takafulink funds report 2013 - prudential bsn takaful · we have the pleasure in presenting to you...

TAKAFULINK FUNDS REPORT 2013Takafulink Reports and Statementsfor the year ended 31 December 2013

Contents

2 CEO’s Message

4 Fund Objectives

5 Investment Review

9 Fund Performance

10 Investment Outlook

14 Financial Highlights

26 Statement of Assetsand Liabilities

30 Statement of Changesin Net Asset Value

34 Statement of Income& Expenditure

38 Notes to the Accounts

40 Statement by Directors

41 Independent Auditors’Report

Dear Certificate Holders,

We have the pleasure in presenting to you the Takafulink Funds Report 2013 of Prudential BSN Takaful Berhad. This report is also available on our website at www.prubsn.com.my.

INNOVATINGTODAY FOR A SECURE TOMORROW

HealthEnrich

2 Takafulink Funds Report 2013

Assalamualaikum warahmatullahi wabarakatuh

Welcome to the 2013 Takafulink Funds Report and thank you for choosing PruBSN as your trusted financial and protection partner. It is once more that time of year to update you on the performance of our funds and to keep you abreast with current market trend and economic development and hope 2013 has been a rewarding year for you as it has been for our business.

A glimpse at the Malaysian economy showed that Malaysia’s gross domestic product grew by 4.7% in 2013, driven by strong domestic demand and a rebound in exports, on top of the country’s vigorous investment activity that will help expand capacity in the economy1.

Here at PruBSN, we are privileged to share with you that our business has remained robust with New Business Annual Contribution Equivalent (ACE)2 of RM269.2 million in 2013. The data provided by Insurance Services Malaysia confirms that PruBSN retained its position as the Number One Family Takaful Operator in Malaysia with a 27.1% market share.

During the year we rolled out two cutting edge inventions, an automated tablet sales solution app which we call PruBSN mobility and a smartphone application called PruBSN Navigator. These applications not only revolutionise the way our business is conducted but more importantly, it demonstrates our enduring focus to enhance customers experience when they are deciding on their financial and protection partner and needs. PruBSN mobility enables our agents and other intermediaries to make a complete sales submission in a simple, fast and accurate manner allowing them to promote the company’s product and services to a wider audience more easily. PruBSN Navigator on the hand is designed with you, the customer, in mind and provides seamless information about our hospital network. You can download it for free at the App Store or Google Play.

CEO’S MESSAGEAzim Mithani

CEO, Prudential BSN Takaful Berhad

1 Bank Negara Malaysia2 Annual Premium Equivalent (APE) or Annual Contribution Equivalent (ACE) is a global and widely accepted standard for measurement of new business performance

of insurance and takaful companies. APE or ACE is the total amount of regular premiums from new business plus (+) 10% of the total amount of single premiums on business written during the year.

3Takafulink Funds Report 2013

Based on these results, our product innovation and strong financial performance, we received further awards from both local and international organisations.

Similarly, our funds performed well in 2013. Our flagship fund Takafulink Dana Ekuiti has produced consistent results to rank in the top four amongst its peers with a 3 year growth of 45.62%3. Our Takafulink Dana Bon returned 1.07% over 1 year and 11.12% over 3 years4. Equally strong was our Takafulink Dana Urus fund which recorded 36.94% return over 3 years, ranking it Number 1 against our peers in the industry for 20135. You will find further details of our fund performance in the following pages.

As always, we remain committed to providing you with the best service and making your money work hard for you.

For more information about our Takafulink Funds Report, please email us at [email protected] or call us at 03 2053 7188.

Looking forward to build greater success with you in 2014!

“ The data provided by Insurance Services Malaysia confirms that PruBSN retained its position as the Number One Family Takaful Operator in Malaysia with a 27.1% market share.”

3 Source: Lipper IM (Date of Extraction: 8 Jan 2014)4 Source: Lipper IM (Date of Extraction: 8 Jan 2014)5 Source: Lipper IM (Date of Extraction: 8 Jan 2014)


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

The Takafulink Dana Urus Fund 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 Fund aims to provide long-term capital appreciation by investing in Shariah-compliant investments with exposure to the Greater China region.

FUND OBJECTIVES


Equity Market

Much of first quarter of 2013 saw Malaysian investors preoccupied with the prospect of the general elections being called. Early in the quarter, the FBM KLCI peaked at 1694 points but consolidated soon after as concerns over the timing of the general elections continued to haunt the equity markets. Weak corporate results released in February did not help market sentiment, and investors remained jittery. By end of the quarter, expectations were high for the dissolution of Parliament to be called, but did not happen. The FBM KLCI corrected to as low as 1613 points in February, before rebounding to close the quarter at 1671.6 or -1.03% quarter-on-quarter. During the quarter, foreign investors continued to be net buyers of Malaysian equities and have been since December of 2012, whilst local investors were generally net sellers.

The Malaysian equity market started second quarter of 2013 as a laggard in terms of performance as regional markets did well, whilst the domestic market remained distracted with the 13th General Elections. Nevertheless, the FBM KLCI hit new highs during the quarter when the election overhang was removed with a comfortable win by the incumbent which would imply continuity of policies, particularly the implementation of the Economic Transformation Programme. By mid second quarter of 2013, markets were surprised by the US Fed’s Bernanke comments and the Federal Open Market Committee (FOMC) minutes released raised the risk of an earlier than expected Fed quantitative easing (QE) “taper”, and weaker than expected manufacturing numbers from China and growing concerns of a potential credit crunch in China spooked equity markets. Funds flowed out of emerging markets on fears of deteriorating current account and fiscal deficits, and Asian currencies depreciated sharply against the US Dollar. Malaysia was not spared from the correction, but managed to rebound towards the end of the second quarter of 2013 as global markets stabilised and recovered.

Third quarter of 2013 started well for Malaysia, benefiting from the global rebound, and saw the KLCI scale new highs. However, selling pressure soon set in when Fitch Rating revised its outlook on Malaysia to “negative” from “stable”, on the back of worsening public finance outlook. Malaysia was not spared in the mid third quarter of 2013 corrections experienced by most emerging markets, which fell on the back of macro concerns, and the currencies of Indonesia, India, Thailand and Malaysia depreciated against other major currencies. By end of third quarter of 2013, Malaysia rebounded briefly in tandem with most regional markets given the expectation of further delay in QE tapering.

INVESTMENT REVIEW


Equity Market (continued)

Malaysia rebounded in fourth quarter of 2013 on the back of the United Malays National Organisation (UMNO) elections securing an outcome that was as expected, and the announcement of what seemed like a fiscally responsible Budget 2014, which introduced the goods and services tax (GST) effective 1 April 2015, more subsidy rationalisation measures, and measures to curb property speculation. Mid fourth quarter of 2013 saw some consolidation and profit taking, as corporate results announced were not inspiring, and foreign investors were net sellers for the month of November with RM3.1bn in equities. By the end of fourth quarter of 2013, Malaysian equity indices scaled new all time highs as investors built positions ahead of 2014.

The FBM KLCI closed the year under review at 1866.96 points, up 10.54%. The broader FBM Emas Index closed the period under review higher by 12.38%. The MSCI Asia Pacific ex-Japan Index rose by 0.46% in USD terms1.

Sukuk Market Review

Bank Negara Malaysia (BNM) held the Overnight Policy Rate (OPR) steady at 3% throughout the period under review, and since May 2011. In the January 2013 Monetary Policy Committee (MPC) meeting, BNM noted weak external demand, particularly from the advanced economies, but that growth in regional economies remained supported by domestic demand. Domestically, the weaker external sector was offset by sustained expansion in domestic activities. Private consumption was supported by income growth and stable employment conditions, while investment was led by capital spending in domestic oriented sectors, the oil and gas sector and implementation of infrastructure projects. In the July 2013 meeting, BNM stated that global monetary conditions remained highly accommodative but financial market volatility had increased as markets reassessed the direction of policy. In the September 2013 meeting, BNM again took note of substantial volatility in global financial markets on market uncertainty over policy direction and that reversing flows from emerging economies following a strong period of inflows had resulted in the depreciation of emerging market currencies. Domestically, domestic demand continued to support growth amid weaknesses in external demand. The impact of subsidy adjustments on consumption spending was expected to be contained by targeted financial assistance.

Investment Review

1Source: Bloomberg: World indices


Sukuk Market Review (continued)

Domestic investment activity continued to be led by capital spending in domestic-oriented industries and the ongoing implementation of infrastructure projects. In the MPC meeting on 7 November 2013, BNM noted that the global economy continued to improve at a moderate pace. In major advanced economies, recovery remained gradual and uneven, whereas in Asia, growth had been sustained on improved exports amid moderating domestic economic activities. Volatility in the global financial markets had receded but markets remained vulnerable to setbacks and changes in sentiment. For the Malaysian economy, the expansion in domestic activities has been supported by improvements in exports. Private consumption and investment have sustained domestic demand amid slower public spending.

Headline inflation rose from 1.2% yoy in December 2012 to 2.9% yoy in November 2013. The increase was mainly driven by faster inflation in food and non alcoholic beverages. Inflation is expected to edge up driven by domestic cost factors. However, the inflation outlook is expected to be tempered by a stable external price environment, moderate domestic demand pressures, expansion in domestic capacity and improvements in food production and distribution. The MPC assessed that there continues to be uncertainties in the balance of risks surrounding the outlook for domestic growth and inflation.

For the period under review, the 3-, 5- and 10-year sovereign sukuk yields rose by 15 bps, 63 bps and 82 bps to close at 3.38%, 3.95% and 4.43% respectively. The MGII curve shifted up during the period under review largely on expectations of QE tapering by the Federal Reserve.

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.

On the supply front, total outstanding MYR issuances at the end of December 2013 stood at about RM1037bn, of which approximately 50.2% was conventional and 49.8% was Islamic2 . The proportion of corporate sukuk in the sukuk universe was higher at about 36% compared to the proportion of corporate bonds in the conventional bonds universe of about 24%. Major primary issuances were from the power, banking, telco and tolled highway sectors, as well as government guaranteed sukuk. The largest corporate non-government guaranteed issuance was RM6.87bn of Binariang GSM Management Sdn Bhd, which was to refinance existing sukuk. Other notable issuances included Malakoff Power’s RM5.38b issuance for debt restructuring.

Investment Review

2Source: Bond Pricing Agency Malaysia


Asia-Pacific ex-Japan

2012’s year-end positive momentum carried through with global equity markets benefitting from increased risk appetites at the start of 2013. Most of Asia Pacific ex-Japan equity markets too ended firmer in January as global tail risks abated. However markets were rattled in February when the banking crisis in Cyprus posed a threat to euro zone’s financial stability. The end of the first quarter saw mixed performances across the global equity markets. China dented the performance of Asian markets. There were exceptions; Thailand, Indonesia and Philippines finished strongly supported by strong domestic demand and improving macro fundamentals.

The second quarter was marked by volatility. The strong momentum for risky assets faded in May, followed by a global sell-off in late May and early June. Markets were unnerved by the US Fed Chairman’s comments on the possibility of tapering of QE later in the year; interest rates across bond markets globally rose sharply in reaction. Global equities fell in the quarter, with emerging markets among the worst hit. The prospect of a reduced and an eventual unwind of QE support for bond markets, coupled with concerns over weakening economic prospects in the emerging markets, particularly in China, led to portfolio outflows from emerging markets.

Asia ex-Japan stock markets rose moderately in the third quarter as investors welcomed the US Fed’s unexpected decision to delay tapering. Signs of a recovery in Chinese economic activity shored sentiment but emerging market concerns, namely widening current account deficits and weakening currencies, however, continued to cap the upside.

The fourth quarter saw more moderate gains in Asia ex Japan markets. Markets were buoyed by the favourable economic news out of China and India. However, confidence faded after concerns in emerging Asia which included the impact of a deadly typhoon in the Philippines, political unrest in Thailand, and a weakening currency in Indonesia. Markets lost momentum by year-end as the United States Federal Reserve announced that it would start to taper its asset purchase program in January 2014.

Investment Review


Takafulink Dana Ekuiti

As at 31 December 2013, the Fund’s Net Asset Value per unit appreciated by 15.11% to RM2.0481 as compared to RM1.7792 as at 31 December 2012.

Since inception (1 December 2006), the Fund registered a positive return of 104.66%.

Takafulink Dana Bon

As at 31 December 2013, the Fund’s Net Asset Value per unit increased to RM1.3048 from RM1.3019 as at 31 December 2012, recording a return of 0.22% for the period under review.


Takafulink Dana Urus

As at 31 December 2013, the Net Asset Value per unit of the Takafulink Dana Urus was RM1.8687 compared to RM1.6708 as at 31 December 2012, recording a return of 11.85% for the period under review.


Takafulink Dana Ekuiti Dinasti

As at 31 December 2013, the Fund’s Net Asset Value per unit appreciated by 10.03% to RM1.1799 as compared to RM1.0723 as at 31 December 2012.

Since inception (5 April 2010), the Fund registered a positive return of 17.99%.

FUND PERFORMANCE


Equity

Thus far the reaction towards the commencement of the QE tapering has been quite controlled and manageable. This event should bring some optimism that the global economic recovery is on track, whilst being reassured of a low interest rate environment. The tapering scare in May 2013 had been the wakeup call much needed by many of the emerging markets to start focusing on strengthening their fiscal and current accounts, and hence we expect the impact of this latest decision to have less of an impact than before.

Domestically, the Malaysian government has continued on their subsidy rationalisation stance with the hikes in electricity tariff, and talks about allowing the toll concessionaires to raise the tolls as stipulated in their concession agreements. However, consumers have started to tighten their belts in light of suppliers raising their prices, passing on the effects of the subsidy rationalisation. The BR1M payment has been distributed in February 2014, which should alleviate some of the increases in cost of living, but the government’s political will, will be under pressure. Staying true to the fiscal consolidation path should deter rating agencies from downgrading Malaysia’s sovereign rating, and improve Malaysia’s balance sheet strength.

We expect a better 2014 for the Malaysia equity market, mainly supported by earnings recovery following a lackluster 2013 earnings. With stronger oil & gas orders, improving CPO prices, less external sectors drag and lower base in 2013, we expect market earnings to grow by 10-12% in 2014.

Despite our overall positive view on the Malaysia market next year, we think the journey will be volatile. We are cautious in the first half of 2014, mainly on concern of the impact of US QE tapering. We think the QE tapering may have negative impact on the Malaysia market, which may result in weakness in Ringgit. Equities with high foreign holdings may also be negatively impacted. Other short term headwinds will be the continue subsidy rationalisation and credit tightening measures, which may impact the domestic consumption growth. We are more positive on the second half of 2014 outlook. Barring any unforeseen shocks, we expect the corporate earnings growth to drive a better market performance in the second half.

INVESTMENT OUTLOOK


Sukuk

In the MPC meeting on 7 November, BNM kept the OPR unchanged at 3.0%. BNM noted that the global economy continued to improve at a moderate pace. In the major advanced economies, recovery remained gradual and uneven, whereas in Asia, growth has been sustained on improved exports amid moderating domestic economic activities. Volatility in the global financial markets has receded but markets remained vulnerable to setbacks and changes in sentiment.

For the Malaysian economy, the expansion in domestic activity has been supported by improvements in exports. Private consumption and investment have sustained domestic demand amid slower public spending. Going forward, growth is expected to benefit from improvements in the external sector amid some moderation in domestic demand. Domestic demand is expected to moderate reflecting public sector consolidation and some moderation in private consumption.

Inflation is expected to edge up driven by domestic cost factors. However, the inflation outlook is expected to be tempered by a stable external price environment, moderate domestic demand pressures, expansion in domestic capacity and improvements in food production and distribution.

The MPC assessed that there continues to be uncertainties in the balance of risks surrounding the outlook for domestic growth and inflation. With this, the OPR could likely remain at 3.0% for first half of 2014.

On 20 November, Moody’s upgraded the outlook for Malaysia’s government bond and issuer ratings from stable to positive. It affirmed the rating at A3 (the other two international rating agencies, Fitch and Standard & Poor’s had affirmed Malaysia’s sovereign rating with negative and stable outlooks respectively in July). Moody’s cited improved prospects for fiscal consolidation, highlighting measures announced by the government including the Goods and Services Tax (GST) and reduction in fuel subsidies. It also noted the depth of the nation’s onshore capital markets and stable economic performance.

On 2 December, the government announced a hike in electricity tariffs averaging 15% for Peninsular Malaysia and 17% for Sabah and Labuan to take effect in 2014, effectively reducing subsidies by the government. Moody’s stated that the move was positive for Malaysia’s credit rating.

On 18 December, the US Federal Reserve announced that it would taper its monthly bond purchases to $75bn from $85bn beginning January 2014. The 10 year US Treasury yield rose in December, crossing the 3% level by the end of the month. Volatility in the local fixed income market is likely to persist on tapering initiated by the Federal Reserve.

Investment Outlook


Asia

Outlook

Looking ahead, Asian share valuations are attractively below their long-term averages. A slow but apparently steady economic recovery in the United States and the deceleration of Europe’s banking and economic crisis may herald a recovery of global consumption. This can provide solid opportunities for Asian earnings growth and a rebound of valuations by whetting demand for the region’s exports.

Global

Market Overview

Financial markets started 2013 on a positive note as the worst-case outcomes from the US fiscal cliff deal failed to materialise. Subsequent European debt issues, however, and softer Chinese economic data dampened sentiment especially in the emerging economies. In general, risk assets in many developed economies rallied until early May as confidence in a “healing” US economy grew.

The positive momentum came to halt in late May and June after the US Federal Reserve Board indicated that it could scale back its QE programme should the US economy continues to recover. Both bonds and equities sold off sharply haunted by the spectre of rising interest rates.

The third quarter of 2013, however, ended positively for global equities. Improving economic data and reassurance from a number of central banks that monetary policy would remain accommodative soothed the market. The US Federal Reserve’s unexpected decision to defer QE tapering and its dovish assessment of the US economy reinforced expectations that the Fed would keep policy rates low for a sustained period.

Global equities generally rose over the fourth quarter, with the US, Japan and Europe outperforming, as positive data pointed to an ongoing economic recovery. Over in Asia Pacific, the gains were more moderate. Early optimism running up to China’s third plenum and the promise of reforms was offset by a number of concerns in emerging Asian markets, namely the impact of a deadly typhoon in the Philippines, political unrest in Thailand and currency weakening in Indonesia. Markets too lost momentum by year-end as the US Federal Reserve announced that it would start to taper its asset purchase program in January 2014.

Investment Outlook


Global (continued)

Market Overview (continued)

All said, 2013 has been the year of the developed markets. US equities posted the strongest gains; the MSCI US index rose by 32%. Japanese equities rose 27%, inspired by a promise of growth under Abenomics and a weaker yen. Even troubled Europe posted double digit returns of 25%. Emerging markets were, in contrast, weaker and ended 2013 in negative territory. Disappointing growth, excessive credit growth and rising external imbalances were the key reasons investors shunned emerging markets.

Another notable feature of 2013 was a continuation of the move by equity investors into increasingly expensive “safe” sectors (i.e. those that are relatively insulated from slower economic growth). This move was at the expense of the “cyclical” sectors (i.e. those that are more exposed to growth), which have become progressively cheaper. The valuation gap between the “safe” and the “cyclical” sectors seems unjustified. At some point, investors will make the switch, but what the trigger will be is not yet apparent.

After a good ride in 2012, bonds/sukuk faced a number of challenges in 2013. Tapering fears caused bonds/sukuk to sell off globally; Asian domestic bonds/sukuk and currencies sold off to levels not seen since their 2009 lows. A substantial shift in investors’ tolerance for duration risk, rather than credit risk, drove bonds/sukuk fund outflows on the whole. In general, corporate credits, particularly high yield corporate bonds/sukuk, offered better value than developed government bonds/sukuk.

Outlook

With the tapering underway, the focus has shifted to interest rates. US monetary policy, however, is expected to remain easy. Considerable economic slack and subdued inflationary pressures in the US serve as major impediments to any significant rise in rates anytime soon. This is corroborated by the Fed’s decidedly dovish stance in its December’s forward policy guidance. As such the near to medium term outlook for corporate credits remains positive. As for equities, stronger growth in developed markets could continue to drive markets higher but ultimately earnings will hold the key to further market gains.

Investment Outlook


FINANCIAL HIGHLIGHTSComparative Performance Tablefor financial year ended 31 December 2013


Description 2013 2012 2011 2010 2009 % % % % %

EquityAutomotive 4.04 – – – –Banking & Finance 2.81 – – 0.30 0.28 Building Materials – 0.33 0.27 2.24 2.73 Conglomerates 8.74 6.29 5.93 9.37 13.30 Construction 5.45 4.59 5.09 13.72 7.98 Consumer Products 2.10 1.50 3.01 1.55 2.89 Industrial – – 4.68 2.66 5.58 Takaful 1.05 – – – –Manufacturing 0.57 3.78 – – – Media – 0.32 – 0.90 0.25 Motor – 1.56 – 1.91 1.45 Oil & Gas 22.82 19.02 22.50 11.86 4.76 Plantation 10.04 7.04 10.39 13.16 14.67 Power 9.93 7.83 0.92 8.41 10.41 Property 4.09 5.70 3.38 4.90 4.77 Services – 2.49 – – – Technology 1.11 1.50 – 2.25 0.60 Telecommunications 25.06 28.45 23.85 16.72 12.49 Transportation 0.85 – 3.82 6.56 3.07 Water – – – 0.15 0.49 98.66 90.40 83.84 96.66 85.72Cash and Islamic Deposits 3.46 12.21 17.03 4.00 15.38 Other Assets 0.79 0.37 0.49 0.71 0.75 Total Liabilities (2.91) (2.98) (1.36) (1.37) (1.85)

Total 100.00 100.00 100.00 100.00 100.00


Comparative Performance Tablefor financial year ended 31 December 2013

Financial Highlights


Description 2013 2012 2011 2010 2009 % % % % %

Total Net Asset Value (RM) 444,277,106 313,674,835 203,868,447 141,289,501 93,892,359Units in Circulation 216,923,836 176,298,428 133,612,489 100,463,328 78,577,690NAV Per Unit (RM) 2.048 1.779 1.526 1.406 1.195 Highest NAV per unit (RM) 2.054 1.779 1.526 1.415 1.204 Lowest NAV per unit (RM) 1.693 1.511 1.296 1.149 0.871 Total Return (+) – Capital Growth 15.11% 16.61% 8.49% 17.70% 36.13%

Average Annual Return – Fund (+)PeriodOne year 15.11% 16.61% 8.49% 17.70% 36.13%Three years 13.35% 14.19% 20.24% 1.17% 5.53%Five years 18.47% 5.55% 8.46% n/a n/a

Average Annual Return – Benchmark:FTSE – Bursa Malaysia Emas Shariah Index (FBMSHA)PeriodOne year 13.29% 11.85% 2.41% 18.20% 43.03%Three years 9.07% 10.63% 20.08% (1.53%) 5.10%Five years 17.01% 1.81% 7.04% n/a n/a


Takafulink Dana Ekuiti Fund Performance

(40.00)

(20.00)

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06

Jun-

07

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09

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

+ The Fund returns are calculated based on five decimal placeThe unit prices of the Funds may go down as well as up and the past performance figures shown are not indicative of future performance.

TDE FBMSHA


Takafulink Dana Bon

Description 2013 2012 2011 2010 2009 % % % % %

Sukuk: – Sukuk 89.97 83.00 66.88 60.36 54.25 – Government 2.59 5.14 13.28 25.18 26.37 – Quasi Government 6.04 7.92 7.56 5.81 7.13 Cash and Islamic Deposits 0.86 3.27 12.48 8.98 12.40 Other Assets 0.91 1.16 0.71 0.65 0.66 Total Liabilities (0.37) (0.49) (0.91) (0.98) (0.81)

Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 39,738,109 38,783,817 37,630,097 23,791,465 18,724,204 Units in Circulation 30,454,959 29,789,395 30,549,422 20,258,545 16,817,282 NAV Per Unit (RM) 1.305 1.302 1.232 1.174 1.113 Highest NAV per unit (RM) 1.324 1.302 1.232 1.174 1.114 Lowest NAV per unit (RM) 1.288 1.232 1.175 1.114 1.060 Total Return (+) – Capital Growth 0.22% 5.70% 4.89% 5.47% 5.01%




Takafulink Dana Bon

Description 2013 2012 2011 2010 2009 % % % % %


Average Annual Return – Benchmark:MBB 1 month Tier 1 Islamic Deposit ratePeriodOne year 2.75% 2.84% 2.93% 2.51% 2.13%Three years 2.84% 2.76% 2.52% 2.51% 2.65%Five years 2.63% 2.66% 2.68% n/a n/a




Takafulink Dana Bon Fund Performance

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Takafulink Dana Bon Vs. MBB 1 Month Tier 1 Islamic Deposit Rate


TDB MBB 1 Month Tier 1 Islamic Deposit Rate

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Jun-

07

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Description 2013 2012 2011 2010 2009 % % % % %

Investment in – Takafulink Dana Ekuiti Fund 77.43 82.48 71.71 82.35 81.33 Takafulink Dana Bon Fund 22.57 17.52 28.29 17.65 18.67 Cash and Islamic Deposits – – – – – Other Assets – 0.01 – 0.01 – Total Liabilities – (0.01) – (0.01) –

Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 127,408,086 90,908,575 61,186,502 39,683,534 23,037,250Units in Circulation 68,180,347 54,410,831 41,711,100 29,079,728 19,479,632NAV Per Unit (RM) 1.869 1.671 1.467 1.365 1.183 Highest NAV per unit (RM) 1.872 1.671 1.467 1.371 1.188 Lowest NAV per unit (RM) 1.607 1.457 1.302 1.150 0.911 Total Return (+) – Capital Growth 11.85% 13.90% 7.49% 15.39% 29.17%





Description 2013 2012 2011 2010 2009 % % % % %


Average Annual Return – Benchmark: 80% FBMSHA + 20% 1 Month Maybank Tier 1 Islamic Deposit ratePeriodOne year 11.18% 10.05% 2.29% 15.06% 32.02%Three years 7.76% 8.98% 16.38% (0.69%) 4.95%Five years 14.03% 2.12% 6.34% n/a n/a




Takafulink Dana Urus Fund Performance

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Takafulink Dana Urus Vs. 80% FBMSHA + 20% 1 Month Maybank Tier 1 Islamic Deposit Rate


TDU 80%FBMSHA & 20%1 MTH MBB T1 Islamic Deposit Rate

Dec-

06

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07

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07

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Description 2013 2012 2011 2010 % % % %

Investment in – Eastspring Investments Dinasti Equity Fund 102.23 99.27 98.54 97.29 Cash and Islamic Deposits – 1.52 0.93 0.64 Other Assets 0.74 0.99 1.24 3.43 Total Liabilities (2.97) (1.78) (0.70) (1.36)

Total 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 14,001,888 8,838,416 4,523,965 1,465,272Units in Circulation 11,866,743 8,242,370 4,663,788 1,339,304NAV Per Unit (RM) 1.180 1.072 0.970 1.094 Highest NAV per unit (RM) 1.188 1.073 1.148 1.123 Lowest NAV per unit (RM) 0.995 0.931 0.931 0.932 Total Return (+) – Capital Growth 10.03% 10.55% (11.34%) 9.41%





Description 2013 2012 2011 2010 % % % %

Average Annual Return – Fund (+)PeriodOne year 10.03% 10.55% (11.34%) 9.40%Three years 2.55% n/a n/a n/aFive years n/a n/a n/a n/a

Average Annual Return – Benchmark:80% FBMSHA + 20% 1 Month Maybank Tier 1 Islamic Deposit ratePeriodOne year 18.04% 6.75% (16.48%) 8.66%Three years 2.96% n/a n/a n/aFive years n/a n/a n/a n/a




TAKAFULINK DANA EKUITI DINASTI FUND PERFORMANCE

(15.00)

(10.00)

Date

% C

hang

e Si

nce

Ince

ptio

n

(5.00)

0.00

5.00

10.00

15.00

20.00

(15.00)

(10.00)

(5.00)

0.00

5.00

10.00

15.00

20.00% %

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


TDED Dow Jones Islamic Market Greater China Index

Dec-

06

Jun-

07

Dec-

07

Jun-

08

Dec-

08

Jun-

09

Dec-

09

Jun-

10

Dec-

10

Jun-

11

Dec-

11

Jun-

12

Dec-

12

Jun-

13

Dec-

13


STATEMENT OF ASSETS AND LIABILITIESas at 31 December 2013


2013 2012 RM % RM %

InvestmentsShariah-compliant Shares 438,326,692 98.66 283,549,943 90.40

Cash and DepositsCash at Bank 10,984 0.00 4,480 0.00 Islamic Deposits 15,390,000 3.46 38,310,000 12.21

Tax Assets 155,561 0.04 1,025,231 0.33 Other Assets 3,323,923 0.75 140,154 0.04

Dividend Receivable 1,630,060 0.37 92,529 0.03Due from Stockbroking Companies 1,626,273 0.37 – –Accrued Profit 67,590 0.01 47,625 0.01

Total Assets 457,207,160 102.91 323,029,808 102.98 Provision for Deferred Tax (3,631,641) (0.82) (2,047,769) (0.65)Provision for Taxation (1,364,222) (0.31) (2,779,866) (0.89)Other Liabilities (7,934,191) (1.78) (4,527,338) (1.44)

Total Liabilities (12,930,054) (2.91) (9,354,973) (2.98)

Net Asset Value of the Fund 444,277,106 100.00 313,674,835 100.00

Participants FundCapital 307,294,045 69.17 231,108,018 73.68 Generated Income Carried Forward 136,983,061 30.83 82,566,817 26.32

Total Participants Fund 444,277,106 100.00 313,674,835 100.00

Net Asset Value Per Unit (RM) 2.04808 1.77923

NUMBER OF UNITS 216,923,836 176,298,428


Statement of Assets and Liabilitiesas at 31 December 2013

Takafulink Dana Bon

2013 2012 RM % RM %

InvestmentsSukuk 39,180,302 98.60 37,254,452 96.06

Cash and DepositsCash at Bank 12,986 0.03 36,927 0.10Islamic Deposits 330,000 0.83 1,230,000 3.17

Other Assets 362,472 0.91 449,819 1.16

Total Assets 39,885,760 100.37 38,971,198 100.49Provision for Taxation (131,798) (0.33) (155,155) (0.40)Provision for Deferred Tax 3,874 0.01 (32,226) (0.09)Other Liabilities (19,727) (0.05) – –

Total Liabilities (147,651) (0.37) (187,381) (0.49)





NUMBER OF UNITS 30,454,959 29,789,395



2013 2012 RM % RM %

Investments in – Takafulink Dana Ekuiti Fund 98,650,054 77.43 74,977,933 82.48 Takafulink Dana Bon Fund 28,761,105 22.57 15,930,468 17.52 Other Assets – – 9,791 0.01

Total Assets 127,411,159 100.00 90,918,192 100.01 Other Liabilities (3,073) (0.00) (9,617) (0.01)






NUMBER OF UNITS 68,180,347 54,410,831




2013 2012 RM % RM %

Investments in – Eastspring Investments Dinasti Equity Fund 14,313,584 102.23 8,773,783 99.27 Cash at Bank 198 – 134,178 1.52 Other Assets 104,047 0.74 87,768 0.99

Total Assets 14,417,829 102.97 8,995,729 101.78 Provision for Deferred Tax (65,140) (0.47) (14,604) (0.17)Other Liabilities (350,801) (2.50) (142,709) (1.61)



Participants FundCapital 12,375,544 88.38 8,458,783 95.70 Generated Income Carried Forward 1,626,344 11.62 379,633 4.30



NUMBER OF UNITS 11,866,743 8,242,370



CHANGES IN NET ASSET VALUEfor the financial year ended 31 December 2013


2013 2012 RM RM

Net Asset Value at beginning of year 313,674,835 203,868,447

Amounts received from units created 276,362,259 201,162,150 Amounts paid for units cancelled (200,176,232) (130,865,858)Excess of income over outgo 54,416,244 39,510,096

Value of fund at end of year 444,277,106 313,674,835


Changes in Net Asset Valuefor the financial year ended 31 December 2013

Takafulink Dana Bon

2013 2012 RM RM


Amounts received from units created 53,917,848 12,333,899 Amounts paid for units cancelled (53,071,501) (13,258,139)Excess of income over outgo 107,945 2,077,960




2013 2012 RM RM


Amounts received from units created 77,682,610 53,643,524 Amounts paid for units cancelled (53,563,312) (33,840,287)Excess of income over outgo 12,380,213 9,918,836





2013 2012 RM RM


Amounts received from units created 16,768,201 14,482,797 Amounts paid for units cancelled (12,851,440) (10,892,511)Excess of income over outgo 1,246,711 724,165




STATEMENT OF INCOME & EXPENDITUREfor the financial year ended 31 December 2013


2013 2012 RM RM

Net Shariah-compliant Investment Income 12,400,111 10,072,701Profit Income 1,107,129 1,055,800 Dividend Income 11,292,982 9,016,901

Profits on Disposal 14,511,736 17,554,870 Shariah-compliant Securities 14,511,736 17,554,870

Unrealised Capital Gain 38,495,317 20,138,682 Other Income – 14,787

Total Income 65,407,164 47,781,040 Investment Management Fees (5,492,525) (3,807,674)Loss on Disposal (2,951,894) (2,292,067)

Shariah-compliant Securities (2,951,894) (2,292,067)Provision for Taxation (2,500,042) (2,147,063)Other Outgo (46,459) (24,140)

Bank Charges (1,408) (2,629)Disposal for Charitable Causes (22,196) –Custodian Charges (22,855) (21,511)

Total Outgo (10,990,920) (8,270,944)

Excess of Income over Outgo 54,416,244 39,510,096

Generated Income Brought Forward 82,566,817 43,056,721 Amount Available for Distribution – – Generated Income Carried Forward 136,983,061 82,566,817


Takafulink Dana Bon

2013 2012 RM RM

Net Shariah-compliant Investment Income 2,111,362 1,709,441 Profit Income 2,111,362 1,709,441

Profits on Disposal 110,087 547,592 Shariah-compliant Securities 110,087 547,592

Unrealised Capital Gain – –Provision for Taxation – 153,995

Total Income 2,221,449 2,411,028 Investment Management Fees (231,843) (187,531)Loss on Disposal (403,150) (23,700)

Shariah-compliant Securities (403,150) (23,700)Unrealised Capital Loss (1,065,702) (114,646)Provision for Taxation (407,286) – Other Outgo (5,523) (7,191)

Total Outgo (2,113,504) (333,068)

Excess of Income over Outgo 107,945 2,077,960

Generated Income Brought Forward 6,107,195 4,029,235 Amount Available for Distribution – –Generated Income Carried Forward 6,215,140 6,107,195

Statement of Income & Expenditurefor the financial year ended 31 December 2013



2013 2012 RM RM

Net Shariah-compliant Investment Income 1,367,894 960,795 Profits on Disposal 5,264,105 4,146,733 Unrealised Capital Gain 7,128,846 5,788,416

Total Income 13,760,845 10,895,944 Investment Management Fees (1,380,632) (977,108)

Total Outgo (1,380,632) (977,108)

Excess of Income over Outgo 12,380,213 9,918,836

Generated Income Brought Forward 20,338,674 10,419,838 Amount Available for Distribution – – Generated Income Carried Forward 32,718,887 20,338,674




2013 2012 RM RM

Net Shariah-compliant Investment Income 197,576 115,111Profits on Disposal – 734,016 Unrealised Capital Gain 1,263,391 –

Total Income 1,460,967 849,127 Investment Management Fees (163,370) (95,377)Provision for Taxation (50,536) (29,361)Other Outgo (350) (224)

Total Outgo (214,256) (124,962)

Excess of Income over Outgo 1,246,711 724,165

Generated Income/(Accumulated Losses) Brought Forward 379,633 (344,532)Amount Available for Distribution – –Generated Income Carried Forward 1,626,344 379,633



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% instead of the statutory rate of 8%. The Board of Directors are of the opinion that since these temporary differences will only be realised in the future, the lower tax rate of 4% has been used to ensure equitable unit pricing for incoming, outgoing and remaining unit-holders; and

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

b. InvestmentsQuoted 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 financial institutions.

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

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

d. Profit IncomeProfit income is recognised on an accrual basis.

NOTES TO THE ACCOUNTS


1. Summary of Significant Accounting Policies (continued)

e. Gains/Losses on Disposal of InvestmentsGains or losses arising from the disposal on investment are credited or charged to the capital account.

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

g. Fee RebateThis relates to rebate of fees from the Fund Manager in respect of investment held in Takafulink Dana Ekuiti and Takafulink Dana Bon for the Takafulink Dana Urus.

h. Cash and Cash EquivalentsCash and cash equivalents consists of cash in hand and balances with Islamic banks, excluding Islamic deposits.

2. Other Outgo comprises bank charges and custodian charges.

3. 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.

4. At 31 December 2013, the Funds had no contingent liabilities or commitments.

5. All amounts are stated in Ringgit Malaysia.

Notes to the Accounts


In the opinion of the Directors, the Takafulink Funds (‘Funds’) financial statements set out on pages 35 to 48, comprising the Statements of Assets and Liabilities as at 31 December 2013 and the related Statements of Income and Expenditure and Statements of Changes in Net Asset Value for the financial year ended 31 December 2013 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:

Philip Seah Cheng Chua

Datuk Adinan bin Maning

Kuala Lumpur,4 April 2014

STATEMENT BY DIRECTORS


Report on the Financial Statements

We have audited the financial statements of the Takafulink Funds of Prudential BSN Takaful Berhad, which comprise the Statements of Assets and Liabilities as at 31 December 2013, and the Statements of Income and Expenditure, Statements of Changes in Net Asset Value for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 35 to 48.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements in accordance with the accounting policies set out in Note 1 to the financial statements and Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL 010-15) and for such internal control as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

INDEPENDENT AUDITORS’ REPORT

to the unitholders of Takafulink Funds

Takafulink Funds Report 2013

Opinion

In our opinion, the financial statements as of 31 December 2013 and for the year then ended have been prepared, in all material respects in accordance with the accounting policies set out in Note 1 to the financial statements and Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL 010-15).

Emphasis of Matter

Without qualifying our opinion, we wish to draw your attention to Note 1a (ii) to the accounts whereby a lower rate of tax was used for deferred taxation provision. As fully explained in Note 1a (ii), the Directors of the Company are of the opinion that it is fairer to unitholders to use a lower rate than the statutory tax rate in the pricing of units.

Other Matter

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

KPMGFirm Number: AF: 0758Chartered Accountants

Petaling Jaya,4 April 2014

Independent Auditors’ Reportto the unitholders of Takafulink Funds

42

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

www.facebook.com/prubsn

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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