GROUP MANAGING DIRECTOR S STATEMENT 3 FUND PROFILE 4 GLOBAL AND LOCAL ECONOMIC REVIEW 8 EQUITY AND FIXED INCOME MARKET REVIEW 10

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2 CONTENTS Page GROUP MANAGING DIRECTOR S STATEMENT 3 FUND PROFILE 4 GLOBAL AND LOCAL ECONOMIC REVIEW 8 EQUITY AND FIXED INCOME MARKET REVIEW 10 MARKET OUTLOOK AND INVESTMENT STRATEGY 12 FUND PERFORMANCE REPORT 14 SOFT COMMISSION RECEIVED FROM BROKERS 28 STATEMENT BY DIRECTORS 29 REPORT OF THE AUDITORS 30 STATEMENTS OF ASSETS AND LIABILITIES AS AT 31 DECEMBER STATEMENTS OF ASSETS AND LIABILITIES AS AT 31 DECEMBER STATEMENTS OF INCOME AND EXPENDITURE FOR FINANCIAL YEAR ENDED 31 DECEMBER 2011 STATEMENTS OF INCOME AND EXPENDITURE FOR FINANCIAL PERIOD ENDED 31 DECEMBER 2010 STATEMENTS OF CHANGES IN NET ASSET VALUE FOR FINANCIAL YEAR ENDED 31 DECEMBER 2011 STATEMENTS OF CHANGES IN NET ASSET VALUE FOR FINANCIAL PERIOD ENDED 31 DECEMBER CASH FLOW STATEMENT FOR FINANCIAL YEAR ENDED 31 DECEMBER CASH FLOW STATEMENT FOR FINANCIAL PERIOD ENDED 31 DECEMBER NOTES TO THE FINANCIAL STATEMENTS 39 DETAILS OF INVESTMENTS 43 COMPARATIVE PERFORMANCE TABLE 53 P a g e 2

3 GROUP MANAGING DIRECTOR S STATEMENT In the Name of Allah, the Most Compassionate, the Most Merciful It is my great pleasure to present the 2011 Annual Report of Takaful Malaysia s Investment-Linked Funds consisting of the Ittizan (Balanced Fund), Istiqrar (Stable Capital Fund), Ihfaz Equity Index Fund, Ittihad Growth Fund, Istifad Blue Chips Fund, Irad Dividend Fund and Ihsan Balanced Fund for the year ended 31 December The year 2011 was a challenging year for the world economy as the United States (USA) suffered weaker than expected economic performance, Japan was hit by a devastating earthquake and Europe s sovereign debt crisis deepened. Despite these shocks, emerging market economies had demonstrated resilience, showing a steady growth path to recovery, well ahead of major developed countries which faced challenges of low growth, high unemployment, weak housing markets and mounting fiscal burdens. Against this backdrop, the International Monetary Fund (IMF) estimated the world economy to grow at a more moderate pace of 3.8% in 2011 after expanding at 5.2% in On the domestic front, the Malaysian economy continued to expand, albeit at a more modest pace of 5.1% in 2011 (7.2% growth in 2010), driven mainly by strong domestic demand. Continued pre-emptive and accommodative monetary stance adopted by Bank Negara Malaysia coupled with implementation of the government s initiatives such as Economic Transformation Programme (ETP), New Economic Model and the Budget 2011 had cushioned the impact of weaker economic growth in advanced economies. Nevertheless, on the financial market, amid adverse external uncertainties and massive sell-off of major and regional equity markets, the local bourse experienced greater volatility with the Bursa Malaysia s main benchmark for Shariah-compliant stocks, FTSE Bursa Malaysia Emas Shariah Index lost 1, points or 13.2% in the third quarter 2011 before bouncing back to register a modest gain of 2.41% in Despite the challenging investment landscape in 2011, all our funds continued to register encouraging growth in their net asset value per unit with the best performance led by Irad Dividend Fund with a return of 6.39% against its benchmark performance of 2.41%. This is followed by Ittizan (Balanced Fund) which had registered a return of 5.22%, outperforming their benchmark return of 2.56%. Similarly, our index tracker fund, Ihfaz Equity Index Fund also gained about 4.46%, outperforming its benchmark return of 2.41% during the same period under review. You may find out more about the funds information and financial performance in the following pages. In 2012, the global growth is expected to remain moderate as world investment and trade continue to expand, but at a slower pace. However, the challenges remain as possible escalation of the ongoing fiscal concerns in the advanced economies could add further strains to the international financial system and undermine the prospects for continued global growth. For Malaysia, although the current challenging external environment could present greater downside risks to its economic growth prospects for 2012, Malaysia s strong fundamental on the back of resilient domestic demand is expected to support its economic growth trajectory. Amidst the expected external uncertainties and market volatility in 2012, we shall continue to be prudent and vigilant in outlining the investment strategies for your funds to ensure their long-term investment objectives are met and at the same time investment risk and return is managed efficiently. Last but not least, we would like to express our utmost appreciation and gratitude for your continuous support for our Takaful Investment-Linked products mainly the newly launched Takaful mygenlife. We will continue to strive and work hard to serve you better and achieve our vision to be the preferred choice for insurance. May Allah give us His guidance, Amin. DATO MOHAMED HASSAN MD KAMIL Group Managing Director P a g e 3

4 FUND PROFILE ITTIZAN (BALANCED FUND) Investment Objective To achieve reasonable returns and capital growth opportunities through selected investments in Shariah approved shares listed in Bursa Malaysia and Shariah-compliant Islamic debt securities. Investment Strategy Invest in a balanced asset allocation comprising of Shariah-compliant equity and Islamic debt securities and money market. Asset Allocation At least 30% and a maximum of 70% in Malaysian shares approved by the Shariah Advisory Council of the Securities Commission; The balance in cash, long and short term Islamic debt securities and other liquid Islamic investments. Performance Benchmark 70% FBM Emas Shariah Index ( FBMSI ) and 30% one-month return Maybank General Investment Account rate ( GIA ). ISTIQRAR (STABLE CAPITAL FUND) Investment Objective To achieve relatively stable pattern of investment returns over medium term through selected investment in Shariah approved shares listed in Bursa Malaysia and Shariah-compliant fixed income securities. Investment Strategy Invest in a balanced asset allocation comprising mainly in Islamic debt securities with smaller exposure in Shariah-compliant equity. Asset Allocation A maximum of 35% in Malaysian shares approved by the Shariah Advisory Council of the Securities Commission; At least 65% and a maximum 100% in cash, long and short term Islamic debt securities and other liquid Islamic investments. Performance Benchmark 30% FBM Emas Shariah Index ( FBMSI ) and 70% one-month return Maybank General Investment Account rate ( GIA ). P a g e 4

5 IHFAZ EQUITY INDEX FUND Investment Objective To achieve returns that tracks the performance of FBM Emas Shariah Index. Investment Strategy Invest mainly in the top forty of the Index component stocks; closely tracking the movement of the Benchmark in the medium to long term; Constant rebalancing of the component stocks to closely track the benchmark performance. Asset Allocation 90% - 95% in Malaysian shares approved by the Shariah Advisory Council of the Securities Commission; The balance in Islamic money market instruments. Performance Benchmark FBM Emas Shariah Index ( FBMSI ). ITTIHAD GROWTH FUND Investment Objective To achieve capital growth opportunities and dividend income through selective investments in Shariah approved shares listed in Bursa Malaysia. Investment Strategy Invest primarily in selected Shariah-compliant equities that comprise of a diversified portfolio of index-linked companies, blue-chip stocks and companies with growth prospects and attractive dividend yields that are listed on Bursa Malaysia; Active portfolio management constant review on asset allocation and stocks holding. Stock/portfolio turnover would be practically high in search for opportunities in capital gain and dividend yield stocks. Asset Allocation At least 50% and a maximum of 95% in Malaysian shares approved by the Shariah Advisory Council of the Securities Commission; The balance in cash, long and short term Islamic debt securities and other liquid Islamic investments. Performance Benchmark FBM Emas Shariah Index ( FBMSI ). P a g e 5

6 ISTIFAD BLUE CHIPS FUND Investment Objective To achieve consistent capital growth in the long run through investments in Shariah-compliant Blue Chips Shares. Investment Strategy Invest primarily in Shariah-compliant equities with higher market capitalisation to achieve long term capital growth; Active portfolio management - constant review on asset allocation and stock holding in search of stocks that meet the objective of the Fund. Asset Allocation At least 40% and a maximum of 90% in Malaysian shares approved by the Shariah Advisory Council of the Securities Commission; The balance in Islamic money market instruments. Performance Benchmark FBM Emas Shariah Index ( FBMSI ). IRAD DIVIDEND FUND Investment Objective To achieve dividend income in the long term through selective investments in high dividend yield shares that provide a minimum annual gross dividend of 4.00%. To achieve capital growth through selective investments in Blue Chips Shares that could potentially provide capital growth in the long run. Investment Strategy Invest primarily in dividend yield stocks that provide a minimum annual gross dividend of 4.00% as well as blue-chip stocks that could potentially grow in the long run; At all times, exposure in stocks that yield a minimum of 4% annual gross dividend shall be at least 50% of the equity exposure; Constant review on asset allocation and stock holding in search of stocks that comply with the objectives of the Fund. Asset Allocation At least 40% and a maximum of 90% in Malaysian shares approved by the Shariah Advisory Council of the Securities Commission; At least 50% of the equity exposure is in dividend yield shares; The balance in Islamic money market instruments. Performance Benchmark FBM Emas Shariah Index ( FBMSI ). P a g e 6

7 IHSAN BALANCED FUND Investment Objective To achieve moderate streams of income and consistent capital growth over the medium-to-long term period by investing in a diversified portfolio of investments; To construct a diversified portfolio containing a balanced mixture of equities and fixed income securities. Investment Strategy Invest in a balanced asset allocation comprising of Shariah-compliant equity, debt securities and money market. Asset Allocation At least 10% and a maximum of 40% in Malaysian shares approved by the Shariah Advisory Council of the Securities Commission; At least 10% and a maximum of 60% in Islamic debt securities and Malaysian Government Investment Issues; The balance in Islamic money market instruments. Performance Benchmark 40% FBM Emas Shariah Index ( FBMSI ) and 60% 12 months return Maybank General Investment Account rate ( GIA ). P a g e 7

8 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 GLOBAL AND LOCAL ECONOMIC REVIEW This annual report is for the period from 1 January 2011 until 31 December Global growth slowed throughout the year as the global economy was traumatized with a series of economic woes, natural disasters, political upheavals as well as the European sovereign credit turmoil. In 1Q2011, most advanced economies registered moderate growth as domestic demand remained subdued amid elevated unemployment and the contraction of the Japanese economy after the March 11 earthquake. The moderate growth remained in 2Q2011 on account of fiscal sustainability issues and financial distress. Also, supply chain dislocations caused by the earthquake and tsunami led to a slowdown in global manufacturing and trade activities. Global economic activity continued to expand at a slower pace in 3Q2011, largely due to the sluggish recovery in the advanced economies which impacted by the persistently high unemployment, financial sector de-leveraging, large fiscal deficits, and a lack of resolution to the Eurozone debt crisis. Nonetheless, 4Q2011 turned out better as advanced economies like United States (US) reported better-than expected economic data. Correspondingly, the International Monetary Fund (IMF), in the January 2012 issue of the World Economic Outlook (WEO), revised its projection of the world economic growth downward to 3.8% in 2011 from the earlier forecast of 4.0% in September 2011, following the escalation of the sovereign debt crisis in Europe. The Eurozone already entered a technical recession at the end of 2011, as signaled by the drop in its manufacturing and services Purchasing Managers Indices (PMI) which stayed below 50. The still unfolding European debt crisis has dampened the region s growth and is weighing on the exports of the European Union s key trading partners, including China, which saw its exports fall to 13.4% in December 2011 as compared with 17.9% in year earlier due to the softening demand. On the positive side, however, the US economy was reported as getting into better shape with encouraging economic data such as a drop in the unemployment rate to 8.5% in December This is the lowest it has been in nearly three years. Manufacturing also grew at its fastest pace in six months. With continued improvements in the housing and labour markets as well as inventory buildup, the US economy reported a strong economic growth rate of 2.8% in 4Q2011 (1.8%: 3Q2011), making it a third straight quarter of accelerated growth. In Asia, economic growth and activity though resilient, has moderated due to policy tightening in early 2011 and slower external demand. Nevertheless, domestic demand was sustained, supported by favourable labour market conditions, continued access to financing, rising income, and high commodity prices. According to Bank Negara Malaysia s Fourth Quarter 2011 Report, Singapore s economy expanded at a slower rate of 3.6% (3Q2011: 5.9%), as activity in the manufacturing sector moderated. Growth in PR China, Hong Kong and Chinese Taipei moderated due to slower export activity. Korea s economy expanded by 3.4% (3Q2011: 3.5%) supported by domestic demand. Indonesia s economic growth was sustained at 6.5% (3Q2011: 6.5%), due largely to continued investment activity and resilient private consumption. The Philippines economy grew by 3.7% (3Q2011: 3.6%), supported mainly by private consumption. In reflection of global economy slowdown, Malaysia s real gross domestic product (GDP) growth moderated to 5.2% in 4Q2011 from 5.8% in 3Q2011 on account of a slowdown in net exports and manufacturing growth, but supported by stronger-than-expected domestic demand and services growth. For the whole year, Malaysia s economy grew by 5.1% (7.2%: 2010) which reflected resilient domestic demand conditions toward the latter part of the year Graph 1 Malaysia s Quarterly Real GDP Growth (% y-o-y) Source : Bloomberg P a g e 8

9 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Additionally, Malaysian economy was also spurred by the government s pump priming activities such as the Economic Transformation Programme (ETP) which focused on sustainable initiatives to transform Malaysia into a high-income nation by To date, Prime Minister has announced 110 new projects under the ETP which committed to invest over RM177bn up to 2020, approximately 70% of the projects have taken-off. Separately, foreign direct investment (FDI) rose 12.3% to RM32.9 billion in 2011 from RM29.3 billion in 2010, indicating continued improvement of FDI flows into Malaysia. Despite the external uncertainties and weakening global growth, Malaysia s economic fundamental remains good as reflected in the healthy current account surpluses together with rising international reserves. Malaysia s annual current account surplus in the balance of payments rose from RM88.1 billion in 2010 to RM97.9 billion in 2011, on the back of continuing higher goods surplus and lower income deficits. Similarly, Bank Negara Malaysia s international reserves have increased steadily on a monthly basis from RM328.6 billion (US$106.5 billion) since early 2011 to a high of RM423 billion (US$133.6 billion) as at end December Currently, the reserves position is sufficient to finance 9.6 months of retained imports and is 4.1 times the short-term external debt. Graph 2 Malaysia Inflation Rate (monthly) Source : Bloomberg Headline inflation, as measured by the Consumer Price Index (CPI), is now on a downward trajectory after peaking at 3.5% in June For December 2011, the Malaysia s CPI slowed further to 3.0% as commodity prices softened and demand condition weakened. Consequently, Bank Negara Malaysia during its meeting in November 2011, maintained the benchmark Overnight Policy Rate (OPR) at 3.00% for a third straight meeting in order to support the domestic growth as global economic recovery was slower than expected. Similarly, the Statutory Reserve Requirement (SRR) was also kept at 4.0% from the previous increase in July 2011, as short-term capital has reversed into outflows gradually since August Note that central banks around the world have exercised restraint in raising rates as the global economic outlook gets cloudier and inflationary pressure is cooled. P a g e 9

10 EQUITY AND FIXED INCOME MARKET REVIEW Equity Markets The year 2011 was a volatile year for the local bourse. This was on the back of a global stock market rout caused by political uncertainties in the Middle East countries, natural disasters that hit global supply chains, the political bickering and standoff on the US debt ceiling, the downgrade of US credit rating by the Standard & Poor s (S&P), worsening eurodebt crisis as well as mounting evidence of slowing growth in many economies. Graph 3 FY2011 FBM Emas Shariah Index and FBM KLCI Performance Source : Bloomberg and Bursa Malaysia Commencing the financial period under review on a strong note at 10, points on 31 December 2010, the main benchmark for the Shariah-compliant stocks, FTSE-Bursa Malaysia Emas Shariah Index ( FBMSI ) recorded an upward move to close at 3-year high of 10, points on 17 January 2011 following an extended rally from the year The local bourse however fell into a correction mode after political uncertainties in the Middle East caused the spike in crude oil prices. The market thereafter underwent a volatile trading period on renewed concern of the euro-debt crisis as sovereign ratings in peripheral Europe were downgraded by international ratings agencies. Subsequently, the FBMSI closed sharply lower below the 10,000 mark in early March 2011 in tandem with the plunge in regional markets after a powerful earthquake rocked Japan s north-eastern coast, triggering a tsunami and damaged nuclear reactors that sent investors to panic selling. Moving into the second quarter of 2011 (2Q2011), the global equity market regained some of its lost ground after the bargain-hunting activities came back on improved market sentiment as European leaders came-out with some positive comments to resolve the euro-debt crisis. Domestically, the positive performance of the local stock market was partly on account of increased economic activities and the ongoing Economic Transformation Programmes (ETPs) and Government Transformation Programmes (GTPs) as well as positive corporate merger and acquisition (M&A) news flow. Supported by the higher participation of retail investors and strong foreign buying momentum, the FBMSI bounced back to close slightly higher by 1.4% quarter-on-quarter at 10, points on 30 June In the 3Q2011, the stock market was increasingly volatile, mirroring other major and regional markets. In July, the FBMSI fell 1.4% from the previous month following the unresolved European debt crisis and uncertainties arising from the US debt ceiling negotiation. The market continued to drop 7.4% in August, as risk averse investors took the cue from the massive sell-off on Wall Street due to the credit rating cut by the international rating agency Standard & Poor (S&P) and the higher risk of a double-dip recession in the US economy. The sharp drop in the local market was also P a g e 10

11 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 attributed to the massive outflow of foreign funds from the equity market amidst continued volatility and deleveraging in the global financial markets. Bank Negara Malaysia reported that about RM3.8 billion of foreign funds net outflow from Malaysia in August 2011, the biggest monthly outflow since 2008 financial crisis. Subsequently, the FBMSI plunged further to a year low of 8, points on 26 September 2011, shedding another 9.0% compared to the previous month due to the escalating of Eurozone sovereign debt crisis and weak global economic outlook,. For the quarter, the local bourse experienced its worst performance since 2008 financial crisis after the FBMSI lost 1, points or -13.2% quarter-on-quarter to close at 9, points on 30 September Graph 4 Total Net Foreign Fund Flows Into Malaysia (RM bil monthly) RM bn (1.0) (2.0) (3.0) (4.0) (5.0) % 0.40% 0.30% 0.20% 0.10% 0.00% -0.10% -0.20% -0.30% -0.40% -0.50% Source : Bank Negara Malaysia, Affin Investment Bank Bhd Foreign flows (RMbn) % of Mkt Cap As the 4Q2011 started, investors sentiment recovered following the announcements of rescue loan packages for the highly-indebted European nations. In October, the FBMSI increased 8.7% from the previous month following the Budget 2012 announcement, which included the move to liberalise 17 services sub-sectors. The market decreased slightly by 0.8% in November, as investors remained concerned over the unresolved Eurozone debt crisis spreading from Greece to Italy and affecting the global economy. Subsequently, the FBMSI recorded a month-on-month increase of 4.6% in December 2011, supported by the positive performance on Wall Street following better-than-expected US economic indicators. At the end of 2011, the FBMSI registered a modest gain of 2.41% year-on-year to close at 10, points whereby the FBM KLCI rose slightly by 0.8% to close at 1, points as at end-december Fixed Income Markets 2011 continued to see vibrant activities in fixed income markets supported by a very strong demand and supply dynamics. As the developed markets were still plagued with sovereign debt crises, particularly within the Eurozone areas, the Malaysian fixed income market saw an increasing flow of foreign capital buying into stable Malaysian sovereign credits. This has resulted in increased foreign holdings in MGS, from RM75.20 billion in January 2011 to RM billion by end of the year. On the back of the strong buying interest by foreign capitals, coupled with anticipated easing monetary policy in 2012 to support growth, MGS yield across the tenure was traded lower towards the end of the year. The yield for MGS 10-year for instance was traded lower to 3.69% from 4% a year before. Similar attributes were observed for the corporate sukuk segment. The corporate sukuk continued to witness net buying interest in particular from local institutional investors which were fueled by the flush of liquidity. New issuances which picked up in the 3Q2011 and 4Q2011 saw strong demand that pushed the order books to strongly oversubscribed. In the meantime, the market also witnessed investors who were aggressively bidding in the secondary market, in particular for longer dated high credit paper for a better yield pick-up. AAA rated paper for 5, 7, and 10 years traded lower by 41bps, 51bps and 69bps as compared to a year ago to close at 3.83%, 4.00% and 4.22% respectively. Money Markets For Islamic money market, short-term rates rose over the period under review following Bank Negara Malaysia s move to increase OPR by 25 basis point from 2.75% to 3.00% in May The 1-Month General Investment Account Maybank rose from 2.77% at the beginning of the review period to 3.00% at the end of the financial period under review. P a g e 11

12 MARKET OUTLOOK AND INVESTMENT STRATEGY Market Outlook In 2011, despite overwhelming market optimism at the beginning of the year, the global equity market, including Malaysia s, underwent a very volatile period given heightened external risks and slower-than-expected global economic recovery. Earlier hopes of a pick-up in the global economy was dented in August 2011 as the global equity markets took a battering, taking an early cue from S&P downgrading United States (US) AAA rating to AA+, and despite the increasing of the US debt-ceiling that managed to steer US away from a temporary debt default. To top it off, market jitters were exacerbated by a worsening Eurozone debt crisis with Greece seemingly unable to satisfy its austerity measures that would prevent it from securing further bailout-loans from the Eurozone emergency fund. Looking ahead in 2012, the challenges facing investors are significant, with expectations that the volatility on stock markets will remain elevated throughout the year. This following development in the domestic and global economies with the outlook of European turmoil would threaten global economy. Accordingly, the International Monetary Fund (IMF) has slashed its growth forecasts for most major countries in 2012 and urged governments to adjust the rhythm of their austerity measures to avoid derailing economic recovery. In an update of the forecasts in its autumn World Economic Outlook, the IMF projected a world GDP growth of 3.3% in 2012, down from the 4.0% it forecast in September. The unfolding sovereign debt crisis in Europe is envisaged to affect the market sentiment further as the outcome from December 2011 EU summit, in which the countries agreed to a fiscal framework and the need for an enforcement mechanism, remains unclear. As the IMF reckons that most major economies were decelerating but not collapsing, it pinned much of the blame on the debt crisis in the Eurozone, where it expected Euro area GDP to shrink by 0.5% in Conversely, growth in the US economy, although modest by some measures, has at least been on an improving trajectory over the course of This could bode well for Liquidity is returning and credit markets have improved considerably. Furthermore, the housing market may finally be hitting bottom. Thus, the US recovery is expected to continue with the IMF forecasting its GDP to grow by 1.8% during the year driven by consumer spending as a key factor. This in turn may provide some support to corporate earnings. Again, the developing world and the highgrowth Asian economies are expected to continue to outpace the advanced economies of Europe, Japan and the US as the power balance shifts. On the local front, external headwinds are unlikely to take centre stage; giving way to domestic affairs as Malaysia s economic growth is expected to remain resilient, supported by domestic factors such as domestic consumption as well as private and government investments. This is in light of the weak external demand which likely to dampen Malaysia s exports growth, especially for electrical and electronic (E&E) products, which account for close to 42% of the country s total exports. Going forward, domestic demand will likely be supported by the implementation of projects under the Economic Transformation Programme (ETP), the implementation of which is likely to be speed up by the government to shield the local economy from the increased risk of a double-dip global recession. A bright spot would be the export of commodities such as palm oil which is expected to remain stable. Overall, government projected Malaysia s GDP to grow 5% to 6% YoY in 2012 although the market consensus is looking a slower growth than 5.1% recorded in Moreover, the slowdown in economic growth and demand will likely lead to lower inflation rates. With lower inflationary pressures, with the inflation rate falling to a 6-month low of 3% in December 2011, Bank Negara Malaysia will likely cut the Overnight Policy Rate (OPR) in 2012 if the economics worsen significantly. As for the outlook of the local equity market in 2012, the external events and developments emanating from Europe, US and China will continue to influence the direction of the local bourse and keep markets on a volatile trajectory in the foreseeable future. However, weaker external development shall be somewhat offset by robust domestic demand supported by accommodative monetary policies and strong consumer spending. Moreover, Bursa Malaysia is known as a defensive market given the resilient domestic situation driven by earnings profiles, high domestic liquidity, low foreign share holdings of Malaysia equities, and strong participation of government-linked investment funds. All of this will cushion the market downside risks. On the fixed income side, MGS is expected to be actively traded in a bull flattening manner particularly in 1H2012 in anticipation of easing monetary policy to support the domestic growth. The local market is also expected to continuously attract strong interests particularly from foreign investors as part of their currency trading or asset allocation strategy having greater exposure in the emerging markets which have been, thus far, insulated from the developed market sovereign credit crisis. P a g e 12

13 On the corporate sukuk, the supply and demand dynamic is expected to be strong. On the supply side, it is expected that bigger issuances in 2012, around RM90 billion, of which one-third of it, or RM30.6 billion, would be from PLUS s issuances which have been completed in January The remaining issuances for 2012 are expected from infrastructure related projects under the ETP, IPP related projects, the telco sector, Danajamin and Cagamas. With flush liquidity in the market, it is expected that the market will continue to see a net buying interest of corporate sukuk in both primary and secondary markets. Nonetheless, as there are signs of increased risk in the global economy, overall credit sentiment is expected to be weakened though at a lesser degree compared to the global financial meltdowns. In relation to that, market interest will flock to safe-haven papers; namely near-sovereigns, bank papers, and bellwether AAA and AA papers, while the non-bank A segment will continue to remain lethargic. Investment Strategy Looking ahead, in anticipation of the market volatility that has primarily been influenced by external factors, strategies for equity investment shall continuously be concentrating on stock pickings. Going forward, these shall be cautiously undertaken in line with the fund stated objectives and asset allocation strategies in order to attain opportunities to enhance the overall returns. For certain funds in which asset allocations strategies have to meet a certain level of exposure in fixed income, the focus and concentration would be more on corporate sukuk within AAA and AA segments for better liquidity and yield pick-up. Active duration management would be the key focus in which the fund may be positioned to have a longer duration in view of the diminishing inflation threat as global economic continuously be engulfed with a negative outlook. P a g e 13

14 Return % FUND PERFORMANCE REPORT ITTIZAN (BALANCED FUND) Performance Review For the 12 months ended 31 December 2011, Ittizan (Balanced Fund) outperformed its benchmark whereby it recorded a return of 5.22% against its benchmark of 2.56% (70% FBMSI and 30% 1-Month GIA) Ittizan vs Benchmark Ittizan Benchmark Jan-11 (2.0) Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 (4.0) (6.0) (8.0) (10.0) Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year Ittizan Benchmark Asset Allocation In terms of asset allocation, the fund has invested 58.6% in equity, 25.1% in Islamic debt securities and the remaining is in money market/cash. On equity sectoral allocation, trading & services was the top sector the fund invested in with 31.4% exposure. The details of asset allocation and the top 5 investment holdings are shown below:- 31.4% 25.1% 16.3% 4.9% 2.5% 7.1% 4.7% 3.4% 3.1% 1.5% Construction Consumer Products Industrial Products Infrastructure Plantation Property Trading & Services REITS Islamic Debt Securities Money Market & Cash P a g e 14

15 Top 5 Investment Holdings Money Market & Cash 16.3% Telekom Malaysia Bhd 5.5% Islamic Debt Securities 25.1% Tenaga Nasional Bhd Petronas Gas Bhd 3.7% 4.8% Equities 58.6% DiGi.Com Bhd Axiata Group Bhd 3.1% 3.0% Fees/Charges levied to the Fund Among the fees/charges levied to the fund are as follows: a) management fee which is calculated based on 1.5% per annum of the Gross Net Asset Value (NAV); b) custodian fee which is calculated based on 0.03% per annum of equity market value and at par value of debt securities. Details on Distribution There was no distribution declared for Ittizan (Balanced Fund) for the period ended 31 December Descriptions of any changes in Fund s Objectives and Strategies There were no material changes in fund s objectives and strategies for the period ended 31 December P a g e 15

16 Return % ISTIQRAR (STABLE CAPITAL FUND) Performance Review For the 12 months ended 31 December 2011, Istiqrar (Stable Capital Fund) outperformed its benchmark whereby it recorded a return of 4.45% against its benchmark of 2.77% (30% FBMSI and 70% 1-Month GIA) Istiqrar vs Benchmark Istiqrar Benchmark Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 (1.0) (2.0) (3.0) Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year Istiqrar Benchmark Asset Allocation In terms of asset allocation, the fund has invested 29.6% in equity, 69.6% in Islamic debt securities and the remaining is in money market/cash which is in accordance with its asset allocation strategy. On equity sectoral allocation, trading & services was the top sector the fund invested in with 16.1% exposure. The details of asset allocation and the top 5 investment holdings are shown below:- 69.6% 16.1% 1.2% 1.2% 3.2% 2.7% 2.2% 1.2% 1.8% 0.7% Construction Consumer Products Industrial Products Infrastructure Plantation Property Trading & Services REITS Islamic Debt Securities Money Market & Cash P a g e 16

17 Top Investment 5 Holdings Money Market & Cash 0.7% Binariang Gsm Sdn Bhd 7.0% Equities 29.6% Rantau Abang Capital Berhad Kapar Energy 6.7% 6.7% Islamic Debt Securities 69.6% National Bank of Abu Dhabi Tesco Stores (M) 6.4% 6.6% Fees/Charges levied to the Fund Among the fees/charges levied to the fund are as follows: a) management fee which is calculated based on 1.5% per annum of the Gross Net Asset Value (NAV); b) custodian fee which is calculated based on 0.03% per annum of equity market value and at par value of debt securities; Details on Distribution There was no distribution declared for Istiqrar (Stable Capital Fund) for the period ended 31 December Descriptions of any changes in Fund s Objectives and Strategies There were no material changes in fund s objectives and strategies for the period ended 31 December P a g e 17

18 Return (%) IHFAZ EQUITY INDEX FUND Performance Review For the period under review, the NAV per unit of Ihfaz Equity Index Fund recorded a positive return of 4.46%, outperforming the gain of 2.41% in its benchmark of FBMSI. Additionally, in line with the fund strategy to closely track its benchmark, its tracking error has consistently within the parameters set by the fund. For the period, the fund s tracking error stood at Ihfaz vs Benchmark and Tracking Error 10.0 Ihfaz Benchmark Tracking Error Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec Tracking Error (%) Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year Ihfaz Benchmark Tracking Error Note : The fund only has 2 years financial track record. Note : Tracking error (also called active risk) is a measure of the deviation from the benchmark. It measures how closely a portfolio follows the index to which it is benchmarked. The index fund could have a tracking error close to zero, while an actively managed portfolio would normally have a higher tracking error. Asset Allocation In terms of asset allocation, the fund has invested 94.4% in equity and the remaining is in money market/cash. On equity sectoral allocation, trading & services was the top sector the fund invested in which is in accordance to the Bursa Malaysia FBMSI index component allocation. The details of asset allocation and the top 5 investment holdings are shown below:- 46.8% 9.4% 2.6% 11.1% 7.2% 12.7% 4.6% 5.6% Construction Consumer Products Industrial Products Infrastructure Plantation Property Trading & Services Money Market & Cash P a g e 18

19 Top 5 Investment Holdings Money Market & Cash 5.6% 94.4% Axiata Group Bhd Sime Darby Bhd IOI Corp Bhd 6.9% 6.7% 7.8% Equities Petronas Gas Bhd DiGi.Com Bhd 5.5% 5.5% Fees/Charges levied to the Fund Among the fees/charges levied to the fund are as follows: a) management fee which is calculated based on 1.5% per annum of the equity market value and 1% of the remaining Gross Net Asset Value (NAV); b) custodian fee which is calculated based on 0.03% per annum of equity market value and at par value of debt securities. Details on Distribution There was no distribution declared for Ihfaz Equity Index Fund for the period ended 31 December Descriptions of any changes in Fund s Objectives and Strategies There were no material changes in fund s objectives and strategies for the period ended 31 December P a g e 19

20 Return % ITTIHAD GROWTH FUND Performance Review For the financial year ended 31 December 2011, Ittihad Growth Fund outperformed its benchmark, FBMSI whereby it recorded a return of 3.23% against its benchmark of 2.41%. Ittihad vs Benchmark 14.0 Ittihad Benchmark Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year Ittihad Benchmark Note : The fund only has 2 years financial track record. Asset Allocation In terms of asset allocation, the fund has invested 71.3% in equity and the remaining is in money market/cash. On equity sectoral allocation, trading & services was the top sector the fund invested in with 37.2% exposure. The details of asset allocation and the top 5 investment holdings are shown below:- 37.2% 28.7% 9.3% 8.1% 1.6% 7.1% 8.1% Construction Industrial Products Infrastructure Plantation Property Trading & Services Money Market & Cash P a g e 20

21 Top 5 Investment Holdings Money Market & Cash 28.7% IOI Corp Bhd Tenaga Nasional Bhd 4.9% 5.6% Petronas Gas Bhd 4.8% Equities 71.3% Axiata Group Bhd 4.7% Parkson Holdings Bhd 4.6% Fees/Charges levied to the Fund Among the fees/charges levied to the fund are as follows: a) management fee which is calculated based on 1.5% per annum of the equity market value and 1% of the remaining Gross Net Asset Value (NAV); b) custodian fee which is calculated based on 0.03% per annum of equity market value and at par value of debt securities. Details on Distribution There was no distribution declared for Ittihad Growth Fund for the period ended 31 December Descriptions of any changes in Fund s Objectives and Strategies There were no material changes in fund s objectives and strategies for the period ended 31 December P a g e 21

22 Return % ISTIFAD BLUE CHIPS FUND Performance Review For the financial year ended 31 December 2011, the NAV per unit of Istifad Blue Chips Fund is recorded a positive return of 2.23% in tandem with the positive movement of the benchmark, FBMSI which recorded an increase of 2.41% during the same period under review. Istifad vs Benchmark Istifad Benchmark 1.0 (4.0) Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 (9.0) (14.0) Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year Istifad Benchmark Note : The fund only has 2 years financial track record. Asset Allocation In terms of asset allocation, the fund has invested 70.0% in equity and the remaining is in money market/cash. On equity sectoral allocation, construction was the top sector the fund invested in as most of the blue chip companies are included in this sector. The details of asset allocation and the top 5 investment holdings are shown below:- 33.0% 30.0% 8.9% 3.0% 8.6% 4.1% 8.6% 3.8% Construction Consumer Products Industrial Products Infrastructure Plantation Property Trading & Services Money Market & Cash P a g e 22

23 Top 5 Investment Holdings Money Market & Cash Equities 30.0% 70.0% IOI Corp Bhd Tenaga Nasional Bhd Gamuda Bhd Parkson Holdings Bhd 4.6% 4.6% 6.1% 6.0% Petronas Gas Bhd 4.4% Fees/Charges levied to the Fund Among the fees/charges levied to the fund are as follows: a) management fee which is calculated based on 1.5% per annum of the equity market value and 1% of the remaining Gross Net Asset Value (NAV). b) custodian fee which is calculated based on 0.03% per annum of equity market value and at par value of debt securities. Details on Distribution There was no distribution declared for Istifad Blue Chips Fund for the period ended 31 December Descriptions of any changes in Fund s Objectives and Strategies There were no material changes in fund s objectives and strategies for the period ended 31 December P a g e 23

24 Return % IRAD DIVIDEND FUND Performance Review For the 12 months ending 31 December 2011, the NAV per unit of Irad Dividend Fund recorded a return of 6.39%, outperforming its benchmark return of 2.41% of FBMSI. The fund which focused on high dividend yielding stocks tend to be less volatile as compared to the overall market as reflected in the fund performance for the period under review. Irad vs Benchmark 11.0 Irad Benchmark (4.0) Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 (9.0) (14.0) Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year Irad Benchmark Note : The fund only has 2 years financial track record. Asset Allocation In terms of asset allocation, the fund has invested 72.3% in equity and the remaining is in money market/cash. On equity sectoral allocation, trading & services was the top sector the fund invested in with 32.1% allocation. The details of asset allocation and the top 5 investment holdings are shown below:- 32.1% 27.7% 4.3% 6.2% 8.9% 6.6% 5.3% 5.4% 3.5% Construction Consumer Products Industrial Products Infrastructure Plantation Property Trading & Services REITS Money Market & Cash P a g e 24

25 Top 5 Investment Holdings Money Market & Cash 27.7% Telekom Malaysia Bhd Petronas Gas Bhd 4.4% 6.5% Petronas Dagangan Bhd 3.7% Equities 72.3% UMW Holdings Bhd 3.7% DiGi.Com Bhd 3.5% Fees/Charges levied to the Fund Among the fees/charges levied to the fund are as follows: a) management fee which is calculated based on 1.5% per annum of the equity market value and 1% of the remaining Gross Net Asset Value (NAV); b) custodian fee which is calculated based on 0.03% per annum of equity market value and at par value of debt securities. Details on Distribution There was no distribution declared for Irad Dividend Fund for the period ended 31 December Descriptions of any changes in Fund s Objectives and Strategies There were no material changes in fund s objectives and strategies for the period ended 31 December P a g e 25

26 Return % IHSAN BALANCED FUND Performance Review For the financial year ended 31 December 2011, the NAV per unit of Ihsan Balanced Fund recorded a positive return of 2.56% in tandem with the positive movement of its benchmark of 2.81% (40% FBMSI and 60% 12-Month Maybank GIA rate). Ihsan vs Benchmark 5.0 Ihsan Benchmark (1.0) Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 (3.0) (5.0) Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year Ihsan Benchmark Note : The fund only has 1 year financial track record. Asset Allocation As at 31 December 2011, the majority of the fund s asset allocation is towards Islamic debt securities in line with its stated asset allocation mandate to invest up to 60% in Islamic debt securities. The fund had invested 51.1% in Islamic debt securities with the top holding is Binariang GSM Sdn Bhd sukuk with a holding of 7.9% of the fund s NAV. The details of asset allocation and the top 5 investment holdings are shown below:- 51.1% 2.0% 2.0% 5.6% 1.9% 5.0% 1.5% 13.5% 17.4% Construction Consumer Products Industrial Products Infrastructure Plantation Property Trading & Services Islamic Debt Securities Money Market & Cash P a g e 26

27 Money Market & Cash 17.4% Binariang GSM Sdn Bhd Top 5 Investment Holdings 7.9% Equities 31.5% Padiberas Nasional Bhd National Bank of Abu Dhabi 7.5% 7.4% Islamic Debt Securities 51.1% Westports Malaysia Sdn Bhd Lingkaran Transkota Sdn Bhd 7.3% 7.3% Fees/Charges levied to the fund Among the fees/charges levied to the fund are as follows: a) management fee which is calculated based on 1.2% per annum of the Gross Net Asset Value (NAV); b) custodian fee which is calculated based on 0.03% per annum of equity market value and at par value of debt securities. Details on Distribution There was no distribution declared for Ihsan Balanced Fund for the period ended 31 December Descriptions of any changes in Fund s Objectives and Strategies There were no material changes in fund s objectives and strategies for the period ended 31 December P a g e 27

28 SOFT COMMISSION RECEIVED FROM BROKERS Soft commissions received from brokers may be retained by the Company on behalf of the funds provided that the services rendered are related to the management of the investment-linked funds and of demonstrable benefit to certificate owners as per the requirements of Clause 6.2 of the Guidelines on Investment-Linked Insurance/Takaful Business. During the financial year under review, the management company had received on behalf of the funds, soft commissions in the form of research materials and investment related publications which are incidental to the investment management of the funds. Meanwhile, all dealings with brokers are executed at competitive market rates. P a g e 28

29 STATEMENT BY DIRECTORS In the opinion of the Manager, the Takaful Investment-Linked Funds ( Funds ) financial statements set out on pages 32 to 42, comprising the Statements of Assets and Liabilities as at 31 December 2011 and the related Statements of Income and Expenditure, Changes in Net Asset Value and cash flow of the Funds for the financial year ended 31 December 2011 together with the notes thereto, have been drawn up in accordance with the Guidelines on Investment- Linked Insurance/Takaful Business issued by Bank Negara Malaysia and give true and fair view of the financial position of the Funds as at 31 December 2011 and their financial performance and the movements in the Statements of Changes in Net Assets attributable to the unitholders of the Funds for year ended on that date. Signed in accordance with a resolution of the Directors: Dato Paduka Ismee Ismail Dato Mohamed Hassan Kamil Kuala Lumpur, Date : 22 March 2012 P a g e 29

30 REPORT OF THE AUDITORS to the unitholders of the Takaful Malaysia s Investment-Linked Funds (Company No K) (Incorporated in Malaysia) Report on the Financial Statements We have audited the financial statements of Takaful Investment-Linked Funds ( Funds ) of Syarikat Takaful Malaysia Berhad, which comprise the Statements of Assets and Liabilities as at 31 December 2011, and the related Statements of Income and Expenditure, Changes in Net Asset Value and cash flow of the Funds for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 32 to 42. Directors Responsibility for the Financial Statements The Directors of the Manager are responsible for the preparation of these financial statements that give a true and fair view in accordance with the Guidelines on Investment-Linked Insurance/Takaful Business, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Funds preparation and fair presentation of the financial statements 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors of the Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Funds as at 31 December 2011 and of their financial performance and changes in net assets attributable to the unitholders of the Funds for the year then ended in accordance with the accounting policies set out in Note 1 to the financial statements and the Guidelines on Investment-Linked Insurance/Takaful Business. P a g e 30

31 Other Matters This report is made solely to the unitholders of Takaful Investment-Linked Funds, as a body, in accordance with the Guidelines on Investment-Linked Insurance/Takaful Business and for no other purpose. We do not assume responsibility to any other person for the content of this report. KPMG Desa Megat & Co Firm Number: AF 0759 Chartered Accountants Petaling Jaya, Selangor Date : 22 March 2012 P a g e 31

32 STATEMENTS OF ASSETS AND LIABILITIES AS AT 31 DECEMBER 2011 ASSETS Islamic Debt Securities ITTIZAN ISTIQRAR IHFAZ ITTIHAD ISTIFAD IRAD IHSAN Note RM RM RM RM RM RM RM 2 5,339,375 8,154, ,765,775 Quoted Shares 3 12,434,491 3,471,724 4,774,381 2,701,096 2,570,304 2,705,781 1,089,588 Other Assets 211, , ,330 76, , , ,077 Deposits with Financial Institutions Cash and cash equivalents 3,965, ,000-1,106,000 1,098,000 1,041, ,000 7,589 49, ,528 2,039 1,673 3,119 1,480 21,957,616 12,054,288 5,324,239 3,885,544 3,789,535 3,863,089 3,554,920 LIABILITIES Other Liabilities 718, , ,660 99, , ,826 96, , , ,660 99, , ,826 96,529 Net Asset Value 21,239,238 11,715,673 5,058,579 3,786,286 3,672,455 3,741,263 3,458,391 REPRESENTED BY Certificate holders Capital Accumulated Income Carried Forward 10,756,647 8,215,847 4,132,579 3,473,439 3,412,910 3,383,459 3,390,879 10,482,591 3,499, , , , ,804 67,512 21,239,238 11,715,673 5,058,579 3,786,286 3,672,455 3,741,263 3,458,391 Number of Units 13,871,401 9,423,878 3,790,811 3,383,972 3,335,751 3,306,250 3,326,291 Net Asset Value Per Unit P a g e 32

33 STATEMENTS OF ASSETS AND LIABILITIES AS AT 31 DECEMBER 2010 ASSETS Islamic Debt Securities ITTIZAN ISTIQRAR IHFAZ ITTIHAD ISTIFAD IRAD IHSAN Note RM RM RM RM RM RM RM 2 4,670,725 7,547, ,819,800 Quoted Shares 3 11,523,620 3,824,330 3,734,589 2,661,493 2,497,806 1,921, ,950 Other Assets 2,688, , ,812 70,255 44,936 42, ,430 Deposits with Financial Institutions Cash and cash equivalents 2,416, ,534 1,126,000 1,564, , , ,974 56, ,017 6,253 21,299,710 12,014,192 4,280,375 3,682,408 3,669,032 3,576,204 3,254,433 LIABILITIES Other Liabilities 638, , , , , , , , , , , , , ,174 Net Asset Value 20,661,313 11,796,035 4,010,804 3,422,707 3,349,985 3,285,447 3,126,259 REPRESENTED BY Certificate holders Capital Accumulated Income Carried Forward 11,160,436 8,769,775 3,163,732 3,162,614 3,115,268 3,091,799 3,085,186 9,500,877 3,026, , , , ,648 41,073 20,661,313 11,796,035 4,010,804 3,422,707 3,349,985 3,285,447 3,126,259 Number of Units 14,199,486 9,910,043 3,140,055 3,158,543 3,112,006 3,088,798 3,084,619 Net Asset Value Per Unit P a g e 33

34 STATEMENTS OF INCOME AND EXPENDITURE FOR FINANCIAL YEAR ENDED 31 DECEMBER 2011 ITTIZAN ISTIQRAR IHFAZ ITTIHAD ISTIFAD IRAD IHSAN RM RM RM RM RM RM RM Income Gross Dividend Income 383, , ,042 86,446 81,876 92,796 35,206 Profit Income: Islamic Debt Securities 216, , ,973 Islamic Investment Deposits with Financial 136,096 23,030 21,001 25,993 27,981 34,863 13,649 Institutions Profit on Disposal: Islamic Debt Securities 96, , ,000 Quoted Shares 1,339, , , , , ,807 5,421 Unrealised Capital Gain ,365-2,171, , , , , , ,249 Outgo Fees (313,606) (178,784) (63,184) (49,459) (47,224) (46,605) (39,891) Unrealised Capital Loss (752,322) (249,151) (79,591) (131,729) (113,315) - (8,200) Other Outgo (124,087) (63,467) (158,588) (87,880) (72,550) (80,070) (70,719) (1,190,015) (491,402) (301,363) (269,068) (233,089) (126,675) (118,810) Excess of Income over Outgo Undistributed Income brought forward Amount Available for Distribution Undistributed Income carried forward 981, ,566 78,928 52,754 24, ,156 26,439 9,500,877 3,026, , , , ,648 41,073 10,482,591 3,499, , , , ,804 67,512 10,482,591 3,499, , , , ,804 67,512 P a g e 34

35 STATEMENTS OF INCOME AND EXPENDITURE FOR FINANCIAL PERIOD ENDED 31 DECEMBER 2010 ITTIZAN ISTIQRAR IHFAZ ITTIHAD ISTIFAD IRAD IHSAN RM RM RM RM RM RM RM Income Gross Dividend Income 609, , ,799 35,103 53,283 63,174 - Profit Income: Islamic Debt Securities 276, , ,455 Islamic Investment Deposits with Financial 262, ,882-77,321 75,723 86,734 49,296 Institution Profit on Disposal: Islamic Debt Securities 49,843 3, Quoted Shares 706,681 18, ,181 5,157 1, Unrealised Capital Gain 2,649, , , , , ,247 14,893 4,554,456 1,235, , , , ,155 83,644 Outgo Investment Management Fees (434,357) (254,420) (77,979) (53,826) (53,555) (51,231) (35,404) Other Outgo (299,720) (100,907) (87,062) (28,812) (26,495) (22,611) (7,167) (734,077) (355,327) (165,041) (82,638) (80,050) (73,842) (42,571) Excess of Income over Outgo Undistributed Income brought forward Amount Available for Distribution Undistributed Income carried forward 3,820, , , , , ,313 41,073 5,680,498 2,146,551 17,783 4,036 4,305 4,335-9,500,877 3,026, , , , ,648 41,073 9,500,877 3,026, , , , ,648 41,073 P a g e 35

36 STATEMENTS OF CHANGES IN NET ASSET VALUE FOR FINANCIAL YEAR ENDED 31 DECEMBER 2011 ITTIZAN ISTIQRAR IHFAZ ITTIHAD ISTIFAD IRAD IHSAN RM RM RM RM RM RM RM Net Asset Value at the Beginning of the Financial Year 20,661,313 11,796,035 4,010,804 3,422,707 3,349,985 3,285,447 3,126,259 Amount received from Units Creation Amount paid from 1,484, ,539 1,028, , , , ,994 Units Cancellation (1,888,061) (1,187,467) (59,317) (61,634) (35,785) (17,551) (14,301) Net Income 981, ,566 78,928 52,754 24, ,156 26,439 Net Asset Value at the End of Financial Year 21,239,238 11,715,673 5,058,579 3,786,286 3,672,455 3,741,263 3,458,391 STATEMENTS OF CHANGES IN NET ASSET VALUE FOR FINANCIAL PERIOD ENDED 31 DECEMBER 2010 ITTIZAN ISTIQRAR IHFAZ ITTIHAD ISTIFAD IRAD IHSAN RM RM RM RM RM RM RM Net Asset Value at the Beginning of the 16,785,184 10,820,752 3,026,533 3,037,673 3,013,091 3,010,279 - Financial Period Increase in Capital ,000,000 Amount received from Units Creation 3,583,301 1,572, , , , , ,431 Amount paid from Units Cancellation (3,527,551) (1,476,537) (107,151) (88,915) (76,540) (69,594) (70,245) Net Income 3,820, , , , , ,313 41,073 Net Asset Value at the End of Financial Period 20,661,313 11,796,035 4,010,804 3,422,707 3,349,985 3,285,447 3,126,259 P a g e 36

37 CASH FLOW STATEMENT FOR FINANCIAL YEAR ENDED 31 DECEMBER 2011 ITTIZAN ISTIQRAR IHFAZ ITTIHAD ISTIFAD IRAD IHSAN 2011 RM RM RM RM RM RM RM Cash flow from operating activities Income before taxation 981, ,566 78,928 52,754 24, ,156 26,439 Adjustment for: Profit Income (352,298) (381,900) (21,001) (25,993) (27,981) (34,863) (100,622) Gross dividend income (Profit)/loss on disposal Unrealised capital loss/(gain) (383,021) (120,886) (117,042) (86,446) (81,876) (92,796) (35,206) (1,436,410) (462,182) (242,248) (209,383) (148,060) (121,807) (9,421) 752, ,151 79, , ,315 (41,365) 8,200 Outgo from operations before changes in operating (437,693) (242,251) (221,772) (137,339) (119,774) (126,675) (110,610) assets and liabilities Proceeds from disposal of investment 6,254,986 3,472,196 2,796,336 1,767,707 1,591,540 1,879, ,899 Purchase of investment (8,699,419) (3,714,008) (3,673,471) (1,941,122) (1,601,293) (1,976,587) (1,215,291) Decrease/(Increase) in other assets 2,477, ,091 (74,518) (6,154) (74,622) (70,694) (1,647) Increase/(Decrease) in other liabilities 79, ,458 (3,911) (160,443) (201,967) (168,931) (31,645) Cash used in operations (324,671) (244,514) (1,177,336) (477,351) (406,116) (463,217) (446,294) Gross dividend income received 383, , ,042 86,446 81,876 92,796 35,206 Profit income received 352, ,900 21,001 25,993 27,981 34, ,622 Net cash generated from/(used in) operating activities 410, ,272 (1,039,293) (364,912) (297,259) (335,558) (310,466) Cash flow from financing activities Proceeds from creations of units Payment for cancellation of units Net cash (used in)/generated from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 31 December 2010 Cash and cash equivalents at 31 December ,484, ,539 1,028, , , , ,994 (1,888,061) (1,187,467) (59,316) (61,633) (35,785) (17,551) (14,301) (403,789) (553,928) 968, , , , ,693 6,859 (295,656) (70,446) (54,087) 1,383 (43,898) (4,773) , ,974 56, ,017 6,253 7,589 49, ,528 2,039 1,673 3,119 1,480 P a g e 37

38 CASH FLOW STATEMENT FOR FINANCIAL PERIOD ENDED 31 DECEMBER 2010 ITTIZAN ISTIQRAR IHFAZ ITTIHAD ISTIFAD IRAD IHSAN 2010 RM RM RM RM RM RM RM Cash flow from operating activities Income before taxation 3,820, , , , , ,313 41,073 Adjustment for: Profit Income (539,159) (461,961) - (77,321) (75,723) (86,734) (68,751) Gross dividend income (609,704) (165,368) (186,799) (35,103) (53,283) (63,174) - Profit on disposal (756,524) (22,454) (124,181) (5,157) (1,241) - - Unrealised capital gain (2,649,069) (585,253) (683,350) (221,114) (180,215) (113,247) (14,893) Outgo from operations before changes in operating assets and (734,077) (355,327) (165,041) (82,638) (80,050) (73,842) (42,571) liabilities Proceeds from disposal of investment 11,177,544 6,293,538 1,226,223 2,144,175 1,885,951 1,445,775 - Purchase of investment (6,077,769) (6,108,699) (1,324,057) (2,463,221) (2,317,591) (1,808,510) (3,097,857) (Increase)/Decrease in other assets (1,226,828) 1,307,869 (201,019) (36,177) (35,910) (36,339) (135,430) (Decrease)/Increase in other liabilities (4,418,659) (1,521,619) 260, , , , ,174 Cash used in operations (1,279,789) (384,238) (203,629) (185,275) (235,198) (188,746) (3,147,684) Gross dividend income received 609, , ,799 35,103 53,283 63,174 - Profit income received 539, ,961-77,321 75,723 86,734 68,751 Net cash (used in)/ generated from operating activities (130,926) 243,091 (16,830) (72,851) (106,192) (38,838) (3,078,933) Cash flow from financing activities Proceeds from creations of units Payment for cancellation of units Net cash generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 July 2009 Cash and cash equivalents at 31 December ,583,301 1,572, , , , , ,431 (3,527,551) (1,476,537) (107,151) (88,915) (76,540) (69,594) (70,245) 55,750 95, , , ,482 85,855 85,186 (75,176) 338, ,152 56, ,017 (2,993,747) 75,906 6, , ,000, , ,974 56, ,017 6,253 P a g e 38

39 NOTES TO THE FINANCIAL STATEMENTS The Manager and its principal activities The Manager is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The address of its registered office and principal place of business of the Company is located at: 26 th Floor, Annexe Block Dataran Kewangan Darul Takaful No.4, Jalan Sultan Sulaiman Kuala Lumpur The Company is principally engaged in managing family and general takaful businesses. The family takaful business includes investment-linked products. The financial statements were approved by the Board of Directors of the Manager on 22 March Summary of significant accounting policies The accounting policies set out below have been applied consistently to periods presented in these financial statements, unless otherwise stated. (a) Basis of accounting The financial statements have been prepared in accordance with the notes set out in Note 1, The Guidelines on Investment-Linked Insurance/Takaful Business (issued by Bank Negara Malaysia) and the requirements of the certificate document. (b) Functional and presentation currency These financial statements are presented in Ringgit Malaysia (RM), which is the Funds functional currency. (c) Investments Quoted shares, which are Shariah approved, are stated at the closing market prices as at the date of the Statement of Assets and Liabilities. Islamic debt securities are valued at cost adjusted for amortisation of premiums or accretion of discounts over their par values at the time of acquisition using the effective yield method. The carrying value is subsequently revalued to reflect their fair values by using price quoted by Bond Pricing Agency Malaysia. Any increase or decrease in value of investments at each reporting date is taken into Statement of Income and Expenditure. (d) Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and bank balances. (e) Net Creation of Units Net creation of units represents contributions paid by participants as payment for new certificate/top up for existing certificate. Net creation of units is recognised on a receipt basis. (f) Net Cancellation of Units Net cancellation of units represents cancellation of units arising from the surrenders and withdrawals by participant. Net cancellation of units is recognised upon surrendering of/withdrawal from the related takaful certificates. (g) Income Recognition Dividend income is recognised when the right to receive payment is established. Income is recognised on time proportion basis that takes into account the effective yield of the asset. P a g e 39

40 Gain or loss of disposal of quoted shares is credited or charged to the Statement of Income and Expenditure. (h) Investment management fees Investment management fees are calculated in accordance with the provisions of the certificate document. 2. Islamic debt securities (i) Ittizan 31 December 2011 RM 31 December 2010 RM Cost 5,325,607 4,562,500 Accretion of discount - 24,866 Unrealised capital gain 13,768 83,359 Market value 5,339,375 4,670,725 (ii) Istiqrar Cost 8,101,855 7,372,126 Accretion of discount - 20,089 Unrealised capital gain 52, ,185 Market value 8,154,849 7,547,400 (iii) Ihsan Unquoted in Malaysia Islamic debt securities Cost 1,761,738 1,809,248 Amortisation of premium - (1,156) Unrealised capital gain 4,037 11,708 Market value 1,765,775 1,819, Quoted shares (i) Ittizan 31 December 2011 RM 31 December 2010 RM Quoted in Malaysia Cost 11,465,982 9,897,246 Unrealised capital gain 968,509 1,626,374 Market value 12,434,491 11,523,620 (ii) Istiqrar Quoted in Malaysia Cost 3,219,475 3,445,208 Unrealised capital gain 252, ,122 Market value 3,471,724 3,824,330 P a g e 40

41 (iii) Ihfaz Quoted in Malaysia Cost 4,156,811 3,037,428 Unrealised capital gain 617, ,161 Market value 4,774,381 3,734,589 (iv) Ittihad Quoted in Malaysia Cost 2,611,711 2,440,379 Unrealised capital gain 89, ,114 Market value 2,701,096 2,661,493 (v) Istifad Quoted in Malaysia Cost 2,503,404 2,317,591 Unrealised capital gain 66, ,215 Market value 2,570,304 2,497,806 (vi) Irad Quoted in Malaysia Cost 2,551,169 1,808,510 Unrealised capital gain 154, ,247 Market value 2,705,781 1,921,757 (vii) Ihsan Quoted in Malaysia Cost 1,086, ,609 Unrealised capital gain 2,656 4,341 Market value 1,089, , Financial Instruments The Funds are exposed to market, credit, liquidity and profit rate risks. Market risk Market risk arises when the value of securities fluctuate in response to the activities of the individual companies, general market, or economic conditions. The market risk is managed through portfolio diversification and asset allocation whereby the securities exposure will be reduced in the event of anticipated market weakness. Credit risk Credit risk refers to the ability of an issuer or a counterparty to make timely profit and principal payments. The maximum exposure to credit risk is represented by the carrying amount of each financial asset as disclosed in the Statement of Assets and Liabilities. Liquidity risk This may come about when the realisation of units is required in excess of normal amounts. The extent of exposure to the risk is contained in provisions set out in the prospectus. P a g e 41

42 Profit rate risk When the profit rate rises, bond prices fall and vice versa. The market risk is monitored through periodic reviews of its assets and liability positions, the objective of which being to limit the net changes in the value of assets and liabilities arising from profit rate movements. Shariah risk Shariah risk arises when transactions entered by an Islamic Financial Institution are declared impermissible. Any profit derived from Shariah non-compliance activities shall be cleansed in order to comply with Shariah requirements which may adversely affect the Fund. Fair values The fair values of investments have been disclosed in notes 2 and 3. The basis of deriving the fair values is disclosed in Note 1(c). P a g e 42

43 DETAILS OF INVESTMENTS ITTIZAN Security Name Number of Units Total Cost Market Value % of NAV Construction Gamuda Berhad 176, , , % Malaysian Resources Corporation Bhd 80, , , % WCT Berhad 115, , , % Consumer 371, ,461 1,043, % QL Resources Berhad 48, , , % UMW Holdings Bhd 55, , , % 103, , , % Industrial Products KNM Group Bhd 40, ,424 39, % Petronas Chemicals Group Bhd 71, , , % Petronas Gas Bhd 51, , , % Uchi Technologies Bhd 217, , , % Infrastructure Project Company 380,187 1,656,101 1,503, % Digi.Com Bhd 168, , , % YTL Power International Bhd 195, , , % Plantation 363, ,813 1,000, % IJM Plantations Bhd 50, , , % IOI Corporation Bhd 107, , , % Property 157, , , % IJM Land Berhad 80, , , % Mah Sing Group Bhd 60, , , % SP Setia Bhd 37, , , % UEM Land Holdings Bhd 80, , , % Real Estate Investment Trust 257, , , % Axis Real Estate Investment Trust 120, , , % Trading/Services 120, , , % Bumi Armada Berhad 30, , , % Axiata Group Berhad 124, , , % Dialog Group Berhad 111, , , % Faber Group Bhd 25,000 54,278 44, % Kencana Petroleum Berhad 127, , , % KFC Holdings (M) Bhd 90, , , % KPJ Healthcare Bhd 45, , , % Maxis Berhad 60, , , % Media Chinese International Ltd 88,000 86, , % P a g e 43

44 ITTIZAN Security Name Number of Units Total Cost Market Value % of NAV Malaysia Marine and Heavy Engineering Bhd 82, , , % Parkson Holdings Berhad 87, , , % Petronas Dagangan Bhd 25, , , % Sime Darby Bhd 65, , , % Tenaga Nasional Bhd 173,187 1,337,957 1,021, % Telekom Malaysia Bhd 235, ,540 1,167, % 1,371,664 5,938,014 6,672, % Total Malaysian Equities 3,124,749 11,465,982 12,434, % Islamic Debt Securities Rantau Abang Capital Berhad 4.91% 250, , , % Lingkaran Transkota Holdings Bhd 4.60% 250, , , % Kapar Energy Ventures Sdn Bhd 6.85% 500, , , % Maybank Islamic Sub-Debt 5.00% 500, , , % Westports Malaysia Sdn Bhd 4.54% 500, , , % Tesco Stores (M) Sdn Bhd 4.25% 500, , , % Binariang Gsm Sdn Bhd 6.60% 500, , , % Padiberas Nasional Berhad 5.05% 250, , , % Senari Synergy Sdn Bhd 4.62% 250, , , % CIMB Islamic Bank Berhad 5.85% 200, , , % Kencana Petroleum Berhad 3.90% 500, , , % Anih Berhad 4.70% 500, , , % DRB Hicom Berhad 4.50% 500, , , % 5,200,000 5,325,607 5,339, % Total Malaysian Equities & Islamic Debt Securities 8,324,749 16,791,589 17,773, % ISTIQRAR Security Name Number of Units Total Cost Market Value % of NAV Construction Malaysian Resources Corporation Bhd 30,000 65,874 64, % WCT Berhad 30,000 72,316 71, % 60, , , % Consumer QL Resources Berhad 30,000 91,223 92, % UMW Holdings Bhd 7,500 44,407 52, % 37, , , % P a g e 44

45 ISTIQRAR Security Name Number of Units Total Cost Market Value % of NAV Industrial Products KNM Group Bhd 10,000 59,262 9, % Petronas Gas Bhd 11, , , % Uchi Technologies Bhd 60,000 82,452 65, % Petronas Chemicals Group Berhad 20, , , % 101, , , % Infrastructure Project Company Digi.Com Bhd 47,000 78, , % Lingkaran Transkota Holdings Berhad 8,000 29,974 30, % YTL Power International Bhd 58, , , % 113, , , % Plantation IOI Corporation Bhd 48, , , % 48, , , % Property Mah Sing Group Bhd 25,000 44,660 52, % SP Setia Bhd 22,500 86,960 86, % 47, , , % Real Estate Investment Trust Axis Real Estate Investment Trust 80, , , % 80, , , % Trading/Services Axiata Group Berhad 56, , , % KFC Holdings (M) Bhd 16,000 58,456 61, % Maxis Berhad 30, , , % Media Chinese International Limited 64,000 60,774 74, % Parkson Holdings Berhad 28, , , % Malaysia Marine and Heavy Engineering Bhd 24, , , % Petronas Dagangan Bhd 4,800 49,188 85, % Petra Perdana Berhad 42,212 72,819 33, % Sime Darby Bhd 21, , , % Tenaga Nasional Bhd 44, , , % Telekom Malaysia Bhd 84, , , % 417,363 1,694,239 1,890, % Total Malaysian Equities 905,280 3,219,475 3,471, % Islamic Debt Securities Rantau Abang Capital Berhad 5.24% 750, , , % Lingkaran Transkota Holdings Bhd 4.60% 500, , , % Kapar Energy Ventures Sdn Bhd 6.85% 50, , , % Maybank Islamic Sub-Debt 5.00% 500, , , % Westports Malaysia Sdn Bhd 4.54% 500, , , % National Bank Of Abu Dhabi 4.75% 750, , , % P a g e 45

46 ISTIQRAR Security Name Number of Units Total Cost Market Value % of NAV Tesco Stores (M) Sdn Bhd 4.25% 750, , , % Binariang Gsm Sdn Bhd 6.60% 750, , , % Padiberas Nasional Berhad 5.05% 500, , , % Senari Synergy Sdn Bhd 4.62% 250, , , % CIMB Islamic Bank Berhad 5.85% 400, , , % Kencana Petroleum Berhad 3.90% 500, , , % Anih Berhad 4.70% 500, , , % DRB Hicom Berhad 500, , , % 7,900,000 8,101,855 8,154, % Total Malaysian Equities & Islamic Debt Securities 8,805,280 11,321,330 11,626, % IHFAZ Security Name Number of Units Total Cost Market Value % of NAV Construction Gamuda Berhad 44, , , % IJM Corporation Bhd 25, , , % Malaysian Resources Corp 24,700 51,188 53, % WCT Bhd 22,700 67,254 54, % YTL Corporation Bhd 47,600 66,867 70, % 165, , , % Consumer UMW Holdings Bhd 18, , , % 18, , , % Industrial Products Lafarge Malayan Cement Bhd 5,300 32,605 37, % Petronas Gas Bhd 18, , , % Petronas Chemicals Group Berhad 40, , , % 63, , , % Infrastructure Project Company Digi.Com Bhd 71, , , % Lingkaran Transkota Holdings Berhad 5,000 18,734 19, % YTL Power International Bhd 39,600 82,578 70, % 115, , , % Plantation Batu Kawan Bhd 2,700 24,282 47, % IOI Corporation Bhd 62, , , % Kuala Lumpur Kepong Bhd 11, , , % 76, , , % P a g e 46

47 IHFAZ Security Name Number of Units Total Cost Market Value % of NAV Property KLCC Property Holdings Bhd 5,500 17,002 17, % Mah Sing Group Bhd 28,300 48,451 59, % SP Setia Bhd 18,600 60,627 71, % UEM Land Holdings Bhd 35,700 93,661 86, % 88, , , % Trading/Services Airasia Bhd 22,100 59,990 83, % Axiata Group Berhad 76, , , % Dialog Group Bhd 18,695 23,978 49, % Kencana Petroleum Berhad 11,800 31,448 35, % KFC Holdings (M) Bhd 11,500 42,860 44, % Maxis Berhad 28, , , % Malaysia Marine and Heavy Engineering Bhd 23, , , % MISC Bhd 14, ,119 79, % MMC Corporation Bhd 13,100 27,224 36, % Parkson Holdings Berhad 28, , , % Petronas Dagangan Bhd 16, , , % Sapuracrest Petroleum Bhd 9,200 30,362 42, % Sime Darby Bhd 38, , , % Star Publications (M) Bhd 10,800 34,996 34, % Tenaga Nasional Bhd 33, , , % Telekom Malaysia Bhd 57, , , % 413,780 2,053,766 2,366, % Total Malaysian Equities 941,653 4,156,811 4,774, % ITTIHAD Security Name Number of Units Total Cost Market Value % of NAV Construction Gamuda 47, , , % IJM Corporation Bhd 16,000 87,390 90, % Malaysian Resources Corporation Bhd 20,000 43,977 43, % WCT Bhd 25,000 74,040 59, % 108, , , % Industrial Products Petronas Gas Berhad 12, , , % Petronas Chemicals Group Bhd 20, , , % 32, , , % P a g e 47

48 ITTIHAD Security Name Number of Units Total Cost Market Value % of NAV Infrastructure Project Company YTL Power International Bhd 33,000 75,732 58, % 33,000 75,732 58, % Plantation IOI Corporation Bhd 39, , , % IJM Plantations Berhad 20,000 61,001 56, % 59, , , % Property IJM Land Berhad 25,000 68,993 57, % SP Setia Bhd 15,000 52,182 57, % Mah Sing Group Bhd 35,000 62,698 73, % Sunway Berhad 14,857 41,600 37, % UEM Land Holdings Bhd 25,000 64,910 60, % UOA Development Bhd 14,000 36,764 19, % 128, , , % Trading/Services AirAsia Bhd 17,000 55,653 64, % Bumi Armada Berhad 7,500 30,258 30, % Axiata Group Berhad 34, , , % Dialog Group Bhd 20,000 35,299 52, % Faber Group Bhd 9,000 19,691 16, % Kencana Petroleum Bhd 56, , , % KFC Holdings (M) Berhad 19,500 72,456 74, % Maxis Berhad 22, , , % Malaysia Marine and Heavy Engineering Bhd 18, , , % Media Chinese International Ltd 21,000 20,291 24, % Parkson Holdings Bhd 30, , , % SapuraCrest Petroleum Berhad 5,000 20,718 23, % Sime Darby Bhd 10,000 88,848 92, % Tenaga Nasional Bhd 31, , , % Telekom Malaysia Bhd 21,200 74, , % 322,850 1,318,596 1,408, % Total Malaysian Equities 684,207 2,611,711 2,701, % P a g e 48

49 ISTIFAD Security Name Number of Units Total Cost Market Value % of NAV Construction Gamuda Bhd 50, , , % IJM Corporation Bhd 11,000 58,522 62, % YTL Corporation Bhd 32,500 48,175 48, % WCT Berhad 20,000 65,390 47, % Consumer 113, , , % MSM Malaysia Holdings Berhad 10,000 48,372 48, % UMW Holdings Bhd 8,500 58,708 59, % Industrial Products 18, , , % Petronas Gas Bhd 10, , , % Petronas Chemicals Group Berhad 25, , , % Infrastructure Project Company 35, , , % Digi.Com Bhd 24,000 68,580 93, % YTL Power International Berhad 33,000 75,619 58, % 57, , , % Plantation IOI Corporation Bhd 41, , , % Kuala Lumpur Kepong Bhd 4,000 88,824 90, % 45, , , % Property SP Setia Bhd 15,500 54,694 59, % UEM Land Holdings Bhd 25,000 65,056 60, % UOA Development Bhd 14,000 36,764 19, % 54, , , % Trading/Services Bumi Armada 7,500 30,258 30, % Axiata Group Berhad 26, , , % KFC Holdings (M) Berhad 19,500 72,456 74, % Maxis Berhad 21, , , % Malaysia Marine and Heavy Engineering Bhd 16,000 93,645 90, % Parkson Holdings Berhad 29, , , % Petronas Dagangan Berhad 5,000 84,419 89, % Sime Darby Berhad 14, , , % Tenaga Nasional Bhd 37, , , % Telekom Malaysia Berhad 31, , , % 208,660 1,166,773 1,213, % Total Malaysian Equities 533,460 2,503,404 2,570, % P a g e 49

50 IRAD Security Name Number of Units Total Cost Market Value % of NAV Construction Gamuda Bhd 30, , , % WCT Berhad 25,000 82,980 59, % 55, , , % Consumer MSM Malaysia Holdings Berhad 10,000 48,372 48, % QL Resources Berhad 15,000 45,368 46, % UMW Holdings Bhd 19, , , % 44, , , % Industrial Products Petronas Gas Bhd 10, , , % Petronas Chemicals Group Berhad 20, , , % Uchi Technologies Bhd 40,000 54,437 43, % 70, , , % Infrastructure Project Company Digi.Com Bhd 34,000 98, , % Lingkaran Transkota Holdings Berhad 8,000 29,974 30, % YTL Power International Bhd 47, ,214 83, % 89, , , % Plantation IOI Corporation Bhd 24, , , % Kuala Lumpur Kepong Bhd 3,000 66,618 68, % 27, , , % Property IJM Land Berhad 10,000 28,391 23, % Mah Sing Group Bhd 30,000 54,169 63, % KLCC Property Holdings Bhd 21,000 69,714 66, % SP Setia Bhd 7,500 28,987 28, % UOA Development Bhd 14,000 36,764 19, % 82, , , % Real Estate Investment Trust Axis Real Estate Investment Trust 50, , , % 50, , , % Trading/Services Amway (M) Holdings Bhd 6,200 48,550 57, % Axiata Group Berhad 18,400 83,423 94, % Bintulu Port Holdings Berhad 7,100 44,889 48, % KFC Holdings (M) Berhad 21,000 77,537 80, % KPJ Healthcare Bhd 21,000 86,553 98, % Maxis Berhad 22, , , % Malaysia Marine and Heavy Engineering Bhd 16,000 93,645 90, % Media Chinese International Ltd 40,000 37,557 46, % Parkson Holdings Berhad 18, , , % P a g e 50

51 IRAD Security Name Number of Units Total Cost Market Value % of NAV Petronas Dagangan Bhd 7, , , % Star Publication (M) Bhd 25,800 87,380 81, % Telekom Malaysia Berhad 48, , , % 252,200 1,065,865 1,201, % Total Malaysian Equities 671,700 2,551,169 2,705, % IHSAN Security Name Number of Units Total Cost Market Value % of NAV Construction Malaysian Resources Corporation Bhd 10,000 22,174 21, % WCT Berhad 20,000 65,390 47, % Consumer 30,000 87,564 69, % MSM Malaysia Holdings Berhad 10,000 48,372 48, % QL Resources Berhad 7,000 21,286 21, % Industrial Products 17,000 69,658 70, % Petronas Gas Berhad 4,600 53,912 69, % Petronas Chemicals Group Bhd 20, , , % Infrastructure Project Company 24, , , % Lingkaran Transkota Holdings Berhad 8,000 29,974 30, % YTL Power International Bhd 20,000 47,167 35, % Plantation 28,000 77,141 66, % IOI Corporation Bhd 15,000 77,608 80, % Kuala Lumpur Kepong Bhd 4,000 88,824 90, % Property 19, , , % Mah Sing Group Bhd 15,000 27,774 31, % UOA Development Bhd 14,000 36,764 19, % Trading/Services 29,000 64,538 50, % Axiata Group Berhad 7,000 32,322 35, % KFC Holdings (M) Berhad 19,500 72,456 74, % Maxis Berhad 8,000 42,781 43, % Media Chinese International Ltd 15,000 13,009 17, % Malaysia Marine and Heavy Engineering Bhd 10,000 60,415 56, % P a g e 51

52 IHSAN Security Name Number of Units Total Cost Market Value % of NAV Parkson Holdings Berhad 13,000 77,574 73, % Petronas Dagangan Berhad 3,800 63,895 67, % Sime Darby Berhad 7,500 69,187 69, % Telekom Malaysia Bhd 5,800 20,829 28, % 89, , , % Total Malaysian Equities 237,200 1,086,932 1,089, % Islamic Debt Securities Westports Malaysia Sdn Bhd 4.54% 250, , , % National Bank Of Abu Dhabi 4.75% 250, , , % Tesco Stores (M) Sdn Bhd 4.25% 250, , , % Binariang Gsm Sdn Bhd 6.60% 250, , , % Padiberas Nasional Bhd 5.05% 250, , , % Lingkaran Transkota Sdn Bhd 4.60% 250, , , % CIMB Islamic Bank Berhad 5.85% 200, , , % 1,700,000 1,761,738 1,765, % Total Malaysian Equities & Islamic Debt Securities 1,937,200 2,848,670 2,855, % P a g e 52

53 COMPARATIVE PERFORMANCE TABLE ITTIZAN Portfolio Composition 31-Dec Dec Jun Jun Jun-07 (%) (%) (%) (%) (%) a. Equities: Construction Consumer Products Industrial Products Infrastructure Plantation Property Trading & Services REITs Derivatives b. Islamic Debt Securities c. Money Market & Cash TOTAL Dec Dec Jun Jun Jun-07 Total NAV (RM) 21,239,238 20,661,313 16,785,184 23,103,316 23,649,602 Number of units 13,871,401 14,199,486 14,197,887 17,669,009 17,297,969 NAV per Unit (RM) Highest NAV (RM) Lowest NAV (RM) Total Annual Return (% p.a) a) Capital Growth (9.77) (4.38) b) Income Distributions Average Annual Return : One-Year (9.77) (4.38) Three-Year 3.07 (0.13) Five-Year Benchmark Performance (70% FBM Shariah Index : 30% 1-Month GIA Rates Maybank) Average Annual Return : One-Year (8.29) (5.33) Three-Year 2.34 (0.29) Five-Year * Note : 2010 return for one-year is based on 12-month from 31 Dec 2009 to 31 Dec 2010 P a g e 53

54 ISTIQRAR 31-Dec Dec Jun Jun Jun-07 Portfolio Composition (%) (%) (%) (%) (%) a. Equities: Construction Consumer Products Industrial Products Infrastructure Plantation Property Trading & Services REITs b. Islamic Debt Securities c. Money Market & Cash TOTAL Dec Dec Jun Jun Jun-07 Total NAV (RM) 11,715,673 11,796,035 10,820,752 11,708,998 11,722,068 Number of units 9,423,878 9,910,043 9,820,000 9,776,795 9,562,501 NAV per Unit (RM) Highest NAV (RM) Lowest NAV (RM) Total Annual Return (% p.a) a) Capital Growth (8.17) (2.44) b) Income Distributions Average Annual Return : One-Year (8.17) (2.44) Three-Year 0.69 (1.60) Five-Year Benchmark Performance (30% FBM Shariah Index : 70% 1-Month GIA Rates Maybank) Average Annual Return : One-Year (2.53) (1.18) Three-Year Five-Year * Note : 2010 return for one-year is based on 12-month from 31 Dec 2009 to 31 Dec 2010 P a g e 54

55 Portfolio Composition IHFAZ ITTIHAD 31-Dec Dec Dec Dec-10 (%) (%) (%) (%) a. Equities: Construction Consumer Products Industrial Products Information Technology Infrastructure Plantation Property Trading & Services b. Islamic Debt Securities c. Money Market & Cash TOTAL IHFAZ ITTIHAD 31-Dec Dec Dec Dec-10 Total NAV (RM) 5,058,579 4,010,804 3,786,286 3,422,707 Number of units 3,790,811 3,140,055 3,383,972 3,158,543 NAV per Unit (RM) Highest NAV (RM) Lowest NAV (RM) Total Annual Return (% p.a) a) Capital Growth b) Income Distributions Average Annual Return : One-Year Three-Year Five-Year Benchmark Performance FBMSI FBMSI FBMSI FBMSI Average Annual Return : One-Year Three-Year Five-Year P a g e 55

56 Portfolio Composition ISTIFAD IRAD 31-Dec Dec Dec Dec-10 (%) (%) (%) (%) a. Equities: Construction Consumer Products Industrial Products Information Technology Infrastructure Plantation Property Trading & Services REITS b. Islamic Debt Securities c. Money Market & Cash TOTAL ISTIFAD IRAD 31-Dec Dec Dec Dec-10 Total NAV (RM) 3,672,455 3,349,985 3,741,263 3,285,447 Number of units 3,335,751 3,112,006 3,306,250 3,088,798 NAV per Unit (RM) Highest NAV (RM) Lowest NAV (RM) Total Annual Return (% p.a) a) Capital Growth b) Income Distributions Average Annual Return : One-Year Three-Year Five-Year Benchmark Performance FBMSI FBMSI FBMSI FBMSI Average Annual Return : One-Year Three-Year Five-Year P a g e 56

57 Portfolio Composition IHSAN 31-Dec Dec-10 (%) (%) a. Equities: Construction Consumer Products Industrial Products Information Technology - - Infrastructure Plantation Property Trading & Services b. Islamic Debt Securities c. Money Market & Cash TOTAL IHSAN 31-Dec Dec-10 Total NAV (RM) 3,458,390 3,126,259 Number of units 3,326,291 3,084,619 NAV per Unit (RM) Highest NAV (RM) Lowest NAV (RM) Total Annual Return (% p.a) a) Capital Growth b) Income Distributions - - Average Annual Return : One-Year Three-Year - - Five-Year - - Benchmark Performance FBMSI FBMSI Average Annual Return : One-Year Three-Year - - Five-Year - - * There was no performance return for Ihsan in FYE 31 December 2010 as the fund is a new fund. P a g e 57

58 P a g e 58