Takafulink Reports and Statements for the year ended 31 ... · After 61 years of Barisan Nasional...

TAKAFULINK FUNDS REPORT 2018Takafulink Reports and Statements

for the year ended 31 December 2018

For All For Life

Dear Certificate Holders,

We have the pleasure in presenting you the 2018 Takafulink Funds Report. This report is also available at www.prubsn.com.my. Contents

2 CEO’s Message

4 Fund Objectives

5 Investment Review

12 Fund Performance

13 Investment Outlook

15 Financial Highlights

28 Statement of Assets and Liabilities

34 Statement of Changes in Net Asset Value

37 Statement of Income and Expenditure

43 Notes to the Accounts

44 Statement by Directors

45 Independent Auditors’ Report

Speak to our Takaful Consultant today for FREE consultation. Terms and conditions apply.

CEO’s Message

In the name of Allah, Most Gracious and Most Merciful

Dear PruBSN Takafulink Certificate Holder,

As you are aware, Takaful is premised on the concept of taawun (co-operation and mutual assistance). With your participation in the Takaful plan, you have managed to also help others as part of your contribution payment is donated into the Tabarru’ fund for the purpose of protecting fellow participants during times of misfortune, such as loss of life or permanent disability.

2 Takafulink Funds Report 2018

CEO’s Message I am glad to say that with your participation collectively, we have managed to provide protection to over 800,000 customers in Malaysia. More specifically, in the year of 2018, with the Tabarru’ that we have collected, we have utilised this to pay a total of RM494 million involving over 120,000 claims cases. In addition, with the excess in the Tabarru’ fund (the balance after deducting all claims payable and reserves), we will be distributing RM52 million back to over 612,000 Takafulink certificate holders (with the balance to PruBSN as an incentive to manage the Tabarru’ fund soundly on behalf of certificate holders).

The metrics above provide a clear indication of our focus in ensuring efficient and ethical management of claims on behalf of certificate holders.

Whether it is in our dealings with our customers, with our own people or in the way we support our communities, PruBSN is committed to uphold the takaful spirit of taawun for common good in everything that we do. Across all our activities last year, we have remained focused on our mission and purpose to go above and beyond our day-to-day operations. The performance, driven by our strong multi-distribution channel strategy, new product offerings and technological transformation, meant that PruBSN has been the Number 1 Family Takaful Operator for eight years successively.

2018 have also seen us aggressively putting our efforts towards increasing the takaful penetration and closing the protection gap of Malaysians. In March 2018, we launched PruBSN Microtakaful Jariyah, the first takaful plan of its kind in the country that provides a 12 month basic family takaful coverage at no cost to help alleviate the burden of families below the national poverty line. We have also recently introduced the Ihsan rider with our latest offering, PruBSN AnugerahPlus, which supports the Microtakaful Jariyah effort whereby our customers can contribute from as low as RM5 per month. In July 2018, we launched our

packaged solutions, PruBSN Setia and PruBSN Impian, which offers comprehensive and customisable protection targeted at working adults and children. As a preventive healthcare measure for our customers, we have partnered with our panel hospitals to offer discounted and complimentary influenza vaccination. We have also formed strategic partnerships with health technology companies, Doctor2U and Prenetics, to deliver our promise to help our customers live healthier lives and ensure a buoyant future growth for PruBSN.

Based on these achievements and our contributions to the industry, we have clinched more than a dozen highly regarded awards last year including the Best Takaful Company in Asia awarded in The International Takaful Summit in London. All these achievements come against the backdrop of a challenging year, but we upheld our focus on differentiated offerings that have helped us build deeper relationships with our valued customers, partners and shareholders.

The foundation of our company remains strong and we are on the right track to delivering growth. Having said that, I would like to thank you for your trust and loyalty in us thus far, to fulfill your financial protection needs which has been and always will be the number one reason for us to continue doing well.

Should you require more information regarding our funds, please reach out to us at 03-20537188 or e-mail us at [email protected].

With Best Wishes,

Nor Azman ZainalChief Executive OfficerPrudential BSN Takaful Berhad

Takafulink Funds Report 2018 3

Fund ObjectivesThe Takafulink Dana Ekuiti aims to maximise returns over medium-to-long term by investing in high quality Shariah-Compliant equities listed on Bursa Malaysia.

The Takafulink Dana Bon aims to provide medium-to-long term accumulation of capital by investing in selected sukuk and Islamic money market instruments.

The Takafulink Dana Urus seeks to maximise returns over medium-to-long term by investing in Shariah-Compliant equities, sukuk and Islamic money market instruments through Takafulink Dana Ekuiti and Takafulink Dana Bon, and in any other such Takafulink funds that may become available in the future.

The Takafulink Dana Ekuiti Dinasti aims to provide long-term capital appreciation by investing in Shariah-Compliant investments with exposure to the Greater China region.

The Takafulink Dana Dinamik aims to provide capital appreciation by actively investing in Shariah-Compliant equities and equity-related securities. For defensive considerations, the Fund may invest in Shariah-Compliant debentures and money market instruments.

The Takafulink Dana Aktif aims to provide capital appreciation by investing in small market capitalisation Shariah-Compliant securities of companies with growth potential.

Takafulink Funds Report 20184

Investment Review

Equity Market

As with the beginning of each new year, Q1 2018 saw a good start for global markets and Malaysia, driven by improving economic prospect and positive investor sentiment despite the distraction of a three-day US government shutdown. The rally was driven by the expectation of a strong Malaysian Ringgit on the back of higher oil prices, Bank Negara Malaysia’s Overnight Policy Rate hike and inflows of foreign funds into Malaysia. However this rally was short lived as come February global markets corrected sharply, ironically spooked by the stronger job and wage data in the US, stoking fears of higher than expected inflation which may result in the US Federal Reserve being more hawkish, triggering a sell-off in the US bond market. The Malaysian equity market corrected as foreign investors reduced their exposure in Malaysia with RM1.2 billion net outflow in February. Global market correction continued in the third month of the Q1 2018 as investors sold down US stocks on concerns regarding global growth given US President Trump’s escalating protectionist stance. US imposed tariffs on steel and aluminium imports from China, Canada and the EU, resulting retaliating measures from the affected countries. Malaysian equity markets similarly were volatile in tandem with global markets, given the openness of the Malaysian economy. However, the Malaysian ringgit during the period managed to maintain its strength against the USD, appreciating 3.02% quarter-on-quarter, supported by firmer oil prices.

Q2 2018 has been another volatile period for investors, concerned by a possible full-blown trade war between the US and China and the repercussions on other exporting nations. However, higher oil prices that saw crude oil prices breach

USD70 per barrel, helped provide support for Malaysia’s ringgit and equity market, that saw the KLCI just one point shy of all-time highs that was hit in 2014. This rally was short lived as markets corrected over rising US treasury yields and the sell-off in technology stocks due to the weaker outlook guided by major handset component manufacturers and Facebook’s scandal of not protecting personal data properly. Middle of the quarter saw domestic investors surprised by the unexpected 14th General Elections outcome. After 61 years of Barisan Nasional rule, Malaysia voted in a new government under the coalition of Pakatan Harapan (PH). The first two weeks post GE14 saw the swearing in of the new Prime Minister, Tun Mahathir, and then the subsequent swearing in of 12 cabinet ministers. May was a month of change for Malaysia, as the new government worked quickly to meet expectations as proposed in their 100-Day manifesto, starting with the announcement to set GST at 0% effective 1 June 2018 from the current 6%, and to prepare to roll out Sales and Services Tax by 1 September 2018. Construction stocks were sold down on concerns that the mega rail projects would be delayed, terminated or reduce in value. Emerging Markets Asia performed poorly towards the end of the Q2 2018, as investors became more risk averse, faced with trade war concerns, hawkish US Fed statements, and weaker China economic data together with a weakening yuan. Malaysia experienced significant net selling bringing 6M2018 foreign net selling to RM6.8 billion. The ringgit depreciated 4.3% quarter-on-quarter, however, so has other emerging market currencies. During the month, the new PH government announced the remaining cabinet line-up, a new Attorney General, and appointed a new BNM Governor.


Investment Review

Equity Market (continued)

Q3 2018 has been a good quarter for the Malaysian equity market with most indices registering positive gains, recovering in tandem with emerging markets and investors looking to bottom fish. Asia Pacific equity markets reported weaker gains as the Korean and Chinese markets were impacted by fears in relation to the US-China trade tensions, slower growth in China and yuan depreciation. Investor sentiment was weighed down by the escalation of trade tensions, and emerging markets were also rattled by fears of twin deficits and potential contagion effects from sharp currency depreciation as experienced by countries such as Turkey and Argentina. Towards the end of the Q3 2018, equity markets in Malaysia and regionally took a breather, although foreigners investors finally turned slight net buyer for the month of September, after four months of outflows. Brent crude oil prices rose to above USD80 per barrel as concerns for a tighter market re-emerged after OPEC and Russia show no signs to increase production. The ringgit depreciated 0.7% quarter-on-quarter versus the USD, which is relatively mild when compared to other emerging market currencies. However this resilience may be partly attributable to Malaysia’s commodity exports such as crude oil and palm oil.

Q4 2018 was a period of correction. The Malaysian equity market corrected in tandem with global markets as the US market took a nosedive early in the Q4 2018 as US technology stocks declined sharply with the US-China trade war heating up. Domestically, the Government of Malaysia hosted a conference titled “Malaysia – A New Dawn” which was well attended by investors but may have unduly spooked investors with their “people-first”, anti-monopoly, and “sacrifice” rhetoric. This was followed by the tabling of the Malaysian Budget 2019 which focused on measures to improve disposable income for the B40 group, revised the fiscal deficit to 3.7% in 2018 and 3.4% in 2019, and amidst concerns expressed by rating agencies of Malaysia’s increasing reliance on oil revenues. Brent crude oil dropped sharply in the second half of the Q4 2018, declining by 38% quarter-on-quarter to close the period at USD45.41 per barrel. The oil price weakness spurred OPEC to agree to production cuts until April 2019, but the news had minimal impact on oil prices. External events towards the end of the quarter added to the volatility, such as the arrest of Huawei’s CFO in Canada, just after the US and China announced a temporary trade war truce on 30 Nov 2018.

The FTSE Bursa Malaysia Shariah Emas Index (FBMSHA) closed the year under review at 11,504.43 points, lower by 13.52%. The broader FTSE Bursa Malaysia EMAS Index (FBMEMAS) closed the period under review lower by 10.93%. The MSCI Asia Pacific ex-Japan Index rose by 16.25% in USD terms.


Investment Review

Sukuk Market Review

BNM increased the OPR by 25 bps to 3.25% from 3.00% during its first Monetary Policy Committee MPC meeting of 2018 on 25 January. BNM stated that the hike was a pre-emptive move to prevent a build-up of risks that could arise from interest rates being too low for a prolonged period of time. Following the rate hike in January, BNM maintained the OPR at 3.25% throughout the remaining of the year and believed that the current level of OPR remains accommodative. In the recent Monetary Policy Committee’s statement in November 2018, BNM reiterated that the current level of OPR remains accommodative and the domestic economy is expected to remain on a steady growth path in 2018 and 2019. Nevertheless, BNM cautioned that global growth outlook remains tilted to the downside, with trade tensions continuing to be a key source of downside risk. As such, BNM will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation before making any changes in its monetary policies.

On the economic front, Malaysia’s economy continued to grow at a slower pace at +4.4% year-on-year in third quarter of 2018, following a +4.5% year-on-year in the second quarter of 2018 and +5.4% year-on-year in the first quarter of 2018. The slower growth in the third quarter of 2018 was mainly due to commodity-specific shockers in the Mining & Quarrying (Q3 2018: -4.6%, Q2 2018: -2.2% year-on-year) while Services (Q3 2018: +7.2% year-on-year, Q2 2018: +6.5% year-on-year) and Manufacturing (Q3 2018: +5.0% year-on-year, Q2 2018: +4.9% year-on-year) sectors remained key drivers of the economy. Going forward, growth is expected to be broadly sustained, supported mainly by private sector spending. The

Malaysian economy is expected to grow by 4.8% year-on-year in 2018 based on Government’s projection which was revised lower from the earlier forecast of 5.0%-5.5%.

During the period under review, headline inflation moderated to +0.2% year-on-year in November 2018 from +3.4% year-on-year registered in November 2017. The moderation in inflation was mainly led by a slowdown in Food & Non-Alcoholic Beverage (Nov-18: +1.1% year-on-year vs. Nov-17: +4.0% year-on-year) and Transport inflation (Nov-18: -2.3% year-on-year vs. Nov-17: +10.8% year-on-year). Similarly, core inflation moderated to +0.5% year-on-year in November 2018 from +2.2% year-on-year registered in November 2017. BNM expects the underlying inflation to remain contained in the absence of strong demand pressures.

The surprise win by PH in the 14th general election has marked a new start to the Malaysian political scene with a change in the ruling coalition party for the first time in the Malaysian history since independence in 1957. This unprecedented victory has ushered in a new era for Malaysian politics and opportunities for reform. However, there are some concerns on the fiscal health of the country as the Government recently unveiled the country’s “real” fiscal position coupled with new economic policies such as the abolishment of Government Service Tax (GST) and the continuity of fuel subsidies. Nevertheless, the government is expected to continue to improve the economic conditions of the country and focus more on reduction of government’s debt, controlled spending and tax reformation.


Investment Review

Sukuk Market Review (continued)

In the Budget 2019, the Government proposed an expansionary budget to help address short-term issues and to lay the foundation for longer term growth and fiscal agenda. The Government expects higher fiscal deficit of RM53.3billion or 3.7% of GDP for 2018 (vs. the original target of 2.8% of GDP) and 3.4% of GDP for 2019. This came on the back of slower revenue expansion and upward revision in operating and development expenditures. As a result, rating agencies (Moody’s and Fitch) have voiced concerns over the level of Malaysia’s national debts. While Moody’s highlighted that wider deficits and a heightened reliance on volatile oil-related revenues will weaken the fiscal profile in the near term, Fitch, on the other hand, said that failure to stick to a more conservative fiscal consolidation path raises some concerns about policy credibility. Nevertheless, the Government appears committed on its plan for a long-term fiscal consolidation while improving transparency. As such, this “one-off” pressure should subside after 2019 as the government plans to reduce fiscal deficit further to 2.8% of GDP by 2021.

In 2018, the US Federal Reserve (Fed) followed through on their interest rate hike projections as the Fed increased its benchmark rate four times. The Fed increased its key interest rate by 25bps each time in its Federal Open Market Committee (FOMC) meetings in March, June, September and December 2018 to end in the range of 2.25-2.50%. During the recent FOMC meeting in December, the Committee noted that labour market has continued to strengthen while the economy has been rising at a strong rate. Nevertheless, the Committee believes that further gradual increases in the target range would be appropriate, though it did soften its tone slightly.

As a result, the Fed revised its forecast of the federal fund rate for 2019 lower to between 2.6%-3.1% from the earlier forecast of between 2.9%-3-4%.

Trade tensions between the US and China have been intensifying over the past several months as both countries have imposed new trade tariffs. US President Donald Trump followed through on months of threats to impose sweeping tariffs on China for its alleged unfair trade practices. As a result, US slapped tariffs on about USD250billion worth of Chinese goods while China retaliated with new tariffs of about USD110billion worth of US goods. Global investors remain wary of the instability as this trade dispute may trigger huge financial repercussions. In the short run, Malaysia may also be affected by this trade dispute as Malaysia is engaged in intermediary trading between China and the US. That said, Malaysia could eventually gain from trade diversion away from China, given high similarity in export structure with China.

Malaysia sovereign sukuk yields moved higher in first twelve months of FY2018 as MGS yields for the 3-, 5-, 10- and 15-year changed by 25bps, 4bps, 5bps and -4bps to close at 3.68%, 3.83%, 4.24% and 4.61% respectively. The increase in MGS yields mainly attributable to (1) sell-off by foreign investors on public debt concerns (2) rising US Treasury yields and (3) on the back of Emerging Market selloff due to global trade disruptions. Separately, Corporate sukuk yields generally moved in tandem with sovereign sukuk yields, albeit at a lag. Activities in the corporate sukuk market were supported by ample liquidity and a stable credit environment.


Investment Review

Sukuk Market Review (continued)

On the supply front, total Corporate issuances continued to remain healthy in 2018 with total new issuances stood around RM89.9billion. Major primary issuances during the year were mainly government guaranteed and corporates sectors. Notable issuances include RM11.1billion from Danainfra Nasional (GG), RM8.9billion from Cagamas (AAA), RM6.0billion from Lembaga Pembiayaan Perumahan Sektor Awam (GG), RM6.0billion from Prasarana Malaysia Berhad (GG), RM5.1billion from Edra Energy (AA3), RM3.5billion from Danga Capital (AAA), RM3.25billion from CIMB Group Holdings Berhad (AA3), RM3.0billion from Tenaga Nasional Berhad (AAA) and RM2.9billion from Public Bank Berhad (AAA).

Global and Asia

Global Equity markets endured one of the most volatile 12 months in decades in 2018 with almost every major market seeing a decline by year end. And yet it started off so well, with January seeing a continuation of 2017’s themes of high liquidity levels combined with low interest rates and low inflation, to create a “goldilocks” scenario for equities.

But thereafter, most markets headed lower albeit with the US decoupling from the rest of the world - and especially emerging markets - to gain ground for the first nine months after tax cuts passed in December by Congress fed their way through to corporate earnings. By the end of September, the US had returned a positive 10.6% against Europe down 1.9%, and China which was 9.0% lower.

This pattern began to change in October when the Sino-US trade dispute worsened and economic data from China hinted that the tariff regime was beginning to hit the greater economy.

Back in the US, 10-year Treasury yields spiked to a seven-year high of 3.24% in November as the Federal Reserve stayed committed to raising rates again. Yields did eventually fall back to as low as 2.68% but this didn’t stop the Fed from raising rates in December and hinting at two more in 2019.

It was this that really hurt the market in the autumn and especially in December when political risk in several key markets in December, explaining why the year ended on such a sour and volatile note. 2018 culminated in a chaotic week around Christmas when the Dow Jones Industrial Average had its worst Christmas Eve day of trading, followed on the 26th by its first ever 1,000-point gain.

Equity Market drivers for the year

The negative drivers for the year appeared to crystallise in December with previously immune markets such as the US catching up with the rest of the world. The first of these drivers was the US-Sino trade dispute. This began in 2017 as hyperbole and gained traction in 2018 with three rounds of tariffs against China, with a proportionate response from Beijing on US goods coming into China.

The second driver to send markets tumbling was falling liquidity as central banks in the US, Europe and elsewhere either stopped completely or began to wind down their respective quantitative easing programmes. The third was rather unforeseen at the beginning of the year, growth technology stocks began to stare down the barrel of a downturn, first as privacy concerns on social media raised the spectre of regulation, then questions on the overall health of the global economy began to weigh, with chip stocks in Korea and Taiwan becoming particularly vulnerable.


Investment Review

Global and Asia (continued)

The fourth major driver was politics which were varied, widespread, and both predictable and surprising. Among the notable developments, the European Union faced down a populist government in Italy over its budget deficit that threatened to break EU rules and while it eventually came to an agreement with the UK over the terms of its Brexit divorce, acrimonious division inside Britain’s ruling party means the deal is still far from signed and sealed. Domestic troubles in Spain, Germany and France also weighed on Europe just at the time its exporters were being hit with US tariff increases. It is small wonder then, that the MSCI Europe index underperformed other developed regions to close the year 14.3% lower against the US, which was down just 4.5%.

Politics - normally a “quiet driver” of equity markets - also directly influenced markets as diverse as the US, Brazil, India and Malaysia. Washington saw the instability inside the White House spill into the markets in December when the White House began to question the role of Federal Reserve Chair Jay Powell in the same week as its Secretary of Defence resigned. This caused traders, already jittery after the Fed’s December rate rise, to near panic at the potential instability this would cause, and would be the cause of the 1,000-point market move up when assurances were given.

Emerging Market performances

Emerging Markets followed their Developed Markets counterparts in January and ended 8.3% higher. But from then on, every month was negative, apart from two small bumps higher in July and November. The MSCI Emerging Markets index ended 14.2% lower against a Developed Markets index down 8.2%.

Asia also had a weak year with the MSCI Asia ex Japan index losing 14.1% (Asia Pacific ex Japan was 13.7% down). The market drivers here were similar to other Emerging Markets with an appreciating US dollar pushing many Asia currencies lower, particularly in economies with “twin deficits”. Index heavyweights China and Korea led the way down with losses of 18.7% and 20.5% respectively as technology stocks in both markets fell sharply, then the accelerating trade war between the US and China began pressuring broader parts of the Chinese economy. China started the year as it left 2017 and had a very strong January, propelled by news that the country had scrapped term limits for its president, almost guaranteeing President Xi would remain in power indefinitely. But as the trade-dispute rhetoric descended into actual tariffs in March and April, the stock market turned south with the PBOC reversing its tightening course and loosening policy instead. This offered some support for the market but in a pattern repeated many times during the year, the PBOC support led to a brief rally, only for this to be more than countered by a disappointing turn of events in the trade dispute.

The export-heavy Korean market was dragged into this quagmire with its exports to China affected by the slowdown in growth there and its technology sector pressured by weakness in the chip sub-sector and a notable slowdown in earnings growth country-wide. A 25bps rate hike in November didn’t help matters while a general rapprochement with the North offered only sentimental support for the equity market.


Investment Review

Global and Asia (continued)

Another Asian market dominated by technology, Taiwan, also saw a weak year but with a loss of just 8.2%, it outperformed its north Asian neighbours. A slowdown in Apple iPhone sales and a declining chip-making sector as cryptocurrencies collapse were the main reasons for the sell off here but three strong months in the summer offset some of the losses, while the economy was less affected by the US-imposed export tariffs.

South-east Asia outperformed the Northern Asian markets in part because of its lack of exposure to the technology sector, and partly because of central bank moves to counter both inflationary pressures and related currency depreciation. The Philippines remained a worry to investors and ended the year 16.1% lower as the central bank dithered on policy but elsewhere Indonesia saw its market stabilise after a run on its currency provoked a 1.75% rate hike from its central bank over the year. Thailand’s 5.3% fall proved to be the best index return in Asia reflecting the country’s lack of technology exposure and further evidence of economic stability.

Malaysia was another market that outperformed with a 6.0% drop for the 12 months but it was a year of political change for the country rather than market performance that dominated the headlines. In May, former Prime Minister Tun Mahathir Mohamad was unexpectedly re-elected, defeating incumbent Najib Razak, and he soon set to work re-opening an investigation into the 1MDB scandal and securing a pardon for aspiring leader Anwar Ibrahim. Although the markets initially took the election poorly, they soon recovered although stocks with some exposure to the old regime continued to languish at year end.

India also saw an outperformance relative to other Emerging Markets albeit with a 7.3% loss in dollar terms, but here the depreciation of the rupee was largely to blame as the local-currency denominated indices performed notably better. Markets broadly brushed off political challenges including a division between the central bank governor and the prime minister which resulted in the former unexpectedly resigning in December. Earlier, a large-scale fraud in its banking sector damaged foreign investor sentiment and then a default by one of the country’s non-banking financial companies also weighed, but India drew support from a sharp and rapid decline in crude oil prices, which took off the mounting pressure on its twin deficits. This has also helped the Rupee stage a swift rebound from its recent lows.

Finally in the Asia Pacific region, Australia largely followed the direction of the Developed Market indices with an 11.8% drop. The commodity-rich country saw many of its basic material stocks defy gravity and outperform despite many commodity prices falling but elsewhere, heated competition in the telecom sector weighed heavily as did a continuing review of its banking sector. Australia was another country that saw its Prime Minister changed when Scott Morrison ousted Malcolm Turnbull in a political party election. New Zealand proved to be the best Asia Pacific ex Japan index with a 3.5% drop, reflecting its lack of technology stocks and distance from US-China trade disputes.


Fund Performance

Takafulink Dana Ekuiti

As at 31 December 2018, the Fund’s Net Asset Value per unit depreciated by -9.42% to RM2.10166 as compared to RM2.32014 as at 31 December 2017.

Since inception (1 December 2006), the Fund registered a positive return of 110.01%*.

Takafulink Dana Bon

As at 31 December 2018, the Fund’s Net Asset Value per unit increased to RM1.60245 from RM1.53461 as at 31 December 2017, recording a return of 4.42% for the period under review.


Takafulink Dana Urus

As at 31 December 2018, the Net Asset Value per unit of the Takafulink Dana Urus was RM1.98925 compared to RM2.14088 as at 31 December 2017, recording a negative return of -7.08% for the period under review.


Takafulink Dana Ekuiti Dinasti

As at 31 December 2018, the Fund’s Net Asset Value per unit depreciated by -16.83% to RM1.76594 as compared to RM2.12341 as at 31 December 2017.

Since inception (5 April 2010), the Fund registered a positive return of 76.59%*.

Takafulink Dana Dinamik

As at 31 December 2018, the Net Asset Value per unit of the Takafulink Dana Dinamik was RM0.94031 compared to RM1.0000 as at 8 January 2018 (inception date), recording a return of -5.97%* for the period under review.

Takafulink Dana Aktif

As at 31 December 2018, the Net Asset Value per unit of the Takafulink Dana Aktif was RM0.95993 compared to RM1.0000 as at 30 October 2018 (inception date), recording a return of -4.01%* for the period under review.

* Certificate holder will be receiving annual statement on the actual performance of their respective certificates.


Investment Outlook

Equity Market

External headwinds seem to be getting stronger, with a lot of uncertainties likely to prevail and fuel more volatility. The weak China PMI numbers and the growing expectation of the US economy faltering are legitimate concerns we need to be mindful of. Malaysia’s economy should be relatively resilient, but not immune. Weak global growth numbers will likely lead to weak demand for commodities such as crude oil and palm oil, commodities that Malaysia relies upon quite heavily. In addition, China’s slowing growth (being Malaysia’s largest trading partner) is already having an impact on the demand of US branded handsets, which would influence the future new orders from Malaysian E & E exporters.

We remain cautious over the near-term given the many challenges but are still hopeful for the long-term outlook. Whilst domestic investors have little choice but to be patient with the new government, foreign investors do not need to afford us with such patience. With near term catalysts lacking for Malaysia, we expect this sort of volatility to continue; be it from domestic politics or policies, made more challenging by external noises from the ongoing US-China trade war/truce, US monetary policy, and volatilities in oil prices. We need to tread carefully as the external headwinds are often events beyond our control. As such we continue to advocate focusing on companies with strong fundamentals and a good track record of adapting well even in challenging environments.

Sukuk

While 2018 started out with hopes of a strong global growth, it ended up with heightened global economic, policy and political uncertainty. Moving into 2019, we expect global headlines to be likely dominated by (1) continued intensity of an economic fallout from the US-China trade dispute and (2) the US Federal Reserve’s rate tightening decisions and its impact on emerging market.

As risk appetite sours on fears over a global slowdown, oil prices and US Treasury yields retreated sharply. WTI oil price has fallen by more than c.40% from its high for the year in early October 2018 while some part of the US Treasury yield curve has inverted at one point in December 2018, increasing speculation of a potential recession.

That said, this did not stop the Fed from raising rates by 25bps to between 2.25%-2.50% in December 2018 (the fourth increase in 2018), narrowing the spread between 2- and 10-year Treasury yields significantly. In the latest FOMC statement, whilst the Fed highlighted that some further gradual increases are on the cards, it also lowered its outlook for the 2019 long-run funds rate to the range of 2.6%-3.1% from the earlier forecast of 2.9%-3.4%. While the Fed forecasts two hikes instead of three hikes in 2019, Bloomberg reported that the market is now pricing out any US rate hike in 2019. With several economic data including both the US ISM and Markit manufacturing indices falling sharply in December, sending a strong signal that growth in manufacturing activity is likely to moderate in 2019, we expect the Fed to be more cautious and data-dependent going forward.


Investment Outlook

Sukuk (continued)

On the domestic front, external headwinds seem to be getting stronger as uncertainties are likely to prevail. Although Malaysia’s economy is expected to remain relatively resilient, it is not immune to a weaker global growth as it will likely affect demand for commodities such as crude oil and palm oil, on which Malaysia relies upon quite heavily. With moderate growth, coupled with benign inflationary pressure, we expect Bank Negara Malaysia to maintain an accommodative monetary policy stance in 2019. That said, we do not discount the possibility of a downward rating pressure should the prolonged US-China trade dispute affect Malaysia’s economic strength significantly, weakening its ability to meet its fiscal deficit target.

In 2019, Government issuance is expected to be around RM115billion with 32 public auctions, equally split between MGS and MGII with 16 auctions each. The larger supply of sovereign securities may create a surplus pressure in the market, but we expect domestic sovereign securities to remain supported by ample liquidity and strong investor demand.

On the corporate front, the market is expected to see a decent supply as issuers have stayed sidelined in the past several months. We expect demand for corporate securities to be strong in 2019 due to scarcity of quality corporate securities supply.

Global and Asia

Although 2018 was a weak year for equities almost everywhere, the pain was probably felt more because of the strength of 2017 and the positive way 2018 started with January being so strong. Indeed, on a two-year view, the MSCI World index is still 15.7% higher, with Emerging Markets outperforming Developed Markets with a 23.5% return versus 14.9% respectively.

Asia ex Japan is an outperformer on a regional basis on a two-year view with a 28.0% return (Asia Pacific ex Japan is 23.6% higher reflecting Australia’s underperformance in both years) and while this year was painful for Chinese investors, the MSCI China index is still 35.6% higher on a 24-month basis. India has a 31.5% return, Korea 27% and Thailand is 29.7% better.

Equity markets are up strongly in 2019 after a dismal 2018 following an improvement in investors’ risk appetite and that macroeconomic data is expected to recover in 2019.


Financial HighlightsComparative Performance Tablefor financial year ended 31 December 2018


2018 2017 2016 2015 2014 Description % % % % %

Shariah-Compliant EquitiesAutomotive 1.49 - 1.42 2.02 4.03Banking & Finance 3.34 3.97 4.26 3.81 2.00Building Materials - - 0.45 - -Conglomerates 8.64 7.96 10.16 10.10 10.12Construction 2.75 5.94 3.84 3.20 4.37Consumer Products 5.96 3.50 2.79 3.13 7.82Health Care 7.47 5.80 9.34 10.19 -Takaful - - - - 1.31Manufacturing 5.93 4.12 - - 1.82Media - - - - 0.10Oil & Gas 23.16 18.24 13.76 10.68 11.06Plantation 10.28 11.34 8.84 5.49 8.07Power 10.15 9.79 11.00 10.77 9.59Property 3.32 6.45 6.52 6.36 6.71Services 0.03 0.18 - - -Technology 2.47 6.56 1.50 2.16 1.80Telecommunications 8.76 7.81 16.65 21.26 22.94Transport/Logistic related 0.51 0.14 - - -Transportation 1.80 4.84 4.90 5.50 3.34

96.06 96.64 95.43 94.67 95.08Cash and Islamic Deposits 4.25 7.08 6.54 6.37 5.68Other Assets 0.18 0.42 0.29 0.35 0.46Total Liabilities (0.49) (4.14) (2.26) (1.39) (1.22)

Total 100.00 100.00 100.00 100.00 100.00



Takafulink Dana Ekuiti (continued)

2018 2017 2016 2015 2014 Description % % % % %

Total Net Asset Value (RM) 1,148,034,583 1,060,260,359 782,472,204 676,457,441 557,891,215Units in Circulation 546,250,520 456,982,084 373,553,331 310,420,558 269,098,535 NAV per Unit (RM) 2.10166 2.32014 2.09467 2.17916 2.07319Highest NAV per unit (RM) 2.41359 2.32030 2.17909 2.23588 2.14104Lowest NAV per unit (RM) 2.04309 2.09296 2.05017 1.93892 1.95167Total Return (+) - Capital Growth (9.42%) 10.77% (3.88%) 5.11% 1.23%

Average Annual Return – Fund (+)PeriodOne year (9.42%) 10.77% (3.88%) 5.11% 1.23%Three years (1.20%) 3.82% 0.75% 6.99% 10.76%Five years 0.52% 5.45% 6.54% 9.15% 11.65%

Average Annual Return – Benchmark: FTSE-Bursa Malaysia EMAS Shariah Index (FBMSHA) PeriodOne year (13.52%) 10.72% (6.14%) 2.35% (4.17%)Three years (3.50%) 2.08% (2.72%) 3.57% 6.68%Five years (2.49%) 2.92% 3.13% 4.94% 8.01%



Takafulink Dana Ekuiti Fund Performance

+ The Fund returns are calculated based on five decimal places.

The unit prices of the Funds may go down as well as up and the past performance figures shown are not indicative of future performance.

(40.00)

(20.00)

Date

SI %

Cha

nge

0.00

20.00

40.00

60.00

80.00

140.00

120.00

100.00

(40.00)

(20.00)

0.00

20.00

40.00

60.00

80.00

120.00

140.00

100.00

% %

Takafulink Dana Ekuiti Vs. FTSE – Bursa Malaysia Emas Shariah Index (FBMSHA)

TDE FBMSHA

Dec-

06

Oct

-07

Aug-

08

Jun-

09

May

-10

Mar

-11

Jan-

12

Dec-

12

Oct

-13

Aug-

14

Jul-1

5

May

-16

Mar

-17

Feb-

18

Dec-

18



Takafulink Dana Bon

Description 2018 2017 2016 2015 2014

Sukuk- Private 66.98 70.63 81.78 91.22 88.84 - Government 0.86 1.05 1.50 1.72 1.92 - Quasi Government 27.08 19.13 15.42 4.14 4.71 Cash and Islamic Deposits 4.50 8.68 0.60 2.45 3.95 Other Assets 1.03 0.96 1.11 0.83 0.95 Total Liabilities (0.45) (0.45) (0.41) (0.36) (0.37)

Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 118,333,778 97,055,675 68,157,730 59,926,292 53,317,726Units in Circulation 73,845,501 63,244,670 46,396,573 42,779,802 39,403,967 NAV per Unit (RM) 1.60245 1.53461 1.46903 1.40081 1.35311 Highest NAV per unit (RM) 1.60245 1.53461 1.48039 1.40170 1.35459 Lowest NAV per unit (RM) 1.53477 1.46919 1.40096 1.35325 1.30083 Total Return (+) - Capital Growth 4.42% 4.46% 4.87% 3.53% 3.70%

Average Annual Return – Fund (+)PeriodOne year 4.42% 4.46% 4.87% 3.53% 3.70%Three years 4.58% 4.28% 4.03% 2.76% 3.18%Five years 4.19% 3.51% 3.59% 3.59% 3.98%

Average Annual Return – Benchmark: MBB 12 months Islamic Deposit-i ratePeriodOne year 3.34% 3.12% 3.30% 3.09% 2.89%Three years 3.25% 3.17% 3.09% 2.91% 2.83%Five years 3.15% 3.03% 2.97% 2.90% 2.78%



Takafulink Dana Bon Fund Performance



(10.00)(5.00)

Date

SI %

Cha

nge

0.00

35.0030.0025.0020.0015.005.00

45.0040.00

50.0055.00

70.0065.0060.00

(10.00)(5.00)0.00

35.0030.0025.0020.0015.0010.005.00

40.0045.0050.0055.00

65.0070.00

60.00

% %

Takafulink Dana Bon Vs. MBB 12 Months Islamic Deposit-i Rate

Dec-

06

Oct

-07

Aug-

08

Jun-

09

May

-10

Mar

-11

Jan-

12

Dec-

12

Oct

-13

Aug-

14

Jul-1

5

May

-16

Mar

-17

Feb-

18

Dec-

18

TDB MBB 12 Months Islamic Deposit-i Rate




Description 2018 2017 2016 2015 2014

Investment in -Takafulink Dana Ekuiti 82.00 84.58 80.05 79.11 77.32 Takafulink Dana Bon 18.00 15.42 19.95 20.89 22.68

Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 285,878,390 271,402,328 215,046,447 195,840,723 166,801,352 Units in Circulation 143,711,670 126,771,632 110,149,953 98,226,016 87,659,334 NAV per Unit (RM) 1.98925 2.14088 1.95231 1.99378 1.90284Highest NAV per unit (RM) 2.21408 2.14088 2.00153 2.02576 1.94914Lowest NAV per unit (RM) 1.94296 1.95116 1.91101 1.81783 1.80062Total Return (+) - Capital Growth (7.08%) 9.66% (2.08%) 4.78% 1.82%

Average Annual Return – Fund (+)PeriodOne year (7.08%) 9.66% (2.08%) 4.78% 1.82%Three years (0.08%) 4.01% 1.47% 6.07% 9.06%Five years 1.26% 5.08% 5.88% 7.88% 9.98%

Average Annual Return – Benchmark: 80% FBMSHA + 20% 12 Months Maybank Islamic Deposit ratePeriodOne year (10.26%) 9.19% (4.28%) 2.61% (2.76%)Three years (2.11%) 2.36% (1.52%) 3.52% 5.96%Five years (1.32%) 3.00% 3.16% 4.54% 6.95%



Takafulink Dana Urus Fund Performance



(20.00)

Date

SI %

Cha

nge

0.00

20.00

40.00

60.00

80.00

140.00

120.00

100.00

(20.00)

0.00

20.00

40.00

60.00

80.00

120.00

140.00

100.00

% %

Takafulink Dana Urus Vs. 80% FBMSHA + 20% MBB 12 Months Islamic Deposit-i Rate

Dec-

06

Jun-

07

Jan-

08

Aug-

08

Mar

-09

Oct

-09

May

-10

Dec-

10

Jun-

11

Jan-

12

Aug-

12

Mar

-13

Oct

-13

May

-14

Dec-

14

Jul-1

5

Jan-

16

Aug-

16

Mar

-17

May

-18

Dec-

18

TDU 80% FBMSHA & 20% MBB 12 Months Islamic Deposit-i Rate




Description 2018 2017 2016 2015 2014

Investment in -Eastspring Investments Dinasti Equity Fund 99.83 101.68 100.91 100.76 100.38 Cash at Bank 1.98 0.14 0.20 0.31 0.33 Other Assets 0.08 0.27 0.37 0.24 0.20 Total Liabilities (1.89) (2.09) (1.48) (1.31) (0.91)

Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 48,335,041 47,682,771 31,872,838 24,417,988 17,713,152 Units in Circulation 27,370,668 22,455,799 20,062,820 16,829,444 14,470,661 NAV per Unit (RM) 1.76594 2.12341 1.58865 1.45091 1.22407Highest NAV per unit (RM) 2.19911 2.20533 1.63542 1.53505 1.23372Lowest NAV per unit (RM) 1.76141 1.58867 1.26837 1.22329 1.09389Total Return (+) - Capital Growth (16.83%) 33.66% 9.49% 18.53% 3.75%

Average Annual Return – Fund (+) Period One year (16.83%) 33.66% 9.49% 18.53% 3.75%Three years 6.77% 20.15% 10.42% 10.60% 8.06%Five years 8.40% 14.64% 10.37% 5.81% n/a

Average Annual Return – Benchmark: Dow Jones Islamic Market Greater China Index Period One year (16.12%) 30.21% 8.51% 16.97% 9.91%Three years 5.82% 18.23% 11.74% 14.92% 12.83%Five years 8.80% 16.48% 12.76% 7.01% n/a



Takafulink Dana Ekuiti Dinasti Fund Performance



(20.00)

Date

SI %

Cha

nge

0.00

20.00

40.00

60.00

80.00

140.00

120.00

100.00

(20.00)

0.00

20.00

40.00

60.00

80.00

120.00

140.00

100.00

% %

Takafulink Dana Ekuiti Dinasti Vs. Dow Jones Islamic Market Greater China Index

Apr-1

0

Oct

-10

Mar

-11

Sep-

11

Feb-

12

Aug-

12

Jan-

13

Jul-1

3

Dec-

13

Jun-

14

Nov

-14

Apr-1

5

Oct

-15

Mar

-16

Sep-

16

Feb-

17

Aug-

17

Jan-

18

Jul-1

8

Dec-

18

TDED Dow Jones Islamic Market Greater China Index




Description 2018

Investment in -Eastspring Investments Dana Dinamik Fund 98.79 Cash at Bank 3.26 Provision for Deferred Tax 0.71 Total Liabilities (2.76)

Total 100.00

Total Net Asset Value (RM) 1,094,671 Units in Circulation 1,164,154 NAV per Unit (RM) 0.94031Highest NAV per unit (RM) 1.01374Lowest NAV per unit (RM) 0.92225Total Return (+)- Capital Growth (5.97%)

Average Annual Return – Fund (+)PeriodOne year (Launched on 8 January 2018) (6.23)Three years N/AFive years N/A

Average Annual Return – Benchmark:50% Financial Times Stock Exchange Bursa Malaysia Emas Shariah Index (FBMS) + 50% MBB 12-month Islamic Deposit-i RatePeriodOne year (6.80)Three years N/AFive years N/A



Takafulink Dana Dinamik Fund Performance (Since Inception)



(7.00)

Date

SI %

Cha

nge

(5.00)

(6.00)

(4.00)

(3.00)

(2.00)

(1.00)

2.00

1.00

0.00

(7.00)

(5.00)

(6.00)

(4.00)

(3.00)

(2.00)

(1.00)

1.00

2.00

0.00

% %

Takafulink Dana Dinamik Vs. 50% Financial Stock Exchange Bursa Malaysia Emas Shariah Index (FBMS) + 50% MBB 12 Months Islamic Deposit-i Rate

Jan-

18

Feb-

18

Mar

-18

Apr-1

8

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec-

18

TDED 50% FBMSHA & 50% MBB 12 Months Islamic Deposit-i Rate


Financial HighlightsComparative Performance Tablefor 2 months period ended 31 December 2018


Description 2018

Investment in -Eastpring Investments Islamic Small-Cap Fund 83.69Cash at Bank 16.24Other Assets 0.12Total Liabilities (0.05)

Total 100.00

Total Net Asset Value (RM) 4,576Units in Circulation 4,767NAV per Unit (RM) 0.95993Highest NAV per unit (RM) 0.99995Lowest NAV per unit (RM) 0.94886Total Return (+)- Capital Growth (4.01%)

Average Annual Return – Fund (+)PeriodOne year (Launched on 30 October 2018) (21.09%)Three years N/AFive years N/A

Average Annual Return – Benchmark:80% FTSE Bursa Malaysia Small Cap Shariah Index + 20% FTSE Bursa Malaysia EMAS Shariah IndexOne year (47.00%)Three years N/AFive years N/A


Financial HighlightsComparative Performance Tablefor 2 months period ended 31 December 2018

Takafulink Dana Aktif Fund Performance



(11.00)

Date

SI %

Cha

nge

(8.00)(7.00)

(10.00)(9.00)

(6.00)(5.00)(4.00)(3.00)(2.00)(1.00)

2.001.000.00

(11.00)(10.00)

(7.00)(6.00)

(9.00)(8.00)

(5.00)(4.00)(3.00)(2.00)(1.00)

1.002.00

0.00

% %

Takafulink Dana Aktif Vs. 80% FTSE Bursa Malaysia Small Cap Shariah Index+ 20% FTSE Bursa Malaysia EMAS Shariah Index

Jan-

18

Feb-

18

Feb-

18

Mar

-18

Mar

-18

Apr-1

8

Apr-1

8

May

-18

May

-18

Jun-

18

Jun-

18

Jul-1

8

Jul-1

8

Aug-

18

Aug-

18

Sep-

18

Sep-

18

Oct

-18

Oct

-18

Nov

-18

Nov

-18

Dec-

18

Dec-

18

TDA 80% FTSE Bursa Malaysia Small Cap Shariah Index + 20% FTSE Bursa Malaysia EMAS Shariah Index


Statement of Assets and Liabilitiesas at 31 December 2018


2018 2017 RM % RM %

InvestmentsShariah-Compliant Equities 1,102,762,916 96.06 1,024,638,882 96.64

Cash and Islamic Deposits 48,844,342 4.25 75,017,294 7.08 Cash at Bank 44,342 0.00 37,294 0.01Islamic Deposits 48,800,000 4.25 74,980,000 7.07

Tax Assets 1,178 0.00 1,178 0.00Other Assets 2,058,636 0.18 4,552,320 0.42

Total Assets 1,153,667,072 100.49 1,104,209,674 104.14 Provision for Deferred Tax (319,782) (0.03) (10,223,840) (0.96)Provision for Taxation 0 - (849,053) (0.08)Other Liabilities (5,312,707) (0.46) (32,876,422) (3.10)

Total Liabilities (5,632,489) (0.49) (43,949,315) (4.14)

Net Asset Value of the Fund 1,148,034,583 100.00 1,060,260,359 100.00

Participants FundCapital 1,019,403,638 88.80 821,414,217 77.47 Generated Income Carried Forward 128,630,945 11.20 238,846,142 22.53

Total Participants Fund 1,148,034,583 100.00 1,060,260,359 100.00

Net Asset Value per Unit (RM) 2.10166 2.32014

NUMBER OF UNITS 546,250,520 456,982,084



Takafulink Dana Bon

2018 2017 RM % RM %

InvestmentsSukuk 112,318,723 94.92 88,139,830 90.81

Cash and Islamic Deposits 5,332,824 4.50 8,429,037 8.68 Cash at Bank 62,824 0.05 39,037 0.04Islamic Deposits 5,270,000 4.45 8,390,000 8.64

Other Assets 1,220,762 1.03 932,693 0.96

Total Assets 118,872,309 100.45 97,501,559 100.45 Provision for Taxation (406,889) (0.34) (360,656) (0.37)Provision for Deferred Tax (79,676) (0.07) (43,279) (0.04)Other Liabilities (51,966) (0.04) (41,949) (0.04)

Total Liabilities (538,531) (0.45) (445,884) (0.45)

Net Asset Value of the Fund 118,333,778 100.00 97,055,675 100.00

Participants FundCapital 97,132,788 82.08 80,482,628 82.92 Generated Income Carried Forward 21,200,990 17.92 16,573,047 17.08

Total Participants Fund 118,333,778 100.00 97,055,675 100.00


NUMBER OF UNITS 73,845,501 63,244,670




2018 2017 RM % RM %

InvestmentsTakafulink Dana Ekuiti 234,403,103 82.00 229,546,660 84.58 Takafulink Dana Bon 51,470,988 18.00 41,846,125 15.42

Other Assets 4,299 0.00 9,543 -

Total Assets 285,878,390 100.00 271,402,328 100.00Other Liabilities - - - -

Total Liabilities - - - -





NUMBER OF UNITS 143,711,670 126,771,632




2018 2017 RM % RM %

InvestmentsEastspring Investments Dinasti Equity Fund 48,248,369 99.83 48,481,272 101.68

Cash at Bank 958,318 1.98 67,996 0.14Other Assets 40,660 0.08 128,057 0.27

Total Assets 49,247,347 101.89 48,677,325 102.09 Provision for Taxation (114,256) (0.24) (205,703) (0.43)Provision for Deferred Tax (168,082) (0.35) (704,120) (1.48)Other Liabilities (629,968) (1.30) (84,731) (0.18)

Total Liabilities (912,306) (1.89) (994,554) (2.09)





NUMBER OF UNITS 27,370,668 22,455,779




2018 RM %

InvestmentsEastspring Investments Dana Dinamik Fund 1,081,460 98.79

Cash at Bank 35,676 3.26 Provision for Deferred Tax 7,745 0.71

Total Assets 1,124,881 102.76 Other Liabilities (30,210) (2.76)

Total Liabilities (30,210) (2.76)

Net Asset Value of the Fund 1,094,671 100.00

Participants FundCapital 1,142,056 104.33 Generated Loss Carried Forward (47,385) (4.33)

Total Participants Fund 1,094,671 100.00

Net Asset Value per Unit (RM) 0.94031

NUMBER OF UNITS 1,164,154




2018 RM %

InvestmentsEastspring Investments Islamic Small-Cap Fund 3,829 83.69

Cash at Bank 743 16.24 Provision for Deferred Tax 6 0.12

Total Assets 4,578 100.05 Other Liabilities (2) (0.05)

Total Liabilities (2) (0.05)

Net Asset Value of the Fund 4,576 100.00

Participants FundCapital 4,644 101.49 Generated Loss Carried Forward (68) (1.49)

Total Participants Fund 4,576 100.00

Net Asset Value per Unit (RM) 0.95993

NUMBER OF UNITS 4,767


Statement of Changes in Net Asset Valuefor the financial year ended 31 December 2018


2018 2017 RM RM

Net Asset Value at Beginning of Year 1,060,260,359 782,472,204

Amounts Received from Units Created 923,850,938 853,590,508 Amounts Paid for Units Cancelled (725,861,517) (668,523,161)Net (Outgo)/Income (110,215,197) 92,720,808

Value of Fund at End of Year 1,148,034,583 1,060,260,359

Takafulink Dana Bon

2018 2017 RM RM

Net Asset Value at Beginning of Year 97,055,675 68,157,730

Amounts Received from Units Created 42,794,860 52,090,183 Amounts Paid for Units Cancelled (26,144,700) (26,797,841)Excess of Income over Outgo 4,627,943 3,605,603

Value of Fund at End of Year 118,333,778 97,055,675




2018 2017 RM RM





2018 2017 RM RM







2018 RM

Net Asset Value at Beginning of Year -

Amounts Received from Units Created 1,644,323Amounts Paid for Units Cancelled (502,267)Net Outgo (47,385)

Value of Fund at End of Year 1,094,671


2018 RM

Net Asset Value at Beginning of Year -

Amounts Received from Units Created 6,120Amounts Paid for Units Cancelled (1,476)Net Outgo (68)

Value of Fund at End of Year 4,576


Statement of Income and Expenditurefor the financial year ended 31 December 2018


2018 2017 RM RM

Net Shariah-Compliant Investment Income 31,031,145 24,962,176 Profit Income 2,555,399 1,248,834 Dividend Income 28,475,746 23,713,342

Profits on Disposal 43,412,312 30,921,098 Unrealised Capital Gain - 82,636,740

Total Income 74,443,457 138,520,014 Investment Management Fees (16,645,190) (13,601,471)Loss on Disposal (52,890,743) (24,793,245)Unrealised Capital Loss (125,039,312) -Provision for Taxation 9,961,081 (7,365,292)Other Outgo (44,490) (39,198)

Total Outgo (184,658,654) (45,799,206)

Net (Outgo)/Income (110,215,197) 92,720,808

Generated Income Brought Forward 238,846,142 146,125,334 Generated Income Carried Forward 128,630,945 238,846,142



Takafulink Dana Bon

2018 2017 RM RM

Net Shariah-Compliant Investment Income 5,087,659 4,035,482 Unrealised Capital Gain 454,968 331,229

Total Income 5,542,627 4,366,711 Investment Management Fees (529,812) (421,113)Loss on Redemption (3,775) (5,700)Provision for Taxation (376,537) (330,122)Other Outgo (4,560) (4,173)

Total Outgo (914,684) (761,108)

Excess of Income over Outgo 4,627,943 3,605,603





2018 2017 RM RM

Net Shariah-Compliant Investment Income 3,725,569 3,207,226 Profits on Disposal 4,966,992 5,848,422 Unrealised Capital Gain - 16,306,693

Total Income 8,692,561 25,362,341 Investment Management Fees (3,644,268) (3,131,447)Loss on Disposal (200,113) - Unrealised Capital Loss (25,487,083) -

Total Outgo (29,331,464) (3,131,447)

Net (Outgo)/Income (20,638,903) 22,230,894





2018 2017 RM RM

Net Shariah-Compliant Investment Income 3,020,889 744,593 Income Distribution 2,109,075 - Others 911,814 744,593

Profit on Disposal 1,428,195 226 Unrealised Capital Gain - 9,946,159 Provision for Taxation 536,038 -Other Income 85,541 1,572,066

Total Income 5,070,663 12,263,044 Investment Management Fees (750,511) (609,175)Unrealised Capital Loss (13,400,949) - Provision for Taxation - (397,846)Other Outgo - (128,551)

Total Outgo (14,151,460) (1,135,572)

Net (Outgo)/Income (9,080,797) 11,127,472





2018 RM

Net Shariah-Compliant Investment Income 51,304Income Distribution 44,491Others 6,813

Provision for Taxation 7,746

Total Income 59,050Investment Management Fees (6,920)Loss on Disposal (2,682)Unrealised Capital Loss (96,819)Other Outgo (14)

Total Outgo (106,435)

Net Outgo (47,385)

Generated Loss Carried Forward (47,385)


Statement of Income and Expenditurefor 2 months period ended 31 December 2018


2018 RM

Net Shariah-Compliant Investment Income 3Provision for Taxation 6

Total Income 9Investment Management Fees (5)Unrealised Capital Loss (72)

Total Outgo (77)

Net Outgo (68)

Generated Loss Carried Forward (68)


Notes to the Accounts

1. Summary of Significant Accounting Policies

a. Basis of Accounting

The financial statements have been prepared in accordance with The Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL 010-15) and the requirements of the certificate document, modified by the following:

(i) for the purpose of unit pricing, investments at market value are adjusted to include future cost of acquisitions. This is to ensure equitable unit pricing for incoming, outgoing and remaining unit-holders;

(ii) for the purpose of unit pricing, provision for deferred tax is recognised on taxable and deductible temporary differences using an actuarially calculated rate of 4% for Takafulink Dana Ekuiti Dinasti Fund and 8% for the remaining funds. The Board of Directors are of the opinion that since these temporary differences will only be realised in the future, the lower tax rate of 4% has been used for Takafulink Dana Ekuiti Dinasti to ensure equitable unit pricing for incoming, outgoing and remaining unit-holders; and

(iii) all deferred tax assets or liabilities arising from the temporary differences on unrealised gains or losses are recognised.

b. Investments

Quoted investments are valued at the closing market prices at the end of the financial year. Unquoted sukuk are valued at the prevailing prices quoted by a valuation agency since 1 April 2016.

Net unrealised gains or losses in value of investments are credited or charged to the capital account.

c. Dividend Income

Dividend income is recognised when the right to receive payment is established.

d. Profit Income

Profit income is recognised on an accrual basis.

e. Gains/Losses on Disposal of Investments

Gains or losses arising from the disposal on investment are credited or charged to the capital account.

f. Investment Management Fees

Investment management fees are calculated in accordance with the provisions of the certificate document.

g. Other Income

Other income comprises income arising from rebates of management fees from the fund manager.


Notes to the Accounts

1. Summary of Significant Accounting Policies (continued)

h. Other Outgo

Other outgo comprises bank charges and custodian charges

i. Cash at Bank

Cash at Bank consists of cash in hand and balances with Islamic banks, excluding Islamic deposits.

2. Rebates and Soft Commissions

The Fund Managers are restricted by regulations from receiving any rebate or share any commission from any broker/dealer. Accordingly, any rebate and share commission received from stockbrokers/dealers shall be directed to the Funds. However, soft commissions received in the form of goods and services which are of demonstrable benefit to unit-holders such as fundamental databases, financial wire services, technical analysis software and stock quotation system incidental to investment management of the Funds are retained by the Fund Manager.

3. At 31 December 2018, the Funds had no contingent liabilities or commitments.

4. All amounts are stated in Ringgit Malaysia.

Statements by DirectorsIn the opinion of the Directors, the Takafulink Funds (‘Funds’) financial statements set out on pages 37 to 53, comprising the Statements of Assets and Liabilities as at 31 December 2018 and the related Statements of Income and Expenditure and Statements of Changes in Net Asset Value for the financial year ended 31 December 2018 together with the notes thereto, have been prepared, in all material respects in accordance with the accounting policies set out in Note 1 to the financial statements and Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL 010-15) issued by Bank Negara Malaysia.

Signed in accordance with a resolution of the Directors:

Datuk Yunos Bin Abd Ghani

Lilian Ng Lup-Yin

Kuala Lumpur,19 March 2019


Independent Auditors’ Reportto the unitholders of Prudential BSN Takaful Berhad’s Takafulink Funds(Company No. 740651-H) (Incorporated in Malaysia)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Takafulink Funds of Prudential BSN Takaful Berhad (“the Manager”), which comprise the Statements of Assets and Liabilities as at 31 December 2018, the Statements of Changes in Net Asset Value and the Statements of Income and Expenditure for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 37 to 53.

In our opinion, the accompanying financial statements for the year ended 31 December 2018 are prepared, in all material respects, in accordance with the accounting policies set out in Note 1 to the financial statements and the Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL 010-15).

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our auditors’ report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We wish to draw your attention to Note 1a (ii) to the financial statements whereby a lower rate of tax was used for deferred taxation provision. As fully explained in Note 1a (ii), the Directors of the Manager are of the opinion that it is fairer to unitholders to use a lower rate than the statutory tax rate in the pricing of units. Our opinion is not modified in respect of this matter.

Independence and Other Ethical Responsibilities

We are independent of the Takafulink Funds in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountant’s Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.



Information Other than the Financial Statements and Auditors’ Report Thereon

The Directors of the Manager are responsible for the other information. The other information comprises the information included in the Takafulink Funds Performance Report but does not include the financial statements of the Takafulink Funds and our auditors’ report thereon.

Our opinion on the financial statements of the Takafulink Funds does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Takafulink Funds, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Takafulink Funds or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Statements

The Directors of the Manager are responsible for the preparation of the financial statements in accordance with the accounting policies set out in Note 1 to the financial statements and the Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL 010-15). The Directors are also responsible for

such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Takafulink Funds, the Directors are responsible for assessing the ability of the Takafulink Funds to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Takafulink Funds or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.



Auditors’ Responsibilities for the Audit of the Financial Statements (continued)

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identifyandassesstherisksofmaterialmisstatementofthefinancial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevantto the audit 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 internal control of the Takafulink Funds.

• Evaluate the appropriateness of accounting policies usedand the reasonableness of accounting estimates and related disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use ofthe going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Takafulink Funds to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Takafulink Funds or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Takafulink Funds to cease to continue as a going concern.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Other Matter

This report is made solely to the unitholders of Takafulink Funds, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG PLT(LLP0010081-LCA & AF 0758)Chartered Accountants

19 March 2019Petaling Jaya


Prudential BSN Takaful Berhad (740651-H)

Level 8A, Menara Prudential, No. 10, Jalan Sultan Ismail, 50250 Kuala Lumpur.Tel: 03 2053 7188 Fax: 03 2072 6188

E-mail: [email protected] SMS PruBSN and send to 33080www.prubsn.com.my

Prudential BSN Takaful Berhad is a registered Takaful Operator under the Islamic Financial Services Act 2013 and is regulated by Bank Negara Malaysia.

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