnight Policy Rate (OPR) hike since July 2014 as the market has priced it in to a large extent. The MGS market took cue from UST movements in March and yields declined amid trade tensions between US and China. By April 2018, market liquidity was reduced significantly in the run up to the 14th General Election (GE 14). However, this did not prevent recent a sharp rise in MGS yields, as local yields were pressured upwards by rising UST, in the wake of tapering global trade tensions. Primary issuances of corporate bonds were aplenty in 4Q 2017 as corporate took the opportunity to tap the market before the anticipated OPR hike in January However, primary market activities turned slower in year 2018, in line with development in the MGS market. 2.4 MARKET OUTLOOK AND INVESTMENT STRATEGY Following the unexpected victory of Pakatan Harapan (PH) in the recent GE 14, we expect short term weakness and volatility in the local bond market. This is due to uncertainties on government policies, particularly those relating to fiscal policies and infrastructure development. We believe that sentiment should improve once there is more clarity and details on policy changes. We are positive on long term market outlook given PH s strong national mandate and its pledge to remain broadly market and investment friendly. Internal politics aside, external factors will continue to be key drivers of the local bond market. These include development relating to US-China trade tensions, monetary policies of major global and regional economies as well as US fiscal policies. BNM maintained the OPR at 3.25% in the latest MPC meeting in May At this juncture, we believe it is unlikely that there will be further rate hikes for Malaysia for the rest of 2018 unless there are upside surprises to real gross domestic product (GDP) growth and inflation rate. 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 1, , ,001 to 10, , ,001 to 50, , ,001 to 500, , Above 500, , Manager s stock Total 2, ,

10 3 POLICY ON STOCKBROKING REBATES AND SOFT COMMISSIONS The Management Company did not retain any rebates. For the six months financial period ended 30 April 2018, the Management company or its Fund Manager did not receive any rebates or soft commissions. 7

11 4 STATEMENT BY THE MANAGER We, Edmond Cheah Swee Leng and Chong Soon Min, being two of the Directors of Manulife Asset Management Services Berhad, 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 30 April 2018 and of its financial performance, changes in equity and cash flows of the Fund for the six months financial period 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

12 5 TRUSTEE S REPORT TO THE UNIT HOLDERS OF MANULIFE INVESTMENT We have acted as Trustee of Manulife Investment As-Saad ( the Fund ) for the financial period 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. For HSBC (Malaysia) Trustee Berhad Tan Bee Nie Head,Trustee Operations Kuala Lumpur 28 June

13 6 SHARIAH ADVISER S REPORT TO THE UNIT HOLDERS OF MANULIFE INVESTMENT We have acted as the Shariah Adviser of Manulife Investment As-Saad. 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 Investment As-Saad in accordance with Shariah principles and complied with applicable guidelines, rulings and decisions issued by the Securities Commission pertaining to Shariah matters for the six months financial period ended 30 April In addition, we also confirm that the investment portfolio of Manulife Investment As-Saad comprises securities which have been classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission ( SACSC ). As for the securities which are not certified by the SACSC, we have reviewed the said securities and opined that these securities are designated as Shariah-compliant. For and on behalf of the Shariah Adviser IBFIM MUHAMMAD KHAIRULNIZAM BIN ALIAS Consultant (Shariah)/Designated Person Responsible for Shariah Advisory Kuala Lumpur 28 June

14 7 STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 APRIL 2018 INVESTMENT INCOME/(LOSS) Note Profit income 1,588,395 1,954,402 Net loss on financial assets at fair value through profit or loss 6 (215,052) (2,285,382) RM RM 1,373,343 (330,980) EXPENSES Manager s fee 3 258, ,765 Trustee s fee 4 20,759 27,101 Auditors remuneration 2,975 2,975 Tax agent s fee 1,339 1,339 Other expenses 33,326 30, , ,109 PROFIT/(LOSS) BEFORE TAXATION 1,056,083 (732,089) TAXATION NET PROFIT/(LOSS) AFTER TAXATION AND TOTAL COMPREHENSIVE PROFIT/(LOSS) 1,056,083 (732,089) Profit/(loss) after taxation is made up as follows: Realised 1,429, ,994 Unrealised (373,840) (1,416,083) 1,056,083 (732,089) The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 11

15 8 STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2018 ASSETS Note RM RM Financial assets at fair value through profit or loss 6 58,707,683 79,981,277 Amount due from Manager 78, ,925 Cash and cash equivalents 7 6,138,237 5,653,199 TOTAL ASSETS 64,924,061 86,240,401 LIABILITIES Amount due to Manager - Manager s fee 41,760 52,979 - Cancellation of units 189,805 1,088,146 Amount due to Trustee 3,392 4,239 Other payables 8 8,418 30,336 TOTAL LIABILITIES 243,375 1,175,700 NET ASSET VALUE ( NAV ) OF THE FUND 64,680,686 85,064,701 EQUITY Unit holders capital 57,657,522 77,971,452 Retained earnings 7,023,164 7,093,249 64,680,686 85,064,701 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 2 64,680,686 85,064,701 NUMBER OF UNITS IN CIRCULATION 10 57,873,000 75,733,000 NAV PER UNIT The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 12

16 9 STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 APRIL 2018 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 NOVEMBER ,697,719 5,967,081 69,664,800 Movement in unit holders contribution: Creation of units 15,700,322-15,700,322 Cancellation of units (21,740,519) - (21,740,519) Total comprehensive income - 1,056,083 1,056,083 BALANCE AS AT 30 APRIL ,657,522 7,023,164 64,680,686 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 NOVEMBER ,293,067 7,825, ,118,405 Movement in unit holders contribution: Creation of units 20,323,949-20,323,949 Cancellation of units (38,645,564) - (38,645,564) Total comprehensive income - (732,089) (732,089) BALANCE AS AT 30 APRIL ,971,452 7,093,249 85,064,701 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 13

17 10 STATEMENT OF CASH FLOWS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 APRIL 2018 Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Purchase of Shariah-compliant investments (13,517,274) (55,569,732) Sale of Shariah-compliant investments 22,376,444 59,665,650 Profit income received 1,588,395 2,631,689 Manager s fee paid (262,574) (374,305) Trustee s fee paid (21,004) (29,944) Audit fee paid (6,480) (6,360) Tax agent s fee paid Payment for other fees and expenses (53,556) (4,302) Net cash generated from operating activities 10,104,051 6,312,696 CASH FLOWS FROM FINANCING ACTIVITIES Distribution paid (2,783,372) (3,547,720) Proceeds from creation of units 18,267,451 24,274,946 Payments for cancellation of units (22,321,498) (37,625,146) Net cash used in financing activities (6,837,419) (16,897,920) Net increase/(decrease) in cash and cash equivalents 3,266,632 (10,585,224) Cash and cash equivalents at beginning of the financial period 2,871,605 16,238,423 Cash and cash equivalents at end of the financial period 7 6,138,237 5,653,199 Cash and cash equivalents comprise: Islamic deposit with licensed financial institutions 7 6,049,949 5,636,167 Bank balances in a licensed bank 7 88,288 17,032 6,138,237 5,653,199 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 14

18 11 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE SIX MONTHS FINANCIAL PERIOD 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 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 Provider to exercise judgement in the process of applying the Fund s accounting policies. Although these estimates and judgement are based on the Provider s best knowledge of current events and actions, actual results may differ. There are no significant areas of judgement or complexity that have significant effect on the amounts recognised in the financial statements. There are no critical accounting estimates and assumptions used in the preparation of the financial statements of the Fund for the six months financial period ended 30 April The Fund has applied the following amendments for the first time for the financial period beginning 1 May 2017: Amendments to MFRS 107 Statement of Cash Flows - Disclosure Initiatives (effective from 1 January 2017) introduce an additional disclosure in changes in liabilities arising from financing activities. The adoption of 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. Financial period 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 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. 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. 15

19 Financial period beginning on/after 1 May 2018 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 that replaces the incurred loss impairment model used in MFRS 139. The expected credit losses model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The Fund has reviewed its financial assets and liabilities and has assessed the following impacts from the adoption of the new standard as stated below: There will be no impact on the Fund's accounting for financial assets as the Fund's Shariahcompliant 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 provisions based on ECL rather than only incurred credit losses as is the case under MFRS 139. It applies to financial assets classfied at amortised 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 receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial assets at fair value through profit or loss Financial assets are designated at fair value through profit or loss when they are managed principally for the purpose of selling or repurchasing in the near term and their peformance evaluated on a fair value basis. The Fund designates its investment in Shariah-compliant 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 and cash and cash equivalents in the statement of financial position. 16

20 Other financial liabilities The Fund classifies amount due to Manager, amount due to Trustee 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 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. 17

21 (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 is recognised on an accrual basis using the effective profit rate method. 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. F 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. G 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 values as at the date of statement of financial position. 18

22 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 the 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. (b) Unquoted sukuk The estimated fair value is based on price quoted by a Bond Pricing Agency ( BPA ) registered with the Securities Commission. Where such a quotation is not available or where the Manager is of the view that the price quoted by the BPA for a specific unquoted sukuk differs from the market price by more than 20 basis points, the Manager may use the market price, provided that the Manager: (i) (ii) (iii) (c) records its basis for using non-bpa price; obtains necessary internal approvals to use the non-bpa price; and keeps an audit trail of all decisions and basis for adopting the market yield. Other short-term financial instruments Other short-term financial instruments comprise amount due from/to Manager, 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. H TAXATION Current tax expense is determined according to the tax laws in the jurisdictions of the taxable profit earned during the financial period from the financial assets in which the Fund invests and includes all taxes based upon the taxable profit. I 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. 19

23 12 NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 30 APRIL INFORMATION ON THE FUND Manulife Investment As-Saad ( the Fund ) was established pursuant to a Master Deed dated 31 January 2002, as amended and supplemented by subsequent Supplemental Deeds (hereinafter referred to as the Deeds ) 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 sukuk and lslamic Money Markets instruments issued by Malaysian Goverment, goverment-backed agencies, Bank Negara Malaysia and/or Malaysian Corporation which comply with Shariah requirements. The Fund commenced operations on 30 June 2003 and will continue its operations until terminated as provided under Clause 48.2 of the Deed. The main objective of the Fund is to provide unit holders with higher than average returns compared to fixed deposits in medium- to long-term periods by investing in sukuk and other fixed income securities which are permitted under Shariah principles. 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 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 0.75% 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. 20

24 5 TAXATION RM RM Current taxation: - - Numerical reconciliation between profit/(loss) before taxation multiplied by the Malaysian statutory tax rate and tax expenses of the Fund is as follows: RM RM Profit/(loss) before taxation 1,056,083 (732,089) Tax calculated at Malaysian tax rate of 24% (2016:24%) 253,460 (175,701) Tax effect in respect of: - Expenses not deductible for tax purposes 10,969 12,313 - Restriction on tax deductible expenses for unit trust funds 65,173 83,953 - Investment (loss)/income not subject to tax (329,602) 79,435 Tax expenses FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS RM RM Designated at fair value through profit or loss - Unquoted sukuk 58,707,683 79,981,277 Net (loss)/gain on financial assets at fair value through profit or loss Realised 63,979 (1,027,228) - Unrealised (279,031) (1,258,154) RM RM (215,052) (2,285,382) 21

25 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) UNQUOTED SUKUK Nominal value Carrying value Fair value as at Fair value as at expressed as percentage of value of Fund RM RM RM % Cahya Mata Sarawak Berhad % / ,700,000 3,801,680 3,799, Celcom Transmission (M) Sdn Bhd % / ,000,000 1,009,029 1,012, Celcom Transmission (M) Sdn Bhd % / ,100,000 5,160,577 5,182, DanaInfra Nasional Berhad % / ,600,000 1,662,668 1,595, DanaInfra Nasional Berhad % / ,000,000 1,991,996 1,905, Edra Energy Sdn Bhd % / ,500,000 1,556,777 1,556, Edra Energy Sdn Bhd % / ,500,000 1,571,128 1,567, Edra Energy Sdn Bhd % / ,500,000 1,579,396 1,575, Edra Energy Sdn Bhd % / ,000,000 2,121,794 2,109, Edra Energy Sdn Bhd % / ,500,000 1,592,108 1,589, IJM Corporation Berhad % / ,500,000 6,677,305 6,667, Imtiaz Sukuk II Berhad % / ,250,000 1,271,705 1,270, Imtiaz Sukuk II Berhad % / ,000,000 2,003,506 1,995, Jimah Energy Ventures Sdn Bhd % / , , , Jimah Energy Ventures Sdn Bhd % / ,000,000 4,683,641 4,711, LPPS Berhad % / , , , Mumstaz Rakyat Sukuk Berhad % / ,500,000 2,544,753 2,556, Putrajaya Bina Sdn Bhd % / ,000,000 3,018,699 2,991, PLUS Berhad % / ,500,000 2,649,764 2,580, PLUS Berhad % / ,500,000 1,613,773 1,564, Sarawak Energy Berhad % / ,600,000 4,775,136 4,775, Southern Power Generation Berhad % / ,600,000 1,600,214 1,607,

26 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) UNQUOTED SUKUK Nominal value Carrying value Fair value as at Fair value as at expressed as percentage of value of Fund RM RM RM % Southern Power Generation Berhad % / ,000,000 1,002,574 1,009, UEM Sunrise Berhad % / ,500,000 1,559,253 1,556, UEM Edgenda Berhad % / ,800,000 2,802,399 2,813, TOTAL UNQUOTED SUKUK 56,850,000 58,972,179 58,707, ACCUMULATED UNREALISED LOSS ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (264,496) FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 58,707,683 UNQUOTED SUKUK Nominal value Carrying value Fair value as at Fair value as at expressed as percentage of value of Fund RM RM RM % Aman Sukuk Berhad % / , , , Benih Restu Berhad % / ,500,000 6,578,700 6,590, Bumitama Agriculture Limited % / ,750,000 11,923,926 11,934, DanaInfra Nasional Berhad % / ,600,000 1,664,161 1,609, DanaInfra Nasional Berhad % / ,000,000 1,990,709 1,911, DanaInfra Nasional Berhad % / ,600,000 1,652,382 1,589, Gamuda Berhad % / ,000,000 3,022,179 3,032, Gamuda Berhad % / ,200,000 3,207,545 3,219,

27 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) UNQUOTED SUKUK Nominal value Carrying value Fair value as at Fair value as at expressed as percentage of value of Fund RM RM RM % GII Murabahah % / ,500,000 2,625,939 2,578, IJM Corporation Berhad % / ,500,000 6,688,719 6,728, IJM Corporation Berhad % / ,500,000 1,521,858 1,529, Jimah Energy Ventures Sdn Bhd % / , , , Jimah Energy Ventures Sdn Bhd % / ,000,000 1,126,325 1,128, Jimah Energy Ventures Sdn Bhd - 0% / ,000,000 3,550,866 3,562, Jimah Energy Ventures Sdn Bhd - 0% / ,000,000 4,833,548 4,852, LPPS Berhad % / , , , Mumstaz Rakyat Sukuk Berhad % / ,500,000 2,544,753 2,559, PLUS Berhad % / , , , PLUS Berhad % / ,000,000 7,291,367 7,266, PLUS Berhad % / ,500,000 2,656,074 2,590, PLUS Berhad % / ,500,000 1,617,924 1,566, Sarawak Energy Berhad % / , , , Sarawak Energy Berhad % / ,600,000 10,020,328 10,067, Sarawak Energy Berhad % / , , , UEM Edgenda Berhad % / ,800,000 2,802,519 2,801, TOTAL UNQUOTED SUKUK 76,850,000 80,189,364 79,981, ACCUMULATED UNREALISED LOSS ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (208,087) FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 79,981,277 24

28 7 CASH AND CASH EQUIVALENTS RM RM Islamic deposits with licensed financial institutions 6,049,949 5,636,167 Bank balances in a licensed bank 88,288 17,032 6,138,237 5,653,199 Weighted average rates of returns are as follow: % % Short-term Islamic deposits with licensed financial institutions The Islamic deposits have an average maturity of 2 days ( : 2 days). 8 OTHER PAYABLES RM RM Auditors remuneration 2,495 2,975 Tax agent s fee 4,864 9,439 Sundry payables and accruals 1,059 17,922 8,418 30,336 9 SHARIAH INFORMATION OF THE FUND The Shariah Adviser confirmed that the investment portfolio of the Fund is Shariah-compliant, and which comprise: (a) (b) The investments in sukuk are as per the list of sukuk available at Bond Info Hub and Fully Automated System for Issuing/Tendering of Bank Negara Malaysia; and Liquid assets in the local market which are placed in Shariah-compliant investments and/or instruments. 10 UNITS IN CIRCULATION No. of units No. of units At beginning of the financial period 63,283,000 92,263,000 Add: Creation of units 14,130,000 18,200,000 Less: Cancellation of units (19,540,000) (34,730,000) At end of the financial period 57,873,000 75,733,000 25

29 11 BROKERS AND FINANCIAL INSTITUTIONS TRANSACTIONS The details of transactions with dealers/brokers by value of trades are as follows: Name of dealers/brokers Value of trades Percentage of total trades Brokerage fees Percentage of total brokerage fees RM % RM % 2018 Hong Leong Bank Berhad 11,571, Bank Islam Malaysia Berhad 7,963, RHB Investment Bank Berhad 6,189, Standard Chartered Bank Malaysia Berhad 2,642, CIMB Investment Bank Berhad 2,091, ,459, For the financial period ended 30 April 2018, details of transactions with dealers/brokers by value of trades apply only to sukuk transactions. This took effect from 24 May 2017 as per Securities Commission s Guidelines on Unit Trust Funds. Name of dealers/brokers and financial institutions Value of trades Percentage of total trades Brokerage fees Percentage of total brokerage fees RM % RM % 2017 Bank Islam Malaysia Berhad 31,069, CIMB Islamic Bank Berhad 29,480, RHB Investment Bank Berhad 26,282, CIMB Investment Bank Berhad 23,974, Maybank Islamic Bank Berhad 18,570, HwangDBS Investment Bank Berhad 18,286, RHB Islamic Bank Berhad 17,950, Maybank Berhad 9,783, Standard Chartered Bank Malaysia Berhad 8,858, Hong Leong Bank Berhad 6,931, Others 5,854, ,040, As at the end of each financial period, there were no transactions with related parties. 26

30 12 UNITS HELD BY THE MANAGER AND PARTIES RELATED TO THE MANAGER The related parties and their relationship with the Fund are as follows: Related parties Manulife Asset Management Services Berhad Manulife Financial Corporation ( Manulife ) Manulife Holdings Berhad HSBC Malaysia Trustee Berhad for Manulife PRS-Conservative Fund HSBC Malaysia Trustee Berhad for Manulife PRS-Moderate Fund HSBC Malaysia Trustee Berhad for Manulife PRS-Growth Fund CIMB Islamic Trustee Berhad for Manulife Shariah PRS-Conservative Fund CIMB Islamic Trustee Berhad for Manulife Shariah PRS-Moderate Fund CIMB Islamic Trustee Berhad for Manulife Shariah PRS-Growth Fund Subsidiaries and associates of Manulife as disclosed in its financial statements Directors of Manulife Asset Management Services Berhad Relationship The Manager Ultimate holding company of the Manager Immediate holding company of the Manager Trustee of Manulife PRS-Conservative Fund Trustee of Manulife PRS-Moderate Fund Trustee of Manulife PRS-Growth Fund Trustee of Manulife Shariah PRS- Conservative Fund Trustee of Manulife Shariah PRS-Moderate Fund Trustee of Manulife Shariah PRS-Growth Fund Subsidiaries and associate companies of the ultimate holding company of the Manager Directors of the Manager Units held by the Manager and parties related to the Manager: DIRECTOR OF THE MANAGER WONG BOON CHOY ** MANAGER MANULIFE ASSET MANAGEMENT SERVICES BERHAD * As at: No. of units RM No. of units RM ,626 5,170 47,018 52, ,442 4,989 47,553 53,412 MANULIFE PRS-CONSERVATIVE FUND** HSBC MALAYSIA TRUSTEE BERHAD FOR MANULIFE PRS-MODERATE FUND** MANULIFE PRS-GROWTH FUND** No. of units RM No. of units RM No. of units RM , , , , , ,131 1,293,248 1,452,576 27