For the Financial Year Ended 31 December 2017

Transcription

1 Annual Review 2017 For the Financial Year Ended 31 December 2017 MANULIFE INVESTMENT-LINKED FUNDS EQUITY FUND MANAGED FUND INCOME FUND DANA EKUITI DINAMIK MANULIFE FLEXI INVEST FUND MANULIFE PROGRESS FUND MANULIFE DIVIDEND FUND MANULIFE EMERGING EASTERN EUROPE FUND MANULIFE CHINA VALUE FUND MANULIFE ASIAN SMALL CAP GROWTH FUND MANULIFE ASIA-PACIFIC REITS FUND

2 ABOUT MANULIFE MALAYSIA Manulife Insurance Berhad, a wholly owned subsidiary of Manulife Holdings Berhad, and a member of Canadabased Manulife Financial Corporation. We have been established over 54 years in Malaysia and was listed on the KLSE in As at 31 December 2017, assets under management were over 10 billion. Through its subsidiary companies, the Manulife Group offers an innovative range of financial protection and wealth management products and services to meet different customer needs.

3 MARKET COMMENTARY SIP LIFESTYLE PORTFOLIO CONTENT 1. Market Commentary 2 2. Fund Performance 36 - Comparative Performance Tables 48 - Investment Information Summary of Financial Statement Notes to the Financial Information Statement by Manager Independent Auditors Report 97 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 1

4 MARKET COMMENTARY

5 MARKET COMMENTARY EQUITY FUND FUND OBJECTIVE The fund s investment objective is to provide investors with medium to long term capital appreciation by investing entirely in equities from various sectors of the Malaysian economy. Investors in this fund are able to tolerate short-term volatility. INVESTMENT REVIEW During the financial year under review (1st January 2017 to 31st December 2017), Malaysia s economy continued to be underpinned by domestic spending and private investments. Its gross domestic product growth continued to accelerate from 4.5 in 4Q 2016 to 6.2 in 3Q Global markets in the first half of the year kicked off to a strong start as investors took a positive view of a Trump Presidency and a Republican majority in Congress. The optimism spilled over to the Asia Pacific markets as sentiment was boosted by Trump s continued emphasis on his inflationary policies and tax cuts. This optimism was later supported by a rally in crude oil prices, after OPEC members complied with their output cuts. Global market enthusiasm took a pause as geopolitical tensions from Syria and North Korea, and the French elections brought some uncertainty. Nonetheless, these concerns were soon shrugged off as the global market rally continued to gain traction, supported by several major tailwinds. Economic data from the largest economies pointed towards a synchronized global growth, led by the US, which posted a strong 3Q 2017 GDP growth, favorable corporate earnings results, and the eventual signing of the Republican tax reform bill into law. The US continued to exhibit a robust labour market, reinforcing the Federal Reserve s third interest rate hike in 2017 to From Asia, China s Communist Party Congress concluded with Xi Jinping strengthening his position at the top as General Secretary of the Party for another term. In addition, Japan continued its economic revival, registering its seventh consecutive quarter of GDP growth (3Q17: 0.6 q-o-q) and its central bank reassuring the markets that it intends to maintain its dovish stance, which added more to the bullish sentiment throughout the period. Malaysia however bucked the global trend, with its equity market weak for most of the periods from a lack of fresh catalysts before rallying in December. It saw limited gains from the recovery in crude oil prices to a two year high of USD 66.98/barrel, while its strong economic data and the 2018 Budget failed to excite the market. Nonetheless, the MYR strengthened against the USD by 10.9 to 4.05, making it one of the best performing currencies in the region, driven by its relative underperformance against the region in 2016 and expectations of a possible interest rate hike by Bank Negara in On the corporate front, the results reporting seasons were uninspiring, with the large caps generally in-line with expectations throughout the year. The proposed merger between RHB Bank and AmBank was aborted while the Sime Darby s demerger exercise did not bring much excitement as it was weighed down by high valuations. The market only rallied in December, driven by the Banking stocks on rate hike expectations and positive developments in the US. For the financial year under review, the FBM KLCI registered a positive return of 9.45 y-o-y. However, the broader market out-performed the FBM KLCI, with the FBM Mid 70, FBM Small Cap, and FBM EMAS Shariah index increasing by 23.40, 15.87, and respectively. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 3

6 MARKET COMMENTARY EQUITY FUND (CONTINUED) OUTLOOK Global growth continues to be synchronized and broad base. Rate hike is the US remains as evidence to the overall improvement in the US economy. Fed raised the US 2018 GDP growth to 2.5, up from previous forecast of 2.1; while GDP forecast for 2019 was revised upwards to 2.1 from previous expectation of 2.0, referencing a potential lift in economic activity at the back of the US tax reform. Recent inflation readings were below Fed s target of 1.9, reemphasizing Fed s to remain an accommodative and gradual stance in the monetary policy tightening. On Europe front, ECB opted to keep interest rates unchanged. Similarly to the US, ECB upgraded its 2018 GDP forecast to 2.3 from 1.8 previously, but expressed some concern over inflation. That said, ECB is likely to remain gradual in its normalization of monetary policy. The ongoing economic expansion in the Euro area is expected to continue to be supported by the ECB s monetary policy measures. Over is Asia, even though China s economic growth slowed but steady deceleration will continue in 2018 as policymakers continue to rebalance the country s economic model. Its equity market will continue to benefit from the stabilization of the Chinese economy, with growth still promising, supported by ongoing modest fiscal expansion. STRATEGY The Malaysian market has shown some positive signs. Both domestic and foreign participation are increasing and gradually shifting back to the market. Stronger external demand and infrastructure spending will continue to support economic growth. Thematic plays on GE14, interest rate hike and infrastructure spending are key positive themes increasingly boosting market sentiment. Undemanding market valuation against regional peers should continue to attract more foreign interest in addition to favorable uptrend of the Ringgit and crude oil. We continue to stay invested and focus on companies that demonstrate growth and strong cash flows. TOP 5 HOLDINGS As at 31 December 2017 Top 5 Equity Holding Weight CIMB Group Holdings Bhd 7.3 Public Bank Bhd 6.2 Malayan Banking Bhd 6.1 Tenaga Nasional Bhd 5.4 Telekom Malaysia Bhd 3.6 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 4

7 MARKET COMMENTARY EQUITY FUND (CONTINUED) ASSET ALLOCATION As at 31 December 2017 Equities : 90.5 Cash : 9.5 Total : Reits 1.2 Cash 9.5 Construction 6.4 Trading/Services 31.3 Consumer Products 3.4 Finance 22.1 Technology 4.7 Properties 2.9 Plantations 7.4 Infrastructure 2.0 Industrial Products 9.1 MANAGEMENT FEE Fund management fee of 1.50 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund. Equity Fund is managed by Manulife Asset Management Services Berhad. This report is prepared for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 5

8 MARKET COMMENTARY MANAGED FUND FUND OBJECTIVE The fund s investment objective is to provide investors with long term capital appreciation by investing in a range of equities, as well as enjoy the protection from a spread of fixed income securities. INVESTMENT REVIEW Equities During the financial year under review (1st January 2017 to 31st December 2017), Malaysia s economy continued to be underpinned by domestic spending and private investments. Its gross domestic product growth continued to accelerate from 4.5 in 4Q 2016 to 6.2 in 3Q Global markets in the first half of the year kicked off to a strong start as investors took a positive view of a Trump Presidency and a Republican majority in Congress. The optimism spilled over to the Asia Pacific markets as sentiment was boosted by Trump s continued emphasis on his inflationary policies and tax cuts. This optimism was later supported by a rally in crude oil prices, after OPEC members complied with their output cuts. However, global market enthusiasm took a pause as geopolitical tensions from Syria and North Korea, and the French elections brought some uncertainty. Nonetheless, these concerns were soon shrugged off as the global market rally continued to gain traction, supported by several major tailwinds. Economic data from the largest economies pointed towards a synchronised global growth, led by the US, which posted a strong 3Q 2017 GDP growth, favourable corporate earnings results, and the eventual signing of the Republican tax reform bill into law. Furthermore, the US continued to exhibit a robust labour market, reinforcing the Federal Reserve s third interest rate hike in 2017 to From Asia, China s Communist Party Congress concluded with Xi Jinping strengthening his position at the top as General Secretary of the Party for another term. In addition, Japan continued its economic revival, registering its seventh consecutive quarter of GDP growth (3Q17: 0.6 q-o-q) and its central bank reassuring the markets that it intends to maintain its dovish stance, which added more to the bullish sentiment throughout the period. Malaysia however bucked the global trend, with its equity market weak for most of the period from a lack of fresh catalysts before rallying in December. It saw limited gains from the recovery in crude oil prices to a two year high of USD In addition, its strong economic data and the 2018 Budget failed to excite. Nonetheless, the MYR strengthened against the USD by 10.9 to 4.05, making it one of the best performing currencies in the region, driven by its relative underperformance against the region in 2016 and expectations of a possible interest rate hike by Bank Negara in For its corporate sector, its results reporting seasons were uninspiring, with the large caps generally in-line with expectations throughout the year. The proposed merger between RHB Bank and AMMB was aborted and Sime Darby s demerger exercise did not bring much excitement as it was weighed down by high valuations. The market only rallied in December, driven by the Banking stocks on rate hike expectations and positive developments in the US. For the period under review, the FBM KLCI registered a positive return of 9.45 y-o-y. However, the broader market out-performed the FBM KLCI, with the FBM Mid 70, FBM Small Cap, and FBM EMAS Shariah index increasing by 23.40, 15.87, and respectively. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 6

9 MARKET COMMENTARY MANAGED FUND (CONTINUED) Fixed Income During the financial year under review (1st January 2017 to 31st December 2017), the US Treasury (UST) yield curve bear flattened. Short-term yields rose steadily throughout the first half of the financial year amid expectations of rate hikes in Yields retreated slightly in the summer months as the market was worried that the below-target inflation and disappointing economic data from the US would hinder the Fed s rate hike decisions. Rising geopolitical tension in relation to North Korea also fueled risk aversion trades, sending UST yields lower. In the final three months of the financial year however, yields were driven up significantly by progress on US tax reform policy, which heightened expectations of interest rate hikes in On local shores, Malaysia Government Securities (MGS) yield curve shifted down. Market was generally bullish in the mid of the financial year as market players reacted favorably to BNM s measures allowing FX hedging by foreign investors. Bank Negara Malaysia (BNM), as expected, left the Overnight Policy Rate (OPR) unchanged at 3.00 throughout the year. BNM did surprise the market with a hawkish tone in its November 2017 Monetary Policy Committee statement. Despite heightened expectation of an OPR hike, short-term yields declined as the rate hike expectation attracted foreign inflows riding on the back of strengthening MYR. During this period, we saw continuous demand for corporate bonds from local investors, with yieldhunting trades abound. Primary issuances of corporate bonds were also active. In general, corporate bond yields tracked that of MGS but at much reduced quantum, causing credit spreads to widen. OUTLOOK Equities Global growth continues to be synchronised and broad base. Rate hike is the US remains as evidence to the overall improvement in the US economy. Fed raised the US 2018 GDP growth to 2.5, up from previous forecast of 2.1; while GDP forecast for 2019 was revised upwards to 2.1 from previous expectation of 2.0, referencing a potential lift in economic activity at the back of the US tax reform. Recent inflation readings were below Fed s target of 1.9, reemphasizing Fed s to remain an accommodative and gradual stance in the monetary policy tightening. On Europe front, ECB opted to keep interest rates unchanged. Similarly to the US, ECB upgraded its 2018 GDP forecast to 2.3 from 1.8 previously, but expressed some concern over inflation. That said, ECB is likely to remain gradual in its normalization of monetary policy. The ongoing economic expansion in the Euro area is expected to continue to be supported by the ECB s monetary policy measures. Over is Asia, even though China s economic growth slowed but steady deceleration will continue in 2018 as policymakers continue to rebalance the country s economic model. Its equity market will continue to benefit from the stabilization of the Chinese economy, with growth still promising, supported by ongoing modest fiscal expansion. Fixed Income We believe external factors will continue to be key drivers of the local bond market. These include monetary policies of major global and regional economies and US fiscal policies. We also remain vigilant on geopolitical developments. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 7

10 MARKET COMMENTARY MANAGED FUND (CONTINUED) In Malaysia, BNM raised the OPR by 25 bps to 3.25 as anticipated by the market, in view of the continuous GDP growth trend both locally and globally. In the medium term we expect a flatter yield curve. Short term yields should rise following the recent hike but long term yields may not rise significantly given the still benign inflation outlook. The recent 25 bps hike in OPR is viewed as normalization of rate; probability of further rate hikes in 2018 is very much data-dependent. Until a clearer picture emerges, yields should stay rangebound, driven by external market uncertainties. Foreign investors may also tread more cautiously as the national election approaches, resulting in some market uncertainties. STRATEGY Equities The Malaysian market has shown some positive signs. Both domestic and foreign participation are increasing and gradually shifting back to the market. Stronger external demand and infrastructure spending will continue to support economic growth. Thematic plays on GE14, interest rate hike and infrastructure spending are key positive themes increasingly boosting market sentiment. Undemanding market valuation against regional peers should continue to attract more foreign interest in addition to favorable uptrend of the Ringgit and crude oil. We continue to stay invested and focus on companies that demonstrate growth and strong cash flows. Fixed Income We still expect strong demand for corporate bonds, supported by ample liquidity in the local market and local investors demand for yield pick-up. The stable economic environment is beneficial for the corporate bond market as this generally translates into a more conducive credit environment. Corporate bond yields are also less vulnerable to external shock and market volatility. As such, we will continue to look for investment opportunities in the credit space to enhance portfolio yield. TOP 5 HOLDINGS As at 31 December 2017 Top 5 Equity Holdings Weight Public Bank Bhd 4.0 Telekom Malaysia Bhd 3.6 CIMB Group Holdings Bhd 3.5 Tenaga Nasional Bhd 3.5 Genting Bhd 2.8 Top 5 Core Fixed Income Holdings Weight Bumitama Agri Ltd 2.5 BGSM Management Sdn Bhd 2.4 Bank Islam Malaysia Bhd 2.0 N.U.R Power Bhd 2.0 AMMB Holdings Bhd 1.7 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 8

11 MARKET COMMENTARY MANAGED FUND (CONTINUED) ASSET ALLOCATION As at 31 December 2017 Equities : 71.1 Bond : 14.7 Cash : 14.2 Total : Fixed Income 14.7 Industrial Products 10.4 Infrastructure 3.3 Plantations 3.4 Finance 11.9 Technology 4.0 Consumer Products 3.6 Construction 4.7 Trading/Services 27.1 Cash 14.2 Properties 1.9 REITS 0.8 MANAGEMENT FEE Fund management fee of 1.35 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund. Managed Fund is managed by Manulife Asset Management Services Berhad. This report is prepared for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 9

12 MARKET COMMENTARY INCOME FUND FUND OBJECTIVE The Fund s investment objective is to provide investors a steady return through accumulation of capital over the long term. It is suitable for investors seeking stability of principal and a higher return compared to bank deposits but with an acceptance risk to capital invested. INVESTMENT REVIEW During the financial year under review (1st January 2017 to 31st December 2017), the US Treasury (UST) yield curve bear flattened. Short-term yields rose steadily throughout the first half of the financial year amid expectations of rate hikes in Yields retreated slightly in the summer months as the market was worried that the belowtarget inflation and disappointing economic data from the US would hinder the Fed s rate hike decisions. Rising geopolitical tension in relation to North Korea also fuelled risk aversion trades, sending UST yields lower. In the final three months of the financial year however, yields were driven up significantly by progress on US tax reform policy, which heightened expectations of interest rate hikes in On local shores, Malaysia Government Securities (MGS) yield curve shifted down. Market was generally bullish in the mid of the financial year as market players reacted favorably to BNM s measures allowing FX hedging by foreign investors. Bank Negara Malaysia (BNM), as expected, left the Overnight Policy Rate (OPR) unchanged at 3.00 throughout the year. BNM did surprise the market with a hawkish tone in its November 2017 Monetary Policy Committee statement. Despite heightened expectation of an OPR hike, short-term yields declined as the rate hike expectation attracted foreign inflows riding on the back of strengthening MYR. During this period, we saw continuous demand for corporate bonds from local investors, with yield-hunting trades abound. Primary issuances of corporate bonds were also active. In general, corporate bond yields tracked that of MGS but at much reduced quantum, causing credit spreads to widen. OUTLOOK We believe external factors will continue to be key drivers of the local bond market. These include monetary policies of major global and regional economies and US fiscal policies. We also remain vigilant on geopolitical developments. In Malaysia, BNM raised the OPR by 25 bps to 3.25 as anticipated by the market, in view of the continuous GDP growth trend both locally and globally. In the medium term we expect a flatter yield curve. Short term yields should rise following the recent hike but long term yields may not rise significantly given the still benign inflation outlook. The recent 25 bps hike in OPR is viewed as normalization of rate; probability of further rate hikes in 2018 is very much data-dependent. Until a clearer picture emerges, yields should stay rangebound, driven by external market uncertainties. Foreign investors may also tread more cautiously as the national election approaches, resulting in some market uncertainties. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 10

13 MARKET COMMENTARY INCOME FUND (CONTINUED) STRATEGY We still expect strong demand for corporate bonds, supported by ample liquidity in the local market and local investors demand for yield pick-up. The stable economic environment is beneficial for the corporate bond market as this generally translates into a more conducive credit environment. Corporate bond yields are also less vulnerable to external shock and market volatility. As such, we will continue to look for investment opportunities in the credit space to enhance portfolio yield. PORTFOLIO STATEMENT Securities Net Book Value () Market Value () on Net Asset Value Corporate Bonds -Unquoted & Unsecured 25,779, ,804, Government Guaranteed Bonds 1,203, ,168, Total 26,983, ,972, TOP 5 HOLDINGS As at 31 December 2017 Top 5 Equity Holding Weight GENM Capital Bhd 9.0 Krung Thai Bank PCL/Cayman Islands 8.0 AFFIN Bank Bhd 7.4 Bumitama Agri Ltd 7.2 Cahya Mata Sarawak Bhd 5.8 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 11

14 MARKET COMMENTARY INCOME FUND (CONTINUED) ASSET ALLOCATION As at 31 December 2017 Bonds : 97.0 Cash & Deposits : 3.0 Total : Cash 3.0 Fixed Income 97.0 MANAGEMENT FEE Fund management fee of 0.75 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund. Income Fund is managed by Manulife Asset Management Services Berhad. This report is prepared for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 12

15 MARKET COMMENTARY DANA EKUITI DINAMIK FUND OBJECTIVE Dana Ekuiti Dinamik s investment objective is to maximize medium to long term capital appreciation by investing in Shariah compliant equity and equity-related securities listed on the Bursa Malaysia. INVESTMENT REVIEW During the financial year under review (1st January 2017 to 31st December 2017), Malaysia s economy continued to be underpinned by domestic spending and private investments. Its gross domestic product growth continued to accelerate from 4.5 in 4Q 2016 to 6.2 in 3Q Global markets in the first half of the year kicked off to a strong start as investors took a positive view of a Trump Presidency and a Republican majority in Congress. The optimism spilled over to the Asia Pacific markets as sentiment was boosted by Trump s continued emphasis on his inflationary policies and tax cuts. This optimism was later supported by a rally in crude oil prices, after OPEC members complied with their output cuts. Global market enthusiasm took a pause as geopolitical tensions from Syria and North Korea, and the French elections brought some uncertainty. Nonetheless, these concerns were soon shrugged off as the global market rally continued to gain traction, supported by several major tailwinds. Economic data from the largest economies pointed towards a synchronized global growth, led by the US, which posted a strong 3Q 2017 GDP growth, favorable corporate earnings results, and the eventual signing of the Republican tax reform bill into law. The US continued to exhibit a robust labour market, reinforcing the Federal Reserve s third interest rate hike in 2017 to From Asia, China s Communist Party Congress concluded with Xi Jinping strengthening his position at the top as General Secretary of the Party for another term. In addition, Japan continued its economic revival, registering its seventh consecutive quarter of GDP growth (3Q17: 0.6 q-o-q) and its central bank reassuring the markets that it intends to maintain its dovish stance, which added more to the bullish sentiment throughout the period. Malaysia however bucked the global trend, with its equity market weak for most of the periods from a lack of fresh catalysts before rallying in December. It saw limited gains from the recovery in crude oil prices to a two year high of USD 66.98/barrel, while its strong economic data and the 2018 Budget failed to excite the market. Nonetheless, the MYR strengthened against the USD by 10.9 to 4.05, making it one of the best performing currencies in the region, driven by its relative underperformance against the region in 2016 and expectations of a possible interest rate hike by Bank Negara in On the corporate front, the results reporting seasons were uninspiring, with the large caps generally in-line with expectations throughout the year. The proposed merger between RHB Bank and AmBank was aborted while the Sime Darby s demerger exercise did not bring much excitement as it was weighed down by high valuations. The market only rallied in December, driven by the Banking stocks on rate hike expectations and positive developments in the US. For the financial year under review, the FBM KLCI registered a positive return of 9.45 y-o-y. However, the broader market out-performed the FBM KLCI, with the FBM Mid 70, FBM Small Cap, and FBM EMAS Shariah index increasing by 23.40, 15.87, and respectively. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 13

16 MARKET COMMENTARY DANA EKUITI DINAMIK (CONTINUED) OUTLOOK Global growth continues to be synchronized and broad base. Rate hike is the US remains as evidence to the overall improvement in the US economy. Fed raised the US 2018 GDP growth to 2.5, up from previous forecast of 2.1; while GDP forecast for 2019 was revised upwards to 2.1 from previous expectation of 2.0, referencing a potential lift in economic activity at the back of the US tax reform. Recent inflation readings were below Fed s target of 1.9, reemphasizing Fed s to remain an accommodative and gradual stance in the monetary policy tightening. On Europe front, ECB opted to keep interest rates unchanged. Similarly to the US, ECB upgraded its 2018 GDP forecast to 2.3 from 1.8 previously, but expressed some concern over inflation. That said, ECB is likely to remain gradual in its normalization of monetary policy. The ongoing economic expansion in the Euro area is expected to continue to be supported by the ECB s monetary policy measures. Over is Asia, even though China s economic growth slowed but steady deceleration will continue in 2018 as policymakers continue to rebalance the country s economic model. Its equity market will continue to benefit from the stabilization of the Chinese economy, with growth still promising, supported by ongoing modest fiscal expansion. STRATEGY The Malaysian market has shown some positive signs. Both domestic and foreign participation are increasing and gradually shifting back to the market. Stronger external demand and infrastructure spending will continue to support economic growth. Thematic plays on GE14, interest rate hike and infrastructure spending are key positive themes increasingly boosting market sentiment. Undemanding market valuation against regional peers should continue to attract more foreign interest in addition to favorable uptrend of the Ringgit and crude oil. We continue to stay invested and focus on companies that demonstrate growth and strong cash flows. TOP 5 HOLDINGS As at 31 December 2017 Top 5 Equity Holding Weight Tenaga Nasional Bhd 7.7 Telekom Malaysia Bhd 3.9 Uchi Technologies Bhd 3.5 PPB Group Bhd 3.3 Time dotcom Bhd 3.0 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 14

17 MARKET COMMENTARY DANA EKUITI DINAMIK (CONTINUED) ASSET ALLOCATION As at 31 December 2017 Equities : 84.7 Cash : 15.3 Total : Cash 15.3 Trading/Services 29.3 Construction 8.5 Consumer Products 8.9 Technology 4.2 Properties 3.8 Plantations 4.1 Infrastructure 3.0 Industrial Products 22.9 MANAGEMENT FEE Fund management fee of 1.50 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund. Dana Ekuiti Dinamik is managed by the Manulife Asset Management Services Berhad. This report is prepared for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 15

18 MARKET COMMENTARY MANULIFE FLEXI INVEST FUND FUND OBJECTIVE Manulife Flexi Invest Fund s investment objective is to provide medium-to-long-term capital appreciation. The Fund may invest between of the Fund s NAV in equities and equity related instruments and/or fixed income securities (including but not limited to money market instruments and other liquid assets.) The Fund may also invest up to 30 into foreign markets. INVESTMENT REVIEW During the financial year under review (1st January 2017 to 31st December 2017), Malaysia s economy continued to be underpinned by domestic spending and private investments. Its gross domestic product growth continued to accelerate from 4.5 in 4Q 2016 to 6.2 in 3Q Global markets in the first half of the year kicked off to a strong start as investors took a positive view of a Trump Presidency and a Republican majority in Congress. The optimism spilled over to the Asia Pacific markets as sentiment was boosted by Trump s continued emphasis on his inflationary policies and tax cuts. This optimism was later supported by a rally in crude oil prices, after OPEC members complied with their output cuts. Global market enthusiasm took a pause as geopolitical tensions from Syria and North Korea, and the French elections brought some uncertainty. Nonetheless, these concerns were soon shrugged off as the global market rally continued to gain traction, supported by several major tailwinds. Economic data from the largest economies pointed towards a synchronized global growth, led by the US, which posted a strong 3Q 2017 GDP growth, favorable corporate earnings results, and the eventual signing of the Republican tax reform bill into law. The US continued to exhibit a robust labour market, reinforcing the Federal Reserve s third interest rate hike in 2017 to From Asia, China s Communist Party Congress concluded with Xi Jinping strengthening his position at the top as General Secretary of the Party for another term. In addition, Japan continued its economic revival, registering its seventh consecutive quarter of GDP growth (3Q17: 0.6 q-o-q) and its central bank reassuring the markets that it intends to maintain its dovish stance, which added more to the bullish sentiment throughout the period. Malaysia however bucked the global trend, with its equity market weak for most of the periods from a lack of fresh catalysts before rallying in December. It saw limited gains from the recovery in crude oil prices to a two year high of USD 66.98/barrel, while its strong economic data and the 2018 Budget failed to excite the market. Nonetheless, the MYR strengthened against the USD by 10.9 to 4.05, making it one of the best performing currencies in the region, driven by its relative underperformance against the region in 2016 and expectations of a possible interest rate hike by Bank Negara in On the corporate front, the results reporting seasons were uninspiring, with the large caps generally in-line with expectations throughout the year. The proposed merger between RHB Bank and AmBank was aborted while the Sime Darby s demerger exercise did not bring much excitement as it was weighed down by high valuations. The market only rallied in December, driven by the Banking stocks on rate hike expectations and positive developments in the US. For the financial year under review, the FBM KLCI registered a positive return of 9.45 y-o-y. However, the broader market out-performed the FBM KLCI, with the FBM Mid 70, FBM Small Cap, and FBM EMAS Shariah index increasing by 23.40, 15.87, and respectively. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 16

19 MARKET COMMENTARY MANULIFE FLEXI INVEST FUND (CONTINUED) OUTLOOK Global growth continues to be synchronized and broad base. Rate hike is the US remains as evidence to the overall improvement in the US economy. Fed raised the US 2018 GDP growth to 2.5, up from previous forecast of 2.1; while GDP forecast for 2019 was revised upwards to 2.1 from previous expectation of 2.0, referencing a potential lift in economic activity at the back of the US tax reform. Recent inflation readings were below Fed s target of 1.9, reemphasizing Fed s to remain an accommodative and gradual stance in the monetary policy tightening. On Europe front, ECB opted to keep interest rates unchanged. Similarly to the US, ECB upgraded its 2018 GDP forecast to 2.3 from 1.8 previously, but expressed some concern over inflation. That said, ECB is likely to remain gradual in its normalization of monetary policy. The ongoing economic expansion in the Euro area is expected to continue to be supported by the ECB s monetary policy measures. Over is Asia, even though China s economic growth slowed but steady deceleration will continue in 2018 as policymakers continue to rebalance the country s economic model. Its equity market will continue to benefit from the stabilization of the Chinese economy, with growth still promising, supported by ongoing modest fiscal expansion. STRATEGY The Malaysian market has shown some positive signs. Both domestic and foreign participation are increasing and gradually shifting back to the market. Stronger external demand and infrastructure spending will continue to support economic growth. Thematic plays on GE14, interest rate hike and infrastructure spending are key positive themes increasingly boosting market sentiment. Undemanding market valuation against regional peers should continue to attract more foreign interest in addition to favorable uptrend of the Ringgit and crude oil. We continue to stay invested and focus on companies that demonstrate growth and strong cash flows. TOP 5 HOLDINGS As at 31 December 2017 Top 5 Equity Holding Weight Tenaga Nasional Bhd 3.4 CIMB Group Holdings Bhd 3.3 Telekom Malaysia Bhd 3.2 Malaysia Airports Holdings Bhd 2.8 Public Bank Bhd 2.7 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 17

20 MARKET COMMENTARY MANULIFE FLEXI INVEST FUND (CONTINUED) ASSET ALLOCATION As at 31 December 2017 Equities : 89.3 Cash : 10.7 Total : Cash 10.7 Foreign 21.5 Construction 5.1 Consumer Products 2.3 REITS 0.6 Finance 9.7 Trading/ Services 27.6 Industrial Products 12.8 Technology 4.2 Infrastructure 2.2 Plantations 1.4 Properties 1.9 MANAGEMENT FEE Fund management fee of 1.50 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund. Manulife Flexi Invest Fund is managed by the Manulife Asset Management Services Berhad. This report is prepared for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 18

21 MARKET COMMENTARY MANULIFE PROGRESS FUND FUND OBJECTIVE Manulife Progress Fund (MPF) aims to achieve long term capital growth at a reasonable level of risk by investing in a diversified portfolio of small to medium-sized public-listed companies listed on the Bursa Malaysia. MPF is a feeder fund and invests at least 95 of its Net Asset Value in Manulife Investment Progress Fund (MIPF). INVESTMENT REVIEW During the financial year under review (1st January 2017 to 31st December 2017), Malaysia s economy continued to be underpinned by domestic spending and private investments. Its gross domestic product growth continued to accelerate from 4.5 in 4Q 2016 to 6.2 in 3Q Global markets in the first half of the year kicked off to a strong start as investors took a positive view of a Trump Presidency and a Republican majority in Congress. The optimism spilled over to the Asia Pacific markets as sentiment was boosted by Trump s continued emphasis on his inflationary policies and tax cuts. This optimism was later supported by a rally in crude oil prices, after OPEC members complied with their output cuts. Global market enthusiasm took a pause as geopolitical tensions from Syria and North Korea, and the French elections brought some uncertainty. Nonetheless, these concerns were soon shrugged off as the global market rally continued to gain traction, supported by several major tailwinds. Economic data from the largest economies pointed towards a synchronized global growth, led by the US, which posted a strong 3Q 2017 GDP growth, favorable corporate earnings results, and the eventual signing of the Republican tax reform bill into law. The US continued to exhibit a robust labour market, reinforcing the Federal Reserve s third interest rate hike in 2017 to From Asia, China s Communist Party Congress concluded with Xi Jinping strengthening his position at the top as General Secretary of the Party for another term. In addition, Japan continued its economic revival, registering its seventh consecutive quarter of GDP growth (3Q17: 0.6 q-o-q) and its central bank reassuring the markets that it intends to maintain its dovish stance, which added more to the bullish sentiment throughout the period. Malaysia however bucked the global trend, with its equity market weak for most of the periods from a lack of fresh catalysts before rallying in December. It saw limited gains from the recovery in crude oil prices to a two year high of USD 66.98/barrel, while its strong economic data and the 2018 Budget failed to excite the market. Nonetheless, the MYR strengthened against the USD by 10.9 to 4.05, making it one of the best performing currencies in the region, driven by its relative underperformance against the region in 2016 and expectations of a possible interest rate hike by Bank Negara in On the corporate front, the results reporting seasons were uninspiring, with the large caps generally in-line with expectations throughout the year. The proposed merger between RHB Bank and AmBank was aborted while the Sime Darby s demerger exercise did not bring much excitement as it was weighed down by high valuations. The market only rallied in December, driven by the Banking stocks on rate hike expectations and positive developments in the US. For the financial year under review, the FBM KLCI registered a positive return of 9.45 y-o-y. However, the broader market out-performed the FBM KLCI, with the FBM Mid 70, FBM Small Cap, and FBM EMAS Shariah index increasing by 23.40, 15.87, and respectively. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 19

22 MARKET COMMENTARY MANULIFE PROGRESS FUND (CONTINUED) OUTLOOK Global growth continues to be synchronized and broad base. Rate hike is the US remains as evidence to the overall improvement in the US economy. Fed raised the US 2018 GDP growth to 2.5, up from previous forecast of 2.1; while GDP forecast for 2019 was revised upwards to 2.1 from previous expectation of 2.0, referencing a potential lift in economic activity at the back of the US tax reform. Recent inflation readings were below Fed s target of 1.9, reemphasizing Fed s to remain an accommodative and gradual stance in the monetary policy tightening. On Europe front, ECB opted to keep interest rates unchanged. Similarly to the US, ECB upgraded its 2018 GDP forecast to 2.3 from 1.8 previously, but expressed some concern over inflation. That said, ECB is likely to remain gradual in its normalization of monetary policy. The ongoing economic expansion in the Euro area is expected to continue to be supported by the ECB s monetary policy measures. Over is Asia, even though China s economic growth slowed but steady deceleration will continue in 2018 as policymakers continue to rebalance the country s economic model. Its equity market will continue to benefit from the stabilization of the Chinese economy, with growth still promising, supported by ongoing modest fiscal expansion. STRATEGY The Malaysian market has shown some positive signs. Both domestic and foreign participation are increasing and gradually shifting back to the market. Stronger external demand and infrastructure spending will continue to support economic growth. Thematic plays on GE14, interest rate hike and infrastructure spending are key positive themes increasingly boosting market sentiment. Undemanding market valuation against regional peers should continue to attract more foreign interest in addition to favorable uptrend of the Ringgit and crude oil. We continue to stay invested and focus on companies that demonstrate growth and strong cash flows. TOP 5 HOLDINGS (MIPF) As at 31 December 2017 Top 5 Equity Holding Weight PESTECH International Bhd 3.9 Uchi Technologies Bhd 3.7 Inari Amertron Bhd 3.2 Malaysia Airports Holdings Bhd 2.8 Kawan Food Bhd 2.7 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 20

23 MARKET COMMENTARY MANULIFE PROGRESS FUND (CONTINUED) ASSET ALLOCATION (MIPF) As at 31 December 2017 Equities : 85.6 Cash : 14.4 Total : REITS 1.1 Cash 14.4 Trading/Services 24.0 Construction 7.8 Consumer Products 8.0 Technology 8.5 Properties 3.6 Finance 3.2 Plantations 3.5 Infrastructure 2.4 Industrial Products 23.5 MANAGEMENT FEE Fund management fee of 1.50 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund. Manulife Progress Fund is managed by the Manulife Asset Management Services Berhad. This report is prepared for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 21

24 MARKET COMMENTARY MANULIFE DIVIDEND FUND FUND OBJECTIVE Manulife Dividend Fund ( the fund ) is a feeder fund investing in the Manulife Investment Dividend Fund (MIDF), which aims to provide a steady recurring income that is potentially higher than the prevailing fixed deposit rates. At the same time, the Target Fund also attempts to attain medium- to long-term capital appreciation. PORTFOLIO REVIEW During the financial year under review (1st January 2017 to 31st December 2017), Malaysia s economy continued to be underpinned by domestic spending and private investments. Its gross domestic product growth continued to accelerate from 4.5 in 4Q 2016 to 6.2 in 3Q Global markets in the first half of the year kicked off to a strong start as investors took a positive view of a Trump Presidency and a Republican majority in Congress. The optimism spilled over to the Asia Pacific markets as sentiment was boosted by Trump s continued emphasis on his inflationary policies and tax cuts. This optimism was later supported by a rally in crude oil prices, after OPEC members complied with their output cuts. Global market enthusiasm took a pause as geopolitical tensions from Syria and North Korea, and the French elections brought some uncertainty. Nonetheless, these concerns were soon shrugged off as the global market rally continued to gain traction, supported by several major tailwinds. Economic data from the largest economies pointed towards a synchronized global growth, led by the US, which posted a strong 3Q 2017 GDP growth, favorable corporate earnings results, and the eventual signing of the Republican tax reform bill into law. The US continued to exhibit a robust labour market, reinforcing the Federal Reserve s third interest rate hike in 2017 to From Asia, China s Communist Party Congress concluded with Xi Jinping strengthening his position at the top as General Secretary of the Party for another term. In addition, Japan continued its economic revival, registering its seventh consecutive quarter of GDP growth (3Q17: 0.6 q-o-q) and its central bank reassuring the markets that it intends to maintain its dovish stance, which added more to the bullish sentiment throughout the period. Malaysia however bucked the global trend, with its equity market weak for most of the periods from a lack of fresh catalysts before rallying in December. It saw limited gains from the recovery in crude oil prices to a two year high of USD 66.98/barrel, while its strong economic data and the 2018 Budget failed to excite the market. Nonetheless, the MYR strengthened against the USD by 10.9 to 4.05, making it one of the best performing currencies in the region, driven by its relative underperformance against the region in 2016 and expectations of a possible interest rate hike by Bank Negara in On the corporate front, the results reporting seasons were uninspiring, with the large caps generally in-line with expectations throughout the year. The proposed merger between RHB Bank and AmBank was aborted while the Sime Darby s demerger exercise did not bring much excitement as it was weighed down by high valuations. The market only rallied in December, driven by the Banking stocks on rate hike expectations and positive developments in the US. For the financial year under review, the FBM KLCI registered a positive return of 9.45 y-o-y. However, the broader market out-performed the FBM KLCI, with the FBM Mid 70, FBM Small Cap, and FBM EMAS Shariah index increasing by 23.40, 15.87, and respectively. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 22

25 MARKET COMMENTARY MANULIFE DIVIDEND FUND (CONTINUED) OUTLOOK Global growth continues to be synchronized and broad base. Rate hike is the US remains as evidence to the overall improvement in the US economy. Fed raised the US 2018 GDP growth to 2.5, up from previous forecast of 2.1; while GDP forecast for 2019 was revised upwards to 2.1 from previous expectation of 2.0, referencing a potential lift in economic activity at the back of the US tax reform. Recent inflation readings were below Fed s target of 1.9, reemphasizing Fed s to remain an accommodative and gradual stance in the monetary policy tightening. On Europe front, ECB opted to keep interest rates unchanged. Similarly to the US, ECB upgraded its 2018 GDP forecast to 2.3 from 1.8 previously, but expressed some concern over inflation. That said, ECB is likely to remain gradual in its normalization of monetary policy. The ongoing economic expansion in the Euro area is expected to continue to be supported by the ECB s monetary policy measures. Over is Asia, even though China s economic growth slowed but steady deceleration will continue in 2018 as policymakers continue to rebalance the country s economic model. Its equity market will continue to benefit from the stabilization of the Chinese economy, with growth still promising, supported by ongoing modest fiscal expansion. STRATEGY The Malaysian market has shown some positive signs. Both domestic and foreign participation are increasing and gradually shifting back to the market. Stronger external demand and infrastructure spending will continue to support economic growth. Thematic plays on GE14, interest rate hike and infrastructure spending are key positive themes increasingly boosting market sentiment. Undemanding market valuation against regional peers should continue to attract more foreign interest in addition to favorable uptrend of the Ringgit and crude oil. We continue to stay invested and focus on companies that demonstrate growth and strong cash flows. TOP 5 HOLDINGS (MIDF) As at 31 December 2017 Top 5 Equity Holding Weight CIMB Group Holdings Bhd 5.9 Public Bank Bhd 5.8 Malayan Banking Bhd 5.2 Tenaga Nasional Bhd 4.1 Samsung Electronics Co Ltd 3.9 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 23

26 MARKET COMMENTARY MANULIFE DIVIDEND FUND (CONTINUED) ASSET ALLOCATION (MIDF) As at 31 December 2017 Equities : 94.4 Cash : 5.6 Total : Foreign 17.3 Cash 5.6 Construction 5.1 Consumer Products 2.7 REITS 3.3 Finance 18.9 Trading/Services 25.3 Industrial Products 7.8 Technology 2.1 Properties Plantations Infrastructure 4.4 MANAGEMENT FEE Fund management fee of 1.50 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund. Manulife Dividend Fund is managed by the Manulife Asset Management Services Berhad. This report is prepared for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 24

27 MARKET COMMENTARY MANULIFE EMERGING EASTERN EUROPE FUND FUND OBJECTIVE Manulife Emerging Eastern Europe Fund aims to achieve capital growth through investment, primarily in securities listed or traded on the stock exchanges of Central and Eastern European countries. It is intended that the Fund will concentrate on securities traded on stock exchanges in the Czech Republic, Hungary, Poland, Slovakia and Russia whilst such securities may also be listed in other exchanges as depository receipts or certificates, or in other forms of instruments. However, the Fund will seek to broaden its participation in other markets within the region as they develop. Manulife Emerging Eastern Europe Fund is a feeder fund that invests in Manulife Global Fund-Emerging Eastern Europe (MGF-EEEF) A Share. PORTFOLIO REVIEW The sub-fund generated a strong return in 2017, supported by a powerful recovery in share prices in Turkey and on the back of the attractive returns seen across central Europe as well as some peripheral markets, and despite a lackluster return from Russia. The performance of the sub-fund was ahead of its MSCI EM Europe 10/40 Index benchmark over the period under review. This was largely the result of its stock selection, particularly in Russia and Kazakhstan and amongst companies in the consumer staples sector. Although an underweight exposure to the booming Polish stockmarket detracted from performance, this was more than countered by the actual companies held within the portfolio with a new addition, Dino Polska, adding significant value over the period. Dino Polska is a convenience store retailer focused on the more rural areas of the country with an aggressive programme of new store rollouts matched to a strong trading environment. It reported a succession of consensus-beating results over the course of the year and its share price responded accordingly. In Russia, an underweight exposure to the energy giant Gazprom, which was divested over the period, also supported relative performance as its share price suffered with the company deciding not to pay out an enhanced dividend despite market expectations. In Kazakhstan, the sub-fund s holding in the copper producer KAZ Minerals, another new addition to the portfolio, was also strongly beneficial given a firm copper price and some excellent operational results; its share price more than doubled over the year as a whole. In terms of portfolio positioning over the period under review, the sub-fund maintained its underweight exposure to Poland, with attractively valued companies few and far between (Dino Polska being one exception). This was balanced by an overweight exposure to Turkey. Exposure to Russia moved from a small overweight to a small underweight over the year. On a sector analysis, the sub-fund remained underweight the energy, materials and telecommunications services sector whilst keeping its overweight position in consumer discretionary and staples. This positioning was broadly successful. The most significant changes to the sub-fund s portfolio over the period under review were the divestment of Gazprom and the addition of Dino Polska, both mentioned above. Other notable changes included the divestment of Russian diamond producer ALROSA and the addition of several new holdings in Turkey, including Mavi, a fast growing fashion retailer, and Petrochemicals producer Petkim. MARKET PORTFOLIO All the stockmarkets of Emerging Eastern Europe made gains over 2016, led by central Europe but with Turkey and many of the smaller stockmarkets also showing marked strength. The one exception was Russia, where share prices also rose but to a much lesser extent. Local currencies also made gains, benefiting from a weaker US dollar. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 25

28 MARKET COMMENTARY MANULIFE EMERGING EASTERN EUROPE FUND (CONTINUED) Turkey was amongst the best performing regional markets over the first half of the period under review with financial markets reactively positively to the outcome of the constitutional referendum, which installed an executive presidency in Ankara thus ensuring continuity and reducing political uncertainty. Later in the period, share prices found further support from the evident strength of the economic recovery, with activity responding well to the fiscal measures put in place in the wake of the coup of the previous year: GDP rose by an extraordinary 11.1 over the year to the third quarter. The relative weakness of Russia came as something of a surprise given the strength of the oil price. A barrel of Brent crude, having started the year at around USD 55, and having dipped as low as USD45 mid-year, closed 2017 nearer USD 65 and heading higher, supported by the strength of global demand and an agreement within OPEC, but also including Russia, to limit supply. This is an undoubted positive for the Russian economy and although the newsflow here was certainly positive it was not dramatically so and the financial markets seemed more concerned by the ongoing sanctions imposed on Russia as a result of its earlier involvement in the Ukrainian civil war, as well as the ongoing situation in Syria, which threatens to destabilize the immediate region. Central European stockmarkets performed well, despite some concern over the more nationalistic approach apparently put forward most noticeably by Poland and Hungary, with economic activity supported by the unexpected strength of the European Union s economy, to which much of the area s manufacturing base is directed through exports. OUTLOOK The outlook for the year ahead across the region is encouraging. Financial markets should be able to focus on economic developments, with no political events expected to cause any disruption. There are no significant elections scheduled for either Turkey or Poland and the outcome of the presidential election in Russia is a foregone conclusion, given Vladimir Putin s firm grip on power. Only Hungary, where rising nationalism is the cause of some concern, has the potential to surprise with parliamentary elections in April, though any broader impact across the region is likely to be minimal whatever the result. Against this backdrop, Russian shares can be expected to benefit from a continued recovery in economic activity. Share prices lagged behind the oil price rally in 2017 and this puts them in a good position to perform well going forward. Share prices in Turkey also benefit from attractive valuations and the market here can be expected to find support from the ongoing strength of economic activity, with any monetary tightening also likely to be viewed favourably by the financial markets. Elsewhere in the region, central Europe, remains a geared play on the ongoing economic recovery of western Europe and as such should continue to prosper. TOP 5 HOLDINGS (MGF-EEEF) As at 31 December 2017 Top 5 Equity Holding Weight LUKOIL 7.4 Sberbank 6.5 NOVATEK 5.9 X5 Retail Group 5.4 PKO Bank Polski 4.5 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 26

29 MARKET COMMENTARY MANULIFE EMERGING EASTERN EUROPE FUND (CONTINUED) ASSET ALLOCATION (MGF-EEEF) As at 31December 2017 Con Discretionary 8.3 IT 3.2 Cash 2.9 Industrials 2.8 Telecoms 1.2 Materials 8.6 Con Staples 11.4 Financials 36.3 Energy 25.2 MANAGEMENT FEE Fund management fee of 1.50 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund. Manulife Emerging Eastern Europe is a feeder fund which feeds into the Manulife Global Fund - Emerging Eastern Europe Fund A Share (MGF-EEEF). The investment reviews are on MGEEEF. Manulife Emerging Eastern Europe Fund is managed by Manulife Asset Management Services Berhad while MGF-EEEF is managed by Fiera Capital (UK) Limited (formerly known as Charlemagne Capital (UK) Limited). This report is prepared for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 27

30 MARKET COMMENTARY MANULIFE CHINA VALUE FUND FUND OBJECTIVE Manulife China Value Fund ( the Fund ) is a feeder fund investing in the Manulife Investment Greater China Fund ( the Target Fund ), which aims to provide capital growth over the medium to long term by investing in larger capitalized companies in the Greater China region namely China, Hong Kong and Taiwan markets, as well as China-based companies listed on approved overseas markets. PORTFOLIO REVIEW In terms of performance attribution, the holdings in the consumer sectors were among the top contributors to the portfolio s performance during the year. In particular, improving end-demand and upgrading demand, particularly in the food and beverage segment, continued to drive the sales momentum of some consumer stocks. The financial sector also contributed to the relative performance due to better margin outlook and improving non-performing loan (NPL) situation. However, the holdings in the oil and gas and basic materials weighed on portfolio performance. The team has a positive view towards the Chinese insurance sector in view of its long-term growth potential. Sector fundamentals have begun to show signs of improvement. Against a backdrop of rising bond yields in China and regulatory changes on high-guaranteed-rate products, a healthier competitive environment and strong premium growth have bolstered share price performance of Chinese insurers. In terms of portfolio movement, the team has further trimmed positions in the China B-share market due to continued liquidity issue and lack of catalyst. In fact, the B-share market has shown significant underperformance compared with other China markets. Among the portfolio s A-share stock picks, white liquor, home appliances, dairy products and auto parts were the top performers that had generated good alpha for the portfolio. Sector-wise, given the stretched valuations in the technology sector, we started to take profit from technology names in the second quarter of this year and become more selective in the sector. MARKET PORTFOLIO Signs of confidence are returning to China in the year under review. The first-quarter macro data of 2017 continued to show that the world s second-largest economy is gaining momentum with benign inflation pressure. Activity in China s manufacturing sector picked up further in March 2017 with the official Purchasing Managers Index (PMI) rose for the second consecutive month to 51.8, the highest since April 2012, supported by fiscal stimulus, and improving domestic and export demand. In the second quarter of 2017, a series of encouraging macro data signaled further stabilization in China s economy. The official manufacturing PMI stayed in expansionary territory in June for the 11th consecutive month while export surprised on the upside on the back of global trade recovery, rising 8.7 in May in USD terms. Meanwhile, China s retail sales grew 10.7 from a year earlier in May 2017, reflecting the continuous progress in China s shift towards a consumption-driven economy. Entering the third quarter, the China market continued to rally on favorable capital flows and upbeat first-half corporate earnings. The MSCI China Index s earnings per share (EPS) for the ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 28

31 MARKET COMMENTARY MANULIFE CHINA VALUE FUND (CONTINUED) first half of 2017 increased 22 1 year-on-year and were one of the highest in global emerging markets. Southbound capital flows remained sanguine, partly due to robust offshore investment demand and the A-H premium, which stood at 41 as at 23 September As a result, in the first half of 2017, an average B1.3 billion of southbound capital flowed into Hong Kong daily. In the fourth quarter, the 19th Party Congress took place in October and was the most watched event in China this year. The Congress not only saw a reshuffling of China s senior leadership but also marked the start of China s new political and economic cycle. After the congress concluded, local government financing tightened, signaling that deleveraging and risk control will remain a key policy focus in Although there are concerns that the continued moderation of growth a consequence of policy tightening may weigh on market performance, we believe the tightening measures are necessary for China to achieve healthier and higher quality growth in the longer run. Meanwhile, a broad-based consolidation is gathering pace across various industries in China and is helping companies to increase market share and strengthen pricing power. The government s calls for stepped-up supply-side reforms, which include reducing the number of state-owned enterprises (SOE), cutting excess capacity and closing down zombie firms, have been the key driving factors. OUTLOOK Over the long term, we remain positive in Greater China equities. We continue to see strong earnings, with over 20 growth estimated for We are also seeing solid inflows of mainland money to Chinese equities and global investors being less underweight in Chinese equities. This year, we believe equity markets will be extraordinarily sensitive to policy signals. With China s Two Sessions, we believe there will have no significant change on policy direction focus will continue to be on various reforms while maintaining decent growth. In particularly, we are closely monitoring the deleveraging process with concerted effort to tackle shadow banking. While deleveraging is overall positive over the longer term, this may lead to inevitable short-term pain. In terms of investment strategy, we will continue to invest in investment opportunities that can benefit from the long-term structural trends in Greater China. These include beneficiaries from supply side reform, environmental protection (coal-to-gas conversion, electric vehicles supply chain etc). We also favour opportunities that can benefit from consumption upgrades as income growth continues. 1 Citi Research, 8 September Goldman Sachs, Bloomberg, as of 23 September ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 29

32 MARKET COMMENTARY MANULIFE CHINA VALUE FUND (CONTINUED) TOP 5 HOLDINGS (MIGCF) As at 31 December 2017 Top 5 Equity Holding Weight TENCENT HOLDINGS LTD 8.9 ALIBABA GROUP HOLDING-SP ADR 7.9 TAIWAN SEMICONDUCTOR MANUFAC 6.1 PING AN INSURANCE GROUP CO-H 3.4 IND & COMM BK OF CHINA-H 3.0 ASSET ALLOCATION (MIGCF) As at 31 December 2017 Utilities 3.5 Energy 3.8 Materials 3.1 Industrials 1.9 Consumer Staples 1.6 Telecommunication Services 0.8 Health Care 3.8 Real Estate 5.7 Consumer Discretionary 8.1 Information Technology 39.9 Cash 8.2 Financials 19.5 MANAGEMENT FEE Fund management fee of 1.50 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund. Manulife China Value Fund is a feeder fund which feeds into the Manulife Investment Greater China Fund (MIGCF). The investment reviews are on MIGCF. Manulife China Value Fund is managed by Manulife Asset Management Services Berhad while MIGCF is managed by Manulife Asset Management (Hong Kong) Limited. This report is prepared for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 30

33 MARKET COMMENTARY MANULIFE ASIAN SMALL CAP GROWTH FUND FUND OBJECTIVE Manulife Asian Small Cap Growth Fund ( the Fund ) aims to achieve long term capital growth for investors who hold a long term investment view and are prepared to accept significant fluctuations in the value of their investments. MASCGF is a feeder fund and invests at least 95 of its Net Asset Value in Manulife Global Fund Asian Small Cap Equity Fund (MGF ASCEF). MGF ASCEF investment portfolio will be made on a diversified basis, for which its underlying securities will consist mainly of equity related investments and equities of smaller capitalisation companies in the Asian and/or Pacific region. PORTFOLIO REVIEW The sub-fund s stock selection and asset allocation decisions at the country and sector level contributed positively. Growth stocks with strong earnings momentum were well rewarded during the period. Given the sub-fund s focus on growth companies with identifiable catalysts including better-than-expected earnings, substantial alpha was generated. The sub-fund outperformed in all markets with the exception of some underperformance in India and Thailand. The subfund s best performing holdings were primarily in the technology, consumer discretionary, and healthcare sectors. The sub-fund generated positive absolute performance on the back of strong stock selection in Indonesia despite the negative benchmark return. Also, strong stock selection in China, Hong Kong, Taiwan, and Australia contributed positively to performance. One of the strongest underlying themes for the period was the lack of supply, together with better-than-expected demand in niche industries throughout the region. Stocks in the portfolio benefitting from this situation ranged from material stocks in China (glass, paper, and optical fibre) to technology stocks in Taiwan (multi-layer ceramic capacitors used in plethora of products in automobile and consumer items). Some underperformance in India was the result of the sub-fund s underweight in the brokerage, consumer, and real estate sectors. In the sub-fund s portfolio manager s (PM) view, a number of companies in these sectors have expensive valuations. The sub-fund did benefit from a rerating of a consumer beverage company as well as a cable and wire operator. With earnings in that market having turned around in the last quarter of 2017, the PM continues to expect outperformance for this market and the companies held in India. Over the period, the sub-fund trimmed some outperforming positions in the consumer discretionary and technology sectors and added to consumer staple, healthcare, and material stocks where an inflection in earnings was witnessed and valuations are lower. MARKET REVIEW Asia Pacific ex Japan small cap equities were strong throughout the year with brief periods of selling pressure. However, the small cap markets were positive every month during the year and closed 2017 at its all-time high. Over the course of the year, the primary driver of performance was strong corporate earnings reports and continued upwards earnings revisions. Asian countries have seen continued improvement in economic data and been reporting GDP growth that was generally stronger than expected. Export recovery continued throughout the year for nearly all countries on the back of strong demand from the technology sector and electronic goods. In the second half of 2017, a rebound in commodity prices on the back of higher global growth expectations drove markets higher. As expected, the Fed raised interest rate three times in Additionally, the US President signed the tax reform plan into law providing upside risk to US economic growth. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 31

34 MARKET COMMENTARY MANULIFE ASIAN SMALL CAP GROWTH FUND (CONTINUED) OUTLOOK The PM remains positive on the Asian small cap equities. The PM sees ample grounds for careful stock picking, as a number of companies remain at attractive valuations particularly relative to large cap equities. Fundamentals, including positive earnings revisions, throughout the region support outperformance of Asian equities generally, together with potential for catch-up by small cap equities. While valuations are no longer inexpensive, the PM feels that equities still appear attractive in light of the strength in earnings expected this year. TOP 5 HOLDINGS (MGF-ASCEF) As at 31December 2017 Top 5 Equity Holding Weight Vitzrocell Co., Ltd. 2.6 Magnachip Semiconductor Corporation 2.0 Xinyi Glass Holdings Limited 1.5 Beigene Ltd. Sponsored Adr 1.5 Inari Amertron Berhad 1.4 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 32

35 MARKET COMMENTARY MANULIFE ASIAN SMALL CAP GROWTH FUND (CONTINUED) ASSET ALLOCATION (MGF-ASCEF) As at 31 December 2017 Thailand 1.4 Philippines 1.4 Indonesia 3.4 Malaysia 4.3 Singapore 1.0 Cash 0.8 Korea 19.3 Hong Kong 6.8 China 12.7 Australia 18.5 India 13.4 MANAGEMENT FEE Fund management fee of 1.50 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund. Taiwan Manulife Asia Small Cap Growth Fund is a feeder fund which feeds into the Manulife Global Fund - Manulife Asia Small Cap Growth Fund (MGF-ASCEF). The investment reviews are on MGF-ASCEF. Manulife Asia Small Cap Growth Fund is managed by Manulife Asset Management Services Berhad while MGF-ASCEF is managed by Manulife Asset Management (Hong Kong) Limited. This report is prepared for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 33

36 MARKET COMMENTARY MANULIFE ASIA-PACIFIC REIT FUND FUND OBJECTIVE Manulife Asia-Pacific REIT Fund ( the Fund ) is a feeder fund investing in the Manulife Investment Asia-Pacific REIT Fund (MIAPRF), which aims to provide long-term capital appreciation and sustainable income through a combined investment in other collective investment schemes, namely REITs and infrastructure funds/ trusts. INVESTMENT REVIEW For the financial period under review (from 3 July 2017 to 31 December 2017), major REIT markets in Asia trended broadly higher in local currency terms. Investors shrugged off initial concerns over the US rate hike as they focused on the potential cyclical rental growth recovery for the real estate market across the region. Most Asia REITs which undertook equity fund raisings during the period fared well as investors continued to favour REITs that would benefit from yield accretive acquisitions. Australia REITs rose as buying sentiment improved following the pullback in the 10-year bond yield. The performance of retail REITs also stabilized after a poor start to the year as the launch of Amazon Prime in Australia failed to live up to the hype. The initial product range on offer was limited and the product pricing was not materially cheaper than the retailers. Singapore REITs also chalked up decent gains led by office landlords following the first q-o-q rental increase in prime office rent after eight straight quarters of rental decline. Industry consultants expect the rental rate to recover over 10 in the next 2 years as demand starts to exceed supply. Managers of S-REITs were also active on the acquisition front with Capitaland Commercial Trust buying Asia Square Tower 2 for S$2.1bn. OUTLOOK The pick-up in business and consumer confidence across Asia has positive implications for the rental market outlook for real estate in the region. In spite of the three interest rate hikes in the US last year, Asia REITs have climbed the wall of worry on expectations of a recovery in the various sub-sectors. In particular, Singapore s GDP growth outlook has surpassed expectations in 2017 and we believe the recovery is sustainable in 2018, barring geopolitical risks. As the supply risk eases for the Singapore office market (which saw its first up-tick in Grade A office rental rate since 1Q15), the improving fundamentals in the business parks and hospitality sub-sectors will also help to lift the operational prospects, which could then offset the impact of rising interest costs. STRATEGY The portfolio managers of the underlying fund favour Singapore REITs, particularly the office landlords (which stand to benefit from the potential recovery in spot rents). We are also positive on hospitality REITs (in anticipation of hotel room rates recovery) and selected retail REITs (with well-positioned malls and resilient traffic footfall). ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 34

37 MARKET COMMENTARY MANULIFE ASIA-PACIFIC REIT FUND (CONTINUED) TOP 5 HOLDINGS (MIAPRF) As at 31 December 2017 Top 5 Equity Holding Weight Link REIT 10.1 CapitaLand Commercial Trust 7.5 CapitaLand Mall Trust 6.1 Mapletree Commercial Trust 5.6 Keppel REIT 5.6 ASSET ALLOCATION (MIAPRF) As at 31 December 2017 EQUITIES : 97.3 CASH : 2.7 TOTAL : Cash 2.7 REITS 97.3 MANAGEMENT FEE Fund management fee of 1.50 is charged to the Fund during the year. It is calculated on a daily basis based on the net asset value of the Fund Manulife Asia-Pacific REIT Fund and Manulife Investment Asia-Pacific REIT Fund are managed by Manulife Asset Management Services Berhad. This report is prepared by the managers for information purposes only. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 35

38 FUND PERFOANCE

39 FUND PERFOANCE EQUITY FUND FUND PERFOANCE For financial year under review, Manulife Equity Fund (MLEF) underperformed its benchmark. The underperformance was attributed to stock selection in Industrial Products, Trading & Services and Construction sectors. However, overweight exposure in Technology and stock selection in Finance and Consumer Products sectors offset some underperformance. Performance calculated as at 31December 2017 Performance 1 mth 3 mths 6 mths 1 Yr 3 Yrs 5 Yrs Since Inception * Equity Fund FBM 100 Index Relative +/(-) (0.99) (0.92) (2.24) (1.78) (11.22) (3.71) The Fund s performance is calculated on NAV to NAV basis. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date:10 th July 2000 AVERAGE ANNUAL RETURN AND BENCHMARK 1 year Performance 3 year 5 year Equity Fund FBM Relative +/(-) (1.78) (3.51) (0.62) Note: The fund performance is based on the last trading day of the month/year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 37

40 FUND PERFOANCE MANAGED FUND FUND PERFOANCE For the period under review, Manulife Managed Fund (MLMF) was up by in 2017, outperforming its benchmark s return of For equity, the Fund s outperformance was mainly attributable to its overweight exposure in the Technology and Industrial products sector. The fixed income portion of the Fund outperformed the benchmark mainly due to the running yields of its fixed income holdings. Performance calculated as at 31 December 2017 Performance 1 mth 3 mths 6 mths 1 Yr 3 Yrs 5 Yrs Since Inception * Managed Fund FBM month Maybank FD Rate Relative +/(-) (1.16) (0.35) (1.47) 0.76 (8.65) The Fund s performance is calculated on NAV to NAV basis. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date: 10 th July 2000 AVERAGE ANNUAL RETURN AND BENCHMARK Performance 1 year 3 year 5 year Managed Fund FBM mth Maybank FD Rate Relative +/(-) 0.76 (2.72) 0.18 Note: The fund performance is based on the last trading day of the month/year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 38

41 FUND PERFOANCE INCOME FUND FUND PERFOANCE The Fund achieved an overall return for the year of 4.31 with the Net Asset Value per unit increasing from as at end-december 2016 to as at end-december Overall return since the Fund s inception in February 2002 was Performance calculated as at 31 December 2017 Performance 1 mth 3 mths 6 mths 1 yr 3 yrs 5 yrs Since Inception * Income Fund month Maybank FD rate Relative +/(-) 0.10 (0.04) (1.43) Performance calculated on published NAV to NAV basis net of management fees and expenses. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date: 1 st February 2002 AVERAGE ANNUAL RETURNS AND BENCHMARK 1 year Performance 3 year 5 year Income Fund month Maybank FD rate Relative +/(-) (0.26) Note: The fund performance is based on the last trading day of the month/year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 39

42 FUND PERFOANCE DANA EKUITI DINAMIK FUND PERFOANCE For the period under review, Dana Ekuiti Dinamik (MLDED) was up by in 2017, outperforming its benchmark FBM EMAS Shariah s gain of The Fund s outperformance was mainly attributable to its overweight exposure to the Technology sector. Good stock selection in the Industrial Products sector continues to lift performance. Performance calculated as at 31 December 2017 Performance 1 mth 3 mths 6 mths 1 yr 3 yrs 5 yrs Since Inception * Dana Ekuiti Dinamik FBM Emas Shariah Index Relative +/(-) (1.84) (1.34) (3.13) The Fund s performance is calculated on NAV to NAV basis. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date: 6 th October 2003 AVERAGE ANNUAL RETURN AND BENCHMARK 1 year Performance 3 year 5 year Dana Ekuiti Dinamik Fund FBM Emas Shariah Index Relative +/(-) Note: The fund performance is based on the last trading day of the month/year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 40

43 FUND PERFOANCE MANULIFE FLEXI INVEST FUND FUND PERFOANCE For the period under review, Manulife Flexi Invest Fund (MFIF) was up by 16.3 in 2017, outperforming its benchmark s return of 7.9. The Fund s outperformance was mainly attributable to its overweight exposure to the Technology and Industrial Products sectors. Its stock selection in the foreign space continues to lift performance. Performance calculated as at 31 December 2017 Performance 1 mth 3 mths 6 mths 1 yr 3 Yrs 5 Yrs Since Inception * Manulife Flexi Invest Fund FBM month Maybank FD rate Relative +/(-) (0.08) 1.06 (0.05) The Fund s performance is calculated on NAV to NAV basis. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date:17 th February 2012 AVERAGE ANNUAL RETURN AND BENCHMARK Performance 1 year 3 year 5 year Manulife Flexi Invest Fund FBM Ave 12-mth Maybank FD Rate Relative +/(-) Note: The fund performance is based on the last trading day of the month/year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 41

44 FUND PERFOANCE MANULIFE PROGRESS FUND FUND PERFOANCE For the period under review, Manulife Progress Fund (MPROG) was up by in 2017, underperforming its benchmark s return of The underlying fund underperformed due to its stock selection in the Industrial products, Consumer products, and Trading and Services sectors. However, overweight exposure and stock selection in the Technology sector helped to offset some of the underperformance. Performance calculated as at 31 December 2017 Performance 1 mth 3 mths 6 mths 1 yr 3 Yrs 5 Yrs Since Inception * Manulife Progress Fund FBM Small Cap+ 50 FBM Relative +/(-) (2.16) (0.78) 0.64 (4.62) The Fund s performance is calculated on NAV to NAV basis. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date:12 th January 2015 AVERAGE ANNUAL RETURN AND BENCHMARK Performance 1 year 3 year Manulife Progress Fund FBM Small Cap Index + 50 FBM MID 70 Index Relative +/(-) (4.62) - - Note: The fund performance is based on the last trading day of the month/year 5 year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 42

45 FUND PERFOANCE MANULIFE DIVIDEND FUND FUND PERFOANCE Since inception, Manulife Dividend Fund (MDF) performed in-line with its benchmark s return. Performance was attributed to the underlying fund, which was driven by stock selection in Finance and Consumer Products sectors; and allocation in the foreign investments. Performance calculated as at 31 December 2017 Performance 1 mth 3 mths 6 mths 1 yr 3 Yrs 5 Yrs Since Inception * Manulife Dividend Fund FBM 100 Index month Maybank FD rate Relative +/(-) (0.66) (0.59) The Fund s performance is calculated on NAV to NAV basis. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date:3 rd July 2017 AVERAGE ANNUAL RETURN AND BENCHMARK 1 month Performance 3 months 5 months Manulife Dividend Fund FBM 100 Index month Maybank FD rate Relative +/(-) Note: The fund performance is based on the last trading day of the month/year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 43

46 FUND PERFOANCE MANULIFE EMERGING EASTERN EUROPE FUND FUND PERFOANCE The Fund s Net Asset Value per unit increased from as at 31 December 2016 to as at 31 December The Fund s recorded a total return of since inception. Performance calculated as at 31 December 2017 Performance 1 mth 3 mths 6 mths 1 Yr 3 Yrs 5 Yrs Since Inception * Manulife Emerging Eastern Europe Fund 3.89 (0.27) (12.05) MSCI Emerging Europe 10/40 Index 1.62 (0.11) (45.79) Relative +/(-) 2.27 (0.16) (3.29) 7.58 (14.26) The Fund s performance is calculated on NAV to NAV basis. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date: 12 th November 2007 AVERAGE ANNUAL RETURN AND BENCHMARK Performance 1 year 3 years 5 years Manulife Emerging Eastern Fund MSCI Emerging Europe 10/40 Index Relative +/(-) 7.58 (3.59) 2.20 Note: The fund performance is based on the last trading day of the month/year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 44

47 FUND PERFOANCE MANULIFE CHINA VALUE FUND FUND PERFOANCE The Fund s Net Asset Value per unit increased from as at 31 December 2016 to as at 31 December The Fund s recorded a total return of since inception. Performance calculated as at 31 December 2017 Performance 1 mth 3 mths 6 mths 1 yr 3 Yrs 5 Yrs Since Inception * Manulife China Value Fund MSCI Golden Dragon Index** Relative +/(-) 0.22 (0.44) (0.66) (2.58) (12.25) (8.23) (2.65) The Fund s performance is calculated on NAV to NAV basis. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date: 12 th November 2007 **Effective 15th November 2017, the indicative benchmark has changed from FTSE All World Greater China (FTAW 10 Index) to MSCI Golden Dragon Index. AVERAGE ANNUAL RETURN AND BENCHMARK Performance 1 year 3 years 5 years Manulife China Value Fund MSCI Golden Dragon Index** Relative +/(-) (2.58) (3.27) (1.04) Note: The fund performance is based on the last trading day of the month/year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 45

48 FUND PERFOANCE MANULIFE ASIAN SMALL CAP GROWTH FUND FUND PERFOANCE The Fund s Net Asset Value per unit increased from as at 31 December 2016 to as at 31 December The Fund s recorded a total return of since inception. Performance calculated as at 31 December 2017 Performance 1 mth 3 mths 6 mths 1 Yr 3 Yrs 5 Yrs Since Inception * Manulife Asian Small Cap Growth Fund MSCI AC Asia Pacific Ex Japan Small Cap Relative +/(-) (20.90) The Fund s performance is calculated on NAV to NAV basis. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date: 12 th January 2015 AVERAGE ANNUAL RETURN AND BENCHMARK Performance 1 year 3 year Manulife Asian Small Cap Growth Fund MSCI AC Asia Pacific Ex Japan Small Cap Index Relative +/(-) Note: The fund performance is based on the last trading day of the month/year 5 year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 46

49 FUND PERFOANCE MANULIFE ASIA-PACIFIC REIT FUND FUND PERFOANCE For the financial period between 3 July 2017 (its inception date) and 31 December 2017, Manulife Asia-Pacific REIT Fund marginally underperformed the benchmark index. The relative underperformance was mainly attributable to country allocation at the underlying fund level and cash drag effects (due to the deployment of progressive inflows since the fund launch). Performance calculated as at 31 December 2017 Performance 1 mth 3 mths 6 mths 1 Yr 3 Yrs 5 Yrs Since Inception * Manulife Asia-Pacific REIT Fund Manulife Investment Asia REIT Ex Japan Index Relative +/(-) (0.44) (2.39) The Fund s performance is calculated on NAV to NAV basis. The value of units may go down as well as up. Past performance is not indicative of future results. The fund performance is strictly the performance of the investment-linked (IL) fund and not to the gross premium/contribution of the IL insurance product. * Inception Date:3 rd July 2017 AVERAGE ANNUAL RETURN AND BENCHMARK 1 month Performance 3 months 5 months Manulife Asia-Pacific REIT Fund Manulife Investment Asia REIT Ex Japan Index Relative +/(-) Note: The fund performance is based on the last trading day of the month/year ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 47

50 COMPARATIVE PERFOANCE TABLE

51 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES The table below shows the performance tables of the Funds: EQUITY FUND 2017 Net Asset Value ( NAV ) 305,046, ,326, ,876, ,267, ,753,586 Number of units in circulation 61,008,759 55,071,866 46,353,443 38,225,326 32,927,146 NAV per unit Highest NAV per unit during the financial year Lowest NAV per unit during the financial year Categories of investments 2017 Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV - Quoted securities Fixed deposits with licensed banks in Malaysia Quoted equities by sectors 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV 2014 Percentage of NAV 2013 Percentage of NAV Construction Consumer products Corporate action Finance Industrial products Infrastructure project company Plantations Properties Technology Trading /services REITS ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 49

52 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES (CONTINUED) The table below shows the performance tables of the Funds: (continued) MANAGED FUND 2017 Net Asset Value ( NAV ) 204,799, ,936, ,718, ,784, ,201,605 Number of units in circulation 46,364,377 46,646,816 45,738,362 43,834,907 42,008,806 NAV per unit Highest NAV per unit during the financial year Lowest NAV per unit during the financial year Categories of investments 2017 Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV - Quoted securities Unquoted debt securities Fixed deposits with licensed banks in Malaysia Composition of unquoted debt securities 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV 2014 Percentage of NAV 2013 Percentage of NAV Corporate debt securities Malaysia Government Securities Government Investment Issues Quoted securities by sectors 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV 2014 Percentage of NAV 2013 Percentage of NAV Construction Consumer products Corporate action Finance Industrial products Infrastructure project company Plantations Properties Technology Trading /services REITS ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 50

53 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES (CONTINUED) The table below shows the performance tables of the Funds: (continued) MANAGED FUND (CONTINUED) Unquoted debt securities by sectors 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV 2014 Percentage of NAV 2013 Percentage of NAV Agriculture, forestry and fishing Construction Electricity, gas and water Finance, insurance, real estate and business services Government and other service Manufacturing Transport, storage and communications ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 51

54 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES (CONTINUED) The table below shows the performance tables of the Funds: (continued) DANA EKUITI DINAMIK 2017 Net Asset Value ( NAV ) 31,212,870 23,823,949 23,247,654 21,028,796 20,930,440 Number of units in circulation 8,955,259 7,865,403 7,323,534 7,105,065 7,081,223 NAV per unit Highest NAV per unit during the financial year Lowest NAV per unit during the financial year Categories of investments 2017 Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV - Quoted securities Fixed deposits with licensed banks in Malaysia Quoted equities by sectors 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV 2014 Percentage of NAV 2013 Percentage of NAV Construction Consumer products Finance Industrial products Infrastructure project company Plantations Properties Technology Trading /services REITS ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 52

55 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES (CONTINUED) The table below shows the performance tables of the Funds: (continued) INCOME FUND 2017 Net Asset Value ( NAV ) 27,817,907 25,776,692 24,711,428 22,107,557 21,064,730 Number of units in circulation 16,148,782 15,612,106 15,459,824 14,248,590 13,974,138 NAV per unit Highest NAV per unit during the financial year Lowest NAV per unit during the financial year Categories of investments 2017 Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV - Quoted debt securities Unquoted securities Fixed deposits with licensed banks in Malaysia Composition of unquoted debt securities 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV 2014 Percentage of NAV 2013 Percentage of NAV Corporate debt securities Malaysia Government Securities Government Investment Issues Unquoted debt securities by sectors 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV 2014 Percentage of NAV 2013 Percentage of NAV Agriculture, forestry and fishing Construction Electricity, gas and water Finance, insurance, real estate and business services Government and other service Transport, storage and communications ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 53

56 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES (CONTINUED) The table below shows the performance tables of the Funds: (continued) MANULIFE FLEXI INVEST FUND Net Asset Value ( NAV ) 58,878,208 36,975,585 30,709,375 26,985,474 20,874,505 Number of units in circulation 35,686,221 26,058,815 21,443,820 21,819,344 17,509,359 NAV per unit Highest NAV per unit during the financial year Lowest NAV per unit during the financial year Categories of investments 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV 2014 Percentage of NAV 2013 Percentage of NAV - Quoted securities - Within Malaysia Outside Malaysia Fixed deposits with licensed banks in Malaysia Quoted equities by sectors (within Malaysia) 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV 2014 Percentage of NAV 2013 Percentage of NAV Construction Consumer products Finance Industrial products Infrastructure project company Plantations Properties Technology Trading/services REITS ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 54

57 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES (CONTINUED) The table below shows the performance tables of the Funds: (continued) Quoted equities by sectors (outside Malaysia) 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV 2014 Percentage of NAV 2013 Percentage of NAV Consumer products Construction Industrial products Plantation Resources Trading/services Finance Technology ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 55

58 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES (CONTINUED) The table below shows the performance tables of the Funds: (continued) MANULIFE CHINA VALUE FUND 2017 Net Asset Value ( NAV ) 17,291,241 13,885,927 13,579,073 11,421,249 9,371,557 Number of units in circulation 12,781,424 12,213,605 11,815,278 11,275,564 10,367,630 NAV per unit Highest NAV per unit during the financial year Lowest NAV per unit during the financial year Categories of investments 2017 Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV - Foreign investments Fixed deposits with licensed banks in Malaysia MANULIFE EMERGING EASTERN EUROPE FUND 2017 Net Asset Value ( NAV ) 4,115,820 3,846,126 2,892,595 2,320,742 2,865,554 Number of units in circulation 4,926,462 5,045,684 4,696,092 4,036,044 3,620,894 NAV per unit Highest NAV per unit during the financial year Lowest NAV per unit during the financial year Categories of investments 2017 Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV Percentage of NAV - Foreign investments ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 56

59 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES (CONTINUED) The table below shows the performance tables of the Funds: (continued) MANULIFE ASIAN SMALL CAP GROWTH FUND Net Asset Value ( NAV ) 1,189, , ,569 Number of units in circulation 962, , ,013 NAV per unit Highest NAV per unit during the financial year Lowest NAV per unit during the financial year Categories of investments 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV - Foreign investments MANULIFE PROGRESS FUND Net Asset Value ( NAV ) 17,167,408 7,811,845 2,764,260 Number of units in circulation 12,699,289 6,646,386 2,270,778 NAV per unit Highest NAV per unit during the financial year Lowest NAV per unit during the financial year Categories of investments 2017 Percentage of NAV 2016 Percentage of NAV 2015 Percentage of NAV - Quoted securities Fixed deposits with licensed banks in Malaysia ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 57

60 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES (CONTINUED) The table below shows the performance tables of the Funds: (continued) MANULIFE DIVIDEND FUND Launched on 3 July Net Asset Value ( NAV ) 2,048,300 Number of units in circulation 1,993,449 NAV per unit Highest NAV per unit during the financial period Lowest NAV per unit during the financial period Percentage Categories of investments of NAV - Quoted securities MANULIFE ASIA-PACIFIC REIT Launched on 3 July Net Asset Value ( NAV ) 1,844,159 Number of units in circulation 1,799,936 NAV per unit Highest NAV per unit during the financial period Lowest NAV per unit during the financial period Percentage Categories of investments of NAV - Quoted securities ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 58

61 FUND PERFOANCE REPORT COMPARATIVE PERFOANCE TABLES (CONTINUED) CAPITAL GROWTH AND INCOME DISTRIBUTION TABLE 2017 Capital Growth Income Distribution Equity Fund (4.65) (3.30) (1.18) Managed Fund (3.40) (2.65) Dana Ekuiti Dinamik (4.59) Income Fund Manulife Flexi Invest Fund (0.90) Manulife China Value Fund (0.90) Manulife Emerging Eastern Fund (27.34) Manulife Asian Small Cap Growth Fund (1.61) Manulife Progress Fund (3.42) Manulife Dividend Fund Manulife Asia-Pacific REIT Fund Note: The fund performance is based on the last calender day of the year. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 59

62 INVESTMENT INFOATION

63 FUNDS PERFOANCE REPORT INVESTMENT INFOATION The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: EQUITY FUND Quoted securities QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Equities CONSTRUCTION GADANG HOLDINGS BHD 1,151,700 1,235,728 1,278, GAMUDA BHD 1,527,400 7,678,837 7,575, IJM CORPORATION BHD 1,674,800 5,516,447 5,074, PROTASCO BHD 1,488,000 1,655,776 1,562, WCT HOLDINGS BHD 2,479,122 4,165,311 4,016, CONSUMER PRODUCTS KAWAN FOOD BHD 348, ,001 1,024, NESTLE (M) BHD 49,200 3,336,324 5,033, PPB GROUP BHD 153,500 2,477,904 2,646, SALUTICA BHD 1,263,200 1,847,186 1,831, FINANCE ALLIANCE BANK MALAYSIA BHD 1,137,700 4,472,573 4,619, CIMB GROUP HOLDINGS BHD 3,383,707 17,616,802 22,129, HONG LEONG BANK BHD 189,000 2,584,690 3,213, MALAYAN BANKING BHD 1,937,469 17,730,862 18,715, PUBLIC BANK BHD 909,700 17,482,207 18,885, INDUSTRIAL PRODUCTS CAHYA MATA SARAWAK BHD 735,900 2,748,322 2,796, HARTALEGA HOLDINGS BHD 219,800 1,411,731 2,347, KOSSAN RUBBER INDUSTRIES BHD 332,200 2,269,890 2,694, PETRONAS CHEMICALS GROUP BHD 982,900 7,288,854 7,568, PETRONAS GAS BHD 545,600 10,818,264 9,537, SCGM BHD 141, , , SLP RESOURCES BHD 2,040 4,435 3, UNITED U-LI CORPORATION BHD 726,500 3,850,865 2,455, INFRASTRUCTURE PROJECT COMPANY DIGI.COM BHD 766,800 4,135,496 3,718, TIME DOTCOM BHD 265,400 1,891,613 2,415, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 61

64 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) EQUITY FUND (CONTINUED) Quoted securities (continued) QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Equities (continued) PLANTATION GENTING PLANTATIONS BHD 304,700 3,140,557 3,181, IOI CORPORATION BHD 1,181,600 5,297,794 5,340, KUALA LUMPUR KEPONG BHD 306,100 7,281,686 7,615, SIME DARBY PLANTATION BHD 1,150,107 5,874,355 6,406, PROPERTIES IOI PROPERTIES GROUP BHD 1,543,375 2,996,758 2,855, SP SETIA BHD 662,411 2,165,555 2,444, SIME DARBY PROPERTY BHD 1,282,407 1,756,246 2,167, UEM SUNRISE BHD 1,273,700 1,379,040 1,324, YTL CORPORATION BHD 3,708,522 4,670,987 4,858, TECHNOLOGY GLOBETRONICS TECHNOLOGY BHD 1,191,800 4,575,893 7,746, INARI AMERTRON BHD 1,909,000 2,834,773 6,490, TRADING/SERVICES ASTRO MALAYSIA HOLDINGS BHD 753,800 2,003,570 1,990, AXIATA GROUP BHD 1,068,313 5,961,215 5,843, BERJAYA FOOD BHD 4,134,700 7,005,587 7,359, BEAZ AUTO BHD 1,134,100 2,331,534 2,415, DIALOG GROUP BHD 963,400 1,599,742 2,408, ENGTEX GROUP BHD 3,001,300 3,899,770 3,301, GENTING BHD 1,144,200 8,993,458 10,515, GENTING MALAYSIA BHD 1,250,700 6,468,933 6,991, MAGNUM BHD 482,400 1,167, , MALAKOFF CORP BHD 1,938,900 3,496,374 1,754, MALAYSIA AIRPORTS HOLDINGS BHD 1,036,100 7,459,564 9,096, MISC BHD 1,099,600 9,218,548 8,115, SIME DARBY BHD 806,407 1,379,112 1,782, TALIWORKS CORPORATION BHD 689, , , TELEKOM MALAYSIA BHD 1,789,813 12,647,072 10,899, TENAGA NASIONAL BHD 1,086,100 14,529,699 16,552, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 62

65 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) EQUITY FUND (CONTINUED) Quoted securities (continued) QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Equities (continued) REITS SUNWAY REIT 801,600 1,363,510 1,370, YTL HOSPITALITY REIT 1,753,800 1,859,028 2,157, TOTAL 61,859, ,833, ,089, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 63

66 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) MANAGED FUND Quoted securities QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Equities CONSTRUCTION ECONPILE HOLDINGS BHD 1,060,750 1,023,858 1,272, GADANG HOLDINGS BHD 897,500 1,109, , GAMUDA BHD 199,100 1,031, , IJM CORP BHD 790,800 2,669,871 2,396, SUNWAY CONSTRUCTION GROUP BHD 344, , , WCT HOLDINGS BHD 1,889,881 3,223,562 3,061, CONSUMER PRODUCTS KAWAN FOOD BHD 512,533 1,375,441 1,506, NESTLE (M) BHD 11, ,718 1,176, PPB GROUP BHD 117,200 1,941,063 2,020, PROLEXUS BHD 835,550 1,505, , SALUTICA BHD 1,285,200 1,588,475 1,863, FINANCE ALLIANCE BANK MALAYSIA BHD 520,800 1,976,507 2,114, ALLIANZ MALAYSIA BHD 202,000 2,125,826 2,727, CIMB GROUP HOLDINGS BHD 1,095,593 5,610,376 7,165, HONG LEONG FINANCIAL GROUP BHD 60, ,809 1,078, MALAYAN BANKING BHD 320,102 2,809,264 3,092, PUBLIC BANK BHD 393,100 7,844,869 8,160, INDUSTRIAL PRODUCTS CAHYA MATA SARAWAK BHD 439,800 1,307,966 1,671, HARTALEGA HOLDINGS BHD 281,300 1,961,490 3,004, KOSSAN RUBBER INDUSTRIES BHD 142,900 1,001,229 1,158, LAFARGE MALAYSIA BHD 41, , , PETRONAS CHEMICALS GROUP BHD 268,500 1,997,966 2,067, PETRONAS GAS BHD 64,000 1,035,615 1,118, SAM ENGINEERING & EQUIPMENT BHD 168,800 1,151,041 1,247, SCGM BHD 676,966 1,542,538 1,773, SCIENTEX BHD 205,400 1,750,842 1,778, SLP RESOURCES BHD 1,257,240 2,370,560 2,225, UCHI TECHNOLOGIES BHD 979,400 1,910,662 3,232, UNITED U-LI CORP BHD 507,400 2,660,698 1,715, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 64

67 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) MANAGED FUND (CONTINUED) Quoted securities (continued) QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Equities (continued) INFRASTRUCTURE PROJECT COMPANY DIGI.COM BHD 211, ,585 1,027, TIME DOTCOM BHD 622,800 4,544,567 5,667, PLANTATION GENTING PLANTATIONS BHD 173,900 1,821,897 1,815, IOI CORPORATION BHD 266,200 1,194,860 1,203, KUALA LUMPUR KEPONG BHD 81,600 1,984,183 2,030, SIME DARBY PLANTATIONS BHD 357,615 1,863,359 1,991, PROPERTIES SP SETIA BHD 553,218 1,863,332 2,041, SIME DARBY PROPERTY BHD 560, , , UEM SUNRISE BHD 926,600 1,019, , TECHNOLOGY GLOBETRONICS TECHNOLOGY BHD 650,700 2,950,873 4,229, INARI AMERTRON BHD 929,100 1,346,226 3,158, KESM INDUSTRIES BHD 47, , , TRADING/SERVICES AEON CO. (M) BHD 455,800 1,007, , AXIATA GROUP BHD 189, ,095 1,036, BERJAYA FOOD BHD 3,087,600 4,949,096 5,495, BERJAYA SPORTS TOTO BHD 153, , , BEAZ AUTO BHD 768,800 1,595,429 1,637, DIALOG GROUP BHD 752,800 1,197,690 1,882, ENGTEX GROUP BHD 1,517,500 1,783,219 1,669, GENTING BHD 621,800 5,222,170 5,714, GENTING MALAYSIA BHD 667,300 3,506,648 3,730, IHH HEALTHCARE BHD 177,500 1,001,802 1,038, MAGNUM BHD 309, , , MALAKOFF CORP BHD 595,300 1,074, , MALAYSIA AIRPORTS HOLDINGS BHD 595,300 4,587,281 5,226, MISC BHD 639,000 5,230,338 4,715, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 65

68 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) MANAGED FUND (CONTINUED) Quoted securities (continued) QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Equities (continued) TRADING/SERVICES (CONTINUED) PESTECH INTERNATIONAL BHD 738,300 1,210,961 1,255, SIME DARBY BHD 352, , , TALIWORKS CORP BHD 374, , , TELEKOM MALAYSIA BHD 1,212,199 8,577,117 7,382, TENAGA NASIONAL BHD 466,100 6,806,303 7,103, YTL CORPORATION BHD 3,280,324 4,552,836 4,297, REITS YTL HOSPITALITY REIT 1,310,200 1,463,228 1,611, Warrants CONSUMER PRODUCTS PROLEXUS BHD 202,950-50, INDUSTRIAL PRODUCTS SCGM BHD 26,766-8, TRADING/SERVICES TALIWORKS CORP BHD 25,600-1, TOTAL 39,471, ,909, ,688, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 66

69 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) MANAGED FUND (CONTINUED) Unquoted debt securities AFFIN BANK BHD /02/2027 AMMB HOLDINGS BHD /03/2027 BUMITAMA AGRI LTD /09/2019 BUMITAMA AGRI LTD /03/2019 BANK ISLAM MALAYSIA BHD /12/2025 BGSM MANAGEMENT SDN BHD /12/2022 BERJAYA LAND BHD /12/2019 DANAINFRA NASIONAL /05/2031 IMPIAN EKSPRESI SDN BHD /11/2020 N.U.R POWER SDN BHD /06/2021 PROJEK LEBUHRAYA USAHASA /01/2031 NOMINAL VALUE NET BOOK VALUE MARKET VALUE PERCENTAGE OF NET ASSET VALUE 1,000,000 1,000,000 1,022, ,500,000 3,500,000 3,546, , , , ,000,000 5,059,550 5,043, ,000,000 4,022,400 4,101, ,500,000 5,014,350 4,988, ,500,000 2,513,409 2,521, , , , ,500,000 3,515,582 3,498, ,000,000 3,990,752 3,998, , , , TOTAL 29,350,000 29,993,698 30,071, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 67

70 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) DANA EKUITI DINAMIK Quoted securities QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Equities CONSTRUCTION GADANG HOLDINGS BHD 140, , , GAMUDA BHD 183, , , IJM CORP BHD 206, , , PROTASCO BHD 272, , , WCT HOLDINGS BHD 422, , , CONSUMER PRODUCTS CCM DUOPHAA BIOTECH BHD 114, , , KAWAN FOOD BHD 207, , , NESTLE (M) BHD 1, , , ORIENTAL FOOD INDUSTRIES HOLDINGS BHD 44, ,136 59, PPB GROUP BHD 58, ,451 1,015, PROLEXUS BHD 141, , , SALUTICA BHD 303, , , UMW HOLDINGS BHD 12,500 64,441 62, INDUSTRIAL PRODUCTS CHEMICAL COMPANY OF MALAYSIA 93, , , DAIBOCHI PLASTIC & PACKAGING 348, , , HARTALEGA HOLDINGS BHD 55, , , KOSSAN RUBBER INDUSTRIES BHD 37, , , LAFARGE MALAYSIA BHD 7,800 50,192 48, PETRONAS CHEMICALS GROUP BHD 119, , , PETRONAS GAS BHD 37, , , SAM ENGINEERING & EQUIPMENT BHD 76, , , SCGM BHD 161, , , SCIENTEX BHD 80, , , SLP RESOURCES BHD 426, , , UCHI TECHNOLOGIES BHD 332, ,378 1,095, UNITED U-LI CORP BHD 38, , , ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 68

71 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) DANA EKUITI DINAMIK (CONTINUED) Quoted securities (continued) QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE INFRASTRUCTURE PROJECT COMPANY TIME DOTCOM BHD 102, , , PLANTATION GENTING PLANTATIONS BHD 68, , , IOI CORPORATION BHD 31, , , KUALA LUMPUR KEPONG BHD 11, , , SIME DARBY PLANTATION BHD 26, , , PROPERTIES SP SETIA BHD 234, , , SIME DARBY PROPERTY BHD 65,883 96, , UEM SUNRISE BHD 208, , , TECHNOLOGY GLOBETRONICS TECHNOLOGY BHD 68, , , INARI AMERTRON BHD 130, , , VITROX CORP BHD 65, , , TRADING/SERVICES AEON CO. (M) BHD 75, , , AXIATA GROUP BHD 56, , , BEAZ AUTO BHD 282, , , CYPARK RESOURCES BHD 261, , , DIALOG GROUP BHD 143, , , EITA RESOURCES BHD 56, ,219 89, IHH HEALTHCARE BHD 52, , , KELINGTON GROUP BHD 197, , , MISC BHD 109, , , PESTECH INTERNATIONAL BHD 490, , , SIME DARBY BHD 65, , , SUNWAY BHD 266, , , TALIWORKS CORPORATION BHD 277, , , TELEKOM MALAYSIA BHD 202,136 1,387,118 1,231, TENAGA NASIONAL BHD 157,900 2,294,905 2,406, UZMA BHD 126, , , XIN HWA HOLDINGS BHD 207, , , ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 69

72 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) DANA EKUITI DINAMIK (CONTINUED) Quoted securities (continued) QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Warrants CONSUMER PRODUCTS DAIBOCHI PLASTIC & PACKAGING 8,950-4, TOTAL 7,980,681 24,450,243 26,451, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 70

73 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) INCOME FUND Quoted Securities QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE MANULIFE CASH MANAGEMENT FUND 2,124,801 2,167,633 2,166, Unquoted debt securities AFFIN BANK BHD /02/2027 AMMB HOLDINGS BHD /03/2027 BANK ISLAM MALAYSIA BHD /12/2025 BGSM MANAGEMENT SDN BHD /12/2019 BGSM MANAGEMENT SDN BHD /12/2022 BUMITAMA AGRI LTD /09/2019 CAHYA MATA SARAWAK BHD /05/2022 CELCOM NETWORKS SDN BHD /08/2024 DANAINFRA NASIONAL BHD /05/2031 GENM CAPITAL BHD /08/2025 IJM CORPORATION BHD /06/2022 IMTIAZ SUKUK II BHD /05/2022 JIMAH ENERGY VENTURES SDN BHD /05/2021 KIMANIS POWER SDN BHD /08/2022 KRUNG THAI BANK PUBLIC COMPANY LIMTED, CAYMAN ISLAND /07/2025 NOMINAL VALUE NET BOOK VALUE MARKET VALUE PERCENTAGE OF NET ASSET VALUE 2,000,000 2,008,700 2,045, ,000,000 1,000,000 1,013, , , , ,300,000 1,363,050 1,354, , , , ,000,000 2,014,400 2,013, ,600,000 1,604,320 1,616, , , , , , , ,500,000 2,529,365 2,508, , , , ,550,000 1,550,500 1,553, , , , ,000,000 1,016,600 1,018, ,200,000 2,200,000 2,234, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 71

74 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) INCOME FUND (CONTINUED) Unquoted debt securities (continued) LEMBAGA PEMBIAYAAN PERUMAHAN SEKTOR AWAM /09/2036 MUMTAZ RAKYAT SUKUK BHD /06/2026 PRASARANA MALAYSIA BHD /08/2028 PROJEK LEBUHRAYA USAHASAMA BHD /01/2033 PROJEK LEBUHRAYA USAHASAMA BHD /01/2031 SOUTHERN POWER GENERATION SDN BHD /04/2025 SOUTHERN POWER GENERATION SDN BHD /04/2029 UEM EDGENTA BHD /04/2022 YTL CORPORATION BHD /04/2023 YTL POWER INTERNATIONAL BHD /03/2023 NOMINAL VALUE NET BOOK VALUE MARKET VALUE PERCENTAGE OF NET ASSET VALUE 800, , , , , , , , , , , , ,250,000 1,308,175 1,277, , , , , , , ,200,000 1,200,440 1,209, ,000,000 1,002, , ,000, , , TOTAL 24,500,000 24,815,426 24,806, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 72

75 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) MANULIFE FLEXI INVEST FUND Quoted securities (within Malaysia) QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Equities CONSTRUCTION GADANG HOLDINGS BHD 250, , , GAMUDA BHD 49, , , IJM CORP BHD 210, , , WCT HOLDINGS BHD 535, , , ECONPILE HOLDINGS BHD 479, , , SUNWAY CONSTRUCTION GROUP BHD 152, , , CONSUMER PRODUCTS KAWAN FOOD BHD 177, , , SALUTICA BHD 431, , , PROLEXUS BHD 229, , , FINANCE ALLIANCE BANK MALAYSIA BHD 21,900 85,011 88, ALLIANZ MALAYSIA BHD 50, , , CIMB GROUP HOLDINGS BHD 296,335 1,627,141 1,938, MALAYAN BANKING BHD 144,302 1,314,599 1,393, PUBLIC BANK BHD 77,200 1,573,300 1,602, INDUSTRIAL PRODUCTS DAIBOCHI PLASTIC & PACKAGING 394, , , HARTALEGA HOLDINGS BHD 74, , , KOSSAN RUBBER INDUSTRIES BHD 66, , , SAM ENGINEERING & EQUIPMENT 119, , , SCGM BHD 251, , , SLP RESOURCES BHD 486, , , SCIENTEX BHD 109, , , UCHI TECHNOLOGIES BHD 438, ,170 1,445, UNITED U-LI CORP BHD 156, , , INFRASTRUCTURE PROJECT COMPANY TIME DOTCOM BHD 140, ,456 1,281, PLANTATION GENTING PLANTATIONS BHD 72, , , KIM LOONG RESOURCES BHD 18,900 69,614 80, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 73

76 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) MANULIFE FLEXI INVEST FUND (CONTINUED) Quoted securities (within Malaysia) (continued) QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Equities (continued) PROPERTIES SP SETIA BHD 215, , , SIME DARBY PROPERTY BHD 87, , , UEM SUNRISE BHD 169, , , TECHNOLOGY GLOBETRONICS TECHNOLOGY BHD 161, ,601 1,046, INARI AMERTRON BHD 215, , , VITROX CORP BHD 115, , , TRADING/SERVICES AXIATA GROUP BHD 100, , , BERJAYA FOOD BHD 489, , , BEAZ AUTO BHD 191, , , CYPARK RESOURCES BHD 139, , , DIALOG GROUP BHD 181, , , ENGTEX GROUP BHD 776, , , GENTING BHD 150,300 1,319,817 1,381, GENTING MALAYSIA BHD 202,000 1,056,219 1,129, HARBOUR LINK GROUP BHD 155, , , KELINGTON GROUP BHD 296, , , MALAYSIA AIRPORTS HOLDINGS BHD 188,900 1,511,746 1,658, MISC BHD 151,200 1,187,497 1,115, PESTECH INTERNATIONAL BHD 860, ,754 1,463, SIME DARBY BHD 55, , , TELEKOM MALAYSIA BHD 313,699 2,100,169 1,910, TENAGA NASIONAL BHD 131,100 1,868,509 1,997, UZMA BHD 182, , , YTL CORP BHD 1,062,298 1,477,235 1,391, REITS YTL HOSPITALITY REIT 267, , , Warrants CONSUMER PRODUCTS PROLEXUS BHD 53,550-13, INDUSTRIAL PRODUCTS SCGM BHD 10,063-3, TOTAL 12,354,524 35,098,536 39,905, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 74

77 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) MANULIFE FLEXI INVEST FUND (CONTINUED) Quoted securities (outside Malaysia) QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Foreign Equities CONSUMER PRODUCTS BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED 50, , , CRYSTAL INTERNATIONAL GROUP 182, , , SHENZHOU INTERNATIONAL GROUP 29, ,015 1,114, YUE YUEN INDUSTRIAL (HOLDINGS) LIMITED 31, , , HENGAN INTERNATIONAL GROUP CO LTD 10, , , THAI BEVERAGE PCL 277, , , INDUSTRIAL PRODUCTS POSCO CHEMTECH CO LTD 3, , , LG CHEMICAL LTD , , NAN YA PLASTIC CORP 151,000 1,566,474 1,595, W-SCOPE CORP 12,900 1,044,455 1,084, FINANCE INDUSTRIAL AND COMMERCIAL BANK OF CHINA 82, , , CHINA LIFE INSURANCE CO LTD 61, , , CHINA CONSTRUCTION BANK 116, , , TECHNOLOGY SAMSUNG ELECTRONICS CO LTD 116 1,006,725 1,123, WONIK IPS CO LTD 2, , , ADVANCED PROCESS SYSTEMS CORP 3, , , TENCENT HOLDINGS LTD 5, ,317 1,075, ZTE CORP-H 31, , , TOTAL 1,048,342 11,901,830 12,663, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 75

78 FUNDS PERFOANCE REPORT INVESTMENT INFOATION (CONTINUED) The details of the Investment-Linked Funds as at 31 December 2017 are set out as follows: (continued) MANULIFE CHINA VALUE FUND QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE Manulife Investment Greater China Fund 34,476,969 16,242,100 16,055, MANULIFE EMERGING EASTERN EUROPE FUND QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE MGF EEEF-CLASS A 250,857 3,409,947 4,101, MANULIFE ASIAN SMALL CAP GROWTH FUND QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE MGF-ASCEF 149, ,776 1,117, MANULIFE PROGRESS FUND MANULIFE INVESTMENT PROGRESS FUND MANULIFE DIVIDEND FUND MANULIFE INVESTMENT DIVIDEND FUND MANULIFE ASIA-PACIFIC REIT FUND MANULIFE INVESTMENT ASIA-PACIFIC REIT FUND QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE 38,820,345 16,417,853 16,646, QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE 5,246,854 1,857,682 1,856, QUANTITY AGGREGATE COST MARKET VALUE PERCENTAGE OF NET ASSET VALUE 3,552,315 1,725,790 1,737, ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 76

79 SUMMARY OF FINANCIAL STATEMENT

80 SUMMARY OF FINANCIAL STATEMENT STATEMENTS OF INCOME AND EXPENDITURE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER Equity Fund Managed Fund Dana Ekuiti Dinamik Income Fund Manulife Flexi Invest Fund Manulife China Value INCOME Net investment income Interest income 864,807 2,508,745-1,237,102 75,839 20,744 Profit sharing income , Dividend income 7,603,905 3,963, ,516 18,083 1,168,675 49,170 Accretion of discounts - 196, Rebate income ,888 Gains on disposal of investments 3,656,376 6,488,963 1,163,338-2,228,306 4,871,943 Realised exchange gains ,360,196 Unrealised capital gains 28,054,383 14,050,760 2,587, ,538 5,155,256 - Deferred tax ,713 Total income 40,179,471 27,208,322 4,534,525 1,512,723 8,628,076 7,952,654 OUTGO Management expenses 4,621,248 3,206, , ,621 1,064, ,232 Amortisation of premiums , Loss on disposal of investments - 241,740-53, Realised exchange losses ,865 - Unrealised exchange losses ,796 3,283,867 Unrealised capital losses ,611-1,187,512 Current tax 230, ,749 69,420 80, , ,990 Deferred tax 2,244,351 1,139, ,017 17, ,773 - Total outgo 7,096,367 5,122, , ,229 2,165,645 5,330,601 Excess of income over outgo 33,083,104 22,085,784 3,703,896 1,111,494 6,462,431 2,622,053 Undistributed income brought forward Undistributed income carried forward 50,301,493 65,750,662 12,432,230 6,508,602 7,097,288 3,842,533 83,384,597 87,836,446 16,136,126 7,620,096 13,559,719 6,464,586 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 78

81 SUMMARY OF FINANCIAL STATEMENT STATEMENTS OF INCOME AND EXPENDITURE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 (CONTINUED) 2017 Manulife Emerging Eastern Europe Fund Manulife Asian Small Cap Growth Fund Manulife Progress Fund 3 July to 31 December 2017 Manulife Dividend Fund 3 July to 31 December 2017 Manulife Asia-Pacific REIT Fund INCOME Net investment income Interest income , Dividend income 61,777 6,808 1,008,007 51,710 19,093 Rebate income 74,275 9, ,623 6,575 5,405 Gains on disposal of investments - - 3, Realised exchange gains 72,306 10, Unrealised capital gains 988, , ,704-12,003 Deferred tax Total income 1,197, ,415 1,801,425 58,392 36,501 OUTGO Management expenses 75,386 13, ,610 7,016 4,999 Loss on disposal of investments 191,929 5,367-2,788 1,563 Unrealised exchange losses 512,784 91, Unrealised capital losses ,344 - Current tax 7,858 2,138 29,490 1,315 1,136 Deferred tax 37,613 16,746 47, Total outgo 825, , ,596 12,463 8,658 Excess of income over outgo 371, ,483 1,515,829 45,929 27,843 Undistributed income/(losses) brought forward 216,101 (9,569) 71, Undistributed income carried forward 587, ,914 1,587,325 45,929 27,843 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 79

82 SUMMARY OF FINANCIAL STATEMENT STATEMENTS OF INCOME AND EXPENDITURE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 (CONTINUED) 2016 Equity Fund Managed Fund Dana Ekuiti Dinamik Income Fund Manulife Flexi Invest Fund Manulife China Value Fund INCOME Net investment income Interest income 1,143,856 2,771,885-1,174, ,856 15,218 Profit sharing income , Dividend income 5,903,346 3,600, , ,004 82,128 Accretion of discounts , Rebate income ,957 Gains on disposal of investments ,268,494 - Realised exchange gains 6,690,094 1,649,916 1,063, ,045 - Unrealised exchange gains ,746 Unrealised capital gains , Deferred tax 1,772, , , ,232 1,703 Total income 15,509,815 8,997,476 2,020,019 1,225,985 2,797, ,752 OUTGO Management expenses 3,855,368 3,183, , , , ,804 Amortisation of premiums - 265, Loss on disposal of investments , Realised exchange losses ,370 Unrealised exchange losses ,124 - Unrealised capital losses 21,780,379 11,711,954 2,489,863-1,952, ,254 Current tax 499, ,758 76,700 81, ,419 26,854 Deferred tax , Total outgo 26,135,753 15,397,852 3,102, ,542 3,103, ,282 Excess of (outgo over income)/income over outgo (10,625,938) (6,400,376) (1,082,759) 812,443 (305,387) (96,530) Undistributed income bought forward 60,927,431 72,151,038 13,514,989 5,696,159 7,402,675 3,939,063 Undistributed income carried forward 50,301,493 65,750,662 12,432,230 6,508,602 7,097,288 3,842,533 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 80

83 SUMMARY OF FINANCIAL STATEMENT STATEMENTS OF INCOME AND EXPENDITURE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 (CONTINUED) 2016 Manulife Emerging Eastern Europe Fund Manulife Asian Small Cap Growth Fund Manulife Progress Fund INCOME Net investment income Interest income ,633 Dividend income 70,517 3, ,338 Rebate income 36,969 5,460 66,152 Realised exchange gains 26, Unrealised exchange gains 188,066 36,967 - Unrealised capital gains 643, Deferred tax ,405 Total income 965,792 46, ,528 OUTGO Management expenses 62,827 7,612 80,742 Loss on disposal of investments 94,691 4,335 - Unrealised capital losses - 26, ,612 Current tax 4, ,412 Deferred tax 67, Total outgo 229,913 40, ,766 Excess of income over outgo/ (outgo over income) 735,879 6,381 (212,238) Undistributed (outgo)/income brought forward (519,778) (15,950) 283,734 Undistributed income/(losses) carried forward 216,101 (9,569) 71,496 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 81

84 SUMMARY OF FINANCIAL STATEMENT STATEMENTS OF ASSETS AND LIABILITIES AS AT 31 DECEMBER Equity Fund Managed Fund Dana Ekuiti Dinamik Income Fund Manulife Flexi Invest Fund Manulife China Value ASSETS Investments Quoted securities 276,089, ,688,984 26,451,669 2,166,022 39,905,782 16,055,924 Unquoted debt securities - 30,071,133-24,806, Foreign investments ,663,225 - Fixed deposits with licensed banks in Malaysia 28,141,246 31,273,824 4,765,053-4,194, ,355 Other receivables 2,367,163 4,152,181 1,364, ,628 5,204,746 1,055,814 Deferred tax assets ,894 Cash and cash equivalents 577, , ,516 48, ,012 19,926 Total assets 307,175, ,433,523 32,724,990 27,932,297 62,771,169 17,973,913 LIABILITIES Payables 382,050 5,142,274 1,264,696 26,851 3,246,698 40,417 Current tax liabilities 286, ,507 87,310 87, , ,255 Deferred tax liabilities 1,460, , , ,491 - Total liabilities 2,129,361 6,634,310 1,512, ,390 3,892, ,672 NET ASSETS ATTRIBUTABLE TO POLICYHOLDERS 305,046, ,799,213 31,212,870 27,817,907 58,878,208 17,291,241 REPRESENTED BY: Policyholders capital 221,661, ,962,767 15,076,744 20,197,811 45,318,489 10,826,655 Undistributed income carried forward 83,384,597 87,836,446 16,136,126 7,620,096 13,559,719 6,464,586 NET ASSETS ATTRIBUTABLE TO POLICYHOLDERS 305,046, ,799,213 31,212,870 27,817,907 58,878,208 17,291,241 NUMBER OF UNITS IN CIRCULATION 61,008,759 46,364,377 8,955,259 16,148,782 35,686,221 12,781,424 NET ASSET VALUE ATTRIBUTABLE TO POLICYHOLDERS PER UNIT ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 82

85 SUMMARY OF FINANCIAL STATEMENT STATEMENTS OF ASSETS AND LIABILITIES AS AT 31 DECEMBER 2017 (CONTINUED) 2017 Manulife Emerging Eastern Europe Fund Manulife Asian Small Cap Growth Fund Manulife Progress Fund Manulife Dividend Fund Manulife Asia-Pacific REIT Fund ASSETS Investments Quoted securities ,646,164 1,856,337 1,737,792 Foreign investments 4,101,720 1,117, Fixed deposits with licensed banks in Malaysia , Other receivables 6, , , , ,664 Deferred tax assets Cash and cash equivalents 82,439 35,190 11,681 15,751 16,645 Total assets 4,190,607 1,269,935 17,256,878 2,051,907 2,013,101 LIABILITIES Payables 11,275 62,582 25,839 2, ,846 Current tax liabilities 8,170 2,153 45,366 1,315 1,136 Deferred tax liabilities 55,342 15,769 18, Total liabilities 74,787 80,504 89,470 3, ,942 NET ASSETS ATTRIBUTABLE TO POLICYHOLDERS 4,115,820 1,189,431 17,167,408 2,048,300 1,844,159 REPRESENTED BY: Policyholders capital 3,528,181 1,000,517 15,580,083 2,002,371 1,816,316 Undistributed income carried forward 587, ,914 1,587,325 45,929 27,843 NET ASSETS ATTRIBUTABLE 4,115,820 1,189,431 17,167,408 2,048,300 1,844,159 TO POLICYHOLDERS NUMBER OF UNITS IN 4,926, ,942 12,699,289 1,993,449 1,799,936 CIRCULATION NET ASSET VALUE ATTRIBUTABLE TO POLICYHOLDERS PER UNIT ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 83

86 SUMMARY OF FINANCIAL STATEMENT STATEMENTS OF ASSETS AND LIABILITIES AS AT 31 DECEMBER 2017 (CONTINUED) 2016 Equity Fund Managed Fund Dana Ekuiti Dinamik Income Fund Manulife Flexi Invest Fund Manulife Progress Fund ASSETS Investments Quoted securities 211,398, ,519,316 19,658,757-30,201,488 - Unquoted debt securities - 38,385,724-20,001, Foreign investments ,568,324 Fixed deposits with licensed banks in Malaysia 28,787,123 31,098,098 3,642,536 5,275,391 2,780, ,950 Other receivables 3,385,699 1,350, , ,213 3,588,327 43,157 Deferred tax assets 783, ,268 46,903 18, Cash and cash equivalents 353, , ,157 17,252 2,763,807 52,279 Total assets 244,708, ,748,193 24,420,026 25,907,190 39,333,906 14,372,710 LIABILITIES Payables 755,378 3,458, ,282 46,221 2,124, ,228 Current tax liabilities 626, ,634 91,795 84, ,881 26,739 Deferred tax liabilities , ,816 Total liabilities 1,382,043 3,811, , ,498 2,358, ,783 NET ASSETS ATTRIBUTABLE TO POLICYHOLDERS 243,326, ,936,597 23,823,949 25,776,692 36,975,585 13,885,927 REPRESENTED BY: Policyholders capital 193,025, ,185,935 11,391,719 19,268,090 29,878,297 10,043,394 Undistributed income carried forward 50,301,493 65,750,662 12,432,230 6,508,602 7,097,288 3,842,533 NET ASSETS ATTRIBUTABLE TO POLICYHOLDERS 243,326, ,936,597 23,823,949 25,776,692 36,975,585 13,885,927 NUMBER OF UNITS IN CIRCULATION 55,071,866 46,646,816 7,865,403 15,612,106 26,058,815 12,213,605 NET ASSET VALUE ATTRIBUTABLE TO POLICYHOLDERS PER UNIT ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 84

87 SUMMARY OF FINANCIAL STATEMENT STATEMENTS OF ASSETS AND LIABILITIES AS AT 31 DECEMBER 2017 (CONTINUED) 2016 Manulife Emerging Eastern Europe Fund Manulife Asian Small Cap Growth Fund Manulife Progress Fund ASSETS Investments Quoted securities - - 7,165,655 Foreign investments 3,824, ,562 - Fixed deposits with licensed banks in Malaysia ,027 Other receivables 8,274 7, ,105 Deferred tax assets ,231 Cash and cash equivalents 75,659 28,491 28,473 Total assets 3,908, ,018 7,863,491 LIABILITIES Payables 39,167 4,892 35,639 Current tax liabilities 5, ,007 Deferred tax liabilities 17, Total liabilities 62,185 5,679 51,646 NET ASSETS ATTRIBUTABLE TO POLICYHOLDERS 3,846, ,339 7,811,845 REPRESENTED BY: Policyholders capital 3,630, ,908 7,740,349 Undistributed income/(losses) carried forward 216,101 (9,569) 71,496 NET ASSETS ATTRIBUTABLE TO POLICYHOLDERS 3,846, ,339 7,811,845 NUMBER OF UNITS IN CIRCULATION 5,045, ,884 6,646,386 NET ASSET VALUE ATTRIBUTABLE TO POLICYHOLDERS PER UNIT ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 85

88 SUMMARY OF FINANCIAL STATEMENT STATEMENTS OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER Net asset value at the beginning of the financial year/period Net realised income after taxation Net unrealised capital gains/(losses) on investments Amounts received from net creation of units Amounts paid for net cancellation of units Equity Fund Managed Fund Dana Ekuiti Dinamik Income Fund Manulife Flexi Invest Fund Manulife China Value 243,326, ,936,597 23,823,949 25,776,692 36,975,585 13,885,927 5,028,721 8,035,024 1,116, ,567 1,823,971 7,093,432 28,054,383 14,050,760 2,587, ,927 4,638,460 (4,471,379) 102,686,940 38,750,560 10,023,099 5,903,821 34,365,929 3,976,763 (74,050,577) (39,973,728) (6,338,074) (4,974,100) (18,925,737) (3,193,502) Net asset value at the end of the financial year/period 305,046, ,799,213 31,212,870 27,817,907 58,878,208 17,291, Net asset value at the beginning of the financial year Net realised income after taxation Net unrealised capital (losses)/gains on investments Amounts received from net creation of units Amounts paid for net cancellation of units 214,876, ,718,239 23,247,654 24,711,428 30,709,375 13,579,073 11,154,441 5,311,578 1,407, ,564 1,845,941 2,978 (21,780,379) (11,711,954) (2,489,863) 14,879 (2,151,328) (99,508) 98,779,190 38,990,533 6,353,978 5,041,236 25,025,443 2,986,398 (59,702,581) (35,371,799) (4,694,924) (4,788,415) (18,453,846) (2,583,014) Net asset value at the end of the financial year 243,326, ,936,597 23,823,949 25,776,692 36,975,585 13,885,927 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 86

89 SUMMARY OF FINANCIAL STATEMENT STATEMENTS OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 (CONTINUED) 2017 Net asset value at the beginning of the financial year/period Net realised (losses)/income after taxation Net unrealised capital gains/(losses) on investments Amounts received from net creation of units Amounts paid for net cancellation of units Manulife Emerging Eastern Europe Fund Manulife Asian Small Cap Growth Fund Manulife Progress Fund Manulife Dividend Fund Manulife Asia-Pacific REIT Fund 3,846, ,339 7,811, (104,036) (11,681) 922,125 47,273 15, , , ,704 (1,344) 12, , ,911 16,334,517 2,462,442 1,866,539 (937,360) (498,302) (8,494,783) (460,071) (50,223) Net asset value at the end of the financial year/period 4,115,820 1,189,431 17,167,408 2,048,300 1,844, Net asset value at the beginning of the financial year Net realised (losses)/income after taxation Net unrealised capital gains/(losses) on investments Amounts received from net creation of units Amounts paid for net cancellation of units 2,892, ,569 2,764,260 (95,737) (3,635) 380, ,616 10,016 (592,612) 955, ,303 9,377,902 (738,020) (462,914) (4,118,079) Net asset value at the end of the financial year 3,846, ,339 7,811,845 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 87

90 NOTES TO THE FINANCIAL INFOATION

91 NOTES TO THE FINANCIAL INFOATION 31 DECEMBER PRINCIPAL ACTIVITIES The principal activities of the Investment-Linked Funds of Manulife Insurance Berhad consisting of Equity Fund, Managed Fund, Dana Ekuiti Dinamik, Income Fund, Manulife Flexi Invest Fund, Manulife China Value Fund, Manulife Emerging Eastern Europe Fund, Manulife Asian Small Cap Growth Fund, Manulife Progress Fund, Manulife Dividend Fund and Manulife Asia- Pacific REIT Fund (hereafter referred to collectively as the Funds ) are to invest in authorised investments. The objective of the Equity Fund and Managed Fund are to invest in authorised investments listed on the Bursa Malaysia Securities Berhad ( Bursa Malaysia ) which seeks to maximise medium to long-term capital appreciation. The objective of the Dana Ekuiti Dinamik seeks to maximise medium to long term capital appreciation by investing in Shariah compliant equity and equity-related securities listed on the Bursa Malaysia. The objective of the Income Fund seeks to provide a steady return to policyholders through accumulation of capital over the long term. The objective of the Manulife Flexi Invest Fund is to provide a platform for investors who seek supervised capital appreciation at medium to high level of risk over a mid-to long term investment horizon. Investors have the opportunity to benefit from equity returns during a market upturn and earn steady return from fixed income during times of market uncertainties. The Manulife Flexi Invest Fund may invest between 0 to 100 of the fund s net asset value in equities and equity related instruments and/or fixed income securities (including but not limited to money market instruments and other liquid assets). The Manulife Flexi Invest Fund is also allowed to invest up to 30 of the fund s net asset value in foreign markets as and when opportunities arise. Manulife China Value Fund invests in Manulife Investment Greater China Fund (MIGCF), which invests mainly in large capitalized companies to achieve capital growth over the medium to long term. MIGCF focuses on the Greater China region, namely China, Hong Kong and Taiwan markets, as well as China based companies listed on approved overseas markets. MIGCF may also invest in collective investment schemes as well as unlisted equities with attractive potential returns, particularly companies that are seeking a listing within one year. The objective of the Manulife Emerging Eastern Europe Fund aims to achieve capital growth through investment primarily in securities which are listed or traded on the stock exchanges of Central and Eastern European countries. Manulife Emerging Eastern Europe Fund is a feeder fund that invests in Manulife Global Fund Emerging Eastern Europe Fund Class A. It is intended that the Fund will concentrate (although not necessarily exclusively) on securities listed or traded on stock exchanges in the Czech Republic, Hungary, Poland, Slovakia and Russia whilst such securities may also be listed in other exchanges as depository receipts or certificates, or in other forms of instruments. The objective of the Manulife Asian Small Cap Growth Fund ( MASCGF ) aims to achieve long term capital growth for investors who hold a long term investment view and are prepared to ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 89

92 NOTES TO THE FINANCIAL INFOATION 31 DECEMBER 2017 (CONTINUED) 1. PRINCIPAL ACTIVITIES (continued) accept significant fluctuations in the value of their investments. MASCGF is a feeder fund and invests at least 95 of its Net Asset Value in Manulife Global Fund Asian Small Cap Equity Fund ( MGF-ASCEF ). MGF-ASCEF investment portfolio will be made on a diversified basis, for which its underlying securities will consist mainly of equity related investments and equities of smaller capitalization companies in the Asian and/or Pacific region. The objective of the Manulife Progress Fund ( MPF ) aims to achieve long term capital growth at a reasonable level of risk by investing in a diversified portfolio of small to medium-sized public-listed companies listed on the Bursa Malaysia. Manulife Progress Fund is a feeder fund and invests at least 95 of its Net Asset Value in Manulife Investment Progress Fund. The objective of Manulife Dividend Fund is to provide a steady recurring income that is potentially higher than the prevailing fixed deposit rates. Manulife Dividend Fund is a feeder fund and invests in Manulife Investment Dividend Fund. The objective of Manulife Asia-Pacific REIT Fund seeks to provide long-term capital appreciation and sustainable income through a combined investment in other collective investment schemes, namely REITs and infrastructure funds/trusts with exposure primarily within Asia-Pacific region. Manulife Asia- Pacific REIT Fund is a feeder fund and invests in Manulife Investment Asia-Pacific REIT Fund. The Manager of the Funds is Manulife Insurance Berhad, a company incorporated in Malaysia, engaged principally in the underwriting of life insurance business including investment-linked business. 2. BASIS OF PREPARATION The financial information of the Funds have been prepared in accordance with the accounting policies as described in Note 3 to the financial information and the Guidelines on Investment-Linked Insurance/Takaful Business issued by Bank Negara Malaysia ( BNM ). The financial information of the Funds have been prepared under the historical cost convention except as disclosed in the significant accounting policies in Note 3 to the financial information. 3. SIGNIFICANT ACCOUNTING POLICIES (a) Financial assets and liabilities (i) Classification A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 90

93 NOTES TO THE FINANCIAL INFOATION 31 DECEMBER 2017 (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Financial assets and liabilities (continued) (i) Classification (continued) A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Funds loans and receivables comprise deposits with licensed financial institutions and other receivables. The Fund classifies payables as other financial liabilities. (ii) Recognition and measurement All purchases of investments are recognised on their trade dates, i.e. the date the commitment exists to purchase the investments. The investments are initially recorded at cost, being fair value of the consideration given. The attributable transaction costs are recognised in the profit or loss when incurred. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Funds have transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expired. Financial assets at fair value through profit or loss Investments of the Funds are designated at initial recognition at fair value through profit or loss. After initial recognition, the investments are recorded at fair value and the unrealised gains or losses on re-measurement to fair value are taken to the statements of income and expenditure. The fair value of investments is determined by using open market valuation at the yearend date. Quoted equity investments are valued based on quoted market prices as at the date of the statements of financial position and the quoted market price used is the current bid price. Unquoted debt securities are initially recognised at fair value and subsequently re-measured at fair value based on the fair values quoted by an approved bond pricing agency in Malaysia. Investment in foreign assets comprises investments under the Underlying Funds which are valued at the net asset values of the underlying funds as at the date of the statements of assets and liabilities. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 91

94 NOTES TO THE FINANCIAL INFOATION 31 DECEMBER 2017 (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Financial assets and liabilities (continued) (ii) Recognition and measurement (continued) Other receivables Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less any impairment losses. Collectability of other receivables is reviewed on an on going basis. An allowance account is used when there is objective evidence that the Funds will not be able to collect all amounts due according to the original terms of the receivables. 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 ). The amount of the impairment allowance is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial. The amount of the impairment loss is recognised in the statements of income and expenditure. When loans and receivables for which an impairment allowance had been recognised become uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to the statements of income and expenditure. (b) Net creation of units Net creation of units represents premiums paid by policyholders as payment for a new contract or subsequent payments to increase the amount of that contract. Net creation of units is recognised on a receipt basis. (c) Net cancellation of units Net cancellation of units represents cancellation of units arising from surrenders and withdrawals by policyholders. Net cancellation of units is recognised upon surrendering of the related insurance contracts. (d) Income recognition Interest income and profit sharing income earned are recognised on a time proportion basis that takes into account the effective yield of the assets. Dividend income is recognised when the right to receive payment is established. Gains or loss on disposal of financial assets is calculated by comparing the net proceeds ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 92

95 NOTES TO THE FINANCIAL INFOATION 31 DECEMBER 2017 (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) (d) Income recognition (continued) with the original cost or amortised cost of the financial assets and is credited or charged to the statements of income and expenditure. Rebate income is received from Manulife Asset Management Hong Kong for placement of investments in Manulife Global Funds and from Manulife Asset Management Services Berhad, a fellow subsidiary of the Manager for placement of investments in Manulife Investment Greater China Fund, Manulife Investment Progress Fund, Manulife Investment Dividend Fund and Manulife Investment Asia-Pacific REIT Fund. The rebate income is accrued on a daily basis. (e) Management expenses Management expenses charged to the Funds include management fee, audit fee and tax fee and are recognised on an accrual basis. (f) Foreign currencies (i) Functional and presentation currency Items included in the financial information of the Funds are measured using the currency of the primary economic environment in which the Funds operate ( the functional currency ). The functional currency and presentation currency of the Funds are Ringgit Malaysia. (ii) Transactions and balances Transactions in a currency other than the functional currency ( foreign currency ) are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Currency translation gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statements of income and expenditure. (g) Taxation The income tax charge is calculated at current tax rate based on the method prescribed under the Income Tax Act, 1967 for life insurance business. Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial information. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or unutilised tax losses can be utilised. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 93

96 NOTES TO THE FINANCIAL INFOATION 31 DECEMBER 2017 (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) (g) Taxation (continued) The tax rate enacted or substantively enacted by the date of the statement of assets and liabilities is used to determine deferred tax. (h) Cash and cash equivalents Cash and cash equivalents consist of cash and bank balances which have an insignificant risk of changes in value. Deposits with financial institutions are not part of cash and cash equivalents as these are held for investment purposes. 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continuously evaluated by the Manager and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Manager makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Fund s results and financial position are tested for sensitivity to changes in the underlying parameters. 5. AVERAGE ANNUAL RETURNS AND BENCHMARK The average annual returns measurement and performance against relevant benchmark indices of the Funds are set out on pages 36 to 47 of the Funds Performance Report. 6. INVESTMENT INFOATION The details of investments and market values of investment holdings as a percentage of net asset value of the Funds are set out on pages 60 to 76 of the Funds Performance Report. 7. COMPARATIVE PERFOANCE TABLE The details of the Funds net asset value, units in circulation, composition of the Funds investments by categories and industry sectors and the breakdown of the total annual returns of the Funds into capital growth and income distribution are set out on pages 48 to 59 of the Funds Performance Report. 8. COMPARATIVES There are no comparative figures for Manulife Dividend Fund and Manulife Asia-Pacific REIT Fund as this is the first set of financial information prepared for both Funds since the launch date on 3 July ANNUAL REVIEW 2016 MANULIFE INVESTMENT-LINKED FUNDS 94

97 STATEMENT BY MANAGER

98 STATEMENT BY MANAGER We, Dato Md Agil bin Mohd Natt and Mark Steven O Dell, being two of the Directors of Manulife Insurance Berhad ( the Manager ), do hereby state that, in the opinion of the Manager, the accompanying financial information of Manulife Investment-Linked Funds, which consists of Equity Fund, Managed Fund, Dana Ekuiti Dinamik, Income Fund, Manulife Flexi Invest Fund, Manulife China Value Fund, Manulife Emerging Eastern Europe Fund, Manulife Asian Small Cap Growth Fund, Manulife Progress Fund, Manulife Dividend Fund and Manulife Asia-Pacific REIT Fund set out on pages 77 to 94 have been prepared in accordance with the accounting policies described in Note 3 to the financial information and the Guidelines on Investment-Linked Insurance/Takaful Business issued by Bank Negara Malaysia. On behalf of the Manager, DATO MD AGIL BIN MOHD NATT DIRECTOR MARK STEVEN O DELL DIRECTOR Kuala Lumpur 26 March 2018 ANNUAL REVIEW 2016 MANULIFE INVESTMENT-LINKED FUNDS 96

99 INDEPENDENT AUDITORS REPORT

100 INDEPENDENT AUDITORS REPORT Independent auditors report to the policyholders of Equity Fund, Managed Fund, Dana Ekuiti Dinamik, Income Fund, Manulife Flexi Invest Fund, Manulife China Value Fund, Manulife Emerging Eastern Europe Fund, Manulife Asian Small Cap Growth Fund, Manulife Progress Fund, Manulife Dividend Fund and Manulife Asia-Pacific REIT Fund of Manulife Insurance Berhad (Incorporated in Malaysia) Report on the Audit of the Financial Information Opinion We have audited the financial information of Equity Fund, Managed Fund, Dana Ekuiti Dinamik, Income Fund, Manulife Flexi Invest Fund, Manulife China Value Fund, Manulife Emerging Eastern Europe Fund, Manulife Asian Small Cap Growth Fund, Manulife Progress Fund, Manulife Dividend Fund and Manulife Asia-Pacific REIT Fund of Manulife Insurance Berhad ( the Funds ), which comprise the statements of assets and liabilities as at 31 December 2017, and the statements of income and expenditure and statements of changes in net asset value for the year/period then ended, and a summary of significant accounting policies, as set out on pages 77 to 94. In our opinion, the accompanying financial information of the Funds for the year/period ended 31 December 2017 are prepared, in all material respects in accordance with the accounting policies as described in Note 3 to the financial information and the Guidelines on Investment-linked Insurance/ Takaful Business issued by Bank Negara Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Information section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter We draw attention to Note 2 to the financial information of the Funds, which describes the basis of accounting. The financial information of the Funds are prepared to assist the Funds in complying with the Guidelines on Investment-linked Insurance/Takaful Business issued by Bank Negara Malaysia. As a result, the financial information of the Funds may not be suitable for another purpose. Our report is intended solely for the policyholders of the Funds, as a body and should not be distributed to or used by parties other than the policyholders of the Funds. Our opinion is not modified in respect of this matter. Independence and Other Ethical Responsibilities We are independent of the Funds in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ( By-Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 98

101 INDEPENDENT AUDITORS REPORT (CONTINUED) Independent auditors report to the policyholders of Equity Fund, Managed Fund, Dana Ekuiti Dinamik, Income Fund, Manulife Flexi Invest Fund, Manulife China Value Fund, Manulife Emerging Eastern Europe Fund, Manulife Asian Small Cap Growth Fund and Manulife Progress Fund of Manulife Insurance Berhad (continued) (Incorporated in Malaysia) Report on Audit of the Financial Information (continued) Information Other than the Financial Information and Auditors Report Thereon The directors of the Manager ( the directors ) are responsible for the other information. The other information comprises the information contained in the Annual Report of the Funds but does not include the financial information of the Funds and our auditors report thereon. Our opinion on the financial information of the Funds does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial information of the Funds, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial information of the Funds or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors of the Manager for the Financial Information The directors are responsible for the preparation of financial information of the Funds that give a true and fair view in accordance with the accounting policies as described in Note 3 to the financial information and the Guidelines on Investment-linked Insurance/Takaful Business issued by Bank Negara Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial information of the Funds that are free from material misstatement, whether due to fraud or error. In preparing the financial information of the Funds, the directors are responsible for assessing the Funds ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Funds or to cease operations, or have no realistic alternative but to do so. Auditors Responsibilities for the Audit of the Financial Information Our objectives are to obtain reasonable assurance about whether the financial information of the Funds as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 99

102 INDEPENDENT AUDITORS REPORT (CONTINUED) Independent auditors report to the policyholders of Equity Fund, Managed Fund, Dana Ekuiti Dinamik, Income Fund, Manulife Flexi Invest Fund, Manulife China Value Fund, Manulife Emerging Eastern Europe Fund, Manulife Asian Small Cap Growth Fund and Manulife Progress Fund of Manulife Insurance Berhad (continued) (Incorporated in Malaysia) Report on Audit of the Financial Information (continued) material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial information. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial information of the Funds, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Funds ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial information of the Funds or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Funds to cease to continue as a going concern. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Ernst & Young AF: 0039 Chartered Accountants Brandon Bruce Sta Maria No /09/2019 J Chartered Accountant Kuala Lumpur, Malaysia 26 March 2018 ANNUAL REVIEW 2017 MANULIFE INVESTMENT-LINKED FUNDS 100

103 MENGENAI MANULIFE MALAYSIA Manulife Insurance Berhad, merupakan anak syarikat milik penuh Manulife Holdings Berhad dan ahli Manulife Financial Corporation yang berpangkalan di Kanada. Kami telah bertapak di Malaysia selama lebih 54 tahun dan disenaraikan di KLSE pada Setakat 31 Disember 2017, aset di bawah pengurusan kami berjumlah lebih 10 bilion. Menerusi anak-anak syarikatnya, Kumpulan Manulife menawarkan rangkaian produk dan perkhidmatan perlindungan kewangan dan pengurusan kekayaan yang terpelbagai untuk memenuhi keperluan pelanggan yang berbeza.