Takaful investment linked funds report ended 31 March 2011

Takaful Investment-Linked Funds Report

CONTENTS

PortfolioStatement

Statementby Manager

IndependentAuditors'Report

Statements ofFinancial Position

Statements of ComprehensiveIncome

Statements ofChanges in Equity

Notes to theFinancialStatements

1-18

19

20-2122-23

24-25

26-28

Cash FlowStatements

29-33

34-87

Takaful Investment-Linked FundsTakaful Investment-Linked Funds Reportfor the year ended 31 March 2011

PORTFOLIO STATEMENT

Takaful Investment-Linked Funds Report 1

FUND NAME :TAKAFUL IKHLAS FIXED INCOME FUNDTAKAFUL IKHLAS BALANCED FUNDTAKAFUL IKHLAS GROWTH FUND

EQUITY MARKET OUTLOOK

Our view on the market is underlined by two key observations on portfolio flows:

- Bonds to equities – mostly evident in the US and other developed economies as improved growth outlook has raised investors’ risk appetite in equities. Selectively in markets like Indonesia, there has been aggressive sell down on the bond market. The foreign selling on Malaysian govvies remain moderate but we are mindful of the high foreign holdings of MGS (estimated RM73bn).

- EM equities to DM equities – inflation hangover in emerging economies and concerns on tightening policies has triggered a shift from EM equities to DM equities. Although Malaysia is least affected by inflations, the portfolio shift out of Asia has

affected the KLCI recently. This trend is expected to continue in the 1H11 amidst volatile market conditions. Until we see inflations peaking in China and signs that Asia’s tightening stance is over, we expect foreign investors will still remain cautious on emerging markets.

The capital flight to developed economies may dominate in 1H 2011. However, we remain positive on structural improvements in Asian economies and as such remain positive on EM Asia over the medium term. Likewise, the economic improvements in the US may cyclical and may not be sustainable. As such, we could see a reversal of flows back into Asia in 2H 2011 when inflation concerns eases (and policy tightening ends).

FIXED INCOME MARKET REVIEW

At the monetary policy (MPC) meeting on 11 March 2011, policymakers held the Overnight Policy Rate (OPR) steady at 2.75%, however they hiked Statutory Reserve Requirement (SRR) ratio from 1.00% to 2.00%, effective 1 April 2011 as a pre-emptive measure to manage the risk of liquidity build-up from resulting in macroeconomic and financial imbalances.

Bank Negara Malaysia (BNM) in its 2010 Annual Report released on 23 March 2011, maintained its previous GDP growth outlook of 5.0-6.0% this year (versus 7.2% growth in 2010). Meanwhile, inflation rate is expected to rise to an average of 2.5% to 3.5% in 2011 from 1.7% in 2010.

Steadier yield movements was seen during early of the month as market players attracted into the safe haven of the government bond market attributable to geo-political tensions in MENA (Middle East North Africa) as well as Japan earthquake and tsunami effects.

However, the higher inflationary expectation set by the BNM annual report has weakened Malaysian Government Bonds market. MGS yields were rose across the board mainly along the 3-year and 5-year MGS as shorter term govvies are more sensitive to policy rate changes.

Central bank conducted two government bonds auctions in the month of March. The mid-month reopening of the MGS September 2016 received a bid-to-cover ratio of 2.24 times for the


FIXED INCOME MARKET REVIEW (CONTD).

RM4.0 billion offered with average yield of 3.567%.

Auction of 3.5 years GII maturing September 2014 saw a weak demand with 1.43 times oversubscribed. The average yield generated from the RM4.0 billion offer was at 3.505%.

BOND MARKET OUTLOOK

Upcoming govvies issuance: 15-year new issue of MGS maturing April 2026 and a 10-year new issue of GII maturing April 2021 which will see about RM4.0 billion being offered.

PM remarked that the government may sell RM48 billion in Islamic bonds to fund the MRT project and more investments will be unveil to spur growth and consider slowing subsidy cuts to shield consumers from rising prices.


Summary of Position Takaful Ikhlas Fixed Income Fund (TIFIF) Apr 2010 - Mar 2011

Total Capital InjectionsTotal Net Income/(Losses)Value at CostMarket ValueExposure

::::

Bonds :Liquidity :Total

As At 31 Mar 2011RM

4,512,030353,034

4,864,6664,865,826

81.43%18.57%

RMRMRM

3,961,242903,424

4,864,666

PORTFOLIO SUMMARY (TIFIF)

Since Inception until 31 March 2011

1 Year (Apr 2010 - March 2011)

3 Years (Apr 2008 - March 2011)

AVERAGE ANNUAL RETURN PORTFOLIO BENCHMARK

18.42% 10.65%

5.64% 2.87%

13.16% 9.34%

Fund Performance

Note: Fund performance compared with Benchmark on GIA


COMPARATIVE FUND PERFORMANCE TABLE (TIFIF)

Total Investment (RM)

Total NAV/Market Value (RM)

CATEGORY OF INVESTMENTS MAR-07 MAR-08

--

100.00%

1,048,797.98 1,496,072.25

MAR-09 MAR-10 MAR-11

1 - Debt Securities (a) Bonds (b) Government Guaranteed

2 - Liquidity/Cash

45.39%-

54.61%

56.61%18.45%

24.94%

80.57%16.65%

2.78%

75.69%5.16%

19.15%

1,198,749.12 1,365,681.64 4,512,029.80

1,058,166.00 1,405,434.001,203,558.00 1,323,028.00 4,292,198.00

Total Number of Units 1,052,706.00 1,508,352.001,157,288.00 1,301,777.00 4,420,281.00

Published NAV per unit (RM) 1.0050 0.93201.0400 1.0160 0.9710

Highest NAV per unit (RM) 1.0060 1.03901.0490 1.0390 1.039

Lowest NAV per unit (RM) 0.9950 0.84100.9950 0.8410 0.8410

Total Annual return:- Capital growth- Income distributions

0.85%-

3.77%-

2.03%-

4.99%-

18.42%

Yearly Performance Table


Summary of Position Takaful Ikhlas Balance Fund (TIBF) Apr 2010 - Mar 2011

Total Capital InjectionsTotal Net Income/(Losses)Value at CostMarket ValueExposure Equities

Bonds LiquidityTotal

As At 31 Mar 2011RM

4,588,003897,827

5,455,8675,589,729

63.80%22.39%13.81%

RMRMRMRM

3,566,2081,251,455

772,0665,589,729

PORTFOLIO SUMMARY (TIBF)





40.35% 37.12%

14.42% 12.82%

17.17% 16.12%

Fund Performance

Note: Fund performance compared with Benchmark on 75% FBM Syariah + 25% GIA

:::


COMPARATIVE FUND PERFORMANCE TABLE (TIBF)




11.19%3.56%3.44%5.45%38.50%5.49%2.33%1.97%

--

28.07%

2,234,272.31 2,863,711.18


1 - Equity (a) Constructions (b) Plantations (c) Consumer Products (d) Industrial Products (e) Trading/Services (f) Properties (g) Infras. Project Co (h) TSR & Warrants

2 - Debt Securities/Bonds

3 - Liquidity/Cash

3.12%15.79%2.94%1.80%34.11%2.72%

--

17.32%-

22.20%

3.68%7.88%2.97%2.19%26.52%3.26%

-

31.35%-

22.15%

13.70%2.62%5.44%2.60%31.31%2.69%3.94%

-

34.81%-

2.89%

8.76%7.77%3.72%4.03%35.31%1.37%2.84%

-

22.39%

13.81%

2 ,468,314.45 2,119,070.43 4,588,003.47

2,216,701.00 2,741,4512 ,437,061.00 2,060,996.00 5,199,044

Total Number of Units 2 ,066,632.00 2,519,1532,165,799.00 2,348,527.00 4,237,813





12.88%-

6.12%-

-19.90%-

27.84%-

40.35%


-


Summary of Position Takaful Ikhlas Growth Fund (TIGF) Apr 2010 - Mar 2011

Total Capital InjectionsTotal Net Income/(Losses)Value at CostMarket ValueExposure

::::

Equities :Liquidity :Total

As At 31 Mar 2011RM

5,100,548888,115

5,941,0276,136,395

84.49%15.51%

RMRMRM

951,8295,184,5666,136,395

PORTFOLIO SUMMARY (TIGF)





39.80% 43.17%

15.71% 16.22%

12.26% 17.23%

Fund Performance

Note: Fund performance compared with Benchmark on FBM Syariah


COMPARATIVE FUND PERFORMANCE TABLE (TIGF)




14.22%1.10%7.92%8.87%35.21%11.07%3.25%3.77%

14.59%

2,333,002 3,398,972


1 - Equity(a) Constructions(b) Plantations(c) Consumer Products(d) Industrial Products(e) Trading/Services(f) Properties(g) Infras. Project Co(h) TSR & Warrants

2 - Liquidity/Cash

5.59%20.38%3.53%4.79%40.05%2.75%

--

22.81%

6.41%12.94%3.72%4.65%29.61%3.32%

--

39.35%

13.57%5.84%5.98%4.56%41.03%2.46%3.99%

-

22.57%

10.57%12.20%4.18%5.20%46.58%2.80%2.96%

-

15.51%

2,653,974 2,258,085 5,100,548

2,328,518 3,148,9722,616,098 2,175,285 5,998,278

Total Number of Units 2,137,879 3,182,9682,292,290 2,746,035 5,362,940





16.33%-

7.06%-

-26.90%-

32.71%-

39.80%-


PORTFOLIO STATEMENT


FUND NAME :AMHIGH ISLAMIC CASH STRATEGYAMHIGH ISLAMIC EQUITY STRATEGIES

ECONOMIC AND EQUITY MARKET REVIEW

The year 2010 was definitely the year of emerging markets, with Asia (excluding Japan) in the spotlight because of its strong economic growth. After the doldrums of the global economic crisis in 2008 and 2009, there were great expectations that the global economic recovery would take root beginning 2010, and it certainly did not disappoint. The journey was not smooth sailing though, as many economies were still affected with varying degree of risks which resulted in downgrades in their sovereign bond debt ratings.

Still, 2010 closed with a bang with convincing growth recorded especially in Asia, and there is hope that this would continue for the next few years. Unfortunately though, certain economies

in Europe especially, did not recover fully as yet. Portugal, Ireland, Italy, Greece and Spain lead the sovereign debt crisis in 2010. While the rating downgrade continues for these countries, fortunately none of these countries have defaulted yet on their loans. Greece’s rating fell to junk status (non-investment grade) and many Eastern European countries may very well go down on the same route if oil prices continue to stay high. A rescue package worth US$1 trillion was formulated to help resolve the Greek crisis, as it was detrimental to the strength of the Euro.

As the economy in most parts of developing world recovered, other countries maintained their super low interest rates. The United States for example, maintained near zero interest rates in March 2010 for an “indefinite term”. This resulted in further interest rates differentials between developed and emerging economies and encouraged investors to shift from developed economies to emerging economies, which promised higher returns on top of a much brighter economic prospect.

2010 also saw the combination of high food prices, high oil prices and wages that do not change much which help drove people to the streets in protests.

The protests even brought governments down as what had happened in Tunisia and Egypt. The protests in Libya especially and elsewhere in the Middle East, help drove up oil prices on concerns of supply disruption. The spike in oil prices has stoked concerns about inflation worldwide, which resulted in the lowering of expected GDP growth rates in most countries.

During the period under review, global risks continued to persist. Tension between the two Koreas intensified when North Korea decided to bombard its southern neighbour. Euro-zone debt worries grew, after Ireland’s sovereign ratings were downgraded, while Spain and Portugal’s ratings were put under review. The insurgencies in the Middle East continued, while the tension in Libya intensified as NATO decided to take action.

Back in Malaysia, the stronger economic recovery beginning in 2010 began to grab BNM’s attention, as BNM started their interest rate normalisation process, by increasing the OPR by 25 bps to 2.25% in March 2010, in an attempt to manage imbalances amid a recovering economy.


ECONOMIC AND EQUITY MARKET REVIEW (CONTD.)

The new economic model (NEM) was unveiled, the first of two parts of which the highlight was to implement new strategies in order for Malaysia to achieve high income status by 2020. The planned goods and services tax (GST) implementation also fizzled, whereby the government postponed indefinitely on grounds that the GST should not be implemented yet because the country’s economy was just starting to recover.

The ringgit continued to strengthen throughout 2010 and early 2011 to a 13-year high, in tandemwith the appreciation of other Asian currencies on several factors, namely increasing interest rates, speculation of the devaluation of the Chinese renmimbi, and continued capital inflow. In fact, the ringgit was the best performer among Asian currencies, with expectation that it may hit below the three ringgit to the US dollar threshold towards the end of the period under review.

In May 2010, BNM raised the OPR further to 2.50%, as Malaysia’s GDP for 1Q10 accelerated

at the fastest pace in 10 years at 10.1% yoy. The 10th Malaysian plan covering the road map for the country’s economy was unveiled by the Prime Minister the following month, which covers 5 years beginning 2011. Some notable targets (or KPIs) under the 10MP are a 12.8% average annual growth in private investments, GDP growth rate of 6% annually, and to reduce the fiscal deficit by half to 2.8% of GDP by 2015.

Subsidy rationalisation programme also began in May 2010, where petrol and diesel prices were gradually increased in tandem with the rising crude oil prices. Sugar prices were also raised by 20 sen. These helped create a push-inflationary effect, causing inflation to rise yoy and prompted BNM to raise the OPR further.

The Malaysian Economic Transformation Programme (ETP) was unveiled in September 2010, setting out key economic targets for the next 10 years. Of utmost importance according to economists, is proper execution which was key to success of the ETP.

The 2011 Budget, although with a few goodies

announced, was without any major surprises. In November 2010, BNM maintained the OPR at 2.75%, as a compromise between managing inflationary pressures and sustaining economic growth. In fact, the GDP growth for the third quarter 2010 has actually slowed down a little bit.

Nevertheless, due to the rising crude oil prices, the Malaysian government intensified its subsidyrationalisation towards the end of the review period and increased the petrol and diesel prices even further. Despite the inflation rate in 2010 being relatively tame on the back of push inflationary factors such as rising commodity prices, the expectation was that the inflation rate will go higher in early 2011 due to the lagging effect. Inflation is also expected to be higher as commodity prices continued to rise, and the government continuing its subsidiary rationalisation programme.

BOND AND SUKUK MARKET REVIEW

The global economy gathered pace in much


BOND AND SUKUK MARKET REVIEW (CONTD.)

of 2010 due to many factors such as positive economic data, the upgrading of the economic outlook of the US economy by the US Federal Reserve Bank, as well as improving consumer sentiments. However, in the emerging markets especially in Asia, governments’ focus has shifted towards dealing with inflation rather than providing continuing support for growth, most notably during the first quarter of 2011. Inflation has also been exacerbated by the rise in global food and oil prices. Most central banks have started aggressive stance to hike interest rates, amid less tightening of monetary policy, led by China, India, South Korea and Taiwan.

In Malaysia, the domestic sovereign bond and sukuk market was affected by many events, bothexternal and internal. The turmoil in the Middle East, the rise in global commodity prices, and the rise inflation coupled with the tightening of monetary policies have all played a role in yields,supply and trading volume.

Corporate bonds and sukuks market meanwhile had a better run in 2010 compared to MGS and GII. Trading activities concentrated in high-end AAA and AA segments, with trading volume in private debt securities (PDS) being moderately higher than in 2009.

ECONOMIC AND EQUITY MARKET OUTLOOK

On the global level, we expect the equity markets in 2011 to provide decent yet subdued returns. The main thrusts for the positive showing of equity markets include favourable global and emerging economic outlook, coupled with decent valuations and improving corporate sector profitability. What make the performance to be subdued are the rising oil, commodity and food prices which have a push-inflation factor and hence result in weaker consumption demand as consumers adjust to the higher prices.

Comparing between developed markets and emerging markets, the developed markets are showing signs of positive momentum, as leading economic indicators showed higher consumer

spending and increasing manufacturing production. Corporate earnings were revised upwards, supporting valuations and markets seen especially in the first quarter of 2011. In the near term, the negative factors affecting developed markets include the central bank of Germany, Europe’s largest economy, raising interest rates, and the fallout from the earthquake disaster in Japan, which creates a certain amount of uncertainty as to the recovery pace in Japan’s economy in the aftermath of the disaster.

Emerging markets on the other hand, especially in Asia, will largely depend on the fallout and recovery of Japan post earthquake. Disruptions in components supply, and the scale-down production in Japan, will mean less manufactured goods and reduced imports from Japan. This in turn will affect the Asia market at least for first half of 2011 as Japan is one of the biggest importers in Asia.

Overall, we expect a positive economic outlook for Malaysia, with BNM expecting a GDP growthrate of 6.0% in 2011. Focus would continue to be


ECONOMIC AND EQUITY MARKET OUTLOOK(CONTD.)

on the ETP and GTP rollout details, and construction projects to be announced concurrently. As at the end of the period under review, the Malaysian market is trading at a PER of 14x, which is at about 15% premium against regional markets. However, if the rollout of ETP and GTP is accelerated, we expect upward revisions of the Malaysian market PER.

BOND AND SUKUK MARKET OUTLOOK

At least for the first half of 2011, external factors such as the disaster in Japan, the turmoil in the Middle East and the sovereign debt situation in parts of Europe, continue to affect most investors’ sentiments towards non-ringgit bonds and sukuks. At the same time especially in the near term, the risk of rising inflation in Malaysia remains on investors’ radar screens. Nevertheless, we view the negative external newsflows as temporary and even then, investors will normally seek debt securities as safe haven. While BNM has

so far kept the OPR unchanged at 2.75% (as at the end of the period under review), we opine that to tackle inflation, the central bank will further hike the OPR gradually under its normalization regime to 3.50% by early 2012. According to the latest BNM annual report, BNM expects inflation to rise to an average of 2.5% to 3.5% in 2011 from 1.7% in 2010.

We expect the issuance of private debt securities (PDS) market to pick up beginning second quarter 2011, with the implementation of some of the Economic Transformation Programme such as the KL MRT. For these types of projects especially infrastructure related, it is highly likely that the bonds/sukuks will be government guaranteed and will fetch an AAA rating. We reckon any new primary issues will be well taken up in view of the relatively high liquidity still in the market. Investors would likely focus on corporate bonds rather than government bonds for better yield enhancements in view of the impending rise in interest rates.

INVESTMENT OBJECTIVE

AmHigh’s investment objective is to provide participants with a steady medium to long term capital growth at a reasonable level of risk through investments in a diversified portfolio of unit trust funds (both equities and non-equities) which are Syariah-compliant.

During the year under review, there has been no change in the investment objective.

PORTFOLIO PERFORMANCE REVIEW

Cash StrategySince inception on 16 July 2008 and up to 31 March 2011, the Cash Strategy has performed steadily and achieved a return of 6.41%. For the period under review (one-year period from 31 March 2010 to 31 March 2011), the Cash Strategy’s return was 3.17%, outperforming its benchmark, the Kuala Lumpur Islamic Reference Rate, which increased by 3.08% during the same period under review. The improvement in return was caused by our focus in sukuk unit trust funds


PORTFOLIO PERFORMANCE REVIEW (CONTD.)

allocating lesser weightings in Islamic money market funds. The upward revision on the OPR by BNM has caused the benchmark’s performance to be adjusted upwards. Overall, our Cash Strategy has shown a steady growth despite the volatility in the equity markets.

Equity StrategyFor the one-year period as at 31 March 2011, the Equity Strategy registered a return of 11.14%, against its benchmark, the Dow Jones Islamic Index, which registered a return of 14.67%. Since inception however, our Equity Strategy registered a return of 32.50% against the benchmark’s return of 7.05%, outperforming the benchmark by some 25%. Despite the volatility in the equitymarkets, we have been able to take advantage on the right market timing when we performed our monthly portfolio rebalancing activities. This is notable as the fund has been growing steadilyupwards since inception.

Portfolio StrategyOur core strategy is to perform active and dynamic investment management, via monthly portfolio rebalancing and to leverage on the right market timing. Through the use of our Quant technical model, suitable unit trust funds will be selected for the investment portfolio. Continuous stringent screening process of underlying unit trust funds will also be in place. For Cash Strategy, we will continue to focus in sukuk funds in view of better prospects and outlook due to the economic transformation plans and other economic boosting activities as announced by the Malaysian government.

The future prospects look bright provided no negative factors affect the economic outlook and market forecast. We expect the steady performance to spillover and continue for the new financial year.

DistributionAmHigh is a pure growth fund and adopts a policy of reinvesting investment profits to maximise returns. Therefore, it does not declare

distributions, nor does it have a distribution policy in relation to investments.

Rebates and Soft CommissionsThe Manager and the External Investment Adviser receive soft commissions from unit trust management companies and brokers in the form of goods and services such as research materials, data and quotation services, investment related publications and software incidental to investment activities. Such soft commissions are of demonstrable benefit to Participants and are retained by the Manager and/or the External Investment Adviser.

The Manager and the External Investment Adviser however, do not retain any rebate from, or otherwise share in any commission with unit trust management companies or brokers, in consideration for direct dealings in the investment of the funds. Accordingly, any rebates or commissions will be directed and reinvested in AmHigh for the mutual benefit of Participants.


Since inception (16 July 2008)

Performance(as at 31 March 2011)

1-year return

Year-to-date (from 1 January)

6.41%

CashStrategy

3.17%

0.50%

8.34%

Benchmark(1-yr KLIRR)

3.08%

0.76%

32.50%

EquityStrategy

11.14%

1.51%

7.05%

Benchmark(DJIM)

14.67%

4.32%

April-10

June-10

May-10

CashStrategy

Monthly Performance (%)

Benchmark(1-yr KLIRR)

EquityStrategy

Benchmark(DJIM)

July-10

September-10

August-10

October-10

December-10

November-10

January-11

March-11

February-11

0.29

0.37

0.31

0.25

0.25

0.26

-0.43

4.23

-5.17

1.02

-2.69

-10.20

0.39

0.27

0.36

0.26

0.25

0.26

2.43

3.16

-0.76

6.02

9.85

-2.93

0.30

0.09

0.35

0.26

0.26

0.25

3.23

2.75

0.01

3.49

6.82

-0.35

0.18

0.37

-0.01

0.26

0.26

0.24

0.84

2.30

-1.60

0.68

1.13

2.46

6-month return 1.21% 1.54% 7.68% 14.91%

3-month return 0.50% 0.76% 1.51% 4.32%

1-month return 0.34% 0.26% 2.30% 1.13%

AmHigh Performance


AmHigh Islamic Cash Strategy performance from 16 July 2008 to 31 March 2011

-0.50

2.00

4.50

7.00

Jul-0

8

Sep-

08

Nov

-08

Jan-

09

Mar

-09

May

-09

Jul-0

9

Sep-

09

Nov

-09

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep-

10

Nov

-10

Jan-

11

Mar

-11

%

Cash Strategy1-year Kuala Lumpur Islamic Reference Rates (KLIRR)

AmHigh Islamic Equity Strategy performance from 16 July 2008 to 31 March 2011

-45

-25

-5

15

35

Jul-0

8

Sep-

08

Nov

-08

Jan-

09

Mar

-09

May

-09

Jul-0

9

Sep-

09

Nov

-09

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep-

10

Nov

-10

Jan-

11

Mar

-11

%

Equity StrategyDow Jones Islamic Market Index (DJIM)

AmHigh Performance (Contd.)


Category of Investment As at 31 March 2011 As at 31 March 2010

Exposure: Equity unit trust funds Non-equity unit trust funds Islamic deposit placement Liquidity

Total

As at 31 March 2009(date of inception: 16 July 2008)

61.19%15.30%0.73%

22.78%

100.00%

63.15%16.15%

-20.70%

100.00%

21.90%2.30%9.53%

66.27%

100.00%

Comparative Fund Performance Table

As at 31 March 2011 As at 31 March 2010

Total NAV

Number of units in circulation

NAV per unit (RM)

Highest NAV per unit (RM)

Lowest NAV per unit (RM)


11,727,117

11,020,104

1.0642

1.0750

0.9960

5,961,376

5,762,342

1.0350

1.0350

0.9960

83,279

82,882

1.0050

1.0040

0.9960

Yearly Performance Table (Cash Strategy)




Total Annual return:

- Capital growth

- Income distributions

Average Annual Return

Benchmark return (1-year KLIRR)


3.17%

3.17%

-

3.17%

3.08%

2.60%

2.60%

-

2.60%

2.58%

0.52%

0.52%

-

0.73%

2.06%

Fund Performance (Cash Strategy)


Total NAV

Number of units in circulation

NAV per unit (RM)

Highest NAV per unit (RM)

Lowest NAV per unit (RM)


62,183,779

47,437,462

1.3139

1.3562

0.9960

28,613,953

23,952,220

1.1950

1.1940

0.9960

418,429

417,013

1.0030

1.0040

0.9960

Yearly Performance Table (Equity Strategies)

Note: Comprised of three combined equity strategies (i.e. Large Cap, Mid Cap, Small Cap Equity Strategy)



As at 31 March 2011 As at 31 March 2010 As at 31 March 2009(date of inception: 16 July 2008)

Total Annual return:

- Capital growth

- Income distributions

Average Annual Return

Benchmark return (DJIM)

11.14%

11.14%

-

11.14%

14.67%

18.66%

18.66%

-

18.66%

47.76%

0.46%

0.46%

-

0.65%

-36.84%

Fund Performance (Equity Strategies)

Note: The weighted average performance return of the three combined equity strategies

Summary of Position Cash Strategy & Equity Strategies as at 31 March 2011

Islamic Cash StrategyIslamic Large Capital Equity StrategyIslamic Medium Capital Equity StrategyIslamic Small Capital Equity StrategyTotal all strategiesExposure

Equity unit trust fundsNon-equity unit trust fundsIslamic deposit placementLiquidityTotal

As At 31 Mar 2011RM

11,770,59625,564,17324,156,41713,599,97075,091,156

61%15%1%

23%

RMRMRMRMRM

45,950,35811,485,413

550,33917,105,04675,091,156

::::

::::



STATEMENT BY THE MANAGER

In the opinion of the Manager, Takaful Ikhlas Sdn. Bhd. the accompanying financial statements set out on pages 22 to 87 have been drawn up in accordance with applicable Financial Reporting Standards in Malaysia and are in compliance with Shari’ah requirements and the Guidelines issued by Bank Negara Malaysia so as to give a true and fair view of the financial position of the TAKAFUL INVESTMENT LINKED FUNDS of TAKAFUL IKHLAS SDN. BHD. as at 31 March 2011 and of their results, changes in net asset value and their cash flows for the year then ended.

On behalf of TAKAFUL IKHLAS SDN. BHD.

Dato’ Syed Moheeb Bin Syed Kamarulzaman

Kuala Lumpur, Malaysia25 May 2011


REPORT OF THE AUDITORS TO THE UNITHOLDERS OF TAKAFUL IKHLAS SDN. BHD.TAKAFUL INVESTMENT LINKED FUNDS (INCORPORATED IN MALAYSIA)

Report on the financial statementsWe have audited the financial statements of the Takaful Investment Linked Funds of Takaful Ikhlas Sdn. Bhd. (“the Manager”) (comprising the Fixed Income Fund, Balanced Fund, Growth Fund, AmHigh Islamic Cash Strategy Fund and AmHigh Islamic Equity Strategies Fund) (“the Funds”), which comprise the statements of financial position as at 31 March 2011, and the statements of comprehensive income, statements of changes in equity and cash flow statements of the Funds for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 22 to 87.

Directors’ responsibility for the financial statementsThe directors of the Manager are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Guidelines issued by Bank Negara Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibilityOur 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.


REPORT OF THE AUDITORS TO THE UNITHOLDERS OF TAKAFUL IKHLAS SDN. BHD.TAKAFUL INVESTMENT LINKED FUNDS (INCORPORATED IN MALAYSIA) (CONTD.)

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Funds’ preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control.

An audit also includes evaluating the appropriateness of the 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.

OpinionIn our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Guidelines issued by Bank Negara Malaysia so as to give a true and fair view of the financial position of the Funds as at 31 March 2011 and of their financial performance and cash flows of the Funds for the year then ended.

Other mattersThis report is made solely to the unitholders of the Funds, as a body, in accordance with the Guidelines issued by Bank Negara Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Habibah binti AbdulAF: 0039 No. 1210/05/12(J)Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia25 May 2011

Auditors’ responsibility (Contd.)


STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2011

AmHigh IslamicCash Strategy Fund

2011RM

11,574,71711,474,703

100,0141,365

-228,500

11,804,582

-

46825,26740,79266,527

11,738,055

12,580,647(842,592)

11,738,05511,020,104

1.0651

BalancedFund2011

RM

5,581,2634,817,663

763,6009,100

-390

5,590,753

69,215

312,388-

10,106391,709

5,199,044

4,437,094761,949

5,199,0434,237,813

1.2268

Fixed IncomeFund2011

RM

4,835,6453,933,845

901,80031,8562,192

3904,870,083

30,907

545,093--

576,0004,294,083

4,137,465156,618

4,294,0834,420,281

0.9715

AmHigh IslamicEquity Strategies Fund

2011RM

61,988,81761,538,755

450,0622,710

-1,012,426

63,003,952

338,574

967203,757298,102841,400

62,162,552

60,171,5381,991,014

62,162,55247,437,462

1.3104

GrowthFund2011

RM

6,206,1665,184,566

1,021,6008,460

-390

6,215,016

68,528

-69,54615,629

153,7036,061,313

5,601,058460,255

6,061,3135,362,940

1.1302

ASSETSInvestments

Financial Assets at FVTPLInvestment accounts with a licensed commercial bank

ReceivablesDeferred Tax AssetsCash and Bank BalancesTOTAL ASSETS

LIABILITIESProvision for taxationAmount due to the Invesment Linked Takaful funds PayablesDeferred tax liabilityTOTAL LIABILITIESNet Assets of Funds

EQUITYUnitholders’ CapitalUndistributed surplus / (deficits)TOTAL EQUITYUNITS IN CIRCULATIONNET ASSET VALUE (“NAV”) PER UNIT (RM)

Note

3

5

4

5

7

The accompanying notes form an integral part of the financial statements.


STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2011 (CONTD.)


2010RM

5,580,1605,580,160

-1,081

-401,452

5,982,693

-

46811,827

9,02321,318

5,961,375

6,037,640(76,265)

5,961,3755,762,342

1.0345

BalancedFund2010

RM

2,766,1602,370,160

396,00094,92917,993

4202,879,502

53,746

84,305--

138,0512,741,451

2,445,014296,437

2,741,4512,519,153

1.0882


RM

1,271,6631,251,663

20,000225,534

2,717420

1,500,334

14,726

80,174--

94,9001,405,434

1,349,25056,184

1,405,4341,508,352

0.9318

AmHigh IslamicEquity StrategiesFund

2010RM

21,817,05221,817,052

-4,849,058

-2,206,760

28,872,870

44,562

96983,107

130,279258,917

28,613,953

27,445,4821,168,471

28,613,95323,952,220

1.1946

GrowthFund2010

RM

3,907,2882,629,288

1,278,00076

23,490420

3,931,274

61,804

209,564510,933

-782,301

3,148,973

2,952,102196,871

3,148,9733,182,968

0.9893

ASSETSInvestments

Financial Assets at FVTPLInvestment accounts with a licensed commercial bank

ReceivablesDeferred Tax AssetsCash and Bank BalancesTOTAL ASSETS

LIABILITIESProvision for taxationAmount due to the Invesment Linked Takaful fundsPayablesDeferred tax liabilitiesTOTAL LIABILITIESNet Assets of Funds

EQUITYUnitholders’ CapitalUndistributed surplus/(deficits)TOTAL EQUITYUNITS IN CIRCULATIONNET ASSET VALUE (“NAV”)PER UNIT (RM)

Note

3

5

4

5

7



STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011


2011RM

-1,440

15,280

397,136

413,856

(1,044,885)(103,527)

(2)(1,148,415)

(734,559)

(31,769)

(766,328)

BalancedFund2011

RM

72,44185,092

134,713

351,256

643,502

(99,133)(29,659)

(99)(128,891)

514,611

(49,099)

465,512


RM

-177,894

40,153

6,563

224,610

(91,683)(15,709)

(77)(107,470)

117,140

(16,706)

100,434


2011RM

-46,039

4,373,857

2,098,281

6,518,177

(4,489,075)(744,700)

(23)(5,233,798)

1,284,380

(461,837)

822,543

GrowthFund2011

RM

102,19630,564

96,602

488,987

718,349

(363,412)(36,905)

(144)(400,461)

317,888

(54,504)

263,384

INCOMEGross dividend incomeProfit IncomeRealised gain on disposal of investmentsFair value gain on FVTPL financial assets

OUTGOCertificate benefits paid and payableManagement expensesInvestment charges

Excess/(deficit) of income over outgo before tax

Taxation

Excess/(deficit) of income over outgo after tax

Note

6



STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011 (CONTD.)


2010RM

-126

-

112,819112,945

(154,871)(24,754)

(30)(179,655)

(66,710)(9,023)

(75,733)

BalancedFund2010

RM

36,73952,204

103,719

420,120612,783

(34,023)(16,427)

(197)(50,647)

562,135(52,081)

510,054


RM

-66,833

4,156

4,18775,176

(47,693)(5,902)

-(53,595)

21,581(6,010)

15,571


2010RM

-417

557,567

1,628,9362,186,919

(661,771)(181,389)

(448)(843,608)

1,343,311(174,840)

1,168,471

GrowthFund2010

RM

52,68517,731

64,275

643,038777,728

(68,957)(21,970)

(237)(91,164)

686,564(66,583)

619,981

INCOMEGross dividend incomeProfit IncomeRealised gain on disposal of investmentsFair value gain on FVTPL financial assets

OUTGOCertificate benefits paid and payableManagement expensesInvestment charges

Excess/(deficit) of incomeover outgo before taxTaxation

Excess/(deficit) of income over outgo after tax

Note

6



STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011

At 1 April 2009Total comprehensive income for the yearAmount received for creations during the yearBalance as at 31 March 2010Total comprehensive income for the yearAmount received for creations during the yearBalance at 31 March 2011

Unitholders’ CapitalNote7(i)(a)

RM

1,287,263-

61,9871,349,250

-2,788,2154,137,465

Undistributed SurplusNote 7(i)(b)

RM

40,61315,571

-56,184

100,434-

156,618

(i) Fixed Income Fund

Total Equity

RM

1,327,87615,57161,987

1,405,434100,433

2,788,2154,294,083


Unitholders’ CapitalNote 7(ii)(a)

RM

2,332,177-

112,8372,445,014

-1,992,080

4 ,437,094

Undistributed SurplusNote 7(ii)(b)

RM

(213,617)510,054

-296,437465,512

-761,949

(i) Balanced Fund

Total Equity

RM

2,118,560510,054112,837

2,741,451465,512

1,992,0805,199,043



STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 (CONTD.)


Unitholders’ CapitalNote 7(iii)(a)

RM

2,683,153-

268,9492,952,102

-2,648,9565,601,058

Undistributed SurplusNote 7(iii)(b)

RM

(423,110)619,981

-196,871263,384

-460,255

(iii) Growth Fund

Total Equity

RM

2,260,043619,981268,949

3,148,973263,384

2,648,9566,061,313


Unitholders’ CapitalNote 7(iv)(a)

RM

83,811-

5,953,8296,037,640

-6,543,007

12,580,647

Undistributed SurplusNote 7(iv)(b)

RM

(532)(75,733)

-(76,265)

(766,328)-

(842,592)

(iv) AmHigh Islamic Cash Strategy

Total Equity

RM

83,279(75,733)

5,953,8295,961,375(766,328)6,543,007

11,738,055



STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011 (CONTD.)


Unitholders’ CapitalNote 7(v)(a)

RM

418,427-

27,027,05527,445,482

-32,726,05660,171,538

Undistributed SurplusNote 7(v)(b)

RM

-1,168,471

-1,168,471

822,543-

1,991,014

(v) AmHigh Islamic Equity Strategies

Total Equity

RM

418,4271,168,471

27,027,05528,613,953

822,54332,726,05662,162,552



CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

CASH FLOWS FROM OPERATING ACTIVITIES

Excess of income over outgo before taxationAdjustment for: Fair value gain on FVTPL financial assets Realised gain on disposal of investments Profit from investment accountsDeficit from operations before changes in operating assets and liabilitiesPurchase of investments(Increase)/Decrease in investment account placements with a commercial bankDecrease/(Increase) in other receivablesNet proceeds from disposal of investmentsIncrease in amount due to the Investment Linked Takaful FundsCash used in operating activitiesProfit received on investment accountsNet cash used in operating activities

CASH FLOW FROM FINANCING ACTIVITYIssue of units for cash representing net cash generated from financing activity

NET DECREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS AT END OF YEAR

2011RM

117,140

(6,563)(40,153)

(177,894)(107,470)

(2,675,619)(881,800)

193,67940,152

464,919(2,966,139)

177,894(2,788,245)

2,788,215

(30)

420

390

2010RM

21,581

(4,187)(4,156)

(66,833)(53,595)

(222,868)303,000

(206,762)4,155

47,199(128,870)

66,833(62,037)

61,987

(50)

470

420



CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011 (CONTD.)


Excess of income over outgo before taxationAdjustment for: Fair value gain on FVTPL financial assets Realised gain on disposal of investments Profit from investment accounts Dividend incomeDeficit from operations before changes in operating assets and liabilitiesPurchase of investments(Increase)/Decrease in investment account placements with a commercial bankNet proceeds from disposal of investmentsDecrease/(Increase) in other receivablesIncrease in other payableIncrease in amount due to the Investment Linked Takaful FundsCash used in operating activitiesProfit received on investment accountsDividend receivedNet cash used in operating activities





2011RM

514,611

(351,253)(134,713)

(85,092)(72,441)

(128,888)(2,096,249)

(367,600)134,713

85,830(5,531)

228,083(2,149,643)

85,09272,441

(1,992,110)

1,992,080

(30)

420

390

2010RM

562,135

(420,120)(103,719)

(52,204)(36,739)(50,647)

(301,880)60,800

100,641(82,446)

-71,702

(201,830)52,20436,739

(112,887)

112,837

(50)

470

420

(ii) Balanced Fund




Excess of income over outgo before taxationAdjustment for: Fair value gain on FVTPL financial assets Realised gain on disposal of investments Profit from investment accounts Dividend incomeDeficit from operations before changes in operating assets and liabilitiesPurchase of investmentsDecrease/(increase) in investment account placements with a commercial bankNet proceeds from disposal of investments(Increase)/decrease in other receivables(Decrease)/increase in amount due to the Investment Linked Takaful Funds(Decrease)/increase in other payablesCash used in operating activitiesProfit received on investment accountsDividend receivedNet cash used in operating activities





2011RM

317,888

(488,987)(96,602)(30,564)

(102,196)(400,461)

(2,066,291)256,400

96,602(8,384)

(209,564)(450,048)

(2,781,946)30,564

102,196(2,648,986)

2,648,956

(30)

420

390

2010RM

686,564

(643,038)(64,275)(17,731)(52,685)(91,164)

(620,286)(390,000)

59,886430

190,787510,933

(339,414)17,73152,685

(268,999)

268,949

(50)

470

420

(iii) Growth Fund




Deficit of income over outgo before taxationAdjustment for: Fair value gain on FVTPL financial assets Realised gain on disposal of investments Profit from investment accountsDeficit from operations before changes in operating assets and liabilitiesPurchase of investmentsNet proceeds from disposal of investments(Increase)/Decrease in investment account placements with a commercial bankIncrease in other receivableIncrease in amount due to Investment Linked Takaful fundsIncrease in other payablesCash used in operating activitiesProfit received on investment accountsNet cash used in operating activities


NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS



2011RM

(734,559)

(397,136)(15,280)

(1,440)(1,148,415)(5,497,435)

15,308(100,014)

(284)-

13,440(6,717,399)

1,440(6,715,959)

6,543,007

(172,952)

401,452

228,500

2010RM

(66,710)

(112,819)-

(126)(179,655)

(5,443,371)-

11,600(866)

-11,827

(5,600,465)126

(5,600,339)

5,953,829

353,490

47,962

401,452

(iv) AmHigh Islamic Cash Strategy Fund




Excess of income over outgo before taxationAdjustment for: Fair value gain on FVTPL financial assets Realised gain on disposal of investment Profit from investment accountsDeficit from operations before changes in operating assets and liabilitiesPurchase of investmentsNet proceeds from disposal of investments(Increase)/decrease in investment account placements with a commercial bankDecrease/(increase) in other receivablesDecrease in amount due to Investment Linked Takaful fundsIncrease in other payablesCash used in operating activitiesProfit received on investment accountsNet cash used in operating activities


NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS


CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD

2011RM

1,284,380

(2,098,281)(4,373,857)

(46,039)(5,233,797)

(37,623,909)4,374,345(450,062)4,846,348

(2)120,650

(33,966,428)46,039

(33,920,389)

32,726,056

(1,194,333)

2,206,760

1,012,426

2010RM

1,343,311

(1,628,936)-

(417)(286,041)

(20,065,563)-

38,400(4,848,348)

-83,107

(25,078,445)417

(25,078,028)

27,027,055

1,949,027

257,733

2,206,760

(v) AmHigh Islamic Equity Strategies Fund


NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2011

1. THE MANAGER AND ITS PRINCIPAL ACTIVITY

The Manager of the Takaful Investment Linked Funds, Takaful Ikhlas Sdn. Bhd. is engaged principally in the managing of general, family and investment-linked takaful businesses.

The Takaful Investment Linked Funds of Takaful Ikhlas Sdn. Bhd. comprise the Fixed Income Fund, Balanced Fund, Growth Fund, AmHigh Islamic Cash Strategy and AmHigh Islamic Equity Strategies.

The Manager is a private limited liability company, incorporated and domiciled in Malaysia. The registered office of the Company is located at 9th Floor, IKHLAS Point, Tower 11A, Avenue 5, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia.

The financial statements were authorised for issue by the Manager on 25 May 2011.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

The financial statements of the Takaful Investment Linked Funds have been prepared under the historical cost convention, unless otherwise indicated in the accounting policies below and comply with Financial Reporting Standards (“FRS”) in Malaysia, the Takaful Act, 1984, and the Guidelines and Circulars issued by BNM and where applicable are modified to comply with the principles of Shariah.

At the beginning of the current financial year, the Takaful Investment Linked Funds had adopted new and revised FRSs which are mandatory for the financial periods beginning on or after 1 April 2010 as described fully in Note 2.3.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.



2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.2 Summary of Significant Accounting Policies

(a) Revenue Recognition

Revenue is recognised when it is probable that the economic benefits associated with the transactions will flow to the enterprise and the amount of the revenue can be measured reliably.

Contributions of the Takaful Investment Linked Funds are in respect of the net creation of units which represent contributions paid by certificate holders as payment for a new contract or subsequent payments to increase the amount of that contract. Net creation of units is recognised on a receipt basis.

Profit income is recognised on a time proportion basis that reflects the effective yield on the assets.

Proceeds arising from the sale of investments are set off against the weighted average cost of investments. The resulting gains or losses are taken to the Statements of Comprehensive Income.

Dividend income is recognised on a declared basis when the policyholders’ right to receive payment is established.

(b) Income Tax

Income tax on the surplus and deficit for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit and surplus for the year and is measured using the tax rates that have been enacted at the Statements of Financial Position.

Deferred tax is provided for, using the liability method, on temporary differences at the date of Statements of Financial Position between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses and unutilised tax credits to the extent that it is probable that taxable profits will be available against the deductible temporary differences, unutilised tax losses and unutilised tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the date of Statements of Financial Position. Deferred tax is recognised in the statement of comprehensive income, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity.

(i)

(ii)

(iii)

(iv)




2.2 Summary of Significant Accounting Policies (Contd.)

(c) Investments and other financial assets

The Takaful Investment Linked Funds classify its investments into financial assets at fair value through profit or loss (“FVTPL”) and loans and other receivables (“LAR”).

The classification depends on the purpose for which the investments were acquired or originated. Management determines the classification of its investments at initial recognition and re-evaluates this at every financial year end.

All regular way purchases and sales of financial assets are recognised on the trade date which is the date that the Company commits to purchase or sell the asset. Regular way puchases or sales of financial assets require delivery of assets within the period generally established by regulation or convention in the market place.

FVTPL

Financial assets at FVTPL include financial assets held for trading and those designated at fair value through profit or loss at inception. Investments typically bought with the intention to sell in the near future are classified as held-for-trading. For investments designated as at fair value through profit or loss, the following must be met;

the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognising gains or losses on a different basis, or

the assets and liabilities are part of a group of financial assets, financial liabilities or both which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

These investments are initially recorded at fair value. Subsequent to initial recognition these investments are measured at the fair value. Fair value adjustments and realised gains and losses are recognised in the Statements of Comprehensive Income.

(i)

-





(c) Investments and other financial assets (Contd.)

LAR

LAR are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These investments are initially recognised at cost, being the fair value of the consideration paid for the acquisition of the investment. All transaction costs directly attributable to the acquisition are also included in the cost of the investment. After initial measurement, loans and receivables are measured at amortised cost, using the effective yield method, less provision for impairment. Gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process.

The Funds’ LAR include investment accounts with a licensed commercial bank which is initially recognised at cost being the fair value of the consideration paid for the acqulsition of the investment. After initial measurement, are measured at amortised cost using the effective yield method less improvement.

(d) Fair value of Financial Instruments

The fair value of financial assets that are actively traded in organised financial markets is determined by reference to quoted market bid prices for assets and offer prices for liabilities, at the close of business on the financial year end.

For investments in unit and real estate investment trusts, if any, fair value is determined by reference to published bid values.

For financial assets where an active market may not exist, the fair value is determined by using valuation techniques. Such techniques include using recent arm’s length transactions, reference to the current market value of another asset which is substantially the same, discounted cash flow analysis and/or option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs. For discounted cash flow techniques, estimated future cash flows are based on management’s best estimates and the discount rate used is a market related rate for a similar asset. Certain financial assets are valued using pricing models that consider, among other factors, contractual and market prices, co-relation, time value of money, credit risk, yield curve volatility factors and/or prepayment rates of the underlying positions. The use of different pricing models and assumptions could produce materially different estimates of fair values.

The fair value of floating rate and over-night deposits with financial institutions is their carrying value. The carrying value is the cost of the deposit/placement and accrued profit. The fair value of fixed yield-bearing deposits is estimated using discounted cash flow techniques. Expected cash flows are discounted at current market rates for similar instruments at the end of the financial year.

If the fair value of a financial asset cannot be measured reliably, the asset is measured at cost, being the fair value of the consideration paid for the acquisition of the asset. All transaction costs directly attributable to the acquisition are also included in the cost of the financial asset.

(ii)





(e) Impairment of Financial Assets

The Takaful Investment Linked Funds assess at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

The Takaful Investment Linked Funds first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. The impairment assessment is performed at each reporting date.

If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original effective yield. The carrying amount of the asset is reduced and the loss is recorded in statement of comprehensive income.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in statement of comprehensive income to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

(f) Derecognition of Financial Assets

Financial assets are derecognised when the rights to receive cash flows from them have expired or when they have been transferred and the Takaful Investment Linked Funds have also transferred substantially all risks and rewards of ownership.

(g) Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Takaful Investment Linked Funds become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.



terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in statement of comprehensive income.

(h) Creation/cancellation of units

Amounts received for units created represent contributions paid by policyholders/unitholders as payment for new contracts or subsequent payments to increase the amount of the contracts.

Creation/cancellation of units are recognised in the financial statements at the next valuation date, after the request to purchase/sell units are received from the unitholders.

(i) Unitholders’ accounts

Unitholders’ accounts of the Funds represent equity instruments in the statement of financial position in accordance with the revised FRS 132: Financial Instruments: Disclosure and Presentation.

(j) Cash and cash equivalents

Cash and cash equivalents include cash in hand and at banks, excluding fixed and call deposits with licensed financial institutions, which have an insignificant risk of changes in value. The cash flow statement has been prepared using the indirect method.

(i)

(ii)



(g) Financial liabilities (Contd.)

Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL.

Financial liabilities held for trading include derivatives entered into by the Takaful Investment Linked Funds that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in statement of comprehensive income. Net gains or losses on derivatives include exchange differences. The Takaful Investment Linked Funds have not designated any financial liabilities as at FVTPL.

Other financial liabilities

The Takaful Investment Linked Funds’ other financial liabilities include trade payables and other payables.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective profit method.

For other financial liabilities, gains and losses are recognised in statement of comprehensive income when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the




2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs and Issues Committee Interpretations (“IC Interpretations”)

The significant accounting policies adopted are consistent with those applied in the annual audited financial statements for the financial year ended 31 March 2010, except for the adoption of the following new/revised FRSs, amendments to FRSs and Interpretations of the Issues Committee (“IC”) issued by the Malaysian Accounting Standards Board (“MASB”) that are mandatory for the financial period beginning 1 January 2010.

Standard/Interpretation

FRS 4: Insurance ContractsFRS 7: Financial Instruments: DisclosuresFRS 8: Operating SegmentsFRS 101: Presentation of Financial Statements (Revised 2009)FRS 123: Borrowing CostsAmendments to FRS 1: First-time Adoption of Financial Reporting Standards and FRS 127: Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or AssociateAmendments to FRS 2: Share-based Payment - Vesting Conditions and CancellationsAmendments to FRS 132: Financial Instruments: PresentationAmendments to FRS 139: Financial Instruments: Recognition and MeasurementFRS 7 : Financial Instruments: DisclosuresAmendment to FRSs contained in the documents entitled Improvements to RFSs (2009).

IC Interpretation 9: Reassessment of Embedded DerivativesIC Interpretation 10: Interim Financial Reporting and ImpairmentIC Interpretation 11: FRS 2 - Group and Treasury Share TransactionsIC Interpretation 13: Customer Loyalty ProgrammesIC Interpretation 14: FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their InteractionTR i - 3: Presentation of Financial Statements of Islamic Financial Institutions

Unless otherwise described below, the directors expect that the adoption of the pronouncements above will have no material impact on the financial statements of the Takaful Investment Linked Funds in the period of their initial application:

FRS 7 : Financial Instruments: Disclosures

Prior to 1 January 2010, information about financial instruments was disclosed in accordance with the requirements of FRS 132 Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk.




2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs and Issues Committee Interpretations (“IC Interpretations”) (Contd.)

The Takaful Investment Linked Funds have applied the FRS 7 new disclosuresthroughout the Takaful Investment Linked Funds’ financial statements for the year ended 31 March 2011.

FRS 101 Presentation of Financial Statements (Revised)

The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes presented as a single line. The Standard also introduces the statement of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense recognised directly inequity, either in one single statement, or in two linked statements. The Takaful Investment Linked Funds have elected to present this statement in one single statement.

The revised FRS 101 also requires the takaful Investment Linked Funds to make new disclosures to enable users of the financial statements to evaluate the Manager’s objectives, policies and process for managing capital risk.

The revised FRS 101 was adopted retrospectively by the Funds.

Amendments to FRS 132 Financial Instruments: Presentation and FRS 101 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation

Amendments to FRS 132 and FRS 101 became effective for annual periods beginning on or after 1 January 2010. The amendment to FRS 132 requires entities to classify puttable financial instruments as equity if the instruments have certain particular features and meet specific conditions. The amendments to FRS 101 require disclosure of certain information relating to puttable instruments classified as equity.

The Unitholders’ capital has the features and meets the conditions for classification as equity instruments. Consequently, upon adoption of the Amendments to FRS 132, Unitholders’ capital is classified as equity of the respective funds, consistent with the disclosures made in previous year.




2.4 Standards issued but not yet effective

As at the date of authorisation of these reports, the following FRSs, Amendments to FRSs and Interpretations of the Issues Committee (“IC Interpretations”) have been issued by the Malaysian Accounting Standards Board (“MASB”) but are not yet effective and have not been adopted by the Takaful Investment Linked Funds.

Effective for financial periods beginning on or after 1 July 2010

FRS 1: First-time Adoption of Financial Reporting Standards (revised)FRS 3: Business Combinations (revised)FRS 127: Consolidated and Separate Financial Statements (amended)Amendments to FRS 2: Share-based PaymentAmendments to FRS 5: Non-current Assets Held for Sale and Discontinued OperationsAmendments to FRS 138: Intangible AssetsAmendments to IC Interpretation 9: Reassessment of Embedded DerivativesIC Interpretation 12: Service Concession ArrangementsIC Interpretation 16: Hedges of a Net Investment in a Foreign OperationIC Interpretation 17: Distribution of Non-cash Assets to Owners

Effective for financial periods beginning on or after 1 January 2011

Amendments to FRS 1: Limited Exemption from Comparative FRS 7 Disclosures for first-time AdoptersAmendments to FRS 1: Additional Amendments for First-time adoptersAmendments to FRS 2: Group Cash-settled Share-based Payments TransactionsAmendments to FRS 7: Improving Disclosures about Financial Instruments

IC Interpretation 4: Determining whether an Arrangement contains a leaseIC Interpretation 18: Transfer of Assets from CustomersTR 3: Guidance on Transition to IFRSsTri-4: Shariah Compliant Sale Contracts

Effective for financial periods beginning on or after 1 July 2011

Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirements IC Interpretation 19, Extinguishing Financial Liabilities with equity instruments

Effective for financial periods beginning on or after 1 January 2012

FRS 124: Related Party Disclosures (revised)IC Interpretation 15: Agreements for the Construction of Real Estate.

The directors expect that the adoption of the standards and interpretations above will have no material on the financial statements in the period of initial application.

2.5 Significant accounting estimates and judgements

(a) Critical judgements in applying the Funds’ accounting policiesIn the process of applying the Takaful Investment Linked Funds’ accounting policies, which are described above, the Manager is of the opinion that there are no instances of judgement which are expected to have a significant financial impact on the amounts and balances recognised in the financial statements.



2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 2.5 Significant accounting estimates and judgements (contd.)

(b) Key Sources of Estimation Uncertainty

The key assumption concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year is discussed below.

Deferred taxDeferred tax implications arising from the changes in corporate income tax rates are measured with reference to the estimated realisation and settlement of temporary differences in the future periods in which the tax rates are expected to apply, based on the tax rates enacted or substantively enacted at the date of the reporting date.

While the Manager’s estimates on the realisation and settlement of temporary differences are based on the available information at the date of the Statements of Financial Position, changes in business strategy, future operating performance and other factors could impact on the actual timing and amount of temporary differences realised and settled. Any difference between the actual amount of the estimated amount would be recognised in the Statements of Comprehensive Income in the period in which actual realisation and settlement occurs.

While the Manager’s estimates on the realisation and settlement of temporary differences are based on the available information at the date of the Statements of Financial Position, changes in business strategy, future operating performance and other factors could impact on the actual

timing and amount of temporary differences realised and settled. Any difference between the actual amount of the estimated amount would be recognised in the statements of comprehensive income in the period in which actual realisation and settlement occurs.

Deferred tax assets are recognised for all provisions for unrealised gains/losses on investments, net amortisation of premium on investments and other temporary differences to the extent that it is probable that taxable profit will be available against which the benefits can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Fair value of financial instrumentsWhen the fair value of financial assets recorded in the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of liquidity and model inputs such as credit risk (both own and counterparty’s), correlation and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. The models are calibrated regularly and tested for validity using prices from any observable current market transactions in the same instrument (without modification or repackaging) or based on any available observable market data.

2011RM

498,9003,434,9453,933,845

901,8004,835,645

500,525

(1,625)498,900

3,460,718

(25,772)3,434,945

901,800

4,835,645



Investments Financial Assets at FVTPL: Unquoted, Government Islamic Investment Unquoted, Private Debt Securities

Investment accounts with a licensed commercial bank

(a) Fair Value Through Profit & Loss (“FVTPL”) Unquoted, Government Islamic Investment

Cost Fair value loss recognised in statement of comprehensive income Fair value

Unquoted, Private Debt Securities Cost Fair value loss recognised in statement of comprehensive income Fair value

(b) Investment accounts with a licensed commercial bank

Total investments


2010RM

-1,251,6631,251,663

20,0001,271,663

-

--

1,285,624

(33,961)1,251,663

20,000

1,271,663

3. INVESTMENTS



Fair ValueRM

498,900498,900

No. ofunits

500,000500,000

Fair Value as% of NAV

11.62%11.62%

CostRM

500,525500,525

The composition, cost and fair value of the investments as at 31 March 2011 are as detailed below:

Government Islamic Investment:

Govt. Islamic Investment 3.87%

Fair ValueRM

251,100199,900301,170176,070199,480701,540283,275102,880410,920400,320306,750101,540

3,434,945

No. ofunits

250,000200,000300,000170,133200,000700,000250,000100,000400,000400,000300,000100,000

3,370,133


5.85%4.66%7.01%4.10%4.65%

16.34%6.60%2.40%9.57%9.32%7.14%2.36%

79.99%

CostRM

259,150200,000300,000171,426200,000700,000300,150103,750415,880405,160303,342101,860

3,460,718

Private Debt Securities:

SilTerra Capital Bhd 3.90%Aman Sukuk Berhad 4.05%AmIslamic Bank Bhd 4.30%Binariang GSM Sdn Bhd 5.55%Gulf Investment Corp. 5.25%M’sia Airport Capital Bhd 4.55%Mukah Power Senior Sukuk 7.80%Putrajaya Hldg Sdn Bhd 5%Sime Darby Bhd 4.75%TTM Sukuk BI-ID 4.61%UMW Holdings Bhd 4.55%Wesport M’sia SB 4.54%

(i) Fixed Income Fund (Contd.)

3. INVESTMENTS (Contd.)


As % ofNAV

11.62%

5.85%54.07%20.08%91.61%

As % ofDebt Securities

12.68%

6.38%59.02%21.91%

100.00%

The table below analyses concentration of credit risk of the fund’s portfolio of debt securities by sectoral distribution:

Credit Rating Government Islamic Investment: Government Guaranteed Private Debt Securities: Government Guaranteed AAA AA

2011RM

498,900

251,1002,321,790

862,0553,933,845

As % ofNAV

11.62%7.14%

19.83%11.66%31.80%

9.57%91.61%


12.68%7.80%

21.64%12.73%34.71%10.45%

100.00%

Sector

Government Islamic Investment Consumer Products Construction and Engineering Financial services Infrastructures and utilities Trading/Services

2011RM

498,900306,750851,320500,650

1,365,305410,920

3,933,845





The effective profit rate during the year ended 31 March 2011 of the investment accounts with a licensed commercial bank of the Fixed Income Fund was 2.68%.


As % ofNAV

21.00%

The table below provides information regarding the credit risk exposures of the Fund’s portfolio of investment accounts according to the credit ratings of licensed financial institution:

Credit Rating

AAA

2011RM

901,800

> 1 YearRM

-

TotalRM

901,800

< 1 YearRM

901,800

The maturity profile of the investment accounts with a licensed commercial bank as at 31 March 2011 is as follows:





InvestmentsFinancial Assets at FVTPL: Unquoted, Government Islamic Investment Unquoted, Private Debt Securities Quoted, Main Board Shariah Approved Securities


(a) Fair Value Through Profit & Loss (FVTPL) Unquoted, Government Islamic Investment Cost Fair Value loss recognised in statement of comprehensive income Fair value

Unquoted, Private Debt Securities Cost Fair Value loss recognised in statement of comprehensive income Fair value

Quoted, Main Board Shariah Approved Securities Cost Fair Value gain/(loss) recognised in statement of comprehensive income Fair value

(b) Investment accounts with a licensed commercial bank Total investments

(ii) Balanced Fund

2011RM

199,5601,051,8953,566,2084,817,663

763,6005,581,263

200,210(650)

199,560

1,057,126(5,231)

1,051,895

3,433,999132,209

3,566,208

763,6005,581,263

2010RM

-591,208

1,778,9522,370,160

396,0002,766,160

---

603,070(11,862)591,208

1,992,016(213,063)1,778,952

396,0002,766,160




(ii) Balanced Fund (Contd.)

Fair ValueRM

199,560199,560

No. ofunits

200,000200,000


3.84%3.84%

CostRM

200,210200,210

Government Islamic Investment:

Govt. Islamic Investment 3.87%

Fair ValueRM

200,780176,070300,660169,965102,880101,540

1,051,895

No. ofunits

200,000170,133300,000150,000100,000100,000

1,020,133


3.86%3.39%5.78%3.27%1.98%1.95%

20.23%

CostRM

200,000171,426300,000180,090103,750101,860

1,057,126

Private Debt Securities:

AmIslamic Bank Bhd 4.30%Binariang GSM Sdn Bhd 5.55%M’sia Airport Capital Bhd 4.55%Mukah Power Senior Sukuk 7.80%Putrajaya Hldg Sdn Bhd 5.00%Westport M’sia SB 4.54%

The composition, cost and fair value of the debt securities, as at 31 March 2011 are as detailed below:




(ii) Balanced Fund (contd.)

As % ofNAV

3.84%

7.76%12.47%24.07%


15.95%

32.25%51.81%

100.00%

The table below analyses concentration of credit risk of the fund’s portfolio of debt securities by sectoral distribution:

Credit Rating Government Islamic Investment: Government Guaranteed Private Debt Securities: AAA AA

2011RM

199,560

403,540648,355

1,251,455

As % ofNAV

3.84%3.86%

12.98%3.39%

24.07%


15.95%16.04%53.94%14.07%

100.00%

Sector

Government Islamic Investment Financial services Infrastructures and utilities Trading/Services

2011RM

199.560200,780675,045176,070

1,251,455



The table below provides information regarding the credit risk exposures of the Fund’s Portfolio of debt securities according to the credit ratings of counterparties:


Fair ValueRM

145,00061,800

910157,090

68,40064,200

207,740142,450

75,000203,060274,500169,480

38,250129,000101,500123,480

No. ofunits

20,00020,0001,000

23,0006,000

30,00034,00037,00025,00026,00030,00038,00015,00050,00050,00018,000


2.79%1.19%0.02%3.02%1.32%1.23%4.00%2.74%1.44%3.91%5.28%3.26%0.74%2.48%1.95%2.38%

CostRM

131,79134,845

0125,07868,06061,131

213,047119,67885,240

235,532263,934149,10867,98585,506

110,82674,625

The composition, cost and fair value of the Shari’ah Approved Securities of the Balanced Fund as at 31 March 2011 are as detailed below:

Syariah Approved Securities:Quoted, Main Board

UMW Holdings BhdQL Resources BhdQL Resources Bhd-WarrantsPetronas Chemicals Group BhdPetronas Gas BhdMalaysian Resources Corp. BhdIJM Corporation BhdGamuda BerhadWCT BerhadMSC BerhadSime Darby BhdPlus Expressways BhdM’sian Bulk Carriers BerhadKencana Petroleum BhdDayang Enterp. Hldgs BhdMsia Marine & Heavy Engineering





Fair ValueRM

244,361178,042178,200218,550115,500158,900

76,360106,260256,500

71,6753,566,208

No. ofunits

40,12531,85033,00046,50050,00070,00023,0007,000

45,00023,500

792,975


4.70%3.42%3.43%4.20%2.22%3.06%1.47%2.04%4.93%1.38%

68.59%

CostRM

282,825179,354171,814215,65679,552

165,21979,487

101,378251,50080,830

3,433,999


Tenaga Nasional BerhadParkson Holdings BhdMaxis BerhadAxiata Group BerhadDialog Group BhdYTL Power International BerhadKLCC Property Holdings BerhadBatu Kawan101 Corporation BhdTradewinds Plantation Bhd





RM

763,600

As % ofNAV

14.69%

Credit Rating

AAA


2011





The effective profit rate during the year ended 31 March 2011 of the investment accounts with a licensed commercial bank of the Balanced Fund was 2.68%.

> 1 YearRM

-

TotalRM

763,600

< 1 YearRM

763,600




InvestmentsFinancial Assets at FVTPL: Quoted, Main Board Shariah Approved Securities


(a) Fair Value Through Profit & Loss (FVTPL) Quoted, Main Board Shariah Approved Securities Cost Fair value gain/(loss) recognised in statement of comprehensive income Fair value


Total investments

(iii) Growth Fund

2011RM

5,184,566

1,021,6006,206,166

4,989,198195,368

5,184,566

1,021,600

6,206,166

2010RM

2,629,288

1,278,0003,907,288

2,922,907(293,619)2,629,288

1,278,000

3,907,288




Fair ValueRM

181,25074,160

1,092204,900114,000107,000244,400177,100120,000173,382457,500175,500156,100

17,850193,500142,100

No. ofunits

25,00024,0001,200

30,00010,00050,00040,00046,00040,00022,20050,00045,00035,0007,000

75,00070,000


2.99%1.22%0.02%3.38%1.88%1.77%4.03%2.92%1.98%2.86%7.55%2.90%2.58%0.29%3.19%2.34%

CostRM

166,28141,814

0170,349113,434101,886252,148152,585133,885199,391440,354153,313134,20631,469

138,827160,161

The composition, cost and fair value of the Shari’ah Approved Securities of the Growth Fund as at 31 March 2011 are as detailed below:


UMW Holdings BhdQL Resources BhdQL Resources Bhd-WarrantsPetronas Chemicals GroupPetronas Gas BhdMalaysian ResourcesIJM Corporation BhdGamuda BerhadWCT BerhadMISC BerhadSime Darby BhdTM BerhadPlus Expressways BhdMalaysian Bulk Carriers BerhadKencana Petroleum BhdDayang Enterprise Holdings Bhd




Fair ValueRM

171,500308,459212,168232,200479,400138,600181,600

83,00089,000

151,800342,000183,330

71,675

5,184,566

No. ofunits

25,00050,65037,95543,000

102,00060,00080,00025,00020,00010,00060,00063,00023,500

1,170,505


2.83%5.09%3.50%3.83%7.91%2.29%3.00%1.37%1.47%2.50%5.64%3.02%1.18%

85.54%

CostRM

119,034347,678216,322224,581479,19795,836

188,38287,59786,384

144,826337,788190,72280,749

4,989,198

(iii) Growth Fund (Contd.)


Mia Marine and Heavy EngineeringTenaga Nasional BerhadParkson Holdings BhdMaxis BerhadAxiata Group BerhadDialog Group EfidYTL Power International BerhadKLCC Property Holdings BerhadSunway City BhdBatu Kawan101 Corporation BhdIJM Plantations BhdTradewinds Plantation




RM

1,021,600

As % ofNAV

16.85%

Credit Rating

AAA


2011


(iii) Growth Fund (Contd.)


The effective profit rate during the year ended 31 March 2011 of the investment accounts with a licensed commercial bank of the Growth Fund was 2.68%.


TotalRM

1,021,600

< 1 YearRM

1,021,600

> 1 YearRM

-



2011RM

11,474,703100,014

11,574,717

10,964,806509,897

11,474,703

100,014

11,574,717

-

5,580,160

2010RM

5,580,160-

5,580,160

5,467,371112,789

5,580,160


Investments Financial Assets at FVTPL: Islamic Unit Trust Investment accounts with a licensed commercial bank

(a) Fair Value Through Profit & Loss (FVTPL) Islamic Unit Trust Cost Fair value gain recognised in statement of comprehensive income Fair value


Total investments




The composition, cost and fair value of the Islamic Unit Trust, as at 31 March 2011 are as detailed below:

Fair ValueRM

2,378,898338,601

1,475,012886,210

1,919,536 290,418

3,556,130629,898

11,474,703

No. ofunits

2,029,777624,945

1,327,0471,637,1873,261,190

579,6766,416,6911,195,933

17,072,445


20.27%2.88%

12.57%7.55%

16.35% 2.47%

30.30%5.37%

CostRM

2,268,900334,206

1,420,700849,600

1,836,600 279,000

3,367,500608,300

10,964,806

Islamic Unit Trust

AmInvestment Services BerhadHwang-DBS Investment Mgt. BerhadMaakl Mutual BerhadPacific Mutual Fund BerhadAvenue Invest BerhadAlliance Investment Management BerhadAmanah Mutual BerhadBIMB Investment Management Berhad

(iv) AmHigh Islamic Cash Strategy Fund (Contd.)






The effective profit rate during the year ended 31 March 2011 of the investment accounts with a licensed commercial bank of the AmHigh Cash Strategy Fund was 2.50%.

As % ofNAV

0.85%

RM

100,014


Credit Rating

AA

2011

> 1 YearRM

-

TotalRM

100,014

< 1 YearRM

100,014


(iv) AmHigh Islamic Cash Strategy Fund (Contd.)



2011RM

61,538,755450,062

61,988,817

57,812,4733,726,282

61,538,755

450,06261,988,817

-21,817,052

2010RM

21,817,052-

21,817,052

20,188,5631,628,489

21,817,052


Investments Financial Assets at FVTPL: Islamic Unit Trust Investment accounts with a licensed commercial bank

(a) Fair Value Through Profit & Loss (FVTPL) Islamic Unit Trust Cost Fair value gain recognised in statement of comprehensive income Fair value

(b) Investment accounts with a licensed commercial bank Total investments

The composition, cost and fair value of the Islamic Unit Trust, as at 31 March 2011 are as detailed below:

Fair ValueRM

11,535,1104,802,842

11,145,2436,172,2416,225,6383,474,1583,417,9152,984,2286,083,081

9855,697,313

61,538,755

No. ofUNITS

29,814,2457,313,737

23,668,55810,396,22910,922,1726,413,4353,950,4332,697,729

19,782,3781,713

14,519,147129,479,777


18.56%7.73%

17.93%9.93%

10.02%5.59%5.50%4.80%9.79%0.00%9.17%

CostRM

10,534,6974,221,620

10,126,1205,831,4065,999,3003,221,0733,379,1002,890,7046,070,700

-5,537,753

57,812,473

Islamic Unit Trust

AmInvestment Services BerhadCIMB-Principal Asset ManagementMaakl Mutual BerhadPacific Mutual Fund BerhadAmanah Mutual BerhadAvenue Invest BerhadHwang-DBS Investment BerhadPrudential Management BerhadBIMB Investment Management BerhadAlliance Investment ManagementAsia Unit Trust






The effective profit rate during the year ended 31 March 2011 of the investment accounts with a licensed commercial bank of the AmHigh Equities Strategies Fund was 2.50%.

4. AMOUNT DUE TO THE INVESTMENT LINKED TAKAFUL FUNDS

As % ofNAV

0.72%

RM

450,062


Credit Rating

AA

2011

> 1 YearRM

-

TotalRM

450,062

< 1 YearRM

450,062

The amount due to the Investment Linked Takaful Funds is profit-free, unsecured and has no fixed terms of repayment.

(v) AmHigh Islamic Equity Strategies Fund (Contd.)




2011RM

2,717

(525)2,192

2010RM

3,052

(335)2,717


(ii) Balanced Fund

(iii) Growth Fund

2011RM

17,993

(28,099)(10,106)

2011RM

23,490

(39,119)(15,629)

2010RM

51,603

(33,610)17,993

2010RM

74,932

(51,442)23,490

At beginning of yearDeferred tax liability arising on unrealised capital gains on investments, recognised in the statements of comprehensive income (Note 6) At the end of the year



5. DEFERRED TAXATION



2011RM

(9,023)

(31,769)(40,792)

2010RM

-

(9,023)(9,023)


(v) AmHigh Islamic Equity Strategies Fund2011

RM

(130,279)

(167,823)-

(298,102)

2010RM

-

(130,315)36

(130,279)

At beginning of yearDeferred tax liability arising on unrealised capital gains on investments, recognised in the statements of income and expenditure (Note 9)At the end of the year

At beginning of yearDeferred tax liability arising on unrealised capital gains on investments, recognised in the statements of income and expenditure (Note 9)Overprovision of deferred tax in prior year At the end of the year

5. DEFERRED TAXATION (CONTD.)



2011RM

16,181

525

16,706

2011RM

21,000

28,099

49,099

2011RM

15,385

39,119

54,504

2010RM

5,675

335

6,010

2010RM

18,471

33,610

52,081

2010RM

15,141

51,442

66,583


(ii) Balanced Fund

(iii) Growth Fund

Tax expense for the year: Malaysian income tax

Deferred tax: Relating to origination and reversal of temporary difference (Note 5)

Tax expense for the year







6. TAXATION



2011RM

-

31,76931,769

2011RM

294,014

167,823-

461,837

2010RM

-

9,0239,023

2010RM

44,561

130,315(36)

174,840



Tax expense for the year: Malaysian income taxDeferred tax: Relating to origination and reversal of temporary difference (Note 5) Tax expense for the year

Tax expense for the year: Malaysian income taxDeferred tax: Relating to origination and reversal of temporary difference (Note 5) Overprovision in prior yearTax expense for the year

6. TAXATION (CONTD.)



The tax charge on the funds relates to tax on investment income at the applicable tax rate of 8%, which is also applicable to that of the Family Takaful fund of the Manager.

A reconciliation of income tax expenses applicable to the surplus before taxation at the tax rate applicable to the Takaful Investment Linked Funds, to income tax expense at the effective income tax rate, is as follows:


Surplus before taxation

Taxation at applicable tax rate of 8%Expenses not deductible for tax purposesTax expense for the year

2011RM

117,140

9,3717,335

16,706

2010RM

21,581

1,7274,2836,010




(iii) Growth Fund



2011RM

317,888

25,43129,07354,504

2010RM

686,564

54,92511,65866,583



2011RM

514,611

41,1697,930

49,099

2010RM

562,135

44,9717,110

52,081

(ii) Balanced Fund






Taxation at applicable tax rate of 8%Expenses not deductible for tax purposesOverprovision of deferred tax in prior yearTax expense for the year

2011RM

1,284,380

102,750359,087

-461,837

2010RM

1,343,311

107,46567,411

(36)174,840

Loss before taxation


2011RM

(734,559)

(58,765)90,53431,769

2010RM

(66,710)

(5,337)14,360

9,023






Unitholders’capitalUndistributed surplusTotal equity

Net assets value per unit at 31 March

(a) Unitholders’ capital

Unitholders’ account at beginning of yearAmount received for creations during the yearAs at end of the year

(b) Undistributed surplus

Undistributed surplus brought forwardNet surplus for the year after taxationUndistributed surplus carried forward

No.ofUnits

1,300,914207,438

1,508,352

No.ofUnits

1,508,3522,911,9294,420,281

Note

(a)(b)

RM1,287,263

61,9871,349,250

RM1,349,2502,788,2154,137,465

2011RM

4,137,465156,618

4,294,083

0.9715

2010RM

1,349,25056,184

1,405,434

0.9318

2011RM

56,184100,434156,618

2010RM

40,61315,57156,184

20102011

7. TOTAL EQUITY



(ii) Balanced Fund






Undistributed surplus/(loss) brought forwardNet surplus for the year after taxationUndistributed surplus carried forward

Note

(a)(b)

No.ofUnits

2,325,394193,759

2,519,153

No.ofUnits

2,519,1531,718,6604,237,813

RM2,332,177

112,8372,445,014

RM2,445,0141,992,0804,437,094

2011RM

4,437,094761,949

5,199,043

1.2268

2010RM

2,445,014296,437

2,741,451

1.0882

2011RM

296,437465,512761,949

2010RM

(213,617)510,054296,437

20102011

7. TOTAL EQUITY (CONTD.)



(iii) Growth Fund






Undistributed surplus/(loss) brought forwardNet surplus for the year after taxationUndistributed surplus carried forward

No.ofUnits

2,712,324470,644

3,182,968

No.ofUnits

3,182,9682,179,9725,362,940

Note

(a)(b)

RM2,683,153

268,9492,952,102

RM2,952,1022,648,9565,601,058

2011RM

5,601,058460,255

6,061,313

1.1302

2010RM

2,952,102196,871

3,148,973

0.9893

2011RM

196,871263,384460,255

2010RM

(423,110)619,981196,871

20102011





Unitholders’capitalUndistributed lossTotal equity





Undistributed loss brought forwardNet loss for the year after taxationUndistributed loss carried forward

No.ofUnits

82,8825,679,4605,762,342

No.ofUnits

5,762,3425,257,762

11,020,104

Note

(a)(b)

RM83,811

5,953,8296,037,640

RM6,037,6406,543,007

12,580,647

2011RM

12,580,647(842,592)

11,738,055

1.0651

2010RM

6,037,640(76,265)

5,961,375

1.0345

2011RM

(76,265)(766,328)(842,592)

2010RM

(532)(75,733)(76,265)

20102011










Undistributed surplus brought forward/at commencement of fundNet surplus for the year after taxationUndistributed surplus carried forward

No.ofUnits

417,01323,535,20723,952,220

No.ofUnits

23,952,22023,485,24247,437,462

Note

(a)(b)

RM418,427

27,027,05527,445,482

RM27,445,48232,726,05660,171,538

2011RM

60,171,5381,991,014

62,162,552

1.3104

2010RM

27,445,4821,168,471

28,613,953

1.1946

2011RM

1,168,471822,543

1,991,014

2010RM

-1,168,4711,168,471

20102011




8. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES

(a) Financial Risk Management Objectives and Policies

The Funds’ financial risk management policies are in line with the policies adopted by the Manager, Takaful Ikhlas Sdn. Bhd. and seek to ensure that adequate financial resources are available for the business activities of the Funds whilst managing the profit rate, liquidity, and market risks. The Funds operate within guidelines that are approved by the Board of Directors of the Manager and their policies are to not engage in speculative transactions. The Funds’ policies in respect of the major areas of treasury activity are set out as follows:

(i) Market RiskMarket risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as profit rates, foreign exchange rates and equity prices.

The Funds’ investments in quoted securities are subject to fluctuations in market prices. The Manager does not use derivative financial instruments to manage market related risks.

The quoted securities portfolio of the Funds are made up of shares issued by fundamentally sound corporations, and which have a proven dividend payment track record. In addition, the Manager has clear investment guidelines and trade authority limits to ensure that the funds invested are not exposed to significant risks.

(ii) Profit Rate RiskProfit rate risk is the risk that the value or future cash flows of financial instruments will fluctuate due to changes in market profit yield.

The profit rate risks of the Funds arise principally from differences in maturities of their assets and liabilities and the reinvestment of profit-bearing assets to meet long-term liabilities. The Funds’ primary profit rate risk in this respect, relates to its profit-bearing assets.

The profit-bearing assets are made up primarily of investment accounts with licensed commercial banks and private debt securities. The profit rate risk in this respect arises from fluctuations in market profit rates which may affect reinvestment decisions for these profit-bearing assets.



(a) Financial Risk Management Objectives and Policies (Contd.)

(ii) Profit Rate Risk (Contd.)The analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on surplus/(loss) and impact on equity and net assets value. The correlations of assumptions will have a significant effect in determining the ultimate impact on profit yield risk, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are non-linear.

Other assets and other liabilities balances presented in the statements of financial position are non-profit bearing.

(a) Fixed Income Fund RM RM

(b) Balanced Fund RM RM

(c) AmHigh Islamic Cash Strategy Fund RM RM

(d) AmHigh Islamic Equity Strategies Fund RM RM

2011Impact on surplus/(loss) for the year

RM’000

(102)105

(30)32

59(59)

311(311)

Changes in basis

+50 bps-50 bps

+50 bps-50 bps

+50 bps-50 bps

+50 bps-50 bps

2010Impact on Equity and

Net Assets Value

RM’000

(102)105

(30)32

59(59)

311(311)

8. FINANCIAL RISK AND MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)




(iii) Credit RiskCredit risk represents the loss that would be recognised if counterparties to retakaful and investment transactions failed to meet its contractual obligations.

Credit risk includes the following elements:• Investment credit risk - financial loss arising from a change in the value of an investment due to a rating downgrade, default, or widening of credit spreads.

• Contribution credit risks - financial loss arising from non-payment of contribution.

The Funds are exposed to investment credit risk on its investment portfolio, primarily from investments in corporate bonds. Creditworthiness assessment for new and existing investments is undertaken by the Manager in accordance with the Investment Policy as approved by the Investment Committee. In addition the credit ratings of bond portfolio are regularly monitored and any downgrade in credit rating will be evaluated to determine actions required. The Funds’ bond portfolio is highly rated, with no material exposure below investment grade.

To mitigate credit risk:• Investment policies will have a prescribed minimum credit rating of bonds that may be held. Investing in a diverse portfolio reduces the impact from individual companies defaulting.

• Counterparty limits are set for investments and cash deposits.

• The Funds’ investment portfolio is managed following standards of diversification. It focuses on investing in high quality investment grade fixed income securities.

• For the financial year ended 31 March 2011, the average credit quality of the Funds’ investment portfolio were AA and AAA by Rating Agency Malaysia (“RAM”) or Malaysian Rating Corporation Berhad (“MARC”).




(iii) Credit Risk (Contd.)Credit Risk Exposure

The Funds’ credit risk exposure on unquoted private debt securities is analysed by sector and credit ratings of conterparties as shown in Note 3.

The Funds’ credit risk exposure on investment accounts with licensed commercial bank is analysed by credit ratings of licensed financial institution as shown in Note 3.

No credit risk exposure for Government Islamic Investments as the investments are government guaranteed and not rated.

(iv) Liquidity RiskLiquidity risk is defined as the risk that the Funds will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Exposure to liquidity risk arises because of the possibility that the Funds could be required to pay its liabilities or redeem its units earlier than expected.

The Manager’s policy is to always maintain a prudent and sufficient level of liquid assets so as to meet normal operating requirements and expected redemption requests by unitholders. Liquid assets comprise cash, deposits with financial institutions and other instruments which are capable of being converted into cash within 7 days.

The following table summarises the maturity profile of the Funds’ units in issue (classified as equity instruments) and financial liabilities. Balances due within six months equal their carrying amounts, as the impact of discounting is insignificant. The table also analyses the maturity profile of the Funds’ financial assets (undiscounted where appropriate) and equity in order to provide a complete view of the Funds’ contractual commitments and liquidity.





(iv) Liquidity Risk (Contd.)

More than5 years

RM

2,596,125

--

2,596,125

-

2,596,125

3 months -1 year

RM

-

---

-

-

1 month -3 months

RM

-

---

-

-

Less than1 month

RM

-

901,80032,246

934,046

576,000576,000

4,137,465

(3,779,419)

Total

RM

3,933,845

901,80032,246

4,867,891

576,000576,000

4,137,465

154,426

1 year -5 years

RM

1,337,720

--

1,337,720

-

1,337,720

(a) Fixed Income Fund

2011Financial assets:Financial assets held at FVTPLIslamic investment accounts with licensed commercial bankOther assetsTotal undiscounted financial assets

Financial liabilities:Other liabilitiesTotal undiscounted financial liabilities

Unitholders’ capital

Liquidity gap






More than5 years

RM

870,965

--

870,965

-

870,965

3 months -1 year

RM

-

---

-

-

1 month -3 months

RM

-

---

-

-

Less than1 month

RM

3,566,208

763,6009,490

4,339,298

381,603381,603

4,437,094

(479,399)

Total

RM

4,817,663

763,6009,490

5,590,753

381,603381,603

4,437,094

772,056

1 year -5 years

RM

380,490

--

380,490

-

380,490

(b) Balanced Fund




Liquidity gap






3 months -1 year

RM

-

---

-

-

1 month -3 months

RM

-

---

-

-

Less than1 month

RM

5,184,566

1,021,6008,850

6,215,016

138,074138,074

5,601,058

475,884

Total

RM

5,184,566

1,021,6008,850

6,215,016

138,074138,074

5,601,058

475,884

1 year -5 years

RM

-

---

-

-

(c) Growth Fund




Liquidity gap

More than5 years

RM

-

---

-

-






3 months -1 year

RM

-

---

-

-

1 month -3 months

RM

-

---

-

-

Less than1 month

RM

11,474,703

100,014229,865

11,804,582

25,73525,735

12,580,647

(801,800)

Total

RM

11,474,703

100,014229,865

11,804,582

25,73525,735

12,580,647

(801,800)

1 year -5 years

RM

-

---

-

-

(d) AmHigh Islamic Cash Strategy Fund




Liquidity gap

More than5 years

RM

-

---

-

-






3 months -1 year

RM

-

---

-

-

1 month -3 months

RM

-

---

-

-

Less than1 month

RM

61,538,755

450,0621,015,136

63,003,952

543,298543,298

60,171,538

2,289,116

Total

RM

61,538,755

450,0621,015,136

63,003,952

543,298543,298

60,171,538

2,289,116

1 year -5 years

RM

-

---

-

-

(e) AmHigh Islamic Equity Strategies Fund




Liquidity gap

More than5 years

RM

-

---

-

-






Notes:

(i) Financial assets

Analysis of financial assets at fair value through profit or loss into maturity groupings is based on the expected date on which these assets will be realised. Quoted equity instruments have been included in the “Less than 1 month category” on the assumption that these are highly liquid investments which can be realised should all of the Fund’s unitholders’ capital are required to be redeemed. For other assets, the analysis into maturity groupings is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the expected date on which the assets will be realised/maturity dates of debt securities.

(ii) Financial liabilities

The maturity grouping is based on the remaining period from the end of the reporting period to the contractual maturity date. When a counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Funds can be required to pay.

(iii) Equity

As unitholders can request for redemption on their units by giving the Manager a 3-day notice period, they have been categorised as having a maturity of “Less than 1 month”. As a result, it appears that the Funds have a liquidity gap within “Less than 1 month”. However, the Funds believe that it would be able to liquidate other investments should the need arise to satisfy all the redemption requirements of the Funds.





(v) Equity Price Risk

Equity price risk is the risk of unfavourable changes in the fair values of equities as the result of changes in the levels of equity indices and the value of individual shares. The equity price risk exposure arises from the Fund’s investments in quoted equity securities.

Equity price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from profit yield risk or currency risk) whether those changes are caused by factors specific to the individual financial instruments or its issuer or factors affecting all similar financial instruments traded in the market.

The Funds’ equity price risk exposures relates to financial assets and financial liabilities whose values will fluctuate as a result of changes in market prices.

The Funds’ price risk policy requires it to manage such risks by setting and monitoring objectives and constraints on investments, diversification plans, limits on investments in each country, sector, market and issuer, having regards also to such limits stipulated by BNM. The Funds’ concentration of equity price risk is analysed by sector of the Funds’ equity instruments as shown in Note 3.

The analysis below is performed for reasonably possible movements in prices with all other variables held constant, showing the impact on equity in respect of quoted investment. The correlation of variables will have significant effect in determining the ultimate impact on price risk, but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted that movements in these variables are non-linear.





(a) Balanced Fund RM RM

(b) Growth Fund RM RM

(c) AmHigh Islamic Cash Strategy Fund RM RM

(d) AmHigh Islamic Equity Strategies Fund RM RM

2011Impact on surplus/(loss) for the year

RM’000

169(169)

248(248)

587(587)

3,108(3,108)

Changes in variables

+5 %-5 %

+5 %-5 %

+5 %-5 %

+5 %-5 %

2011Impact on Equity and

Net Assets Value

RM’000

169(169)

248(248)

587(587)

3,108(3,108)

(v) Equity Price Risk (Contd.)





(b) Fair Values

The financial assets and liabilities of the Takaful Investment Linked Funds, other than amounts due to the Investment Linked Takaful funds are stated at their fair values. The basis for determining fair values of the financial assets and liabilities are as follows:

Quoted securities are determined by reference to the bid market prices quoted on the Bursa Malaysia at the close of business on the Statement of Financial Position.

Market values of private debt securities are determined by reference to the fair values provided by a bond pricing agency/secondary market in Malaysia.

The carrying amounts of the investment accounts, receivables and payables approximate fair values due to the short-term maturity of these financial instruments.

The carrying amount of amount due to the Investment Linked Takaful funds approximate its fair value due to its relatively short- term nature.

The carrying amount of unitholders’ accounts approximate their fair values as the underlying assets and liabilities are stated at fair value and the units are cancellable upon demand by the unitholders.

(i)

(ii)

(iii)

(iv)

(v)


Takaful investment linked funds report ended 31 March 2011

Economy & Finance

Transcript of Takaful investment linked funds report ended 31 March 2011