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 23 January 2007 and will continue its operations until terminated as provided under Clause 48.2 of the Deed. 1.2 FUND TYPE / CATEGORY Income / Islamic Money Market 1.3 OBJECTIVE OF THE FUND To provide Unit Holders with liquidity and current income while maintaining capital stability. Note: Any material change to the Fund s investment objective would require Unit Holders approval. 1.4 DISTRIBUTION POLICY As the Fund is an income fund, the Manager will distribute income at least once a year (if any). 1.5 PERFORMANCE BENCHMARK The performance of the Fund is measured against against CIMB Bank 1-month Fixed Return Income Account-i (FRIA-i) Fixed Maturity rate. 1.6 INVESTMENT STYLE AND STRATEGY The Fund is essentially managed to provide liquidity to meet the short-term cash flow requirements of its Unit Holders while providing a reasonable income return. The Fund s investments are largely confined to short-term Islamic money market instruments and shortdated sukuk that are highly liquid. The Fund Manager adopts a prudent strategy in forming a portfolio of sukuk, which is in accordance with the Fund s investment objective and the Fund Manager s assessment of investment prospects in line with the underlying interest rates and economic outlook. The Fund is actively managed to provide income while maintaining capital stability based on the liquidity management and interest rate outlook. During the six months financial period under review, active management of the portfolio was adopted depending on the sukuk market condition, Islamic money market return expectations and credit conditions. 1

5 2 MANAGER S REPORT 2.1 FUND PERFORMANCE For the six months financial period ended 31 May 2018, the Fund s return increased by 1.43%. The Fund underperformed its benchmark return which increased by 1.54%. The underperformance was due to market value loss of some short term sukuk given the rising of short term interest rate and liquidity management, which reduced longer term higher return Islamic deposit placements. The graph below compares the 6-month performance of the Fund against its benchmark return: 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Nov 17 Fund Performance vs. Benchmark Index Return Dec 17 Jan 18 Feb 18 Manulife Investment Al-Ma mun Return Source: Lipper & CIMB Website Fund Size Mar 18 Apr 18 Benchmark Index Return The Fund s total NAV increased to RM154.25mil from RM118.43mil during the six-month financial period under review. Fund s Returns May 18 (a) The graph below compares the 5-year performance of the Fund against its benchmark return: 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% May 13 Sep 13 Jan 14 Fund Performance vs. Benchmark Index Return May Sep Jan 15 May Sep Jan 16 Manulife Investment Al-Ma mun Return Source: Lipper & CIMB Website May Sep Jan 17 May Sep Jan 18 May 18 Benchmark Index Return 2

6 (b) Average Total Return of the Fund: For the financial period ended 31 May 2018 Fund (% p.a.) Benchmark (% p.a.) 1 year years years Commencement date: 23 January 2007 Source: Lipper & CIMB Website (c) Annual Total Return of the Fund: For the financial period ended: Fund (% p.a.) Benchmark (% p.a.) 31 May May May May May Commencement date: 23 January 2007 Source: Lipper & CIMB Website BASES OF CALCULATION 1. Net Asset Value (NAV) Net Asset Value of the Fund is determined by deducting the value of all the Fund s liabilities from the value of all the Fund s assets, at the valuation point. 2. Net Asset Value per unit Net Asset Value per unit is the net asset value of the Fund divided by the total number of units in circulation, at the valuation point. 3. Fund s Return Fund s return can be calculated based on the computation methods as follows: Daily Total Fund s Return = {[End NAV (Ex-distribution) - Beginning NAV + Dividend Distribution] / Beginning NAV} x 100% Total Fund s Return Average Total Return = Total Fund s return for the period is derived from geometrically linking together the daily total fund s returns. The linking formula is = [(1+ R 1 ) x (1+ R 2 ) x (1+ R n )] -1 where: R 1 is the first daily return for the period, R 2 is the second daily return for the period, and R n is the last daily return for the period. = Annualised Total Return (Actual number of days in a year/ [(1+ Total fund s return for the period) number of days during the period) -1] x 100% 3

7 The following table shows other financial and performance data of the Fund for the past three financial periods: Fund Data 31 May May May 2016 NAV (RM) 154,254,782 86,543, ,460,905 Units in Circulation ( 000) 151,749 84, ,719 NAV (RM per unit) Highest / Lowest NAV (RM per unit) Total Fund Return (%) NAV Return (%) Income Return (%) / / / Management Expenses Ratio (%) Portfolio Turnover Ratio (times) NOTES (i) Management Expenses Ratio (MER) MER can be calculated based on the ratio of the sum of fees and the recovered expenses of the unit trust fund to the average value of the unit trust fund calculated on a daily basis. Fees of the unit trust fund + Recovered expenses of the unit trust fund Average value of the unit trust fund calculated on a daily basis x 100 Where: Fees Recovered expenses Average value of the unit trust fund = All ongoing fees deducted / deductible directly from the unit trust fund in respect of the period covered by the management expense ratio, expressed as a fixed amount, calculated on a daily basis. This would include the annual management fee, the annual trustee fee and any other fees deducted / deductible directly from the unit trust fund; = All expenses recovered from/ charged to the unit trust fund, as a result of the expenses incurred by the operation of the unit trust fund, expressed as a fixed amount. This should not include expenses that would otherwise be incurred by an individual investor (e.g. brokerage, taxes and levies); and = The NAV of the unit trust fund, including unit trust net income value of the fund, less expenses on an accrued basis, in respect of the period covered by the management expense ratio, calculated on a daily basis. The MER for the financial period is 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 the Shariah-compliant 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 higher as compared with previous financial period mainly due to the increase in trading activities. 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 31 May May May 2016 Sukuk Short-Term Islamic Commercial Papers Total Shariah-compliant Investments Islamic Deposits With Licensed Financial Institutions Other Assets & Liabilities (0.07) As at 31 May 2018, the Fund was 29.56% invested in short-term sukuk and the remaining in Islamic deposits. The asset allocation is reflective of the Fund s objective of providing investors with a high level of liquidity at reasonable returns. 2.3 MARKET REVIEW During the six months financial period under review (1st December 2017 to 31st May 2018), the US Treasury (UST) yield curve bear flattened. The 2-year, 5-year and 10-year UST yields went up 66 bps, 59 bps and 50 bps respectively. Short term yields rose throughout the year amid expectation of rate hikes in year However, 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 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, as well as geopolitical risks in Syria. As these risks dissipated in April and May 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 period 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 39 bps, 24 bps and 29 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 at 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 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 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. On 9 May 2018, the country received a jolt as the 61-year old incumbent federal government lost the general election to be replaced by a new government led by the former Prime Minister Tun Dr Mahathir Mohamed. Fortunately, government transition was smooth and without any untoward events. This was a huge relief to market sentiment, with bond yields normalizing. USDMYR level stayed below level, which was still within foreign investor s comfort level. 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 The local bond market has somewhat stabilised after the recent GE 14. However, risks remain as new government policies, especially those relating to fiscal plans and infrastructure developments, continue to be unveiled. Decisions on these matters will have bearing on the country s sovereign rating and foreign investors confidence in Malaysia. Market sentiment should improve and stability restored when more clarity is obtained on this front. External factors will also continue to influence the local bond market. These include development relating to US-China trade tensions, monetary policies of major global and regional economies as well as geopolitical events. 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 31 MAY 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 2, , ,001 to 10, , ,001 to 50, , ,001 to 500, , Above 500, , Manager s stock Total 3, ,

10 3 POLICY ON STOCKBROKING REBATES AND SOFT COMMISSIONS The Management Company did not retain any rebates. For the six months financial period ended 31 May 2018, the Manager and 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, (the "Manager") do hereby state that, in the opinion of the Manager, the unaudited financial statements comprising the statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows, summary of significant accounting policies and notes to the financial statements, are drawn up in accordance with the provisions of the Deeds and give a true and fair view of the financial position of the Fund as at 31 May 2018 and of its financial performance, changes in equity and cash flows of the Fund for the six months financial period ended 31 May 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 23 July

12 5 TRUSTEE S REPORT TO THE UNIT HOLDERS OF MANULIFE INVESTMENT We have acted as Trustee for Manulife Investment Al-Ma'mun ( the Fund ) for the financial period ended 31 May To the best of our knowledge, Manulife Asset Management Services Berhad ("the Manager") has managed the Fund in the financial period under review in accordance with the following: 1. Limitations imposed on the investment powers of the Manager under the deed, securities laws and Guidelines on Unit Trust Funds; 2. Valuation and pricing of units of the Fund are carried out in accordance with the deed and any regulatory requirements; and 3. Creation and cancellation of units of the Fund are carried out in accordance with the deed and any regulatory requirements. For Maybank Trustees Berhad (Company No.: 5004-P) BERNICE K M LAU Head,Operations Kuala Lumpur 23 July

13 6 SHARIAH ADVISER S REPORT TO THE UNIT HOLDERS OF MANULIFE INVESTMENT We have acted as the Shariah Adviser of Manulife Investment Al-Ma'mun. 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 Al-Ma'mun 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 31 May In addition, we also confirm that the investment portfolio of Manulife Investment Al-Ma'mun 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 23 July

14 7 STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 MAY 2018 INVESTMENT INCOME Note Profit income 2,161,030 1,787,524 Net (loss)/gain on financial assets at fair value through profit or loss 6 (44,506) 86,120 RM RM 2,116,524 1,873,644 EXPENSES Manager s fee 3 304, ,749 Trustee s fee 4 48,729 37,560 Auditors remuneration 3,241 3,241 Tax agent s fee 1,346 1,346 Other expenses 35,033 25, , ,372 PROFIT BEFORE TAXATION 1,723,621 1,571,272 TAXATION PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME 1,723,621 1,571,272 Profit after taxation is made up as follows: Realised 1,817,826 1,595,176 Unrealised (94,205) (23,904) 1,723,621 1,571,272 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 31 MAY 2018 ASSETS Note RM RM Financial assets at fair value through profit or loss 6 129,607,091 85,918,288 Amount due from Manager 24,720, ,702 Cash and cash equivalents 7 9, ,785 TOTAL ASSETS 154,336,629 86,614,775 LIABILITIES Amount due to Manager - Manager s fee 58,027 34,975 Amount due to Trustee 9,293 5,596 Other payables 8 14,527 30,974 TOTAL LIABILITIES 81,847 71,545 NET ASSETS VALUE ( NAV ) OF THE FUND 154,254,782 86,543,230 EQUITY Unit holders capital 142,694,325 77,115,601 Retained earnings 11,560,457 9,427, ,254,782 86,543,230 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 2 154,254,782 86,543,230 NUMBER OF UNITS IN CIRCULATION ,749,000 84,679,000 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 31 MAY 2018 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 DECEMBER ,592,604 9,836, ,429,440 Movement in unit holders contribution: Creation of units 216,962, ,962,565 Cancellation of units (182,860,844) - (182,860,844) Total comprehensive income - 1,723,621 1,723,621 BALANCE AS AT 31 MAY ,694,325 11,560, ,254,782 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 DECEMBER ,423,083 7,856, ,279,440 Movement in unit holders contribution: Creation of units 50,103,886-50,103,886 Cancellation of units (65,411,368) - (65,411,368) Total comprehensive income - 1,571,272 1,571,272 BALANCE AS AT 31 MAY ,115,601 9,427,629 86,543,230 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 31 MAY 2018 CASH FLOWS FROM OPERATING ACTIVITIES Note Placements of Islamic deposits with licensed financial institutions (1,699,501,828) (369,603,623) Proceeds from maturity of Islamic deposits with licensed financial institutions 1,703,419, ,176,439 Purchase of Shariah-compliant investments (90,655,021) (65,250,609) Sale of Shariah-compliant investments 70,000,000 50,123,303 Profit income received 3,077,422 1,787,524 Manager s fee paid (298,481) (241,772) Trustee s fee paid (47,749) (38,862) Audit fee paid (6,750) (6,500) Tax agent s fee paid - (2,700) Payment for other fees and expenses (55,519) (24,711) Net cash (used in)/generated from operating activities (10,067,986) 13,918,489 RM RM CASH FLOWS FROM FINANCING ACTIVITIES Distribution paid (4,083,084) (3,313,765) Proceeds from creation of units 199,738,172 55,047,553 Payments for cancellation of units (185,596,850) (65,572,168) Net cash generated from/(used in) financing activities 10,058,238 (13,838,380) Net (decrease/increase in cash and cash equivalent (9,748) 80,109 Cash and cash equivalents atthe beginning of the financial period 18,838 23,676 Cash and cash equivalents at the end of the financial period 7 9, ,785 Cash and cash equivalents comprise: Bank balance in a licensed bank 7 9, ,785 9, ,785 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 31 MAY 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 period presented, unless otherwise stated. A BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The unaudited financial statements of the Fund have been prepared in accordance with the Malaysian Financial Reporting Standards ( MFRS ) and the International Financial Reporting Standards ( IFRS ). The financial statements have been prepared under the historical cost convention, as modified by financial assets at fair value through profit or loss. The preparation of financial statements in conformity with MFRS and IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires the Manager to exercise judgement in the process of applying the Fund s accounting policies. Although these estimates and judgement are based on the Manager s best knowledge of current events and actions, actual results may differ. There are no significant areas of judgement or complexity that have significant effect on the amounts recognised in the financial statements. There are no critical accounting estimates and assumptions used in the preparation of the financial statements of the Fund for the six months financial period ended 31 May The Fund has applied the following amendments for the first time for the financial period beginning 1 June 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 new standards and amendments to published standards and interpretations to existing standards that are applicable to the Fund but not yet effective and have not been adopted one as follow: Financial period beginning on/after 1 June 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 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 (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 investment in unquoted sukuk and Islamic Commercial Papers, 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 classified 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 this standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements. B (i) FINANCIAL ASSETS AND FINANCIAL LIABILITIES Classification The Fund classifies its financial assets in the following categories: at fair value through profit or loss and 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 replacing 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 the statement of comprehensive income. 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 placed with lisenced financial institution and unquoted sukuk are recognised on an accrual basis using the effective profit rate method. Realised gains or losses on sale/redemption of Shariah-compliant investments are calculated based on the difference between the net disposal proceeds and the carrying amount of Shariah-compliant investments, determined on cost adjusted for accretion of discount or amortisation of premium. E EXPENSES Expenses are accounted for on an accrual basis and charged to the statement of comprehensive income. F CASH AND CASH EQUIVALENTS For the purpose of statement of cash flows, cash and cash equivalents comprise cash at bank that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. G 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. Short-term Islamic commercial papers. The short-term Islamic commercial papers are valued at the carrying value of cost adjusted for accrued profit and allocation of discount net of amortisation of premium to maturity.the carrying amount value is reasonable estimate of its fair value due to short tenure of less than one year. (d) 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 Fund's Manager that undertakes the strategic decisions for the Fund. 19

23 12 NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 MAY INFORMATION ON THE FUND Manulife Investment Al-Ma'mun ( 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 Maybank Trustees 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 market instruments issued by Malaysian Goverment, government-backed agencies, Bank Negara Malaysia and/or Malaysia corporations which comply with Shariah requirements. The Fund commenced operations on 23 January 2007 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 liquidity and current income while maintaining capital stability. 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 23 July 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 0.5% 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 0.08% 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 subject to a minimum fee of RM18,000 per annum. 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 before taxation multiplied by the Malaysian statutory tax rate and tax expenses of the Fund is as follows: RM RM Profit before taxation 1,723,621 1,571,272 Tax calculated at Malaysian tax rate of 24% (2017: 24%) 413, ,105 Tax effect in respect of: - Expenses not deductible for tax purposes 18,813 13,706 - Restriction on tax deductible expenses for unit trust funds 75,484 58,864 - Investment income not subject to tax (507,966) (449,675) Tax expenses FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS RM RM Designated at fair value through profit or loss - Unquoted sukuk (Note 6(a)) 45,595,581 39,759,276 - Short-term Islamic commercial papers (Note 6(b)) 9,972,714 4,990,692 - Islamic deposits with licensed financial institutions 74,038,796 41,168, ,607,091 85,918, RM RM Net (loss)/gain on financial assets at fair value through profit or loss - Realised 3, Unrealised (47,721) 86,120 (44,506) 86,120 21

25 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (a) UNQUOTED SUKUK UNQUOTED SUKUK Nominal value Carrying value Fair value as at Fair value as at expressed as percentage of value of Fund RM RM RM % Bumitama Agriculture Limited % / ,000,000 10,170,761 10,156, Gamuda Berhad % / ,000,000 10,039,960 10,036, IJM Corporation Berhad % / ,000,000 5,048,605 5,042, Imtiaz Sukuk II Berhad % / ,000,000 5,108,229 5,103, Kimanis Power Sdn Bhd % / ,000,000 5,072,599 5,074, UEM Sunrise Berhad % / ,000,000 5,071,294 5,069, UEM Sunrise Berhad % / ,000,000 5,112,661 5,111, ,000,000 45,624,109 45,595, (b) SHORT-TERM ISLAMIC COMMERCIAL PAPERS SHORT-TERM ISLAMIC COMMERCIAL PAPERS Fair value as Fair value at expressed as Nominal Carrying as at percentage of value value value of Fund RM RM RM % Sunway Treasury Sukuk Sdn Bhd % / ,000,000 9,972,714 9,972, TOTAL SHORT-TERM ISLAMIC COMMERCIAL PAPERS 10,000,000 9,972,714 9,972, TOTAL SHARIAH-COMPLIANT INVESTMENTS 55,000,000 55,596,823 55,568, ACCUMULATED UNREALISED LOSS ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (28,528) FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 55,568,295 22

26 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (a) UNQUOTED SUKUK UNQUOTED SUKUK Fair value as Fair value at expressed as Nominal Carrying as at percentage of value value value of Fund RM RM RM % Anih Berhad % / ,000,000 5,014,956 5,019, BGSM Management Sdn Bhd % / ,000,000 5,179,663 5,184, Celcom Transmission Sdn Bhd % / ,000,000 5,035,155 5,038, Jimah Energy Ventures Sdn Bhd % / ,000,000 4,180,069 4,185, Kimanis Power Sdn Bhd % / ,000,000 10,148,483 10,146, Kimanis Power Sdn Bhd % / ,000,000 5,083,772 5,093, UEM Sunrise Berhad % / ,000,000 5,091,501 5,091, ,000,000 39,733,599 39,759, (b) SHORT-TERM ISLAMIC COMMERCIAL PAPERS SHORT-TERM ISLAMIC COMMERCIAL PAPERS Fair value as Fair value at expressed as Nominal Carrying as at percentage of value value value of Fund RM RM RM % Sunway Treasury Sukuk Sdn Bhd % / ,000,000 4,990,692 4,990, TOTAL SHORT-TERM ISLAMIC COMMERCIAL PAPERS 5,000,000 4,990,692 4,990, TOTAL SHARIAH-COMPLIANT INVESTMENTS 44,000,000 44,724,291 44,749, ACCUMULATED UNREALISED GAIN ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 25,677 FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 44,749,968 23

27 7 CASH AND CASH EQUIVALENTS RM RM Bank balance in a licensed bank 9, ,785 9, ,785 8 OTHER PAYABLES RM RM Auditors remuneration 2,991 3,241 Tax agent s fee 4,046 4,046 Sundry payables and accruals 7,490 23,687 14,527 30,974 9 SHARIAH INFORMATION OF THE FUND The Shariah Adviser confirmed that the investment portfolio of the Fund is Shariah-compliant, and which comprises: (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 118,169,000 99,769,000 Add: Creation of units 214,390,000 49,340,000 Less: Cancellation of units (180,810,000) (64,430,000) At end of the financial period 151,749,000 84,679,000 24

28 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 RM % 2018 RHB Investment Bank Berhad 55,329, Hong Leong Bank Berhad 15,253, Kenanga Investment Bank Berhad 9,967, Standard Chartered Bank Berhad 5,072, Maybank Islamic Berhad 5,032, ,655, For the six months financial period ended 31 May 2018, details of transactions with dealers/ brokers by value of trades apply only to unquoted sukuk transactions. This took effect from 24 May 2017 as per Securities Commission's Guidelines on Unit Trust Funds. Name of dealers/brokers Value of trades Percentage of total trades RM % 2017 RHB Investment Bank Berhad 34,953, Kenanga Investment Bank Berhad 9,967, Am Bank Malaysia Berhad 5,138, Hong Leong Bank Berhad 5,115, CIMB Investment Bank Berhad 5,052, Maybank Bank Berhad 5,022, ,250, As at the end of each financial period, there were no transactions with related parties. 25

29 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 HSBC Malaysia Trustee Berhad for Manulife Investment As-Saad HSBC Malaysia Trustee Berhad for MIB - Manulife Eap Managed Fund CIMB Islamic Trustee Berhad for Manulife Shariah Dana Sukuk 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 Investment As-Saad Trustee of Manulife EAP Managed Fund Trustee of Manulife Shariah Dana Sukuk 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: (i) Units held by the Manager MANAGER MANULIFE ASSET MANAGEMENT SERVICES BERHAD * As at: No. of units RM , , ,846 55,031 26

30 (ii) Units held by parties related to the Manager: MANULIFE PRS- MODERATE FUND** HSBC MALAYSIA TRUSTEE BERHAD FOR MANULIFE PRS- CONSERVATIVE FUND** MANULIFE PRS- GROWTH FUND** As at: No. of units RM No. of units RM No. of units RM ,341,334 1,363, , ,224 3,475,153 3,532, , , , , , ,923 HSBC MALAYSIA TRUSTEE BERHAD FOR MANULIFE INVESTMENT AS-SAAD** MIB-MANULIFE EAP MANAGED FUND** As at: No. of units RM No. of units RM ,953,628 3,002,363 12,699,993 12,909, MANULIFE SHARIAH PRS- MODERATE FUND** CIMB ISLAMIC NOMINEES (T) SDN BHD FOR MANULIFE SHARIAH PRS- CONSERVATIVE FUND** MANULIFE SHARIAH PRS- GROWTH FUND** No. of units RM No. of units RM No. of units RM , , , ,428 2,355,882 2,394, , ,245 82,017 83, , ,390 CIMB ISLAMIC NOMINEES (T) SDN BHD FOR MANULIFE SHARIAH DANA SUKUK** As at: No. of units RM ,756,965 4,835, * The units are held legally and beneficially. ** The units are held legally. The Manager is of opinion that all transactions with the related parties have been entered into the normal source of business at agreed terms between the related parties. In addition to the related party disclosure mentioned elsewhere in the financial statements, there were no other significant related party transactions and balances. 27

31 13 MANAGEMENT EXPENSES RATIO ( MER ) % % MER MER represents expenses including Manager s fee, Trustee s fee, auditors remuneration, tax agent s fee and other expenses expressed as an annual percentage of the Fund s average net asset value calculated on a daily basis. 14 PORTFOLIO TURNOVER RATIO ( PTR ) PTR (times) PTR represents the average of total acquisitions and disposals of Shariah-compliant investments in the Fund for the financial period over the Fund s average net asset value calculated on a daily basis. 15 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Fund is exposed to a variety of risks which include market risk (including price risk and interest rate risk), credit risk, liquidity risk,and capital risk. Financial risk management is carried out through internal control processes adopted by the Manager and adherence to all rules and regulations as stipulated by the Securities Commission s Guidelines on Unit Trust Funds. Market risk (a) Price risk Price risk arises mainly from uncertainty about future prices of Shariah-compliant investments. It represents the potential loss the Fund may suffer through holding market positions in the face of price movements. The Manager manages the risk of unfavourable changes in prices by continuous monitoring of the performance and risk profile of the Shariah-compliant investment portfolio. The table below shows the assets of the Fund which are exposed to price risk RM RM Designated at fair value through profit or loss -Unquoted sukuk * 45,595,581 39,759,276 -Short term Islamic commercial papers 9,972,714 4,990,692 55,568,295 44,749,968 * Included profit receivable of RM524,581 (2017 : RM499,966) 28