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

Transcription

1

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 13 FUND PERFORMANCE REPORT 17 SOFT COMMISSION RECEIVED FROM BROKERS 31 STATEMENT BY DIRECTORS 32 REPORT OF THE AUDITORS 33 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 2014 STATEMENTS OF INCOME AND EXPENDITURE FOR FINANCIAL PERIOD ENDED 31 DECEMBER 2013 STATEMENTS OF CHANGES IN NET ASSET VALUE FOR FINANCIAL YEAR ENDED 31 DECEMBER 2014 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 42 DETAILS OF INVESTMENTS 46 COMPARATIVE PERFORMANCE TABLE 56 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 pleasure to present the Annual Report of Syarikat Takaful Malaysia Berhad s Investment-Linked Funds (ILP Funds) for the financial year ended The year 2014 has witnessed significant shifts in the landscape of financial markets globally. The economic growth of certain countries in Asia turned out considerably at a subdued pace due to weak momentum continued from the previous year. For Malaysia, the local financial market dwelt in a challenging period during the year under review to register a relatively lower growth than anticipated. As at 31 st December 2014, the FBM KLCI Index closed at 1, points which is points (-5.7%) lower than its opening level of 1, points at the beginning of the financial year. The sell-down was majorly driven by two pertinent factors namely the plunge in Crude Oil and weakening ringgit which were down by 45.95% and 6.76% respectively. On the contrary, countries like India (+29.9%), Philippines (+22.8%) and Indonesia (+22.3%) recorded excellent returns compared to other countries in Asia including Malaysia (-5.7%), Korea (-4.8%) and Hong Kong (1.3%). Against the backdrop of a volatile economy in 2014, I am pleased to report that our business remained resilient and we rose above the challenges in delivering a stable and healthy return of investment to our valued customers. We cautiously took important steps towards executing our investment strategies focused on fulfilling our goal to achieving excellent investment results. Over the past years, our ILP Funds growth momentum has increased tremendously with a proven track record. It is only with your trust and support that we can achieve this level of performance has been a rewarding year for the company s investment portfolio where we sustained a robust growth across all our ILP Funds. As at 31 December 2014, our range of ILP Funds namely myequity Index Fund, mygrowth Fund, myblue Chips Fund, mydividend Fund, mybalanced Fund, Ittizan and Istiqrar have delivered a healthy performance compared to the respective benchmarks in the market. To top it off, our myequity Index Fund registered the best performance with a return of 3.23% against its benchmark performance of negative -4.17%. This is followed by the mydividend Fund which recorded a return of 3.06% against its benchmark return of negative -4.17%. The market is anticipated to remain volatile in 2015 as the most recent drop in oil price has yet to show any signs of recovering. Hence, the impact of falling oil prices on the fiscal deficit of the government will definitely be monitored thoroughly. In spite of the likely challenging circumstances, the World Bank encouragingly conjectured the local government to achieve its 2015 fiscal deficit target of 3% of the GDP. The World Bank is projecting a growth of 4.7% of the GDP in This could be attributed to the withdrawal of fuel subsidy and implementation of the upcoming GST. In all such instances, Takaful Malaysia is poised to drive the growth of our investment products to greater heights. We will continue on being prudent and vigilant in outlining our investment strategies for the ILP Funds so as to ensure that the company s long-term investment objectives are met whilst efficiently managing the investment risk and return levels. We thank you for the confidence you have shown in Takaful Malaysia. My utmost gratitude goes to all our valued customers for the continued patronage of our Takaful Investment-Linked products, particularly the Takaful mygenlife. It is our top priority to consistently deliver results that exceed your expectations as we are at all times committed in bringing sustainable value to our customers. Looking ahead to 2015, we remain confident in gearing up for profitable growth of our business even though conditions before us are challenging. I strongly believe we are well positioned for continued achievement as we embark our successful journey for Takaful Malaysia to be the preferred choice for insurance. May Allah give us His guidance, Amin. Dato Sri Mohamed Hassan Kamil Group Managing Director P a g e 3

4 FUND PROFILE ITTIZAN Investment Objective To achieve reasonable returns and capital growth opportunities via selected investments in Shariah approved shares listed in Bursa Malaysia and Shariahcompliant 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 Investment Objective To achieve a relatively stable pattern of investment returns over medium term through selected investments in Shariah approved shares listed in Bursa Malaysia and Shariah-compliant fixed income securities. Investment Strategy Invest in a balanced asset allocation comprising mainly of 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 at Maybank General Investment Account rate ( GIA ). P a g e 4

5 myequity INDEX FUND Investment Objective To achieve returns that tracks the performance of the FBM Emas Shariah Index. Investment Strategy Invest mainly in the top 40 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 ). mygrowth 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 myblue 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 ). mydividend 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 mybalanced 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 GLOBAL AND LOCAL ECONOMIC REVIEW Economic Review This annual report is for the financial year of 1 January 2014 to 31 December The International Monetary Fund (IMF) revised down its projection for 2014 real GDP growth for the global economy marginally to 3.3%, from 3.4% estimated in July, due largely to weaker-than-expected global activities in the first half of In advanced economies, the legacies of the pre-crisis boom and the subsequent crisis, including high private and public debt, still cast a shadow on the recovery. Emerging markets are adjusting to rates of economic growth lower than those reached in the pre-crisis boom and the post-crisis recovery, the IMF said in its latest World Economic Outlook released in October In the United States, The U.S. economy roared into overdrive in the third quarter as consumer and business spending fuelled the biggest expansion in more than a decade. Gross domestic product grew at a 5% annual rate from July through September, the biggest advance since the third quarter of 2003 and up from a previously estimated 3.9%, revised figures from the Commerce Department in Washington. The median forecast of 75 economists surveyed by Bloomberg projected a 4.3% increase in GDP. U.S. consumer sentiment jumped in December to its highest level in nearly eight years on cheaper gasoline and better job and wage prospects, a survey released on 23 rd December 2014 showed. The Thomson Reuters/University of Michigan's final December reading on the overall index on consumer sentiment came in at 93.6, its best showing on a final basis since January 2007 and the latest in a string of increases since August. The U.S. labour market is beginning to look pretty good on average. As at November 2014, the unemployment rate is down to 5.8%, an improvement of 1.2% year on year. The US Fed noted in its FOMC statement released in December 2014 that, based on its current assessment, it can be patient in beginning to normalize the stance of monetary policy. The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 0.25% target range for the federal funds rate for a considerable time following the end of its asset purchase program in October. Over in Europe, the Eurozone economy grew by 0.2% quarter-on-quarter in third quarter 2014, slightly higher compared to a revised additional 0.1% in the second quarter, as Germany and France, the region s two largest economies, narrowly avoided a recession while Greece showed some signs of revival. A year-on-year basis, real GDP growth remained stable at 0.8% in the third quarter, the same level as in the previous quarter, marking the fourth straight quarter of growth. The pick-up in economic growth was attributed to a reversal in Germany s GDP growth into positive territory of 0.1% quarter-on-quarter in the third quarter, after registering -0.1% in the second quarter. Similarly, France s GDP also rebounded to grow by 0.3% quarter-on-quarter in the third quarter, after declining by 0.1% in the previous quarter. This was further supported by Italy s GDP, which fell at a slower pace of 0.1% quarter-on-quarter in third quarter, from -0.2% in the previous quarter. Meanwhile, a pick-up to 0.7% quarter-on-quarter in the Greek s economy for the third quarter, from +0.3% in the second quarter, spelled signs of a sustained economic recovery. China s real GDP grew at a slower pace of 7.3% year-on-year in the third quarter, compared with +7.5% in the second quarter and +7.4% in the first quarter. This was due to structural reforms in the nation, a sagging housing market and higher base effects from a year ago. While it was the slowest expansion since the first quarter of 2009, the reading was still higher than the median estimate of a 7.2% gain. This will likely bolster the government s case for avoiding broader stimulus measures. For the first nine months, China s real GDP growth remained unchanged at 7.4% year-on-year, the same level of growth as in the first-half and compared with +7.7% in the corresponding period of 2013, on the back of slowing domestic demand. The slower growth was reflected in a moderation in tertiary industries (services), which grew by 7.9% in January-September 2014, compared with P a g e 8

9 8.0% in first-half. These were, however, mitigated by a pick-up in primary industry (agriculture, forestry and fishing) to 4.2% in January-September 2014, from +3.9% in first-half. Malaysia`s Real GDP growth moderated from 6.5% year-on-year in the second quarter to 5.6% year-on-year in third quarter of 2014, in line with market consensus. The moderation was expected given last year's high base as well as slower exports and industrial output in the last quarter. Noteworthy are the resilient growth of household consumption (6.7%) and the sharp slowdown of investment growth to 1.1%. The economy was largely supported by private sector demand and positive, albeit lower net exports contribution. Private sector spending was led by resilient household consumption while private investment growth slowed to 6.8% in third quarter. Bank Negara expects the country s 2014 gross domestic product (GDP) to exceed the 5%-5.5% forecast. Malaysia's overall balance of payment (BOP) deficit widened to RM6.7bn in third quarter 2014, mainly due to a narrower current account surplus and sustained outflows in the financial account (FA). As expected, the current account (CA) surplus narrowed to RM7.6 billion. Based on 9 months data, the CA surplus looks set to exceed economist full-year target of RM43.8bn or 4.1% of GDP. Headline inflation increased to 3.0% year-on-year in November (+2.8% in October). The reading was slightly above market expectations (+2.8%). Compared to the previous month, the consumer price index (CPI) increased 0.5% (+0.5% in October). Core inflation moderated to 2.4% year-on-year after rising to 2.5% in October. YTD inflation remains at an average of 3.2%. P a g e 9

10 EQUITY AND FIXED INCOME MARKET REVIEW Equity Market In brief, the local equity market has been a clear laggard in 2014 relative to the double-digit performance of its regional peers. However, the underperformance was not unexpected on valuation ground. Furthermore, as a net oil exporter, Malaysia is seen as more vulnerable to the falling crude oil price. The performance of FBM KLCI in 2014 put it in the bottom spot when compared with its Asian peers. In terms of local currency, the 5.7% loss recorded by the local benchmark ranked it last among the eleven major regional markets. On net basis, foreign investors have off loaded nearly USD1.5billion of Malaysian equity shares so far in In late January, the market was worried as China s Flash Manufacturing PMI unexpectedly signalled a contraction. The sub-50 number reignited investors concern over China s macro trajectory as well as the overhanging risks with regard to both its official and banking system. Worries over the underlying cut in US Fed monetary stimulus spilled into some emerging markets such as Argentina, South Africa and Turkey in the form of extreme currency volatility. It is noteworthy that these so-called Fragile 5 countries (Brazil, Indonesia, South Africa, India and Turkey) are suffering from twin-deficits in both their fiscal and current accounts. But in a knee-jerk reaction, other Asian equity markets also traded lower with the FBM KLCI retreated to below the 1,800 points level. Pursuant to the late January selloff, equity market found its immediate cyclical bottom in early February. The selloff was short-lived as investors were still convinced of China s prospects and that the Fragile 5 countries shall put their houses in order. The FBM KLCI bottomed at 1,769.8 points and the ensuing recovery was rather swift. Equity markets around the world welcomed the second quarter with a good opening performance but turned jittery soon after as the US market corrected. Being the bell-weather equity market, Wall Street was a cause for concern after it recorded its worst 2-day drop since June Led by technology stocks, the selloff was sparked by a growing concern that valuations may be too high. But the world s equity markets recovered swiftly as the US Fed reiterated its commitment to policies that will support economic recovery. It was a tacit signal that interest rates are to be kept low for some time after the end of QE3. Thus investors were arguably comforted that the liquidity punchbowl would not be taken away so hastily. The benchmark FBM KLCI later climbed to a record after Malaysia reported first quarter GDP growth and current account surplus that beat market estimates. The nation s output grew 6.2% during 1Q14 from a year earlier, the fastest pace since 4Q12, while its current account surplus expanded to RM19.8b in the quarter. World s equity markets greeted the second half of the year on an auspicious note. Wall Street was one of the main catalysts for the optimism. Investors were buoyed by the strong US employment market with the unemployment rate fell to an almost six-year low of 6.1%. Locally, the FBM KLCI recorded a new all-time high of 1, points in early July. Nonetheless, the strong set of economic numbers has given rise to anticipations that the US Federal Reserve may raise interest rate earlier than expected. In the local front, all eyes were on Bank Negara s Monetary Policy Committee (MPC) on 10 July and as widely expected, the central bank decided to hike the OPR by 25 basis points. Equity markets around the world moved back into the red-zone after a promising start to the second half as sentiment was compromised due to negative events in Europe and the Middle East. Later in mid-august, the market regained momentum on optimism over the direction of monetary policy amid increasing expectation that the US Federal Reserve will leave interest rates at current levels for longer period on P a g e 10

11 concerns that consumer spending growth may decelerate. In early September, the ECB unexpectedly cut interest rates and announced a set of new stimulus. It also trimmed its benchmark main refinancing rate to 0.05% from 0.15%. A development that had rather pervasive effect was arguably the US Federal Reserve s release of its Summary of Economic Projections. It was revealed that the median estimate for the federal funds rate (FFR) at the end of 2015 is 1.375%, higher than the 1.125% median estimate that it made known in June. As expected, any indication of a stronger tendency to tighten monetary policy is a bane to the markets. In Asia, the situation was further amplified by the resurgent US Dollar which knocked the wind out of the proverbial Asian equity sails. The selloff was arguably in reaction to a small cut in IMF s global growth outlook for This was coupled with a deeper than expected decline in German s monthly industrial production. It is also notable that at about the same time, another risk asset, namely crude oil futures, was also breaking below its key price support levels. In late November, the price of international benchmark Brent crude oil broke below USD75pb pursuant to OPEC decision to maintain its production level. In the week that follows, price weakened further to below USD70pb as the market fears rising supply against the backdrop of weak demand growth. As a net oil exporter, Malaysia is seen as more vulnerable to the falling crude oil price. Furthermore, the situation was not helped with an announcement by Petronas to cut its capex spending for next year. As a result, the local bourse was struck by a major selloff in early December. The price casualties were rather broad-based but particularly massive among the oil and gas related stocks. FBM KLCI Index, as at 31 st December 2014, closed at 1, points which is points (-5.7%) lower than its opening level of 1, points at the beginning of the year. On a year-to-date basis, the worst performer were Malaysia FBM KLCI Index (-5.7%), Korea (-4.8%) and Hong Kong (1.3%) as India (+29.9%), Philippines (+22.8%) and Indonesia (+22.3%) recorded the best returns in Asia. Malaysia was the worst position - down 5.7% in Our year end 2015 FBM KLCI target is set at 1,810 points which is based on 16.0x price earning (PE) multiple on 2015 estimated earnings of per share (source: Bloomberg). As such, this translates into upside potential for the index is 4.0% which is in-line with our neutral call on the market. Ringgit has weakened further to close at RM3.4973/USD as at 31 st December 2014 from RM3.2805/USD in September For the full year of 2014, Ringgit movement was negative 6.3% against the greenback (USD). Fixed Income Market The year 2014 saw major government bonds across the globe strengthening from the start of the year. The UST 10-year yields stayed low, falling 86 bps year-on-year. Over in Europe, the German bunds saw significant demand, with the 10-year yield compressed further to 0.54% at year-end, down 139 bps y-o-y. One of the reason that led to the rally was risk aversion among the investors. This was due to various factors such as i) the end of the Fed s easy money whereby The Fed effectively ended its quantitative easing in October 2014, ii) ECB s rate cuts and purchase of covered bonds and asset-backed securities, iii) Japan s aggressive stimulus in its battle against deflation, and iv) the slump in oil prices. Locally, the MGS yield shift downward for most part of the year despite the OPR hike in July The yield however started to move up in November 2014 before experiencing a spike in December 2014 as concern on the global economic growth led to investors moving out from the riskier emerging markets, including Malaysia. In terms of issuance, total new government offerings for 2014 declined to 28 MGS/GII securities worth RM84.5 billion (RM51.0 billion from the MGS market and RM33.5 billion from the GII market) compared with RM92.5 billion offered in The amount was however in line with market expectation which anticipated a lower amount of funds to be raised in 2014 in view of the smaller budget deficit which was equivalent to 3.5% of GDP. The government also raised a total of RM6.0 billion through four SPK auctions. In the corporate debt market, a total P a g e 11

12 gross issuance of RM85.9 billion was recorded for the year 2014 slightly lower than RM87.2 billion issued in 2013 attributed to a smaller amount of funds raised from unrated private placements and Cagamas. High grades still dominate the primary supply landscape whereby new issues with ratings of AA3/AA- or higher including quasigovernment account for 86% of total supply in Money Market With regards to the Islamic money market, short-term rates have moved up over the period under review as Bank Negara Malaysia increased the OPR level from 3.00% to 3.25%. In line with the OPR hike, the 1-month Maybank General Investment Account Rate recorded also shifted by 25 bps from 2.75% at the beginning of the period under review to close at 3.00%. P a g e 12

13 MARKET OUTLOOK AND INVESTMENT STRATEGY Market Outlook IMF cut its outlook for global growth to 3.8% in 2015, from 4.0% projected in July due to the risks of rising geopolitical tensions and a financial-market correction as stocks reach frothy levels. The IMF expects the US Federal Reserve to start raising interest rates in the middle of next year, a projection that is in line with the median estimate of economists surveyed by Bloomberg. A sustained period of policy interest rates near zero in advanced economies has raised the risk that some financial markets may be overheating, according to the IMF. IMF said that downside risks related to an equity price correction in 2014 have also risen, consistent with the notion that some valuations could be frothy without naming specific markets and there are concerns that markets are under pricing risk, not fully internalising the uncertainties surrounding the macroeconomic outlook and their implications for the pace of withdrawal of monetary stimulus in some major advanced economies. Among the countries, the US is a bright spot, according to the IMF. The US economy is predicted to grow 2.2% in 2014, faster than +1.7% projected in July. The GDP growth is projected to strengthen to +3.1% in 2015, compared with a 3% pace forecast in July. The slack in the economy, well-anchored inflation expectations, and downside risks to the outlook imply that the current accommodative monetary policy remains appropriate in the US, said the Fund. The IMF, however, cut its projection of GDP growth for the Eurozone in 2014 to 0.8%, down from +1.1% predicted in July. The region s economy is projected to pick up pace and grow by 1.3% in 2015, albeit slower than the 1.5% pace predicted in July. China is forecast to expand 7.4% in 2014 and 7.1% in 2015, little changed from the fund s forecasts in July. World Bank, in Malaysia Economic Monitor released in December 2014, expected 2014 real GDP is expected to grow by 5.7% on a year-to-year basis, up from 4.7 % in Despite tighter fiscal and monetary conditions, private consumption remained buoyant, expanding by an average of 9.3% in the first nine months of Still-robust credit growth and stable employment with continued income growth supported this trend. The decline of crude oil prices that started in June compounded the effect of lower commodity export demand, especially from China. Non-commodity export growth also moderated across all destinations. Electrical and electronics exports registered their smallest expansion in six quarters. World Bank added that export growth is expected to slow further to 4.1% in 2015 (2014: 5.4 %). Investment in oil and gas will slow, and private consumption is also projected to moderate as consumers adjust to higher prices as the goods and services tax (GST) rolls out in April 2015 and credit moderates further. As a result of these factors and the high base in 2014, the forecast for GDP growth in 2015 has been revised down to 4.7%. Weaker exports and higher factor payments led the current account to narrow to 2.9% of GDP in the third quarter. As natural gas prices decline in tandem with crude oil prices and firms import to rebuild inventories, the current account is likely to narrow further to 3.1% of GDP in 2015 from 4.2% in Further declines in oil prices would put additional pressure on the current account. Policy makers should avoid delaying productive investments such as the MRT on this account. On 22 nd January 2015, Prime Minister Datuk Seri Najib Tun Razak made a special address on the country s current economic developments, focusing mainly on the Government s fiscal deficit position due to the sharp fall in global crude oil prices. Since the announcement of Budget 2015 proposals on 10 October 2014, the price of Brent crude oil has fallen sharply by around 46% from US$90.2 per barrel to US$48.8 per barrel currently. The government acknowledges that the earlier 2015 Budget revenue and expenditure proposals, based on the P a g e 13

14 assumption of an average oil price of US$100 per barrel, are not sustainable, as prolonged low crude oil prices will reduce Federal Government revenue, even after the savings from fuel subsidies in In view of the current excess of global crude oil supplies, and recognizing that the drop in oil prices will take quite a while to stabilize, the Government has revised downwards its forecast for the average baseline price of Brent crude oil to US$55 per barrel for 2015, 45% lower from its earlier projection of US$100 per barrel. According to the authority, based on this new oil assumption for 2015, without any fiscal measures (i.e. cut in operating expenditure and other fiscal measures), the country s budget deficit target will increase sharply to -3.9% of GDP this year, from the earlier official budget deficit forecast of -3.0% of GDP. However, in order to prevent any downgrade of the country s sovereign credit rating by the international rating agencies, the Government will introduce new fiscal measures to reduce its budget deficit target, especially after the reaffirmation of Malaysia s negative sovereign credit outlook by Fitch Ratings Agency. Based on the proposed fiscal measures, with a cut in operating expenditure by RM5.5 billion and development expenditure remaining at RM48.5bn for fiscal year 2015, the country s budget deficit is still projected to improve to 3.2% of GDP in 2015, slightly higher than the 3% of GDP projected in the 2015 Budget, but an improvement from 3.5% of GDP estimated for According to Prime Minister, based on Brent crude oil price forecast of US$55 per barrel, there will be a revenue shortfall of RM13.8 billion. Figure 1: Revised Government s Finance: Overall, in light of the uncertainty in the global macroeconomic environment, apart from lowering the oil assumption, the Malaysian Government has also revised downward its real GDP growth forecast for 2015 to be in the range of %, lower than the previous forecast of %. BNM raised the Policy Rate (OPR) by 25 basis points in July, the first rate hike in three years. BNM has since returned to a holding pattern to support domestic demand, and is likely to maintain its supportive stance on growth into 2015 given the sputtering export engine. Nevertheless, monetary policymakers remain highly watchful of financial imbalances, especially from household debt, which reached 87.1% as of 3Q Malaysia s export-dependent economy is susceptible to the uneven recovery in advanced economies and slower growth in China. Tighter monetary policy and liquidity conditions abroad are also likely to impact Malaysia. However, as evidenced by the recent depreciation of the Ringgit, the key risk is further declines in oil prices which would put pressure on external and fiscal accounts. P a g e 14

15 2015 is expected to be a challenging year for the Malaysian market mainly for these reasons: Malaysia will implement 6% GST for the first time, effective from 1 April 2015 which will hurt domestic consumption as consumer sentiment will likely remain dampened, while corporate margins will be squeezed. The two sectors that will be least impacted by GST are telecommunications and plantations. Lower prices for commodities such as oil, palm oil and rubber have negative implications on the Malaysian economy, and therefore, we expect 2015 GDP growth to decelerate to 4.8% from 5.8% in 2014 which will not help consumer sentiment. If oil were to remain at US$70, 2015 growth could come in closer to 4.4% GDP growth could come in closer to 4.4%, implying downside risks to consensus 2015 GDP growth forecast of 4.8% (vs. current consensus: 5.2%). The pressure on the 2015 budget deficit target of 3.0% will be more than expected. We see higher risk that the central bank will not hike rates in 2015, given weaker growth prospects and lower inflation pressures. Forex analysts continue to be bearish on the ringgit (USDMYR forecasts of 3.49 in three months and 3.53 in 12 months). 9.2% earnings growth is too optimistic Consensus is expecting 9.2% of earnings growth and margin expansions in 2015, which is some analysts, are in view that it is too optimistic. Some of the reasons are : a) 6% GST will translate into declining consumer sentiment, hence lead to weaker domestic consumption. b) Corporate tax cut from 25% to 24% is lagging a year behind and will only be implemented in the year of assessment in 2016 or FY16. c) Lower prices of commodities, such as oil, palm oil and rubber, have negative implications on the Malaysian economy as Malaysia is a net exporter of energy/fuel; Malaysian government is also heavily reliant on oil-related revenue with dividends from Petronas, royalties and taxes. Malaysian valuation (P/E or P/B) is not at long-term averages, which suggest that the market is not cheap enough to accumulate, nor is it expensive (relative to its history). The market lacks catalysts and, therefore, expects it to trade in line with the long-term averages. Our year end 2015 FBM KLCI target is set at 1,810 points which is based on 16.0x price earning (PE) multiple on 2015 estimated earnings of per share (source: Bloomberg). As such, this translates into upside potential for the index is 4.0% which is in-line with our neutral call on the market. Ringgit has weakened further to close at RM3.4973/USD as at 31 st December 2014 from RM3.2805/USD in September For the full year of 2014, Ringgit movement was negative 6.3% against the greenback (USD). For 2015, Consensus is expecting Ringgit to weaken further exceeding RM3.60/USD before stabilizing within RM3.40 RM3.50 levels. Further key risks to growth could come from: 1. Impending Fed hike. Most are expecting the US Federal Reserve to begin on rate normalization in However, it s crucial that the Feds get the timing right. If too soon may have the opposite effect on the economy. It could also trigger sharp capital outflows from emerging economies, threatening their currencies further. 2. High foreign bond ownership % of MGS (as of October 2014) is held by foreigners, a relatively high figure and appears inelastic for now. We worry that the MYR could be vulnerable to short-term flow shocks. P a g e 15

16 3. High household debt - Malaysia's household debt remains relatively high (86.8% as of end-2013), the highest in South East Asia. The Malaysian government is trying to rein in household debt, with the main focus on properties. Property developers and potential property buyers complain of high rejection rates when applying for mortgage loans. 4. If corporate earnings results in disappointments for the small caps, rich valuations cannot be supportedthe big cap P/E premium over the small cap in Malaysia is now 46%, which has widened from 14% in October This is partly because small caps suffered the brunt of the market correction in September-December This is the first time in more than a year that the big cap P/E premium has been raised to 46%. Any further disappointment in earnings resulting from the small caps in 2015, will impact share prices significantly, as small caps are generally liquid too. 5. 1MDB has attracted a lot of media attention lately, for the wrong reasons. The Edge has been particularly vocal about 1MDB, which has highlighted concerns about its power assets, Penang land and its USD debt papers. Others are concerned on the falling prospects of the net oil exporter s petroleum revenue, growing 1MDB s financing woes has resulted to the jump in Malaysia's five-year credit default swaps by 40 basis points to 148 basis points in the first two weeks of Japan s prolonged recession. It is quite possible that Japan may be faced with a prolonged recession despite the planned tax hike being postponed. 7. Europe has fallen into a deflation. The situation in Europe is as precarious as ever. Despite Mario Draghi s best efforts, it may take far more than what has been done to address the situation in selected European countries. Investment Strategy We expect further volatility & uncertainly for FBMKLCI Index in first half of 2015 potentially caused by 1) concerns on the earlier than expected Fed Interest rate hike 2) Further weakening of Ringgit 3) Potential capital flight back to US 4) Lower domestic consumption post introduction of GST 4) Risk of further/prolonged oil price weakness. Hence, reiterated our cautious stance on the market since However, market is expected to stabilize in the second half of the year on the back of stable Ringgit & commodity prices, reduction of risk of significant tightening of monetary policies in developed economies, recovery in corporate earnings (from low base) and more promising global economic outlook that will be supportive of exports from Malaysia. As such, a defensive portfolio (consists of stocks that yield above 4%) is preferred as it would help to protect capital against any potential downside risks as mentioned above. A buy-on-weakness approach is our preferred investment strategy. We will accumulate fundamentally robust stocks on weakness in order to outperform the market. On stock selection, the main emphasis shall continue to be given to companies that have good historical track record, strong management team, quality growth with strong earnings visibility and solid balance sheet strength, strong free cash flow to sustain high dividend yield and high liquidity. In addition, high dividend paying stocks will likely to outperform the market during times of market uncertainty. For certain funds which have exposure to investment in fixed income, the focus will be on corporate sukuk within AAA and AA segments for better liquidity. Active duration management would be the key focus, whereby funds may be positioned to shorter duration as upside pressure on the yield curve persists. P a g e 16

17 Return % FUND PERFORMANCE REPORT ITTIZAN Performance Review For the 12 months ended 31 December 2014, Ittizan outperformed its benchmark, recording a return of 1.54% against its benchmark of -2.08% (70% FBMSI and 30% 1-Month GIA) Ittizan Benchmark Ittizan vs Benchmark 0.0 (1.0) (2.0) (3.0) (4.0) (5.0) Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year Ittizan Benchmark (2.08) (2.08) Asset Allocation In terms of asset allocation, the fund has invested 58.01% in equity, 22.84% in Islamic debt securities and the remaining in money market / cash. On equity sectoral allocation, trading & services was the top sector that the fund invested in with 42.59% exposure. The details of asset allocation and the top 5 investment holdings are given below: % 22.84% 19.15% 3.97% 2.96% 2.45% 2.21% Trading & Services Islamic Debt Securities Money Market & Cash Plantation Infrastructure Project Industrial Products Property P a g e 17

18 Money Market & Cash 19.15% Digi.com Bhd Top 5 Investment Holding 2.96% Islamic Debt Securities 22.84% Telekom Malaysia Bhd Axiata Group Bhd 3.13% 7.55% Equities 58.01% Sime Darby Bhd Tenaga Nasional Bhd 7.84% 9.11% Fees / Charges levied to the Fund Among the fees/charges levied to the fund are: 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 for the period ended 31 December Descriptions of any changes in Fund s Objectives and Strategies There were no material changes in the fund s objectives and strategies for the period ended 31 December P a g e 18

19 Return % ISTIQRAR Performance Review For the 12 months ended 31 December 2014, Istiqrar has outperformed its benchmark, recording a return of 2.70% against its benchmark of 0.71% (30% FBMSI and 70% 1-Month GIA) Istiqrar Benchmark Istiqrar vs Benchmark (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 31.2% in equity, 52% in Islamic debt securities and the remaining 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 has invested in with 22.69% exposure. The details of asset allocation and the top 5 investment holdings are given below: % 22.69% 16.80% 2.11% 1.86% 1.47% 1.14% Islamic Debt Securities Trading/Services Money Market & Cash Plantation Infrastructure Project Industrial Products Property P a g e 19

20 Money Market & Cash 16.80% Top 5 Investment Holding Jimah Energy Ventures 4.47% Equities 31.20% Tenaga Nasional Bhd BGSM Management 5.07% 5.77% Islamic Debt Securities 52.00% Kapar Energy Ventures National Bank of Abu Dhabi 6.03% 6.08% 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 for the period ended 31 December Descriptions of any changes in Fund s Objectives and Strategies There were no material changes in the fund s objectives and strategies for the period ended 31 December P a g e 20

21 Return % myequity INDEX FUND Performance Review For the period under review, myequity Index Fund recorded a positive return of 3.23%, outperforming the negative return of 4.17% in its benchmark of FBMSI. Additionally, the tracking error was within the parameters set by the fund and its strategy as to closely track its benchmark. For the period, the fund s tracking error stood at (2.0) (4.0) (6.0) myequity Index vs Benchmark myequity Index Fund (LHS) Benchmark (LHS) Tracking Error (RHS) Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year myequity Index Benchmark (4.17) (4.17) Tracking Error 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. P a g e 21

22 Asset Allocation In terms of asset allocation, the fund has invested 77.61% in equity and the remaining in money market / cash. The asset allocation as at 31 December 2014 was below the minimum equity exposure limit of 90%. This was due to tactical strategy enforced as to reduce market risk & to ensure capital is preserved. On equity sectoral allocation, trading & services was the top sector the fund has 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 given below: % 22.39% 5.58% 5.04% 4.49% 3.95% 3.24% Trading/Services Money Market & Cash Construction Plantation Infrastructure Project Industrial Products Consumer Top 5 Investment Holding Money Market & Cash 22.39% Digi.com Bhd Telekom Malaysia Bhd 4.49% 5.69% Sime Darby Bhd 7.84% Equities 77.61% Axiata Group Bhd Tenaga Nasional Bhd 8.27% 9.49% 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 myequity 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 22

23 Return (%) mygrowth FUND Performance Review For the financial year ended 31 Decembers 2014, mygrowth Fund recorded a positive return of 1.16% in tandem with the movement of the benchmark, FBMSI which recorded a decrease of 4.17% during the same period under review mygrowth Fund Benchmark mygrowth Fund vs Benchmark Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year mygrowth Benchmark (4.17) (4.17) Asset Allocation In terms of asset allocation, the fund has invested 81.63% in equity and the remaining is in money market / cash. On equity sectoral allocation, trading & services was the top sector the fund has invested in with 55.63% exposure. The details of asset allocation and the top 5 investment holdings are given below: % 18.37% 5.13% 5.11% 4.36% 4.13% Trading/Services Money Market & Cash Plantation Construction Industrial Products Infrastructure Project P a g e 23

24 Top 5 Investment Holding Money Market & Cash 18.37% Petronas Gas Bhd Telekom Malaysia Bhd 4.36% 4.41% Axiata Group Bhd 8.27% Equities 81.63% Sime Darby Bhd Tenaga Nasional Bhd 8.38% 9.18% 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 mygrowth 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 24

25 Return (%) myblue CHIPS FUND Performance Review For the period under review, myblue Chips Fund recorded a positive return of 0.81%, outperforming the negative return of 4.17% in its benchmark of FBMSI myblue Chips Fund Benchmark mybluechips Fund vs Benchmark Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year myblue Chips Benchmark (4.17) (4.17) Asset Allocation In terms of asset allocation, the fund has invested 81.25% in equity and the remaining in money market / cash. On equity sectoral allocation, trading and services was the top sector the fund has 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 given below: % 18.75% 5.96% 5.04% 4.11% 3.85% Trading/Services Money Market & Cash Plantation Construction Infrastructure Project Consumer P a g e 25

26 Top 5 Investment Holding Money Market & Cash 18.75% Digi.com Bhd Telekom Malaysia Bhd 4.11% 4.53% Axiata Group Bhd 7.91% Equities 81.25% Sime Darby Bhd 8.06% Tenaga Nasional Bhd 9.61% 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 myblue 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 26

27 Return (%) mydividend FUND Performance Review For the 12 months ending 31 December 2014, mydividend Fund recorded a return of 3.06%, outperforming its benchmark negative return of 4.17% 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 mydividend Fund vs Benchmark mydividend Fund Benchmark Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year mydividend Benchmark (4.17) (4.17) Asset Allocation In terms of asset allocation, the fund has invested 82.14% 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 53.23% allocation. The details of asset allocation and the top 5 investment holdings are shown below: % 17.86% 5.38% 5.10% 4.51% 4.25% Trading/Services Money Market & Cash Infrastructure Project Plantation Construction Industrial Products P a g e 27

28 Top 5 Investment Holding Money Market & Cash 17.86% Telekom Malaysia Bhd Digi.com Bhd 4.61% 5.38% Axiata Group Bhd 8.29% Equities 82.14% Sime Darby Bhd 8.78% Tenaga Nasional Bhd 9.23% 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 mydividend 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 28

29 Return (%) mybalanced FUND Performance Review For the financial year ended 31 December 2014, mybalanced Fund recorded a positive return of 2.58%, outperforming its blended benchmark return of 0.26% (40% FBMSI and 60% 12-Month Maybank GIA rate) mybalanced Fund vs Benchmark mybalanced Fund Benchmark Total Return (%) Average Annual Return (%) 1-Year 3-Year 5-Year 1-Year 3-Year 5-Year mybalanced Benchmark Note : The fund has not completed 5 years financial track record. Asset Allocation As at 31 December 2014, 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 35.20% in Islamic debt securities with the top holding is TNB Northern Bhd sukuk with a holding of 5.57% of the fund s NAV. The details of asset allocation and the top 5 investment holdings are given below: % 32.96% 21.42% 1.98% 1.96% 1.85% 1.27% Islamic Debt Securities Money Market & Cash Trading/Services Industrial Products Infrastructure Project Plantation Property P a g e 29

30 Top 5 Investment Holding Equities 31.84% Alam Maritime Resources 3.76% Money Market & Cash 32.96% Ranhill Powertron II Sdn Bhd Jimah Energy Ventures 3.88% 4.12% Islamic Debt Securities 35.20% Tenaga Nasional Bhd TNB Northern Bhd 4.60% 5.57% 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 mybalanced 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 30

31 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 31

32 STATEMENT BY DIRECTORS In the opinion of the Directors, the Takaful Investment-Linked Funds ( Funds ) financial statements set out on pages 35 to 45, comprising the Statements of Assets and Liabilities as at 31 December 2014 and the related Statements of Income and Expenditure, Statements of Changes in Net Asset Value and Statements of Cash Flows of the Funds for the financial year ended 31 December 2014 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: Tan Sri Ismee Ismail Dato Sri Mohamed Hassan Kamil Kuala Lumpur, Date : 12 March 2015 P a g e 32

33 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 2014, 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 35 to 45. Directors Responsibility for the Financial Statements The Directors of the Manager are responsible for the preparation of these 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 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 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 as of 31 December 2014 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 the Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL ). P a g e 33

34 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 (BNM/RH/GL ) 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 : 12 March 2015 P a g e 34

35 STATEMENTS OF ASSETS AND LIABILITIES AS AT 31 DECEMBER 2014 myequity myblue ITTIZAN ISTIQRAR INDEX mygrowth CHIPS mydividend mybalanced Note RM RM RM RM RM RM RM ASSETS Islamic Debt Securities 2 5,340,310 6,448, ,367,639 Quoted Shares 3 13,566,326 3,869,259 12,248,081 5,724,933 5,551,176 6,128,340 2,141,509 Other Assets 253, ,528 1,013, , , , ,600 Deposits with Financial Institutions Cash and Cash Equivalents 4,636,000 2,124,000 3,563,625 1,329,233 1,327,233 1,388,243 2,098,000 8,231 2,848 4, ,735 1,390 1,697 23,803,967 12,602,699 16,829,804 7,336,860 7,118,358 7,813,276 6,931,445 LIABILITIES Other Liabilities 418, ,869 1,048, , , , , , ,869 1,048, , , , ,674 Net Asset Value 23,385,210 12,400,830 15,781,182 7,013,066 6,832,540 7,461,149 6,725,771 REPRESENTED BY Certificate Holders Capital Accumulated Income Carried Forward 8,570,380 7,386,792 12,662,879 5,757,803 5,518,972 5,755,863 6,080,579 14,814,830 5,014,038 3,118,303 1,255,263 1,313,568 1,705, ,192 23,385,210 12,400,830 15,781,182 7,013,066 6,832,540 7,461,149 6,725,771 Number of Units 12,518,467 8,751,945 9,160,411 5,177,770 4,955,050 5,036,643 5,668,099 Net Asset Value Per Unit P a g e 35

36 STATEMENTS OF ASSETS AND LIABILITIES AS AT 31 DECEMBER 2013 myequity myblue ITTIZAN ISTIQRAR INDEX mygrowth CHIPS mydividend mybalanced Note RM RM RM RM RM RM RM ASSETS Islamic Debt Securities 2 6,121,221 7,761, ,384,640 Quoted Shares 3 16,790,567 4,297,038 11,386,959 5,476,841 5,363,790 5,923,098 2,001,333 Other Assets 738, ,890 1,051, , , , ,438 Deposits with Financial Institutions Cash and Cash Equivalents 1,908, , , , , , , , ,558,567 12,949,537 13,197,232 6,544,965 6,331,849 6,996,355 5,319,465 LIABILITIES Other Liabilities 1,100, , , , , , ,095 1,100, , , , , , ,095 Net Asset Value 24,457,762 12,532,966 12,377,754 6,254,346 6,067,297 6,687,265 5,146,370 REPRESENTED BY Certificate Holders Capital Accumulated Income Carried Forward 9,333,915 7,581,405 9,204,411 4,839,363 4,605,083 4,940,073 4,525,724 15,123,847 4,951,561 3,173,343 1,414,983 1,462,214 1,747, ,646 24,457,762 12,532,966 12,377,754 6,254,346 6,067,297 6,687,265 5,146,370 Number of Units 12,926,122 8,904,600 7,153,541 4,510,356 4,302,222 4,487,083 4,356,342 Net Asset Value Per Unit P a g e 36

37 STATEMENTS OF INCOME AND EXPENDITURE FOR FINANCIAL YEAR ENDED 31 DECEMBER 2014 myequity myblue ITTIZAN ISTIQRAR INDEX mygrowth CHIPS mydividend mybalanced RM RM RM RM RM RM RM Income Gross Dividend Income Profit Income: Islamic Debt Securities Islamic Investment Deposits with Financial Institutions Profit on Disposal: 356,462 98, , , , ,599 49, , , , ,330 61,746 77,020 35,794 35,891 41,357 39,835 Quoted Shares 2,232, ,224 1,402, , , , ,288 Islamic Debt Securities 21,368 26, Other Income 236,525 63, ,762 64,987 63,800 63,817 23,869 3,264,832 1,142,255 1,898, , , , ,013 Outgo Fees (360,820) (187,380) (198,314) (95,285) (93,273) (107,606) (69,444) Unrealised Capital Loss (2,956,563) (795,431) (1,597,020) (812,341) (797,504) (797,706) (298,368) Other Outgo (256,466) (96,967) (157,830) (75,752) (74,163) (83,965) (43,655) (3,573,849) (1,079,778) (1,953,164) (983,378) (964,940) (989,277) (411,467) (Excess of Outgo over Income)/Excess of Income over Outgo Undistributed Income brought forward Amount Available for Distribution Undistributed Income carried forward (309,017) 62,477 (55,040) (159,720) (148,646) (41,906) 24,546 15,123,847 4,951,561 3,173,343 1,414,983 1,462,214 1,747, ,646 14,814,830 5,014,038 3,118,303 1,255,263 1,313,568 1,705, ,192 14,814,830 5,014,038 3,118,303 1,255,263 1,313,568 1,705, ,192 P a g e 37

38 STATEMENTS OF INCOME AND EXPENDITURE FOR FINANCIAL PERIOD ENDED 31 DECEMBER 2013 myequity myblue ITTIZAN ISTIQRAR INDEX mygrowth CHIPS mydividend mybalanced RM RM RM RM RM RM RM Income Gross Dividend Income Profit Income: Islamic Debt Securities Islamic Investment Deposits with Financial Institutions Profit on Disposal: 434, , , , , ,042 45, , , ,188 71,723 24,834 15,706 15,946 19,914 20,458 18,582 Quoted Shares 1,616, , , , , , ,877 Unrealised Capital Gain 878, , , , , , ,281 3,299,578 1,134,143 1,764, , , , ,688 Outgo Fees (348,084) (182,908) (141,219) (76,824) (74,202) (79,045) (54,948) Loss on Disposal: Islamic Debt Securities (50,480) (65,770) (9,440) Other Outgo (272,319) (92,616) (150,359) (87,639) (80,138) (86,675) (39,980) (670,883) (341,294) (291,578) (164,463) (154,340) (165,720) (104,368) Excess of Income over Outgo Undistributed Income brought forward Amount Available for Distribution Undistributed Income carried forward 2,628, ,849 1,472, , , , ,320 12,495,152 4,158,712 1,700, , , , ,326 15,123,847 4,951,561 3,173,343 1,414,983 1,462,214 1,747, ,646 15,123,847 4,951,561 3,173,343 1,414,983 1,462,214 1,747, ,646 P a g e 38

39 STATEMENTS OF CHANGES IN NET ASSET VALUE FOR FINANCIAL YEAR ENDED 31 DECEMBER 2014 myequity myblue ITTIZAN ISTIQRAR INDEX mygrowth CHIPS mydividend mybalanced RM RM RM RM RM RM RM Net Asset Value at the Beginning of the Financial Year 24,457,762 12,532,966 12,377,754 6,254,346 6,067,297 6,687,265 5,146,370 Amount Received from Units Creation 620, ,451 4,326,637 1,113,499 1,166,731 1,333,027 1,716,863 Amount Paid from Units Cancellation (1,384,036) (477,064) (868,169) (195,059) (252,842) (517,237) (162,008) (Net Loss)/Net Income (309,017) 62,477 (55,040) (159,720) (148,646) (41,906) 24,546 Net Asset Value at the End of Financial Year 23,385,210 12,400,830 15,781,182 7,013,066 6,832,540 7,461,149 6,725,771 STATEMENTS OF CHANGES IN NET ASSET VALUE FOR FINANCIAL YEAR ENDED 31 DECEMBER 2013 myequity myblue ITTIZAN ISTIQRAR INDEX mygrowth CHIPS mydividend mybalanced RM RM RM RM RM RM RM Net Asset Value at the Beginning of the Financial Year 22,775,294 12,118,214 7,722,366 4,620,532 4,579,077 4,719,043 4,141,322 Amount Received from Units Creation 912, ,258 3,450, , ,021 1,218, ,109 Amount Paid from Units Cancellation (1,858,945) (751,355) (268,049) (77,485) (59,118) (64,254) (59,381) Net Income 2,628, ,849 1,472, , , , ,320 Net Asset Value at the End of Financial Year 24,457,762 12,532,966 12,377,754 6,254,346 6,067,297 6,687,265 5,146,370 P a g e 39

40 CASH FLOW STATEMENT FOR FINANCIAL YEAR ENDED 31 DECEMBER 2014 myequity myblue ITTIZAN ISTIQRAR INDEX mygrowth CHIPS mydividend mybalanced 2014 RM RM RM RM RM RM RM Cash Flow from Operating Activities Income Before Taxation (309,017) 62,477 (55,040) (159,720) (148,646) (41,906) 24,546 Adjustment for: Profit Income (417,955) (411,450) (77,020) (35,794) (35,891) (41,357) (169,181) Gross Dividend Income (356,462) (98,043) (291,229) (137,722) (141,944) (144,599) (49,675) Profit on Disposal (2,253,890) (569,127) (1,402,113) (585,155) (574,659) (697,598) (193,288) Unrealised Capital Loss 2,956, ,431 1,597, , , , ,368 Outgo from Operations Before Changes in Operating Assets and Liabilities Proceeds from Disposal of Investment (380,761) (220,712) (228,382) (106,050) (103,637) (127,754) (89,230) 22,587,460 7,979,063 20,518,282 11,096,040 9,191,879 9,892,330 3,519,164 Purchase of Investment (22,012,824) (8,047,876) (24,379,936) (12,108,551) (10,246,286) (10,835,861) (5,177,419) Decrease/(Increase) in Other Assets 485, ,362 38,482 (6,638) 47,538 26,819 (57,162) Increase/(Decrease) in Other Liabilities Cash Used in Operations (682,048) (214,702) 229,144 33,175 21,266 43,037 32,579 (3,149) (312,865) (3,822,410) (1,092,024) (1,089,240) (1,001,429) (1,772,068) Profit Income Received 417, ,450 77,020 35,794 35,891 41, ,181 Gross Dividend Income Received Net Cash Generated From/(Used in) Operating Activities 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 1 January 2014 Cash and Cash Equivalents at 31 December ,462 98, , , , , , ,628 (3,454,161) (918,508) (911,405) (815,473) (1,553,212) 620, ,451 4,326,637 1,113,499 1,166,731 1,333,027 1,716,863 (1,384,036) (477,064) (868,169) (195,059) (252,842) (517,237) (162,008) (763,535) (194,613) 3,458, , , ,790 1,554,855 7,733 2,015 4,307 (68) 2, , , ,231 2,848 4, ,735 1,390 1,697 P a g e 40

41 CASH FLOW STATEMENT FOR FINANCIAL YEAR ENDED 31 DECEMBER 2013 myequity myblue ITTIZAN ISTIQRAR INDEX mygrowth CHIPS mydividend mybalanced 2013 RM RM RM RM RM RM RM Cash Flow from Operating Activities Income Before Taxation 2,628, ,849 1,472, , , , ,320 Adjustment For: Profit Income (370,303) (415,024) (15,706) (15,946) (19,914) (20,458) (131,770) Gross Dividend Income (434,435) (112,072) (274,944) (119,215) (119,101) (149,042) (45,760) Profit on Disposal (1,565,534) (383,737) (717,963) (403,794) (415,382) (511,896) (137,437) Unrealised Capital Gain (878,826) (157,540) (755,487) (450,210) (356,260) (297,986) (116,281) Outgo from Operations Before Changes in Operating Assets and Liabilities Proceeds from Disposal (620,403) (275,524) (291,578) (164,463) (154,340) (165,720) (94,928) of Investment 14,501,909 6,321,153 6,237,450 3,856,636 3,861,594 4,331,429 2,295,084 Purchase of Investment (13,661,880) (6,180,629) (9,171,401) (4,676,512) (4,582,269) (5,459,883) (2,989,066) Decrease/(Increase) in Other Assets Increase/(Decrease) in Other Liabilities Cash Used in Operations (363,848) (116,898) (731,698) (114,697) (123,726) (182,849) (139,351) 271,559 81, , , , ,842 81, ,337 (170,051) (3,473,990) (944,586) (872,354) (1,325,181) (847,222) Profit Income Received 370, ,024 15,706 15,946 19,914 20, ,770 Gross Dividend Income Received Net Cash Generated From/(Used In) Operating Activities 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 1 January 2013 Cash and Cash Equivalents at 31 December , , , , , ,042 45, , ,045 (3,183,340) (809,425) (733,339) (1,155,681) (669,692) 912, ,258 3,450, , ,021 1,218, ,109 (1,858,945) (751,355) (268,049) (77,485) (59,118) (64,254) (59,381) (946,227) (378,097) 3,182, , ,903 1,154, ,728 (14,152) (21,052) (474) (313) (1,436) (1,121) (964) 14,650 21,885 1, ,687 2,194 1, , P a g e 41

42 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 Menara Takaful Malaysia No.4, Jalan Sultan Sulaiman Kuala Lumpur The Manager 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 12 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 (BNM/RH/GL ) 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 recognized on a receipt basis. P a g e 42

43 (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 recognized upon surrendering of/withdrawal from the related takaful certificates. (g) Income Recognition Dividend income is recognized when the right to receive payment is established. Income is recognized on time proportion basis that takes into account the effective yield of the asset. 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 2014 RM 31 December 2013 RM Cost 5,484,341 6,220,649 Unrealised capital gain/(loss) (144,031) (99,428) Market value 5,340,310 6,121,221 (ii) Istiqrar Cost 6,603,369 7,846,691 Unrealised capital gain/(loss) (155,305) (84,915) Market value 6,448,064 7,761,776 (iii) mybalanced Cost 2,444,158 2,444,158 Unrealised capital gain/(loss) (76,519) (59,518) Market value 2,367,639 2,384, Quoted shares (i) Ittizan 31 December 2014 RM 31 December 2013 RM Cost 13,107,332 13,419,613 Unrealised capital gain/(loss) 458,994 3,370,954 Market value 13,566,326 16,790,567 P a g e 43

44 (ii) Istiqrar 31 December 2014 RM 31 December 2013 RM Cost 3,682,901 3,385,639 Unrealised capital gain/(loss) 186, ,399 Market value 3,869,259 4,297,038 (iii) myequity Index Cost 11,884,944 9,426,801 Unrealised capital gain/(loss) 363,137 1,960,158 Market value 12,248,081 11,386,959 (iv) mygrowth Cost 5,735,657 4,675,224 Unrealised capital gain/(loss) (10,724) 801,617 Market value 5,724,933 5,476,841 (v) myblue Chips Cost 5,493,132 4,508,243 Unrealised capital gain/(loss) 58, ,547 Market value 5,551,176 5,363,790 (vi) mydividend Cost 6,015,583 5,012,635 Unrealised capital gain/(loss) 112, ,463 Market value 6,128,340 5,923,098 (vii) mybalanced Cost 2,096,593 1,675,050 Unrealised capital gain/(loss) 44, ,283 Market value 2,141,509 2,001,333 P a g e 44

45 4. Financial Instruments The Funds are exposed to market, credit, liquidity and profit rate risks. Market risk Market risk arises when the value of securities fluctuates 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 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. Profit rate risk When the profit rate rises, bond prices fall and vice versa. The market risk is monitored through periodic reviews of its asset and liability positions with the objective to limit the net changes in the value of assets and liabilities arising from profit rate movements. Shariah risk Shariah risk arises when transaction entered by Islamic Financial Institution (IFI) are declared impermissible. Any profit sourced from shariah non compliance activities shall be cleansed in order to retain compliance and it also will impact the reputation of IFI. 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 45

46 DETAILS OF INVESTMENTS ITTIZAN Security Name Construction Number of Units Total Cost Market Value % of NAV Gamuda Berhad 63, , , % IJM Corporation Bhd 18, , , % Consumer UMW Holding Bhd 42, , , % Industrial Products Petronas Gas Bhd 25, , , % Infrastructure Project Company Digi.com Bhd 112, , , % Plantation Genting Plantations Bhd 20, , , % IOI Corporation Bhd 37, , , % Kuala Lumpur Kepong Bhd 24, , , % Property SP Setia Bhd 55, , , % Sunway Bhd 102, , , % Trading/Services Axiata Group Bhd 250,450 1,502,616 1,765, % Berjaya Auto Bhd 77, , , % Dialog Group Bhd 231, , , % IHH Healthcare Bhd 68, , , % KPJ Healthcare Bhd 123, , , % MISC Berhad 32, , , % Maxis Berhad 84, , , % Petronas Dagangan Bhd 26, , , % Perisai Petroleum Teknologi Bhd 647, , , % Sime Darby Bhd 199,452 1,821,672 1,832, % Telekom Malaysia Bhd 106, , , % Tenaga Nasional Bhd 154,387 1,724,704 2,130, % UMW Oil and Gas Corporation Bhd 237, , , % Total Malaysian Equities 2,736,915 13,107,332 13,566, % P a g e 46

47 Malaysian Debt Securities Kapar Energy Ventures Sdn Bhd 500, , , % BGSM Management Sdn Bhd 439, , , % Padiberas Nasional Bhd 250, , , % Senari Synergy Sdn Bhd 250, , , % CIMB Islamic Bank Bhd 200, , , % Anih Berhad 500, , , % DRB Hicom Berhad 500, , , % Project Lebuhraya Usahasama Bhd 500, , , % Jimah Energy Ventures Sdn Bhd 500, , , % Ranhill Powertron II Sdn Bhd 500, , , % TNB Northern Energy Bhd 600, , , % Alam Maritime Resources Bhd 500, , , % Total Malaysian Equities & Debt Securities 7,976,914 18,591,673 18,906, % P a g e 47

48 ISTIQRAR Security Name Number of Units Total Cost Market Value % of NAV Construction IJM Corporation Bhd 12,000 79,046 78, % Gamuda Berhad 6,000 30,774 30, % Consumer UMW Holding Bhd 12, , , % Industrial Products Petronas Gas Bhd 8, , , % Infrastructure Project Company Digi.com Bhd 37, , , % Plantation Genting Plantations Bhd 5,000 55,474 50, % IOI Corporation Bhd 10,000 45,144 48, % Kuala Lumpur Kepong Bhd 7, , , % Property SP Setia Bhd 15,000 49,492 49, % Sunway Bhd 28,000 93,259 92, % Trading/Services Axiata Group Bhd 66, , , % Berjaya Auto Bhd 21,000 67,624 69, % Dialog Group Bhd 88, , , % IHH Healthcare Bhd 23, , , % KPJ Healthcare Bhd 33, , , % MISC Berhad 7,000 47,453 50, % Maxis Berhad 26, , , % Perisai Petroleum Teknologi Bhd 166, ,446 75, % Petronas Dagangan Bhd 10, , , % Sime Darby Bhd 50, , , % Telekom Malaysia Bhd 29, , , % Tenaga Nasional Bhd 45, , , % UMW Oil and Gas Corporation Bhd 53, , , % Total Malaysian Equities 761,479 3,682,901 3,869, % P a g e 48

49 Malaysian Debt Securities Kapar Energy Ventures Sdn Bhd 750, , , % National Bank of Abu Dhabi 750, , , % BGSM Management Sdn Bhd 659, , , % Padiberas Nasional Bhd 500, , , % Senari Synergy Sdn Bhd 250, , , % CIMB Islamic Bank Bhd 400, , , % Anih Berhad 500, , , % DRB Hicom Berhad 500, , , % Jimah Energy Ventures Sdn Bhd 500, , , % Ranhill Powertron II Sdn Bhd 500, , , % TNB Northern Energy Bhd 500, , , % Alam Maritime Resources Bhd 500, , , % Total Malaysian Equities & Debt Securities 7,071,478 10,286,270 10,317, % P a g e 49

50 myequity Security Name Number of Units Total Cost Market Value % of NAV Construction Gamuda Berhad 126, , , % IJM Corporation Bhd 38, , , % Consumer UMW Holding Bhd 46, , , % Industrial Products Petronas Gas Bhd 28, , , % Infrastructure Project Company Digi.com Bhd 114, , , % Plantation Genting Plantations Bhd 13, , , % IOI Corporation Bhd 35, , , % Kuala Lumpur Kepong Bhd 21, , , % Property SP Setia Bhd 45, , , % Sunway Bhd 96, , , % Trading/Services Axiata Group Bhd 185,200 1,115,568 1,305, % Berjaya Auto Bhd 72, , , % Dialog Group Bhd 258, , , % IHH Healthcare Bhd 70, , , % KPJ Healthcare Bhd 88, , , % MISC Berhad 65, , , % Maxis Berhad 76, , , % Petronas Chemical Holdings Bhd 45, , , % Petronas Dagangan Bhd 22, , , % Perisai Petroleum Teknologi Bhd 127, ,331 57, % Sime Darby Bhd 134,714 1,249,259 1,238, % Telekom Malaysia Bhd 130, , , % Tenaga Nasional Bhd 108,525 1,285,323 1,497, % UMW Oil and Gas Corporation Bhd 153, , , % Warrants Genting Plantations Bhd-Warrant 1,600 2,640 3, % Total Malaysian Equities 2,103,502 11,884,944 12,248, % P a g e 50

51 mygrowth Security Name Number of Units Total Cost Market Value % of NAV Construction Gamuda Berhad 35, , , % IJM Corporation Bhd 25, , , % WCT Holdings Bhd 11,716 27,118 18, % Consumer UMW Holding Bhd 24, , , % Industrial Products Petronas Gas Bhd 13, , , % Infrastructure Project Company Digi.com Bhd 47, , , % Plantation Kuala Lumpur Kepong Bhd 12, , , % IOI Corporation Bhd 16,000 72,231 76, % Property SP Setia Bhd 25,000 82,354 82, % Sunway Bhd 50, , , % Trading/Services Axiata Group Bhd 82, , , % Berjaya Auto Bhd 33, , , % Dialog Group Bhd 93, , , % IHH Healthcare Bhd 35, , , % KPJ Healthcare Bhd 53, , , % MISC Berhad 35, , , % Maxis Berhad 39, , , % Perisai Petroleum Teknologi Bhd 307, , , % Petronas Chemical Holdings Bhd 21, , , % Petronas Dagangan Bhd 11, , , % Sime Darby Bhd 63, , , % Tenaga Nasional Bhd 46, , , % Telekom Malaysia Bhd 44, , , % UMW Oil and Gas Corporation Bhd 84, , , % Total Malaysian Equities 1,210,213 5,735,657 5,724, % P a g e 51

52 mybluechips Security Name Number of Units Total Cost Market Value % of NAV Construction Gamuda Berhad 32, , , % IJM Corporation Bhd 28, , , % Consumer UMW Holding Bhd 24, , , % Industrial Products Petronas Gas Bhd 11, , , % Infrastructure Project Company Digi.com Bhd 45, , , % Plantation Genting Plantations Bhd 7,500 83,210 75, % IOI Corporation Bhd 16,000 72,231 76, % Kuala Lumpur Kepong Bhd 11, , , % Property SP Setia Bhd 20,000 65,925 66, % Sunway Bhd 48, , , % Trading/Services Axiata Group Bhd 76, , , % Berjaya Auto Bhd 32, , , % Dialog Group Bhd 98, , , % IHH Healthcare Bhd 33, , , % KPJ Healthcare Bhd 48, , , % MISC Berhad 35, , , % Maxis Berhad 38, , , % Petronas Chemical Holdings Bhd 20, , , % Petronas Dagangan Bhd 11, , , % Perisai Petroleum Teknologi Bhd 298, , , % Sime Darby Bhd 59, , , % Telekom Malaysia Bhd 44, , , % Tenaga Nasional Bhd 47, , , % UMW Oil and Gas Corporation Bhd 73, , , % Total Malaysian Equities 1,160,439 5,493,132 5,551, % P a g e 52

53 mydividend Security Name Number of Units Total Cost Market Value % of NAV Construction Gamuda Berhad 37, , , % IJM Corporation Bhd 23, , , % Consumer UMW Holding Bhd 26, , , % Industrial Products Petronas Gas Bhd 14, , , % Infrastructure Project Company Digi.com Bhd 65, , , % Plantation Genting Plantations Bhd 7,100 78,757 71, % IOI Corporation Bhd 17,000 76,746 81, % Kuala Lumpur Kepong Bhd 10, , , % Property SP Setia Bhd 25,000 82,354 82, % Sunway Bhd 46, , , % Real Estate Investment Trust Axis Real Estate Investment Trust 56, , , % Trading/Services Axiata Group Bhd 87, , , % Berjaya Auto Bhd 34, , , % Dialog Group Bhd 81, , , % IHH Healthcare Bhd 36, , , % KPJ Healthcare Bhd 51, , , % MISC Berhad 34, , , % Maxis Berhad 44, , , % Petronas Chemical Holdings Bhd 22, , , % Petronas Dagangan Bhd 11, , , % Sime Darby Bhd 71, , , % Perisai Petroleum Teknologi Bhd 60,000 61,102 27, % Telekom Malaysia Bhd 50, , , % Tenaga Nasional Bhd 49, , , % UMW Oil and Gas Corporation Bhd 74, , , % Total Malaysian Equities 1,034,112 6,015,582 6,128, % P a g e 53

54 mybalanced Security Name Construction Number of Units Total Cost Market Value % of NAV IJM Corporation Bhd 6,000 39,521 39, % Gamuda Berhad 7,400 37,765 37, % Consumer UMW Holding Bhd 7,000 82,759 76, % Industrial Products Petronas Gas Bhd 6, , , % Infrastructure Project Company Digi.com Bhd 21, , , % Plantation Kuala Lumpur Kepong Bhd 4,200 94,169 95, % IOI Corporation Bhd 6,000 27,087 28, % Property SP Setia Bhd 10,000 33,063 33, % Sunway Bhd 16,000 53,291 52, % Trading/Services Axiata Group Bhd 29, , , % Berjaya Auto Bhd 13,000 41,862 42, % Dialog Group Bhd 41,304 73,132 61, % IHH Healthcare Bhd 13,000 62,342 62, % KPJ Healthcare Bhd 17,000 63,932 62, % MISC Berhad 5,000 34,008 36, % Maxis Berhad 15,000 98, , % Perisai Petroleum Teknologi Bhd 92,000 53,344 41, % Petronas Chemical Holdings Bhd 4,000 21,271 21, % Petronas Dagangan Bhd 4,000 64,449 68, % Sime Darby Bhd 25, , , % Telekom Malaysia Bhd 17, , , % Tenaga Nasional Bhd 22, , , % UMW Oil and Gas Corporation Bhd 27,900 81,066 65, % Real Estate Investment Trust Axis Real Estate Investment Trust 20,000 69,242 72, % Total Malaysian Equities 431,276 2,096,593 2,141, % P a g e 54

55 Malaysian Debt Securities National Bank of Abu Dhabi 250, , , % BGSM Management Sdn Bhd 220, , , % Padiberas Nasional Bhd 250, , , % CIMB Islamic Bank Bhd 200, , , % Project Lebuhraya Usahasama Bhd 250, , , % Jimah Energy Ventures Sdn Bhd 250, , , % Ranhill Powertron II Sdn Bhd 250, , , % TNB Northern Energy Bhd 400, , , % Alam Maritime Resources Bhd 250, , , % Total Malaysian Equities & Debt Securities 2,751,276 4,540,751 4,509, % P a g e 55

56 COMPARATIVE PERFORMANCE TABLE ITTIZAN Portfolio Composition 31-Dec Dec Dec Dec Dec-10 (%) (%) (%) (%) (%) 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 Dec Dec Dec-10 Total NAV (RM) 23,385,210 24,457,156 22,774,730 21,239,238 20,661,313 Number of units 12,518,467 12,926,122 13,530,802 13,871,401 14,199,486 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 (70% FBM Shariah Index : 30% 1-Month GIA Rates Maybank) Average Annual Return : One-Year Three-Year Five-Year P a g e 56

57 ISTIQRAR Portfolio Composition 31-Dec Dec Dec Dec Dec-10 (%) (%) (%) (%) (%) a. Equities: Construction Consumer Products Industrial Products Infrastructure Plantation Property Trading & Services REITs b. Islamic Debt Securities c. Money Market & Cash TOTAL Dec Dec Dec Dec Dec-10 Total NAV (RM) 12,400,830 12,534,317 12,120,158 11,715,673 11,796,035 Number of units 8,751,945 8,904,600 9,203,208 9,423,878 9,910,043 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 (30% FBM Shariah Index : 70% 1-Month GIA Rates Maybank) Average Annual Return : One-Year Three-Year Five-Year P a g e 57

58 myequity INDEX Portfolio Composition 31-Dec Dec Dec Dec Dec-10 (%) (%) (%) (%) (%) a. Equities: Construction Consumer Products Industrial Products Information Technology Infrastructure Plantation Property Trading & Services Warrants b. Islamic Debt Securities c. Money Market & Cash TOTAL Dec Dec Dec Dec Dec-10 Total NAV (RM) 15,781,182 12,377,753 7,722,366 5,058,579 4,010,804 Number of units 9,160,411 7,153,541 5,126,342 3,790,811 3,140,055 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 (FBM Shariah Index) Average Annual Return : One-Year Three-Year Five-Year P a g e 58

59 mygrowth Portfolio Composition 31-Dec 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 Dec Dec Dec Dec Dec-10 Total NAV (RM) 7,013,066 6,254,346 4,620,531 3,786,286 3,422,707 Number of units 5,177,770 4,510,356 3,867,556 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 (FBM Shariah Index) Average Annual Return : One-Year Three-Year Five-Year P a g e 59

60 myblue CHIPS Portfolio Composition 31-Dec 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 Dec Dec Dec Dec Dec-10 Total NAV (RM) 6,832,540 6,067,297 4,579,614 3,672,455 3,349,985 Number of units 4,955,050 4,302,222 3,733,835 3,335,751 3,112,006 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 (FBM Shariah Index) Average Annual Return : One-Year Three-Year Five-Year P a g e 60

61 mydividend Portfolio Composition 31-Dec 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 Dec Dec Dec Dec Dec-10 Total NAV (RM) 7,461,149 6,687,100 4,719,043 3,741,263 3,285,447 Number of units 5,036,643 4,487,083 3,638,863 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 (FBM Shariah Index) Average Annual Return : One-Year Three-Year Five-Year P a g e 61

62 mybalanced Portfolio Composition 31-Dec 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 Dec Dec Dec Dec Dec-10 Total NAV (RM) 6,725,771 5,146,369 4,141,321 3,458,390 3,126,259 Number of units 5,668,099 4,356,342 3,762,770 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 (FBM Shariah Index) Average Annual Return : One-Year Three-Year Five-Year * There was no performance return for Ihsan in FYE 31 December 2010 as the fund commenced March P a g e 62

63 P a g e 63