Prudential BSN Takaful. For All. For Life.

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2 At PruBSN, we power our business by two key virtues innovation and dynamism. This allows us to respond to your needs efficiently and effectively. It is reflected in the innovative first-to-market Takaful products that we develop and in the dynamic purposeful partnerships we form with our employees, agents, business partners, and you, our customer. Most importantly, it enables us to genuinely care for and provide you and your loved ones with Takaful products and services to enrich your life. Prudential BSN Takaful. For All. For Life.

3 Contents 2 CEO s Message 4 Fund Objectives 5 Investment Review Dear Certificate Holders, We have pleasure in presenting to you the Takafulink Funds Report 2011 of Prudential BSN Takaful Berhad. The full version of this report is also available on our website at 9 Fund Performance 10 Investment Outlook 14 Financial Highlights 26 Statement of Assets and Liabilities 31 Statement of Changes in Net Asset Value 35 Statement of Income and Expenditure 39 Notes to the Accounts 41 Statement by Directors 42 Independent Auditors Report

4 CEO S MESSAGE Our flagship Takafulink Dana Ekuiti Fund recorded a strong return of 8.49%, ranking it the best performing equity fund in Azim Mithani CEO, Prudential BSN Takaful Berhad 2 Takafulink Funds Report 2011

5 Dear PruBSN Takafulink Certificate Holders, Assalamualaikum and salam sejahtera. It gives me great pleasure to present to you the 2011 Takafulink Annual Report which should serve as an essential reference as you review your financial needs and goals was a challenging year for both the global economy, following headwinds from the European debt crisis. Nevertheless, Malaysia recorded a healthy GDP growth of 5.2%, only slightly lower than the previous year. Our own business has remained resilient with total Annual Contribution Equivalent (ACE) in 2011 of RM231 million, representing 29% growth and a market share of 28.8%. It gives me great pleasure to inform you that this makes us the Number 1 Takaful Operator in Malaysia based on new business (ACE) results. Similarly, our funds performed well in Our flagship Takafulink Dana Ekuiti Fund recorded a strong return of 8.49%, surpassing our official benchmark by 6.08%, ranking it the best performing equity fund in Our Takafulink Dana Bon Fund and Takafulink Dana Urus Fund also recorded impressive returns of 4.89% and 7.49% respectively 1. Indeed, our Dana Urus Fund is also ranked number 1 against our peers in the industry. You will find more of this information as you flip the pages of this report. For such tremendous results, we thank you for the confidence and trust you have shown in PruBSN. It is only with your support that we can achieve this level of performance. We remain confident that we can build on our past success to better serve you, our customers, who are the heart of all that we do. Thank you once more for your continued support. Wishing you the very best of health, prosperity and peace in 2012! 1 Source: Lipper IM (Date of extraction: 10 th January 2012), 1 year performance, January to December 2011 Takafulink Funds Report

6 FUND OBJECTIVES The Takafulink Dana Ekuiti Fund aims to maximise returns over medium to long term by investing in high quality Shariah-approved shares listed on the Kuala Lumpur Stock Exchange. The Takafulink Dana Bon aims to provide medium to long term accumulation of capital by investing in selected Islamic Private Debt Securities (IPDS) and Islamic Financing Facilities (IFF). The Takafulink Dana Urus seeks to maximise returns over medium to long term by investing in Shariah-approved shares and Islamic Private Debt Securities (IPDS) and Islamic Financing Facilities (IFF) through Takafulink Dana Ekuiti and Takafulink Dana Bon and in any other such Takafulink funds that may become available in the future. The Takafulink Dana Ekuiti Dinasti aims to provide long term capital appreciation by investing in Shariah-compliant investments with exposure to the Greater China region. 4 Takafulink Funds Report 2011

7 INVESTMENT REVIEW Equity Market The market commenced on a strong note in 2011 with the FBM KLCI reaching a new high of 1,574.49, before succumbing to profit taking, ahead of Chinese New Year. February and March brought with it a lot of concerns and uncertainties for the Malaysian market with the ongoing Middle East and North Africa (MENA) region instability and rising oil prices. Malaysia s full year 2010 corporate reporting season was not very inspiring with more disappointments than positive surprises. On 11 March 2011, the earthquake and ensuing tsunami disaster in Japan caused the equity markets to correct globally due to the growing uncertainty. In 2Q11, sentiment in the global equity markets continued to be dampened by Greece s debt woes. Nonetheless, Malaysia s stock market performed relatively well, spurred from the excitement in banking stocks as M&A became the theme in June. Also in June, the listing of MSM Holdings which debuted at a 40% premium on the first day helped drive the market to close 2Q11 higher then the previous high last seen on 17 January Q11 started off with a bang for the KLCI scaling new all-time highs early in the quarter. However, profit taking soon set in as Wall Street and European markets experienced selling pressures on renewed concerns on their debt problems. In the US, we saw the loss of America s triple-a rating for the first time in history and the announcement of US Federal Reserve s choice of Operation Twist which caused the reversal of the 2-year long USD carry trade. The lack of policy direction in response to the Europe debt crisis also weighed on the local market. Domestically, Malaysia s stock market was negatively affected by the Bersih street rally on 9th July which revived concerns about political uncertainties. Sentiment was also weighed down by disappointing corporate results. Many big-cap GLC stocks such as Tenaga, Axiata, MISC, Petronas Chemicals, CIMB, MAS and Proton reported results that were below expectations. On the flip side, M&A activities continued to steal the limelight as companies from the property and finance sectors announced potential buy out offers. Takafulink Funds Report

8 INVESTMENT REVIEW Equity Market (cont d) The KLCI staged a strong rally in early 4Q11 on the back of renewed confidence in Europe that a resolution was imminent for the debt crisis in Europe, from the EU summit held on 23rd October However, the KLCI subsequently corrected sharply in mid-november amidst growing uncertainty in the EU due to transitions in governments in Italy, Greece and Spain, and potential contagion effects. Sentiment was also dampened by the failure of US Congress super committee to reach an agreement on ways to achieve USD2.1 trillion of cost savings in the budget, which would result in across the board spending cuts in Despite disappointment from the 9 December 2011 EU Summit where investors had hoped for a more concrete resolution to the Euro debt crisis, the market was supported by window dressing activities. Domestically, 3Q11 results reporting season were generally in line or slightly below expectations, with few companies surprising on the upside. The 2012 Budget announced on 7th October 2011, will predominantly benefit the low income earners, civil servants, consumer sector and education sectors. The FBM KLCI closed the year under review at 1, points. It rose marginally by 0.78% during the period under review, broadly outperforming regional markets. Bond Market Review On 27 January 2011, BNM decided to maintain the OPR at 2.75%. The Monetary Policy Committee (MPC) considered the current monetary policy as appropriate and consistent with the latest assessment of the economic growth and inflation prospects. Whilst, BNM decided to maintain the OPR Rate at 2.75% on 11 March 2011, the MPC stated that monetary policy is expected to remain supportive of growth, but the degree of monetary accommodation may be reviewed given the sustained growth in the economy and inflation risks. BNM also announced the increased the Statutory Reserve Requirement (SRR) Ratio from 1.00% to 2.00%, effective from 1 April 2011 and clarified that the SRR change is not a signal on the stance of monetary policy, but a pre-emptive measure to reduce the risk of a build-up of liquidity caused by capital flows into Asian emerging economies. 6 Takafulink Funds Report 2011

9 INVESTMENT REVIEW Bond Market Review (cont d) Amidst divided market views, BNM had on May 2011, hiked the OPR by 25 bps to 3.00% after holding it unchanged in 4 consecutive Monetary Policy Committee (MPC) meetings. The Monetary Policy Statement (MPS) cited that although the global recovery is expected to continue going forward, downside risks have increased, arising from the potential for higher energy and commodity prices, possible supply disruptions following developments in Japan and the heightened volatility in capital flows to emerging economies. On the domestic front, demand factors could further exert upward pressure on prices in 2H2011. BNM also raised the Statutory Reserve Requirement (SRR) Ratio from 2.00% to 3.00%, effective from 16 May 2011, as a pre-emptive measure to manage the significant build up of liquidity which may result in financial imbalances and create risks to financial stability. In the July and September MPC meet, BNM decided to keep the OPR unchanged at 3.00%, citing that heightened concerns over external demand risk could lead to slowing export momentum. BNM expects inflation to remain relatively stable for the rest of the year as cost-push inflation is expected to increase only at a gradual pace. The SRR Ratio was also raised from 3.00% to 4.00% in July. In the MPC meeting on 11 November, BNM held the overnight policy rate (OPR) at 3.0%, citing that whilst the Malaysian economy is expected to expand, the weaker external developments could affect the overall growth prospects of the domestic economy. Inflation is expected to remain stable for the rest of the year and moderate into For the period under review, the 3-, 5- and 10-year sovereign bond yields changed by -13 bps, -12 bps and -31 bps to close at 2.98%, 3.22% and 3.69% respectively. The Government bonds rallied in the second half of the year as BNM held its OPR unchanged at 3.00%, citing weakening global and domestic economic outlook as well as moderate inflation. Corporate bond yields generally moved in tandem with sovereign bond yields, albeit at a lag. Activities in the corporate bond market were supported by ample liquidity and an improving credit environment. Takafulink Funds Report

10 INVESTMENT REVIEW Asia-Pacific ex-japan Markets started 2011 on a positive note backed by optimism that the global economy was on a recovery path. Then a series of events: rising oil prices, political unrest in North Africa and Middle East and a devastating earthquake in Japan quickly undermined confidence. As the year progressed, investors had to grapple with concerns over US growth and fiscal problems, Europe s escalating debt crisis, higher inflation and rising interest rate expectations in Asia. Worries that China might suffer a hard landing due to excessive policy tightening also affected sentiment. As the year drew to a close, most equity markets in the Asia Pacific region ex-japan managed to eke out some gains, recovering in part the hefty across-the-board losses recorded in November. China s move to cut its reserve requirement ratio for banks for the first time since 2008 and the coordinated action by six of the world s central banks to cut funding costs for European lenders helped boost the market. A series of favourable U.S. economic data boosted optimism and temporarily eased worries that Europe s debt crisis will erode global growth. Nonetheless the year was marked by heightened market volatility as investors swung between risk taking and risk adverse modes. The MSCI Asia ex Japan posted a decline of 17.98%. India was the worst performing market, underperforming its regional peers due to issues ranging from inflation, lack of policy action and a slowing economy. Persistent inflationary pressures triggered a series of rate hikes by the Reserve Bank of India. As a result, economic growth numbers were downgraded several times during the year. On the other hand, the equity markets of Southeast Asian countries such as Malaysia, Philippines and Indonesia, with inflation rates under their central bank s target zone, emerged as the big outperformers. 8 Takafulink Funds Report 2011

11 FUND PERFORMANCE Takafulink Dana Ekuiti As at 31 December 2011, the Fund s Net Asset Value per unit appreciated by 8.50% to RM as compared to RM as at 31 December Since inception (1 December 2006), the Fund registered a positive return of 52.48%. Takafulink Dana Bon As at 31 December 2011, the Fund s Net Asset Value per unit increased to RM from RM as at 31 December 2010, recording a return of 4.88% for the period under review. Since inception (1 December 2006), the Fund registered a positive return of 23.13%. Takafulink Dana Urus As at 31 December 2011, the Net Asset Value per unit of the Takafulink Dana Urus was RM compared to RM as at 31 December 2010, recording a return of 7.49% for the period under review. Since inception (1 December 2006), the Fund registered a positive return of 46.60%. Takafulink Dana Ekuiti Dinasti As at 31 December 2011, the Fund s Net Asset Value per unit depreciated by 11.33% to RM as compared to RM as at 31 December Since inception (5 April 2010), the Fund registered an adverse return of 3.00%. Takafulink Funds are Shariah compliant. Takafulink Funds Report

12 Equity INVESTMENT OUTLOOK 2012 will continue to be faced with many uncertainties, with 2011 unresolved issues rolling over into 2012, and markets will have to stomach additional potential volatilities on the political front as many countries will be having their elections during the year, which may result in changes in policies. Domestically, Malaysia will continue to take its cue from the issues concerning the external environment. We expect consumer spending to remain fairly resilient for now, as goodies from the Budget 2012 becomes effective 1 Jan 2012, such as the 7-13% pay rise for government employees and one-off payments. Catalysts for the next few months include the potential for the General Election to be called will potentially see the listing of Khazanah s healthcare unit, Felda Global Ventures, amongst others. M&A s will also continue to be a theme in Whilst we believe that corporate earnings growth may be near a bottom, we remain cautious on Malaysian equities going into 2012 given the outstanding global uncertainties. Current global issues are going to take awhile to resolve and will likely be further complicated, potentially in the form of political changes, with the many elections scheduled to occur globally in However these events create opportunities for out performance over the longer term. We continue to favour a bottom-up investment strategy moving forward, whereby tactical stock selection will drive fund outperformance. We will continue to look for companies with stability in earnings, competitiveness in local or overseas markets, transparency and good track record of corporate governance. Bond In the MPC meeting on 31 January 2012, Bank Negara Malaysia decided to maintain the overnight policy rate (OPR) at 3.0%, reiterating that the weaker external developments could affect the overall growth prospects of the domestic economy. With inflation expected to moderate in 2012, we are of the view that the OPR has an increased likelihood of heading south in The Ringgit has been volatile in recent weeks due to increasing risk aversion, as the European debt crisis deepens, and this is expected to prevail in the near term. Supply and activity in corporate bonds is expected to pick up as Issuers take advantage of the low interest rate levels to raise funding. The bond market continues to be supported by ample domestic liquidity and an improving credit environment. 10 Takafulink Funds Report 2011

13 INVESTMENT OUTLOOK ASIA Market Overview Markets started 2011 on a positive note backed by optimism that the global economy was on a recovery path. Then a series of events: rising oil prices, political unrest in North Africa and Middle East and a devastating earthquake in Japan quickly undermined confidence. As the year progressed, investors had to grapple with concerns over US growth and fiscal problems, Europe s escalating debt crisis, higher inflation and rising interest rate expectations in Asia. Worries that China might suffer a hard landing due to excessive policy tightening also affected sentiment. As the year drew to a close, most equity markets in the Asia Pacific region ex-japan managed to eke out some gains, recovering in part the hefty across-the-board losses recorded in November. China s move to cut its reserve requirement ratio for banks for the first time since 2008 and the coordinated action by six of the world s central banks to cut funding costs for European lenders helped boost the market. A series of favourable U.S. economic data boosted optimism and temporarily eased worries that Europe s debt crisis will erode global growth. Nonetheless the year was marked by heightened market volatility as investors swung between risk taking and risk adverse modes. The MSCI Asia ex Japan posted a decline of 17.98%. India was the worst performing market, underperforming its regional peers due to issues ranging from inflation, lack of policy action and a slowing economy. Persistent inflationary pressures triggered a series of rate hikes by the Reserve Bank of India. As a result, economic growth numbers were downgraded several times during the year. On the other hand, the equity markets of Southeast Asian countries such as Malaysia, Philippines and Indonesia, with inflation rates under their central bank s target zone, emerged as the big outperformers. Takafulink Funds Report

14 INVESTMENT OUTLOOK ASIA Outlook The year of 2012 has started with some encouraging market performances, sparked by better-than-anticipated US and Chinese economic data but it is probably too early to say they represent a trend. The factors fuelling 2011 s volatility that is Europe s sovereign and banking issues and growth concerns remain in place - to varying degrees. Equity valuations in many markets suggest that much of the bad news was discounted in the market sell-offs in 3Q2011. All in, value does seem increasingly apparent but this is not without its risks; the factors that undermined confidence over the past few years could still inflict another sell-off. Asia, on the other hand, should remain fairly resilient, although not unaffected by the advanced economies woes. Concerns over China s potential hard landing is over done we believe, as the government s blueprint for growth continues to be oriented towards increasing consumption, and it has plenty of fiscal power to stimulate the economy if need be. While the market is expected to remain volatile, economic growth in the region is expected to surpass developed markets over the medium term and a large number of the Asian companies we invest in continue to enjoy good business conditions. As such, we will continue to focus on a bottom-up approach in search for undervalued stocks. 12 Takafulink Funds Report 2011

15 INVESTMENT OUTLOOK GLOBAL Market Overview The global market witnessed a volatile year in Despite a strong start at the beginning of the year, the market was hit by rising oil prices amid political unrest in North Africa and Middle East as well as a devastating earthquake in Japan. The lack of policy direction in response to the Europe debt crisis adversely impacted the sentiment in the global market. European policy makers, with opposing ideas and backgrounds, are divided on how the Eurozone crisis can be resolved. The burden of sovereign debt has not been confined to Europe. In July, political gridlock about raising the US debt ceiling almost forced the world s largest economy into a technical default and prompted S&P to strip the country of its AAA rating. However, a series of favorable U.S. economic data boosted optimism and temporarily eased worries that Europe s debt crisis will erode global growth. Global equities ended the year lower with the MSCI World Index declining by 7.62%. Developed markets such as the US generally outperformed their Asian counterparts. Outlook Macro risks are likely to continue to overhang markets in Ongoing uncertainties over the European sovereign debt crisis, the status of the US economy and the pace of economic growth in China suggest that upcoming data and other news flow could still cause considerable volatility in the market. The structural debt issues and fiscal drag in the Western economies are expected to be headwinds for global growth. Europe shows little sign of any possible quick and clean resolution to its sovereign debt crisis; a long-drawn-out process is expected as political deadlock is likely to pose hindrance to any decisive, concerted policy actions. Having said that, economic data, notably from the US and China have been surprising on the upside. However, it is probably too early to conclude they represent a trend. It is likely that policy actions will prove more crucial than before to driving asset prices and valuations; not just in Europe or the US, but also monetary policy stances in the emerging world. Against these backdrops, the Fund Managers will continue to focus on bottom-up approach in search for undervalued stocks. Takafulink Funds Report

16 FINANCIAL HIGHLIGHTS Comparative Performance Table for financial year ended 31 December 2011 TAKAFULINK DANA EKUITI Category % % % % % Equity Building Materials Conglomerates Construction Consumer Products Finance Industrial Media Motor Oil & Gas Plantation Power Property Technology Telecommunications Timber 0.41 Transportation Water Cash and Deposits Other Assets (0.01) Total Liabilities (1.36) (1.37) (1.85) (0.46) (2.78) Total Takafulink Funds Report 2011

17 FINANCIAL HIGHLIGHTS Comparative Performance Table for financial year ended 31 December 2011 TAKAFULINK DANA EKUITI Category % % % % % Total Net Asset Value (RM) 203,868, ,289,501 93,892,359 39,816,472 22,179,240 Units in Circulation 133,612, ,463,328 78,577,690 45,362,268 16,330,676 NAV Per Unit (RM) Highest NAV per unit (RM) Lowest NAV per unit (RM) Total Return (+) - Capital Growth 8.49% 17.70% 36.13% % 35.81% - Income Distribution Average Annual Return -Fund (+) Period One year 8.49% 17.70% 36.13% % 35.81% Three years 20.24% 1.17% 5.53% n/a n/a Five years 8.46% n/a n/a n/a n/a Average Annual Return-Benchmark: FTSE-Bursa Malaysia Emas Shariah Index (FBMSHA) Period One year 2.41% 18.20% 43.03% % 43.69% Three years 20.08% -1.53% 5.10% n/a n/a Five years 7.04% n/a n/a n/a n/a Takafulink Funds Report

18 TAKAFULINK DANA EKUITI FUND PERFORMANCE (Since Inception) Takafulink Dana Ekuiti Vs. FTSE-Bursa Malaysia Emas Shariah Index (FBMSHA) % % SI % Change (20.00) (20.00) (40.00) Dec-06 Jun-07 Jan-08 Aug-08 Feb-09 (40.00) Sept-09 Apr-10 Nov-10 May-11 Dec-11 Date TDE FBMSHA + The Fund returns are calculated based on five decimal place The unit prices of the Funds may go down as well as up and the past performance figures shown are not indicative of future performance. 16 Takafulink Funds Report 2011

19 FINANCIAL HIGHLIGHTS Comparative Performance Table for financial year ended 31 December 2011 TAKAFULINK DANA BON % % % % % Category Fixed Income Securities: - Islamic Debt Securities Government Quasi Government Cash and Deposits Other Assets Total Liabilities (0.91) (0.98) (0.80) (0.59) (0.63) Total Total Net Asset Value (RM) 37,630,097 23,791,465 18,724,204 15,528,062 11,704,512 Units in Circulation 30,549,422 20,258,545 16,817,282 14,645,091 11,238,402 NAV Per Unit (RM) Highest NAV per unit (RM) Lowest NAV per unit (RM) Total Return (+) - Capital Growth 4.89% 5.47% 5.01% 1.81% 4.15% Takafulink Funds Report

20 FINANCIAL HIGHLIGHTS Comparative Performance Table for financial year ended 31 December 2011 TAKAFULINK DANA BON % % % % % Average Annual Return -Fund (+) Period One year 4.89% 5.47% 5.01% 1.81% 4.15% Three years 5.12% 4.08% 3.44% n/a n/a Five years 3.89% n/a n/a n/a n/a Average Annual Return-Benchmark: MBB 12mth Tier 1 FD rate Period One year 2.93% 2.51% 2.13% 2.90% 3.20% Three years 2.52% 2.51% 2.65% n/a n/a Five years 2.68% n/a n/a n/a n/a 18 Takafulink Funds Report 2011

21 TAKAFULINK DANA BON FUND PERFORMANCE (Since Inception) Takafulink Dana Bon Vs. 1 Month Maybank Tier 1 Islamic Deposit Rate % % SI % Change (5.00) 0.00 (5.00) (10.00) Dec-06 Oct-07 Aug-08 Jun-09 (10.00) Apr-10 Feb-11 Dec-11 Date TDB 1 MTH MBB T1 Islamic Deposit Rate + The Fund returns are calculated based on five decimal place The unit prices of the Funds may go down as well as up and the past performance figures shown are not indicative of future performance. Takafulink Funds Report

22 FINANCIAL HIGHLIGHTS Comparative Performance Table for financial year ended 31 December 2011 TAKAFULINK DANA URUS % % % % % Category Investment in- Takafulink Dana Equity Fund Takafulink Dana Bon Fund Cash and Deposits Other Assets 0.01 Total Liabilities (0.00) (0.01) Total Total Net Asset Value (RM) 61,186,502 39,683,534 23,037,250 9,031,083 3,047,901 Units in Circulation 41,711,100 29,079,728 19,479,632 9,864,080 2,358,805 NAV Per Unit (RM) Highest NAV per unit (RM) Lowest NAV per unit (RM) Total Return (+) - Capital Growth 7.49% 15.39% 29.17% % 29.21% 20 Takafulink Funds Report 2011

23 FINANCIAL HIGHLIGHTS Comparative Performance Table for financial year ended 31 December 2011 TAKAFULINK DANA URUS % % % % % Average Annual Return -Fund (+) Period One year 7.49% 15.39% 29.17% % 29.21% Three years 17.01% 1.84% 5.26% n/a n/a Five years 7.60% n/a n/a n/a n/a Average Annual Return-Benchmark: 80% FBMSHA + 20% 1 Month Maybank Tier 1 Islamic Deposit rate Period One year 2.29% 15.06% 34.02% % 30.22% Three years 16.38% -0.69% 4.95% n/a n/a Five years 6.34% n/a n/a n/a n/a Takafulink Funds Report

24 TAKAFULINK DANA URUS FUND PERFORMANCE (Since Inception) Takafulink Dana Urus Vs. 80% FBMSHA + 20% 1 Month Maybank Tier 1 Islamic Deposit Rate % % SI % Change (20.00) Dec-06 Oct-07 Aug-08 Jun-09 (20.00) Apr-10 Feb-11 Dec-11 Date TDU 80%FBMSHA & 20%1 MTH MBB T1 Islamic Deposit Rate + The Fund returns are calculated based on five decimal place The unit prices of the Funds may go down as well as up and the past performance figures shown are not indicative of future performance. 22 Takafulink Funds Report 2011

25 FINANCIAL HIGHLIGHTS Comparative Performance Table for financial year ended 31 December 2011 TAKAFULINK DANA EKUITI DINASTI % % Category Investment in- PRUdinasti Equity Fund Cash and Deposits Other Assets Total Liabilities (0.70) (1.36) Total Total Net Asset Value (RM) 4,523,965 1,465,272 Units in Circulation 4,663,788 1,339,304 NAV Per Unit( RM) Highest NAV per unit (RM) Lowest NAV per unit (RM) Total Return (+) - Capital Growth % 9.41% Takafulink Funds Report

26 FINANCIAL HIGHLIGHTS Comparative Performance Table for financial year ended 31 December 2011 TAKAFULINK DANA EKUITI DINASTI % % Average Annual Return -Fund (+) Period One year % 9.40% Three years n/a n/a Five years n/a n/a Average Annual Return-Benchmark: Dow Jones Islamic Market Greater China Index Period One year % 8.66% Three years n/a n/a Five years n/a n/a 24 Takafulink Funds Report 2011

27 TAKAFULINK DANA EKUITI DINASTI FUND PERFORMANCE (Since Inception) Takafulink Dana Ekuiti Dinasti Vs. Dow Jones Islamic Market Greater China Index % % SI % Change 3.00 (2.00) 3.00 (2.00) (7.00) (7.00) (12.00) Apr-10 Sept-10 Feb-11 Jul-11 (20.00) Dec-11 Date TDED Dow Jones Islamic Market Greater China Index + The Fund returns are calculated based on five decimal place The unit prices of the Funds may go down as well as up and the past performance figures shown are not indicative of future performance. Takafulink Funds Report

28 STATEMENT OF ASSETS AND LIABILITIES as at 31 December 2011 TAKAFULINK DANA EKUITI RM % RM % Investments Shariah Approved Shares 170,927, ,570, Cash and Deposits Cash at Bank 9, , Deposits 34,700, ,650, Tax Assets 838, , Other Assets 169, , Dividend Receivable 93, , Accrued Profit 76, , Total Assets 206,645, ,227, Provision for Deferred Tax (1,261,226) (0.62) (1,002,200) (0.71) Provision for Taxation (1,419,346) (0.70) ( 843,023) (0.60) Other Liabilities (96,728) (0.04) (92,402) (0.06) Total Liabilities (2,777,300) (1.36) (1,937,625) (1.37) Net Asset Value of the Fund 203,868, ,289, Takafulink Funds Report 2011

29 STATEMENT OF ASSETS AND LIABILITIES as at 31 December 2011 TAKAFULINK DANA EKUITI RM % RM % Participants Fund Capital 160,811, ,624, Generated Income Carried Forward 43,056, ,665, ,868, ,289, Net Asset Value Per Unit (RM) NUMBER OF UNITS 133,612, ,463,328 Takafulink Funds Report

30 STATEMENT OF ASSETS AND LIABILITIES as at 31 December 2011 TAKAFULINK DANA BON RM % RM % Investments Islamic Debts Securitites 33,008, ,733, Cash and Deposits Cash at Bank 7, , Deposits 4,690, ,090, Other Assets 266, , Total Assets 37,972, ,026, Provision for Taxation (303,820) (0.81) (214,779) (0.90) Provision for Deferred Tax (37,556) (0.10) (17,339) (0.07) Other Liabilities ( 1,282) (2,730) (0.01) Total Liabilities ( 342,658) (0.91) (234,848) (0.98) Net Asset Value of the Fund 37,630, ,791, Participants Fund Capital 33,600, ,166, Generated Income Carried Forward 4,029, ,625, ,630, ,791, Net Asset Value Per Unit (RM) NUMBER OF UNITS 30,549,422 20,258, Takafulink Funds Report 2011

31 STATEMENT OF ASSETS AND LIABILITIES as at 31 December 2011 TAKAFULINK DANA URUS RM % RM % Investments in - Takafulink Dana Ekuiti Fund 43,876, ,679, Takafulink Dana Bon Fund 17,309, ,003, Cash at bank Other Assets 2, Total Assets 61,186, ,686, Other Liabilities (278) (0.00) (2,826) (0.01) Total Liabilities (278) (0.00) (2,826) (0.01) Net Asset Value of the Fund 61,186, ,683, Participants Fund Capital 50,766, ,954, Generated Income Carried Forward 10,419, ,729, ,186, ,683, Net Asset Value Per Unit (RM) NUMBER OF UNITS 41,711,100 29,079,728 Takafulink Funds Report

32 STATEMENT OF ASSETS AND LIABILITIES as at 31 December 2011 TAKAFULINK DANA EKUITI DINASTI RM % RM % Investments in - Prudinasti Equity Fund 4,457, ,425, Cash At Bank 41, , Other Assets 56, , Provision for Deferred Tax 14, (3,682) (0.25) Total Assets 4,570, ,481, Other Liabilities (46,485) (1.03) (16,232) (1.11) Total Liabilities (46,685) (1.03) (16,232) (1.11) Net Asset Value of the Fund 4,523, ,465, Participants Fund Capital 4,868, ,375, Generated Income Carried Forward (344,532) (7.62) 89, ,523, ,465, Net Asset Value Per Unit (RM) NUMBER OF UNITS 4,663,788 1,339, Takafulink Funds Report 2011

33 STATEMENT OF CHANGES IN NET ASSET VALUE for the financial year ended 31 December 2011 TAKAFULINK DANA EKUITI RM RM Net Asset Value at beginning of year 141,289,501 93,892,359 Amounts received from units created 90,339,019 68,787,908 Amounts paid for units cancelled (42,151,420) (40,502,877) Excess of income over outgo 14,391,347 19,112,111 Value of fund at end of year 203,868, ,289,501 Takafulink Funds Report

34 STATEMENT OF CHANGES IN NET ASSET VALUE for the financial year ended 31 December 2011 TAKAFULINK DANA BON RM RM Net Asset Value at beginning of year 23,791,465 18,724,204 Amounts received from units created 25,957,440 7,488,511 Amounts paid for units cancelled (13,522,604) (3,547,042) Excess of income over outgo 1,403,796 1,125,792 Value of fund at end of year 37,630,097 23,791, Takafulink Funds Report 2011

35 STATEMENT OF CHANGES IN NET ASSET VALUE for the financial year ended 31 December 2011 TAKAFULINK DANA URUS RM RM Net Asset Value at beginning of year 39,683,534 23,037,250 Amounts received from units created 34,045,556 24,378,376 Amounts paid for units cancelled (16,233,344) (12,332,083) Excess of income over outgo 3,690,756 4,599,991 Value of fund at end of year 61,186,502 39,683,534 Takafulink Funds Report

36 STATEMENT OF CHANGES IN NET ASSET VALUE for the financial year ended 31 December 2011 TAKAFULINK DANA EKUITI DINASTI RM RM Net Asset Value at beginning of year 1,465,272 Amounts received from units created 7,582,686 1,924,316 Amounts paid for units cancelled (4,090,122) (548,383) Excess of (outgo) over income / Excess of income over outgo (433,871) 89,339 Value of fund at end of year 4,523,965 1,465, Takafulink Funds Report 2011

37 STATEMENT OF INCOME & EXPENDITURE for the financial year ended 31 December 2011 TAKAFULINK DANA EKUITI RM RM Net Investment Income 5,294,160 3,635,382 Profit Income 725, ,335 Dividend income 4,568,506 3,340,047 Profits on Disposal 11,797,838 7,419,662 Securities 11,797,838 7,419,662 Unrealised Capital Gain 6,918,341 11,496,462 Other Income 9,015 11,721 Total Income 24,019,354 22,563,227 Investment Management Fees (2,525,983) (1,661,322) Loss on Disposal (6,243,077) (667,929) Securities (6,243,077) (667,929) Unrealised Capital Loss Provision for taxation (835,349) (1,092,235) Other Outgo (23,598) (29,630) Bank Charges (2,311) (2,141) Custodian Charges (21,287) (27,489) Total Outgo (9,628,007) (3,451,116) Excess of Income over Outgo 14,391,347 19,112,111 Generated Income Brought Forward 28,665,374 9,553,263 Amount Available for Distribution Generated Income Carried Forward 43,056,721 28,665,374 Takafulink Funds Report

38 STATEMENT OF INCOME & EXPENDITURE for the financial year ended 31 December 2011 TAKAFULINK DANA BON RM RM Net Investment Income 1,212, ,709 Profit Income 1,212, ,709 Profits on Disposal 42,904 Securities 42,904 Unrealised Capital Gain 554, ,085 Other Income Total Income 1,767,715 1,324,698 Investment Management Fees (147,664) (105,424) Loss on Disposal (99,900) Securities (99,900) Unrealised Capital Loss Provision for taxation (109,257) (86,843) Other Outgo (7,098) (6,639) Total Outgo (363,919) (198,906) Excess of Income over Outgo 1,403,796 1,125,792 Generated Income Brought Forward 2,625,439 1,499,647 Amount Available for Distribution Generated Income Carried Forward 4,029,235 2,625, Takafulink Funds Report 2011

39 STATEMENT OF INCOME & EXPENDITURE for the financial year ended 31 December 2011 TAKAFULINK DANA URUS RM RM Net Investment Income 621, ,149 Profits on Disposal 1,093, ,134 Unrealised Capital Gain 2,613,829 3,638,201 Total Income 4,328,542 4,990,484 Investment Management Fees (637,786) (390,493) Loss on Disposal Securities Unrealised Capital (Loss) Total Outgo (637,786) (390,493) Excess of Income over Outgo 3,690,756 4,599,991 Generated Income Brought Forward 6,729,082 2,129,091 Amount Available for Distribution Generated Income Carried Forward 10,419,838 6,729,082 Takafulink Funds Report

40 STATEMENT OF INCOME & EXPENDITURE for the financial year ended 31 December 2011 TAKAFULINK DANA EKUITI DINASTI RM RM Net Investment Income 53,137 7,227 Unrealised Capital Gain 92,037 Total Income 53,137 99,264 Investment Management Fees (44,283) (6,082) Unrealised Capital Loss (460,950) Provision for taxation 18,438 (3,681) Other Outgo (213) (162) Total Outgo (487,008) (9,925) Excess of (Outgo) over Income / Excess of Income over Outgo (433,871) 89,339 Generated Income Brought Forward 89,339 Amount Available for Distribution (Accumulated Losses) / Generated Income Carried Forward (344,532) 89, Takafulink Funds Report 2011

41 NOTES TO THE ACCOUNTS 1. Summary of Significant Accounting Policies a. Basis of Accounting The financial statements have been prepared in accordance with The Guidelines on Investment-Linked Insurance/ Takaful Business (BNM/RH/GL ) and the requirements of the certificate document, modified by the following: (i) for the purpose of unit pricing, investments at market value are adjusted to include future cost of acquisitions. This is to ensure equitable unit pricing for incoming, outgoing and remaining unit-holders; (ii) for the purpose of unit pricing, provision for deferred tax is recognised on taxable and deductible temporary differences using an actuarially calculated rate of 4% instead of the statutory rate of 8%. The Board of Directors are of the opinion that since these temporary differences will only be realised in the future, the lower tax rate of 4% has been used to ensure equitable unit pricing for incoming, outgoing and remaining unit-holders; and (iii) during the financial year, the accounting policy has been changed to recognise all deferred tax assets or liabilities arising from the temporary differences on unrealised gains or losses and the impact of the change is immaterial. b. Investments Quoted investments are valued at the closing market prices at the end of the financial year. Unquoted loan stock/bonds are valued at the prevailing prices quoted by financial institutions. Net unrealised gains or losses in value of investments are credited or charged to the capital account. c. Dividend Income Dividend income is recognised when the right to receive payment is established. d. Profit Income Profit income is recognised on an accrual basis. Takafulink Funds Report

42 NOTES TO THE ACCOUNTS e. Gains/Losses on Disposal of Investments Gains or losses arising from the disposal on investment are credited or charged to the capital account. f. Investment Management Fees Investment management fees are calculated in accordance with the provisions of the certificate document. g. Fee Rebate This relates to rebate of fees from the Fund Manager in respect of investment held in Takafulink Dana Ekuiti and Takafulink Dana Bon for the Takafulink Dana Urus. h. Cash and Cash Equivalents Cash and cash equivalents consists of cash in hand and balances with banks, excluding Islamic deposits. 2. Other Outgo comprises bank charges and custodian charges. 3. Rebates and Soft Commissions The Fund Managers are restricted by the regulation from receiving any rebate or share any commission from any broker/ dealer. Accordingly, any rebate and share commission received from stockbrokers/dealers shall be directed to the Funds. However, soft commissions received in a form of goods and services which are of demonstrable benefit to unit-holders such as fundamental databases, financial wire services, technical analysis software and stock quotation system incidental to investment management of the Funds are retained by the Fund Manager. 4. At 31 December 2011, the Funds had no contingent liabilities or commitments. 5. All amounts are stated in Ringgit Malaysia. 40 Takafulink Funds Report 2011

43 STATEMENT BY DIRECTORS In the opinion of the Directors, the Takafulink Funds ( Funds ) financial statements set out on pages 26 to 40, comprising the Statements of Assets and Liabilities as at 31 December 2011 and the related Statements of Income and Expenditure and Statements of Changes in Net Asset Value for the financial year ended 31 December 2011 together with the notes thereto, have been prepared, in all material respects in accordance with the accounting policies set out in Note 1 to the financial statements and Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL ) issued by Bank Negara Malaysia. Signed in accordance with a resolution of the Directors: Datuk Adinan bin Maning Charlie Espinola Oropeza Kuala Lumpur 28 March 2012 Takafulink Funds Report

44 INDEPENDENT AUDITORS REPORT to the unitholders of Takafulink Funds Report on the Financial Statements We have audited the financial statements of the Takafulink Funds of Prudential BSN Takaful Berhad, which comprise the Statement of Assets and Liabilities as at 31 December 2011, and the Statements of Income and Expenditure, Statements of Changes in Net Asset Value for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 26 to 40. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements in accordance with the accounting policies set out in Note 1 to the financial statements and Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL ) and for such internal control as the directors determine are 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 about 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 judgement, 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 entity s preparation of 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 entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, 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. 42 Takafulink Funds Report 2011

45 INDEPENDENT AUDITORS REPORT to the unitholders of Takafulink Funds Opinion In our opinion, the financial statements as of 31 December 2011 and for the year then ended have been prepared, in all material respects in accordance with the accounting policies set out in Note 1 to the financial statements and Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL ). Emphasis of Matter Without qualifying our opinion, we wish to draw your attention to Note 1a (ii) to the accounts whereby a lower rate of tax was used for deferred taxation provision. As fully explained in Note 1a (ii), the Directors of the Company are of the opinion that it is fairer to unitholders to use a lower rate than the statutory tax rate in the pricing of units. Other Matter(s) This report is made solely to the unitholders of the Funds, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report. KPMG Firm Number: AF: 0758 Chartered Accountants 28 March 2012 Petaling Jaya Takafulink Funds Report