1 General Information 1. 2 Manager s Report 2. 3 Policy On Stockbroking Rebates And Soft Commissions 8. 4 Statement By The Manager 9

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2 CONTENTS PAGE 1 General Information 1 2 Manager s Report 2 3 Policy On Stockbroking Rebates And Soft Commissions 8 4 Statement By The Manager 9 5 Trustee s Report 10 6 Statement Of Comprehensive Income 11 7 Statement Of Financial Position 12 8 Statement Of Changes In Equity 13 9 Statement Of Cash Flows Summary Of Significant Accounting Policies Notes To The Financial Statements Corporate Information 43 i

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

5 2 MANAGER S REPORT 2.1 FUND PERFORMANCE For the six months financial period ended 31 October 2017, the Fund s return increased by 2.56%. The Fund outperformed its benchmark return, MDI, which decreased by 0.04%. The outperformance was mainly due to the Fund s selection of stocks in Financials, Consumer Products, Construction and Plantation sectors. Allocation in Technology and foreign markets also added value to the fund performance during the period. The gross distribution of 1.60 sen per unit on 27 October 2017 had the effect of reducing the NAV per unit of the Fund; and the ex-distribution NAV per unit was RM The graph below compares the 6-month performance of the Fund against its benchmark return: 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.0% -0.5% -1.0% Apr 17 Fund Performance vs. Benchmark Index Return May 17 Jun 17 Jul 17 Manulife Investment Dividend Fund Return Source: Lipper, Bloomberg L.P. & Morningstar Fund Size Aug 17 Sep 17 Oct 17 Benchmark Index Return The Fund s total NAV increased to RM205.71mil from RM198.01mil during the six months financial period under review. Fund s Returns (a) The graph below compares the 5-year performance of the Fund against its benchmark return: 50% 40% 30% 20% 10% 0% -10% Oct 12 Feb 13 Jun 13 Fund Performance vs. Benchmark Index Return Oct 13 Feb 14 Jun 14 Oct 14 Feb 15 Jun 15 Manulife Investment Dividend Fund Return Source: Lipper, Bloomberg L.P. & Morningstar Oct 15 Feb 16 Jun 16 Oct Feb Jun Oct 17 Benchmark Index Return 2

6 (b) Average Total Return of the Fund: For the financial period ended 31 October 2017 Fund (% p.a.) MDI (% p.a.) 1 year years 4.07 (0.34) 5 years Commencement date: 28 March 2006 Source: Lipper, Bloomberg L.P. & Morningstar (c) Annual Total Return of the Fund: For the financial period ended: Fund (% p.a.) MDI (% p.a.) 31 October October October 2015 (1.31) (8.77) 31 October October Commencement date: 28 March 2006 Source: Lipper, Bloomberg L.P. & Morningstar BASES OF CALCULATION 1. Net Asset Value (NAV) Net Asset Value of the Fund is determined by deducting the value of all the Fund s liabilities from the value of all the Fund s assets, at the valuation point. 2. Net Asset Value per unit Net Asset Value per unit is the net asset value of the Fund divided by the total number of units in circulation, at the valuation point. 3. Fund s Return Fund s return can be calculated based on the computation methods as follows: Daily Total Fund s Return = {[End NAV (Ex-distribution) - Beginning NAV + Dividend Distribution] / Beginning NAV} x 100% Total Fund s Return Average Total Return = Total Fund s return for the period is derived from geometrically linking together the daily total fund s returns. The linking formula is = [(1+ R 1 ) x (1+ R 2 ) x (1+ R n )] -1 where: R 1 is the first daily return for the period, R 2 is the second daily return for the period, and R n is the last daily return for the period. = Annualised Total Return (Actual number of days in a year/ [(1+ Total fund s return for the period) number of days during the period) -1] x 100% 3

7 The following table shows other financial and performance data of the Fund for the past three financial periods: Fund Data 31 October October October 2015 NAV (RM) 205,713, ,180, ,208,964 Units in Circulation ( 000) 593, , ,615 NAV per unit (RM per unit) Highest / Lowest NAV (RM per unit) Total Fund Return (%) NAV Return (%) Income Return (%) Final Distribution Gross (RM) Net (RM) Ex-date / * 2.56 (1.98) / / (3.09) (3.09) - Management Expenses Ratio (%) Portfolio Turnover Ratio (times) * Ex-NAV NOTES (i) Management Expenses Ratio (MER) MER can be calculated based on the ratio of the sum of fees and the recovered expenses of the unit trust fund to the average value of the unit trust fund calculated on a daily basis. Fees of the unit trust fund + Recovered expenses of the unit trust fund Average value of the unit trust fund calculated on a daily basis x 100 Where: Fees Recovered expenses Average value of the unit trust fund = All ongoing fees deducted / deductible directly from the unit trust fund in respect of the period covered by the management expense ratio, expressed as a fixed amount, calculated on a daily basis. This would include the annual management fee, the annual trustee fee and any other fees deducted / deductible directly from the unit trust fund; = All expenses recovered from/ charged to the unit trust fund, as a result of the expenses incurred by the operation of the unit trust fund, expressed as a fixed amount. This should not include expenses that would otherwise be incurred by an individual investor (e.g. brokerage, taxes and levies); and = The NAV of the unit trust fund, including unit trust net income value of the fund, less expenses on an accrued basis, in respect of the period covered by the management expense ratio, calculated on a daily basis. The MER for the financial period remains fairly consistent with the previous financial period. 4

8 (ii) Portfolio Turnover Ratio (PTR) PTR can be calculated based on the ratio of the average sum of acquisitions and disposals of the Shariah-compliant unit trust fund for the year to the average value of the unit trust fund for the year calculated on a daily basis [Total acquisitions of the fund for the year + Total disposals of the fund for the year]/2 Average value of the unit trust fund calculated on a daily basis The PTR for the financial period remains consistent with previous financial period. The table below show the impact on NAV arising from distribution distributed for the six months financial period: Cum date Details 26 October 2017 NAV before distribution (RM per unit) Less: Distribution (RM per unit) (0.0160) NAV after distribution (RM per unit) The Manager wishes to highlight that past performance of the Fund is not an indication of future performance. The price of units and the investment returns may go down, as well as up. 2.2 Asset Allocation Asset allocation for the past three financial periods: Sector Allocation 31 October 2017 % of Net Asset Value 31 October October 2015 Trading/Services Finance Construction Infrastructure Project Companies Industrial Products Real Estate Investment Trusts (REITs) Consumer Products Plantation Technology Properties Quoted Investments - Local Quoted Investments - Foreign Money Market CIS Deposits With Licensed Financial Institutions Other Assets & Liabilities (2.26) 5

9 Country Allocation 31 October 2017 % of Net Asset Value 31 October October 2015 Hong Kong/China South Korea Indonesia Singapore Taiwan Total Quoted Investments-Foreign As at 31 October 2017, the Fund was 75.27% invested in Malaysian equities, 17.07% in foreign equities and 7.66% in cash instruments. The Fund s allocation, by sectors, saw notable increases in the finance, construction, technology and foreign equities. Allocations were reduced in the trading/services, consumer products, plantation and properties sectors. As for foreign investments, it was largely invested in North Asia such as Hong Kong/China and South Korea. 2.3 MARKET REVIEW During the six months financial period under review (1st May 2017 to 31st October 2017), global markets were affected by geopolitical tensions, starting with Syria and North Korea, and uncertainties from the French elections. However, these concerns were later shrugged off as the French elections concluded favourably. The optimism continued with encouraging gross domestic product (GDP) growth numbers from the major economies, which was soon followed by the US Federal Reserve hiking its interest rate target for the second time in June 2017 by 25bp to 1.25%, and announcing its intention to reduce its USD4.5t balance sheet. Market volatility spiked in July on escalating tensions between the US and North Korea. However, each pullback was met with a strong rebound as positive global economic data, the European Central Bank s (ECB) increasing confidence in the European economy, and expectations of President Donald Trump s tax plan helped to bolster investor sentiment. For Malaysia, it saw the cancellation of RHB Bank and AMMB s proposed merger. This was followed by an uninspiring 2Q 2017 results reporting season, with the large caps generally in line with expectations. The later part of the period saw several tailwinds emerging, which helped to further support global markets. The ECB continued to issue positive statements on the European economy, while the US posted a strong 3Q GDP growth and favourable corporate earnings results, along with increasing hype on Trump s tax reform. From Asia, China s Communist Party Congress concluded with President Xi Jinping strengthening his position at the top as General Secretary of the Party for another term. In addition, Abe s victory in the Japanese elections added more to the bullish sentiment. Malaysia however bucked the global trend, with its equity market down from a lack of fresh catalysts. The 2018 Budget announcement failed to excite as it came in generally in line with expectations. For the period under review, the FBM KLCI registered a negative return of 1.14%. The broader markets were mixed versus the FBM KLCI, with the FBM Mid 70 and Small Cap index returning 2.61%, and -1.29% respectively. 6

10 2.4 MARKET OUTLOOK AND INVESTMENT STRATEGY MANULIFE INVESTMENT The global upswing in economic activity is turning more favourable, with increasingly more robust organisation for economical co-operation and development (OECD) world manufacturing and consumer confidence. The US economic growth remains resilient despite the ongoing political noise. US activity surprise index surge with better-than-expected unemployment rate and higher Institute of dupply management (ISM) Non-Manufacturing. Growth in manufacturing remains steady, fuelled by consumer spending and business environment. Eurozone continues to expand at a solid pace with robust Purchasing Managers Index (PMI) surveys and consistent with higher GDP growth. Political jitters may set in again in 2018 as Italian elections must be held before May Similarly in China, the overall macro trend remains stable despite soft exports and industrial production data. Equities continue to benefit from the stabilisation of the Chinese economy, with growth remains promising supported by ongoing modest fiscal expansion. The malaysian economy will continue to see strong external demand and infrastructure spending to support growth. Current market valuations seem undemanding, and earnings forecast are likely at the end of the downgrade cycle. Stronger economic growth and turning around in earnings momentum are key catalysts for potential market re-rating. Our preference for equities is driven by earnings growth revisions as most global economies are in expansion mode. We will maintain our focus on companies that demonstrates growth and consistent cash flows, and at the same time still trade at attractive valuations. 2.5 BREAKDOWN OF UNIT HOLDINGS BY SIZE AS AT 31 OCTOBER 2017 The following table presents the distribution of the Fund s unit holders according to size of unit holdings: Size of Holdings No. of Unit Holders % No. of Units Held ( 000) % 5,000 and below , ,001 to 10,000 1, , ,001 to 50,000 4, , ,001 to 500,000 2, , Above 500, , Manager s stock Total 9, ,

11 3 POLICY ON STOCKBROKING REBATES AND SOFT COMMISSIONS The Management Company did not retain any rebates. For the six months financial period ended 31 October 2017, the Manager and its Fund Manager did not receive any rebates or soft commissions. 8

12 4 STATEMENT BY THE MANAGER MANULIFE INVESTMENT We, Chong Soon Min and Wong Boon Choy, being two of the Directors of Manulife Asset Management Services Berhad (the Manager ), do hereby state that, in the opinion of the Manager, the unaudited financial statements comprising the statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows, summary of significant accounting policies and notes to the financial statements, are drawn up in accordance with the provisions of the Deeds and give a true and fair view of the financial position of the Fund as at 31 October 2017 and of its financial performance, changes in equity and cash flows of the Fund for the six months financial period ended 31 October 2017 in accordance with the Malaysian Financial Reporting Standards ( MFRS ) and the International Financial Reporting Standards ( IFRS ). For and on behalf of the Manager MANULIFE ASSET MANAGEMENT SERVICES BERHAD CHONG SOON MIN Director WONG BOON CHOY Director Kuala Lumpur 18 December

13 5 TRUSTEE S REPORT TO THE UNIT HOLDERS OF MANULIFE INVESTMENT We have acted as Trustee of Manulife Investment Dividend Fund ( the Fund ) for the financial period ended 31 October To the best of our knowledge, Manulife Asset Management Services Berhad ( the Management Company ), has operated and managed the Fund in accordance with the following: a) limitations imposed on the investment powers of the Management Company and the Trustee under the Deeds, the Securities Commission s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws; b) valuation/pricing is carried out in accordance with the Deeds and any regulatory requirements; and c) creation and cancellation of units are carried out in accordance with the Deeds and any regulatory requirements. During this financial period, a total distribution of 1.60 sen per unit (gross) has been distributed to the unit holders of the Fund. We are of the view that the distribution is not inconsistent with the objective of the Fund. For HSBC (Malaysia) Trustee Berhad Tan Bee Nie Head, Trustee Operations Kuala Lumpur 18 December

14 6 STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2017 INVESTMENT INCOME Note Interest income 227, ,641 Gross dividend income 3,474,405 3,259,887 Net gain on financial assets at fair value through profit or loss 6 2,306,109 3,326,869 Net foreign currency exchange gain 1,106,598 65,543 RM RM 7,114,362 7,017,940 EXPENSES Manager s fee 3 1,531,852 1,375,353 Trustee s fee 4 61,274 55,077 Auditors remuneration 3,277 3,342 Tax agent s fee 1,361 1,361 Other expenses 159, ,631 Transaction costs 137, ,763 1,894,160 1,679,527 PROFIT BEFORE TAXATION 5,220,202 5,338,413 TAXATION 5 (158,504) (23,112) PROFIT AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME 5,061,698 5,315,301 Profit after taxation is made up as follows: Realised 3,955,100 2,378,798 Unrealised 1,106,598 2,936,503 5,061,698 5,315,301 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 11

15 7 STATEMENT OF FINANCIAL POSITION AS AT 31 OCTOBER 2017 ASSETS Note RM RM Financial assets at fair value through profit or loss 6 189,973, ,143,317 Amount due from Manager 9,605,817 1,864,778 Amount due from stockbrokers 295,847 34,092 Dividends receivable 726, ,961 Tax recoverable - 277,346 Cash and cash equivalents 7 17,584,281 22,455,620 TOTAL ASSETS 218,186, ,030,114 LIABILITIES Amount due to Manager - Manager s fee 259, ,546 - Cancellation of units 18,030 - Amount due to Trustee 10,362 9,432 Amount due to stockbrokers 3,084, ,047 Other payables 8 46,250 54,416 Distribution payable 9,054,160 - TOTAL LIABILITIES 12,472, ,441 NET ASSET VALUE ( NAV ) OF THE FUND 205,713, ,180,673 EQUITY Unit holders capital 159,625, ,171,292 Retained earnings 46,088,231 45,009, ,713, ,180,673 NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 2 205,713, ,180,673 NUMBER OF UNITS IN CIRCULATION 9 593,545, ,775,000 NAV PER UNIT The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 12

16 8 STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2017 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 MAY ,915,891 48,097, ,013,359 Movement in unit holders contribution: Creation of units arising from applications 10,753,342-10,753,342 Creation of units arising from distribution 8,936,426-8,936,426 Cancellation of units (7,997,212) - (7,997,212) Total comprehensive income - 5,061,698 5,061,698 Distribution (Note 15) (1,983,225) (7,070,935) (9,054,160) BALANCE AS AT 31 OCTOBER ,625,222 46,088, ,713,453 Unit holders Retained capital earnings Total RM RM RM BALANCE AS AT 1 MAY ,199,028 39,694, ,893,108 Movement in unit holders contribution: Creation of units 18,571,874-18,571,874 Cancellation of units (14,599,610) - (14,599,610) Total comprehensive income - 5,315,301 5,315,301 BALANCE AS AT 31 OCTOBER ,171,292 45,009, ,180,673 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 13

17 9 STATEMENT OF CASH FLOWS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2017 Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Purchase of investments (23,745,406) (26,473,953) Sale of investments 22,213,344 19,115,617 Net realised foreign exchange (loss)/gain (77,521) 128,198 Dividends received 2,969,027 3,125,945 Interest income received 227, ,640 Manager s fee paid (1,605,339) (1,360,368) Trustee s fee paid (64,214) (54,477) Audit fee paid (7,441) - Payment for other fees and expenses (57,841) (111,329) Net cash used in operating activities (148,141) (5,264,727) CASH FLOWS FROM FINANCING ACTIVITIES Distribution paid (14,009,355) (12,591,077) Proceeds from creation of units 24,646,869 30,088,452 Payments for cancellation of units (8,043,952) (14,739,200) Net cash generated from financing activities 2,593,562 2,758,175 Net increase/(decrease) in cash and cash equivalents 2,445,421 (2,506,552) Currency translation differences (44,615) 93,615 Cash and cash equivalents at the beginning of the financial period 15,183,475 24,868,557 Cash and cash equivalents at the end of the financial period 7 17,584,281 22,455,620 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 14

18 10 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER 2017 The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements. The policies have been consistently applied to all the financial years presented, unless otherwise stated. A BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The unadited financial statements of the Fund have been prepared in accordance with the Malaysian Financial Reporting Standards ( MFRS ) and the International Financial Reporting Standards ( IFRS ). The financial statements have been prepared under the historical cost convention, as modified by financial assets at fair value through profit or loss. The preparation of financial statements in conformity with MFRS and IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires the Manager to exercise judgement in the process of applying the Fund s accounting policies. Although these estimates and judgement are based on the Manager s best knowledge of current events and actions, actual results may differ. There are no significant areas of judgement or complexity that have significant effect on the amounts recognised in the financial statements. There are no critical accounting estimates and assumptions used in the preparation of the financial statements of the Fund for the six months financial period ended 31 October The Fund has applied the following amendments for the first time for the financial year beginning 1 November 2016: Amendments to MFRS 101 Presentation of financial statements- Disclosure initiative Amendments to MFRS 10, 12 & 128 Investment entities - Applying the consolidation exception Annual improvements to MFRS Cycle There were no significant impact to other accounting policies of the Fund as a result of the above mentioned. The following are standards, amendments to published standards and interpretations to the existing standards that are applicable to the Fund but not yet effective and have not been early adopted by the Fund. Financial year beginning on/after 1 November 2017 Amendments to MFRS 107 Statement of Cash Flows - Disclosure Initiatives (effective from 1 January 2017) introduce an additional disclosure in changes in liabilities arising from financing activities. The Fund will apply this standard when effective. This standard is not expected to have a significant impact on the Fund's financial statements. Financial year beginning on/after 1 November 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. 15

19 MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investment in equity instruments is always measured at fair value through profit or loss with a irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in OCI rather than the income statement, unless this creates an accounting mismatch. MFRS 9 introduces an expected credit losses model on impairment for all financial assets that replaces the incurred loss impairment model used in MFRS 139. The expected credit losses model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The Fund will apply the standard when effective. This standard is not expected to have a significant impact on the Fund s financial statements. B (i) FINANCIAL ASSETS AND FINANCIAL LIABILITIES Classification The Fund classifies its financial assets in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial assets at fair value through profit or loss Financial assets are designated at fair value through profit or loss when they are managed principally for the purposes of selling or repurchasing in the near term and their performance are evaluated on a fair value basis. The Fund designates its investment in quoted investments as financial assets at fair value through profit or loss at inception. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Fund s loans and receivables comprise amount due from Manager, amount due from stockbrokers, dividends receivable, tax recoverable,cash and cash equivalents in the statement of financial position. Other financial liabilities The Fund classifies amount due to Manager, amount due to Trustee, amount due to stockbrokers, other payables, and distribution payable as other financial liabilities. 16

20 (ii) Recognition and initial measurement Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Fund commits to purchase or sell the assets. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss. Financing and receivables are initially recognised at fair value plus transaction costs. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. (iii) Subsequent measurement - gains and losses Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss are included in the profit or loss in the financial period which they arise. Loan and receivables are subsequently carried at amortised cost using the effective interest rate method. (iv) Subsequent measurement - impairment of financial assets The Fund assesses at the end of the reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the Fund uses to determine that there is objective evidence of an impairment loss include indications that the obligor is experiencing significant financial difficulty, high probability that the obligor will enter bankruptcy or other distressed financial reorganisation and events that would adversely affect the financial capability of the obligor. The amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If loans and receivables has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Fund may measure impairment on the basis of an instrument s fair value by using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment is recognised (such as an improvement in the debtor s/issuer s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss. When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined. (v) De-recognition Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership. Financial liabilities are de-recognised when they are extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or has expired. 17

21 C CREATION AND CANCELLATION OF UNITS The Fund issues cancellable units, which are cancelled at the unit holder s option and are classified as equity. Cancellable units can be put back to the Fund at any time for cash equal to a proportionate share of the Fund s net asset value. The outstanding unit is carried at the redemption amount that is payable at the date of the statement of financial position if the unit holder exercises the right to put the unit back to the Fund. Units are created and cancelled at the unit holder s option at prices based on the Fund s net asset value per unit at the time of creation and cancellation. The Fund s net asset value is calculated by dividing the net assets attributable to unit holders with the total number of outstanding units. The net asset value per unit is computed each dealing day. The price at which units are created or cancelled is calculated by reference to the net asset value per unit as at the close of business on the relevant dealing day. Units in the Fund are classified as equity in the statement of financial position and are stated at fair value representing the price at which unit holders can redeem the units from the Fund. D INCOME RECOGNITION Interest income from deposits placed with licensed financial institution is recognised on an accrual basis using the effective interest rate method. Dividend income from quoted investments is recognised on the ex-dividend date. Realised gains or losses on sale of quoted investments are accounted for as the difference between the net disposal proceeds and the carrying amount of the investments, determined on a weighted average cost basis. E EXPENSES Expenses are accounted for on an accrual basis and charged to the statement of comprehensive income. Expenses arising from net disposal of investments are recognised as transaction costs (Note L to the financial statements). F AMOUNT DUE FROM /TO STOCKBROKERS Amount due from and to stockbrokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the statement of financial position date respectively. These amounts are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment for amount due from stockbrokers. A provision for impairment of amount due from a stockbroker is established when there is objective evidence that the Fund will not be able to collect the amount due from the relevant stockbroker. Significant financial difficulties of the stockbroker, probability that the stockbroker will enter bankruptcy or financial reorganisation, and default in payments are considered indicators that the amount due from the stockbroker is impaired. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest to discount the future cash flows for the purpose of measuring the impairment loss. The effective interest rate method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or, when appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Fund estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. 18

22 G CASH AND CASH EQUIVALENTS For the purpose of statement of cash flows, cash and cash equivalents comprise cash at bank and deposits held in highly liquid investments that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value. H DISTRIBUTION A distribution to the Fund s unit holders is accounted for as a deduction from realised reserve. A proposed distribution to unit holders is recognised in the statement of changes in equity upon approval by the Trustee. Distribution equalisation is the amount attributable to net realised income that is included in the price of units created or units cancelled by the Fund during the reporting period. I CURRENCY TRANSLATION The financial statements are presented in Ringgit Malaysia, which is the Fund s functional and presentation currency. Transactions in foreign currencies during the financial period are converted to Ringgit Malaysia at rate of exchange ruling at transaction dates. Assets and liabilities denominated in foreign currencies at the date of the statement of financial position are translated into Ringgit Malaysia at the rate of exchange approximating those ruling on that date. Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are included in the statement of comprehensive income. J FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants and the measurement date. The information presented herein represents the estimates of fair value as at the date of the statement of financial position. Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the uncertainties and assumptions could materially affect these estimates and the resulting fair value estimates. A range of methodologies and assumptions has been used in deriving the fair values of the Fund s financial instruments as at the date of statement of financial position. The total fair value of each financial instrument is not materially different from the total carrying value. The fair values are based on the following methodologies and assumptions: (a) Short-term deposits with financial institutions For deposits and placements with financial institutions with maturities of less than three months, the carrying value is a reasonable estimate of fair value. For deposits and placements with maturities of three months and above, the estimated fair value is based on discounted cash flows by using prevailing interbank money market interest rates at which similar deposits and placements would be made with financial institutions of similar credit risk and remaining period to maturity. 19

23 (b) Quoted investments The estimated fair value is based on quoted and observable market prices. (c) Other short-term financial instruments Other short-term financial instruments comprise amount due from/to Manager, amount due from/to stock brokers, dividends receivable,amount due to Trustee,distribution payable and other payables. The carrying values of the assets and liabilities are assumed to approximate their fair values due to the short tenure of less than one year. K TAXATION Current tax expense is determined according to the tax laws in the jurisdictions of the taxable profit earned during the financial period from the financial assets in which the Fund invests and includes all taxes based upon the taxable profit. L TRANSACTION COSTS Transaction costs are costs incurred to acquire or dispose of financial assets or liabilities at fair value through profit or loss. They include fees and commissions paid to agents, advisors, brokers and dealers. Transaction costs, when incurred, are immediately recognised in the statement of comprehensive income as expenses. M SEGMENT REPORTING Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic asset allocation committee of the Manager that makes the strategic decisions. 20

24 11 NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS FINANCIAL PERIOD ENDED 31 OCTOBER INFORMATION ON THE FUND Manulife Investment Dividend Fund ( the Fund ) was established pursuant to a Master Deed dated 31 January 2002, as amended and supplemented by subsequent Supplemental Deeds (hereinafter referred to as the Deed ) between Manulife Asset Management Services Berhad ( the Manager ) and HSBC (Malaysia) Trustee Berhad ( the Trustee ). The principal activity of the Fund is to invest in Investments as defined under Clause 1 of the Deed, which includes stocks and securities of companies listed on Bursa Malaysia Berhad and foreign securities listed on any recognised Stock Exchange(s) subject to approval by Bank Negara Malaysia and the Securities Commission, unlisted securities of a Malaysian issuer, deposits with financial institutions, quoted and unquoted fixed income securities. The Fund commenced operations on 28 March 2006 and will continue its operations until terminated as provided under Clause 48.2 of the Deed. The main objective of the Fund is to provide a steady recurring income that is potentially higher than prevailing fixed deposit rates. At the same time, the Fund also attempts to attain medium- to long-term capital appreciation. The Manager of the Fund, a company incorporated in Malaysia, is a wholly-owned subsidiary of Manulife Holdings Berhad, a public limited liability company, incorporated and domiciled in Malaysia, and listed on the main market of Bursa Malaysia. Its principal activities are the management of unit trusts, private retirement schemes, fund management activities and financial planning. The financial statements were authorised for issue by the Board of Directors of the Manager in accordance with a resolution of the Directors on 18 December NET ASSETS ATTRIBUTABLE TO UNITHOLDERS The net assets attributable to unit holders meet the definition of puttable instruments classified as equity instruments under MFRS 132 Financial Instruments: Presentation. The units in the Fund are puttable instruments which entitle the unit holders to a pro-rata share of the net assets of the Fund. The units are subordinated and have identical features. There is no contractual obligation to deliver cash or another financial asset other than the obligation on the Fund to repurchase the units. The total expected cash flows from the units in the Fund over the life of the units are based on the change in the net assets of the Fund. 3 MANAGER S FEE In accordance with the Deed, the Manager is entitled to Manager s fee at a rate of 1.50% per annum of the net asset value of the Fund before deducting Trustee s fee and Manager s fee for the day, calculated on a daily basis. There will be no further liability to the Manager in respect of Manager s fee other than the amount recognised above. 4 TRUSTEE'S FEE In accordance with the Deed, the Trustee is entitled to a fee of 0.06% per annum of the net asset value of the Fund before deducting Trustee s fee and Manager s fee for the day, calculated on a daily basis. There will be no further liability to the Trustee in respect of Trustee s fee other than the amount recognised above. 21

25 5 TAXATION RM RM Current taxation 158,504 23,112 Numerical reconciliation between profit before taxation multiplied by the Malaysian statutory tax rate and tax expenses of the Fund is as follows: RM RM Profit before taxation 5,220,202 5,338,413 Tax calculated at Malaysian tax rate of 24% (2016: 24%) 1,252,848 1,281,219 Tax effect in respect of: - Expenses not deductible for tax purposes 83,170 69,680 - Restriction on tax deductible expenses for unit trust funds 371, ,406 - Investment income not subject to tax (1,400,299) (1,638,157) - Investment loss/(income) subject to different tax rate 116,940 (7,305) - Effect of foreign taxable income (265,584) (15,731) Tax expenses 158,504 23,112 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS RM RM Designated at fair value through profit or loss - Quoted investments - Local ( Note 6 (a)) 154,848, ,714,624 - Quoted investments- Foreign (Note 6 (b)) 35,125,022 15,383,829 - Collective investment scheme ( Note 6 (c)) - 1,044, ,973, ,143,317 Net gain on financial assets at fair value through profit or loss Realised 1,154, ,981 - Unrealised 1,151,214 2,842,888 RM RM 2,306,109 3,326,869 22

26 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (a) QUOTED INVESTMENTS - LOCAL QUOTED INVESTMENTS Quantity MAIN MARKET CONSTRUCTION Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % Gamuda Berhad 755,900 3,891,179 3,968, IJM Corporation Berhad 1,133,000 3,858,772 3,614, Protasco Berhad 889, ,473 1,013, WCT Holdings Berhad 1,223,420 2,037,569 2,030, ,001,620 10,744,993 10,627, CONSUMER PRODUCTS British American Tobbaco (Malaysia) Berhad 54,900 2,422,177 2,152, Nestle ( Malaysia ) Berhad 43,700 3,297,085 3,867, ,600 5,719,262 6,019, FINANCE Alliance Bank Malaysia Berhad 531,800 2,150,479 1,962, CIMB Group Holdings Berhad 1,868,065 11,645,522 11,469, Hong Leong Bank Berhad 261,952 3,670,097 4,175, Malayan Banking Berhad 1,106,018 10,244,692 10,230, Public Bank Berhad 597,100 10,680,575 12,216, ,364,935 38,391,365 40,055, INDUSTRIAL PRODUCTS APM Automotive Holdings Berhad 521,900 2,430,344 1,904, Petronas Chemical Group Berhad 266,700 1,831,002 1,965, SCGM Berhad 181, , , UCHI Technologies Berhad 1,461,040 2,469,810 4,266, U-Li Corporation Berhad 4,900 20,776 21, ,436,406 7,125,250 8,681,

27 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (a) QUOTED INVESTMENTS - LOCAL (CONTINUED) QUOTED INVESTMENTS Quantity Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % INFRASTRUCTURE PROJECT COMPANIES Digi.com Berhad 229, ,645 1,147, Lingkaran Trans Kota Holdings Berhad 491,200 1,538,537 2,893, Time Dotcom Berhad 478,600 1,886,585 4,393, YTL Power Treasury Berhad 1,161,576 1,720,840 1,510, ,360,776 6,048,607 9,943, PLANTATION IOI Corporation Berhad 225,700 1,020,548 1,006, Kuala Lumpur Kepong Berhad 159,200 3,724,154 3,916, ,900 4,744,702 4,922, PROPERTIES Glomac Berhad 4,652,700 4,350,296 3,047, REAL ESTATE INVESTMENT TRUSTS (REITs) Axis Real Estate Investment Trust 1,404,778 1,557,358 2,163, KLCC Real Estate Investment Trust 1,070,200 1,185,035 1,840, Sunway Real Estate Investment Trust 2,249,100 2,512,479 2,721, ,724,078 5,254,872 6,725, TECHNOLOGY Globetronics Technology Berhad 681,200 2,666,909 4,489, TRADING/SERVICES Astro Malaysia Holdings Berhad 772,700 2,056,318 2,171, Axiata Group Berhad 711,800 3,912,686 3,836, Bermaz Auto Berhad 813,700 1,659,712 1,659, Bintulu Port Holdings Berhad 331,000 2,126,274 1,962, Berjaya Sport Toto Berhad 430,185 1,731,873 1,036, Genting Malaysia Berhad 493,500 2,003,960 2,482, Genting Berhad 706,400 5,629,387 6,392, Magnum Berhad 585,100 1,602,569 1,023,

28 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (a) QUOTED INVESTMENTS - LOCAL (CONTINUED) QUOTED INVESTMENTS Quantity TRADING/SERVICES (CONTINUED) Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % Malakoff Corporation Berhad 964,700 1,594, , MISC Berhad 664,100 4,860,485 4,615, Pestech International Berhad 2,995,364 1,467,318 4,972, Sime Darby Berhad 950,143 8,636,699 8,741, Sunway Berhad 893,648 1,213,440 1,546, Tenaga Nasional Berhad 574,300 7,371,198 8,614, Telekom Malaysia Berhad 1,289,563 6,403,142 8,188, YTL Corporation Berhad 1,651,482 2,538,585 2,097, ,827,685 54,807,992 60,335, TOTAL QUOTED INVESTMENTS - LOCAL 38,532, ,854, ,848, (b) QUOTED INVESTMENTS - FOREIGN QUOTED INVESTMENTS Quantity HONG KONG CONSUMER DISCRETIONARY Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % Crystal International Group Limited 173, , , CONSUMER STAPLES Hengan International Group Co Ltd 99,000 2,955,581 4,129, ENERGY Petrochina Company Limited 304, , ,

29 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) QUOTED INVESTMENTS - FOREIGN (CONTINUED) QUOTED INVESTMENTS Quantity HONG KONG (CONTINUED) FINANCE Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % China Life Insurance Company Limited 144,000 1,948,440 2,015, Industrial & Commercial Bank of China Ltd 337, ,552 1,131, ,000 2,927,992 3,146, TECHNOLOGY Tencent Holdings Limited 21,000 2,342,164 3,984, TELECOMMUNICATIONS China Mobile Limited 93,500 4,688,477 3,973, China Unicom Hong Kong Ltd 476,000 2,511,431 2,860, ,500 7,199,908 6,834, UTILITIES China Petroleum & Chemical Corporation 310, , , INDONESIA CONSUMER PRODUCTS Surya Citra Media Tbk PT 1,663,100 1,623,896 1,115, TELECOMMUNICATIONS Telekomunikasi Indonesia Persero Tbk PT 2,098,200 2,744,363 2,637,

30 6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) (b) QUOTED INVESTMENTS - FOREIGN (CONTINUED) QUOTED INVESTMENTS Quantity SOUTH KOREA TECHNOLOGY Cost of shares Fair value as at Fair value as at expressed as percentage of value of Fund Units RM RM % Advanced Process Systems Corporation 15,463 3,183,511 2,248, WONIK IPS Co Ltd 27,895 2,499,931 3,829, ,358 5,683,442 6,078, UTILITIES Korea Electric Power Corporation 16,432 2,962,525 2,425, SINGAPORE CONSUMER PRODUCTS First Resources Limited 370,800 1,819,405 2,267, TOTAL QUOTED INVESTMENTS - FOREIGN 6,149,390 32,737,142 35,125, TOTAL INVESTMENTS 44,682, ,591, ,973, ACCUMULATED UNREALISED GAIN ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 17,382,073 TOTAL FAIR VALUE OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 189,973,463 27