MANULIFE INVESTMENT -CM FLEXI FUND CONTENTS PAGE 1 General Information 1 2 Manager’s Report 3 3 Policy On Stockbroking Rebates And So Commissions 9 4 Statement By The Manager 10 5 Trustee’s Report 11 6 Statement Of Comprehensive Income 12 7 Statement Of Financial Position 13 8 Statement Of Changes In Equity 14 9 Statement Of Cash Flows 15 10 Summary Of Signicant Accounting Policies 16 11 Notes To The Financial Statements 21 12 Corporate Information 36 MANULIFE INVESTMENT -CM FLEXI FUND 1 GENERAL INFORMATION 1.1 THE TRUST The Fund commenced operations on 23 January 2007 and will continue its operations until terminated as provided under Clause 48.2 of the Deed. 1.2 FUND TYPE / CATEGORY Growth / Mixed Assets 1.3 BASE CURRENCY Ringgit Malaysia (RM) 1.4 OBJECTIVE OF THE FUND The Fund seeks to provide Unit Holders with long-term capital appreciation. Note: Any material change to the Fund’s investment objective would require Unit Holders’ approval. 1.5 DISTRIBUTION POLICY Income distribution (if any) is incidental. 1.6 PERFORMANCE BENCHMARK 50% FTSE Bursa Malaysia Top 100 Index (FBM100) + 50% CIMB 12-month xed deposit (FD) rate. Note: The composite benchmark provides a balanced gauge on the asset allocation of the Fund which can invest up to 98% of its net asset value (NAV) in equities and/or equity-related instruments or xed income instruments. The composite benchmark is only used as a reference for performance gauge purpose. The risk prole of the Fund is not the same as the risk prole of this benchmark. The benchmark information is available in www.manulifeinvestment.com.my. 1.7 INVESTMENT STYLE AND STRATEGY The Fund invests in a diversied portfolio of equities and/or equity-related instruments as well as xed income instruments (which includes money market instruments). Liquid assets such as money market instruments and deposits (excluding structured deposits) are used to maintain liquidity position and as a short-term alternative should the equity or bond markets become extremely volatile. The Fund may invest in the investments directly or via Collective Investment Schemes (CISs). The Fund may invest up to 98% of its net asset value (NAV) in a single asset class of equities and/or equity-related instruments or xed income instruments. This allows the Fund the exibility to switch to equities and/or equity-related instruments when the stock market is bullish and to bonds and/or money market instruments when the stock market is bearish. At any one time, the asset mix may also comprise all asset classes. The Fund will maintain at least 2% of its NAV in liquid assets. In addition, any active and frequent trading strategy will depend on investment opportunities or valuations. Strategy on equities and/or equity-related instruments broadly consists of the following: (i) The portfolio’s asset allocation is determined by the Fund Manager’s macro view. A boom-up approach in the stock selection will then follow in determining exposure to certain sector(s) or theme(s). This process will include: • Identication of “growth” companies which have competitive advantages to support strong earnings prospects; and 1 MANULIFE INVESTMENT -CM FLEXI FUND • Screening for “value” which identies fundamentally sound companies whose stock prices have yet to reect such value. These would include those with aractive valuations relative to their industry peers and those trading at signicant discounts to their intrinsic/ book or replacement values. Focus will also be put on laggards and oversold stocks which have the potential to rebound. (ii) In addition to the quantitative factors included above, qualitative factors such as management strength and corporate governance will also be considered. Strategy on fixed income instruments: • Predominantly in short-term bonds, money market instruments and deposits (excluding structured deposits). The short-term nature of these investments allows the Fund Manager to easily switch to equities during conducive stock market or bullish periods. • For investment in bonds such as listed/ unlisted debt instruments issued by the Malaysian Government, its agencies, Bank Negara Malaysia (BNM) and Malaysian corporates, the Fund Manager takes a top-down approach for asset allocation and a boom-up approach for bond selection; looking for bonds with value, investing in bonds aer thorough credit evaluation and identifying the relative market value. The Fund may invest up to 25% of the Fund’s NAV in foreign equities and/or equity-related instruments of companies which are domiciled in/ listed in/ or have significant operations** in the Asia-Pacific region, including but not limited to Australia, China, Hong Kong, India, Indonesia, Japan, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam. **Significant operations means the revenue, earnings, production facilities, assets and/or investments of a company are based in/ derived from the Asia Pacific region. The level of significance will be determined by the Fund Manager on a case-by-case basis based on his/her research and judgement. During the six months financial period under review, the average total return of the Fund increased by 16.6%. 2 MANULIFE INVESTMENT -CM FLEXI FUND 2 MANAGER’S REPORT 2.1 FUND PERFORMANCE For the six months nancial period ended 30 September 2020, the average total return of the Fund increased by 16.6%. The Fund outperformed its benchmark return, which increased by 8.6% over the same period. The outperformance was due to the overweight in gloves and technology. The graph below compares the 6-month performance of the Fund against its benchmark return: Fund Performance vs. Benchmark Index Return 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Mar Apr May Jun Jul Aug Sep 20 20 20 20 20 20 20 Manulife Investment-CM Flexi Fund Return Benchmark Index Return Source: Bloomberg L.P. Fund Size The Fund’s total NAV decreased from RM28.94mil to RM25.36mil as at 30 September 2020. Fund Returns (a) The graph below compares the 5-year performance of the Fund against its benchmark return: Fund Performance vs. Benchmark Index Return 35% 30% 25% 20% 15% 10% 5% 0% -5% Jun-17 Jun-16 Jun-18 Jun-19 Sep-17 Dec-17 Sep-15 Sep-16 Sep-18 Sep-19 Dec-15 Dec-16 Dec-18 Dec-19 Mar-17 Mar-16 Mar-18 Mar-19 Jun-20 Sep-20 Mar-20 Manulife Investment-CM Flexi Fund Return Benchmark Index Return Source: Bloomberg L.P. 3 MANULIFE INVESTMENT -CM FLEXI FUND (b) Average Total Return of the Fund: Fund Benchmark For the nancial period ended 30 September 2020 (% p.a.) (% p.a.) 1 year (2.77) (0.14) 3 years 0.21 (0.57) 5 years 3.71 1.41 Commencement date: 13 February 2007 Source: Bloomberg L.P (c) Annual Total Return of the Fund: Fund Benchmark For the nancial period ended: (% p.a.) (% p.a.) 30 September 2020 (2.77) (0.14) 30 September 2019 (5.46) (3.84) 30 September 2018 9.47 2.36 30 September 2017 15.40 5.07 30 September 2016 3.33 3.83 Commencement date: 13 February 2007 Source: Bloomberg L.P BASES OF CALCULATION 1. Net Asset Value (NAV) Net Asset Value of the Fund is determined by deducting the value of all the Fund’s liabilities from the value of all the Fund’s assets, at the valuation point. 2. Net Asset Value per unit Net Asset Value per unit is the net asset value of the Fund divided by the total number of units in circulation, at the valuation point. 3. Fund’s Return The total Fund’s return comprises both NAV return and Income return. The returns can be calculated based on the computation methods as follows: Total Fund’s Return 100% = [(NAV Return*Series of Income Return)-1] x 100% NAV Return 100% = {[End NAV (Ex-distribution)/Beginning NAV]-1} x 100% Income Return = (Gross Distribution/Ex-NAV price) x 100% Average Total Return = (NAV Return*Series of Income Return) (365.25/n) x100 - 100, where n = number of days between beginning and end dates. 4 MANULIFE INVESTMENT -CM FLEXI FUND The following table shows other nancial and performance data of the Fund for the past three nancial periods: Fund Data 30 September 2020 30 September 2019 30 September 2018 NAV (RM) 25,358,840 28,941,063 37,428,923 Units in Circulation (’000) 127,972 131,680 154,280 NAV (RM per unit) 0.1982 0.2198 0.2426 Highest / Lowest NAV 0.2026 / 0.1680 0.2208 / 0.2158 0.2440 / 0.2228 (RM per unit) Total Fund Return (%) 16.59 3.92 3.54 NAV Return (%) 16.59 3.92 3.54 Income Return (%) - - - Management Expenses 0.86 0.86 0.86 Ratio (%) Portfolio Turnover Ratio 1.30 0.76 0.87 (times) NOTES (i) Management Expenses Ratio (MER) MER is computed based on the total fees and recovered expenses excluding transaction costs incurred by the unit trust fund divided by the average unit trust fund size calculated on a daily basis. Fees of the unit trust fund + Recovered expenses of the unit trust fund x 100 Average value of the unit trust fund calculated on a daily basis Where: Fees = All ongoing fees deducted / deductible directly from the unit trust fund in respect of the period covered by the management expenses ratio, expressed as a xed 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 fund; Recovered = All expenses recovered from/ charged to the unit trust fund, as a expenses result of the expenses incurred by the operation of the unit trust fund, expressed as a xed amount.