It’s Nice to be Appreciated for The Work We Do for You. · Assalamualaikum warahmatullahi...

TAKAFULINK FUNDS REPORT 2014Takafulink Reports and Statementsfor the year ended 31 December 2014

Best Takaful Operator (Asia) by Islamic Business and Finance in 2012 and 2014

It’s Nice to be Appreciated for The Work We Do for You.

Contents

2 CEO’s Message

5 Fund Objectives

6 Investment Review

11 Fund Performance

12 Investment Outlook

15 Financial Highlights

27 Statement of Assetsand Liabilities

31 Statement of Changesin Net Asset Value

35 Statement of Income& Expenditure

39 Notes to the Accounts

41 Statement by Directors

42 Independent Auditors’Report

Dear Certificate Holders,

We have the pleasure in presenting to you the Takafulink Funds Report 2014 of Prudential BSN Takaful Berhad. This report is also available on our website at www.prubsn.com.my.

Takafulink Funds Report 2014

In 2014, we received 3 Prestigious Awards.

It’s Nice to be Appreciatedfor The Work We Do for You.

1 2 3

1 The Asset Triple A Islamic Finance Awards 2014Best Takaful Institution

2 MTA Takaful Starnite Awards 2014Best Takaful Operator for Agency Family Takaful Business

3 Islamic Business & Finance Awards 2014Best Takaful Operator (Asia)

2


Azim MithaniChief Executive Officer

Prudential BSN Takaful Berhad

CEO’S MESSAGE

Dear PruBSN Takafulink Certificate Holders, Assalamualaikum warahmatullahi wabarakatuh

Another year has passed, and as always, our focus has been on our customers, ensuring we provide you with the very best. We also celebrated our 8th Anniversary which signifies eight years of deliberate focus on service and innovation. So that has made 2014 another exciting year. As I present you our Takafulink Funds Report for 2014, I would like to express my gratitude and admiration to all our employees, our agents, and most of all you, our customers for your loyalty and continued patronage.

Global Market in 2014 was marked by volatility due to the rising geopolitical tensions at some parts of Eastern Europe and Middle East, plunging oil prices as well as regional sell-offs. These crises did not spare the Malaysian economy as shown by the depreciation in Ringgit and FBM Shariah Emas Index last year. Nevertheless, with the US recently showing stronger economic data, other major economies followed suit, showing tentative signals of turning around. As for Malaysia, despite these external headwinds, GDP grew at a commendable 6% in 2014 and the outlook for 2015 is cautiously optimistic despite the continued softening of consumer demand due to the weaker currency and impending GST implementation.

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Within our business, we produced New Business Annual Contribution Equivalent (ACE)1 growth of 26.4% year-on-year to reach RM340.1 million in 2014. This result means we retained our position as the Number One Family Takaful Operator in the country for the fourth consecutive year. We are also pleased that our funds have produced consistent results. In a comparison made by Lipper IM2 against peers in the industry, our Takafulink Dana Urus fund ranked Number One with a recorded 60.9% return over a five-year period. Other key financial highlights for all our Takafulink funds can be found in the following pages of this report, which I hope accommodates your financial planning for the upcoming year.

PruBSN is about much more than a broad and successful portfolio. Our business is where Innovation and Creativity thrives and shapes our culture, our philosophy and everything we do, every day. The last couple of years have seen us working tirelessly towards evolving our technology platform. Since December 2013, we have empowered our agents and distributors with PruBSN mobility, a highly professional tablet point of sales app, that enables them to offer our innovative takaful solutions virtually instantly to customers. We followed this up by equipping PruBSN mobility with the industry’s first dongle gateway solution – Malaysia’s first chip-based mobile point-of-sale solution that offers a secure way to manage electronic payments using smartphones and tablets – giving our customers an unrivalled ease and convenience with which to purchase our plans.

Similarly, the response has been tremendous for our earlier customer-faced app, PruBSN Navigator, gaining over 16,000 downloads. Staying true to our innovation spirit, we produced another free mobile application called PruBSN Insan, as a quick and easy way for Muslims to find information relating to religious aspects. Why not download both, if you haven’t already?

We have developed many unique, market leading products since we entered into the market which we complement with aggregated services to ensure we provide the right solutions for our customers. Our latest innovation PruBSN UmmahLink, uniquely combines protection, savings and investment that aims to fulfil the long term aspirations of individuals, whether it is to perform Hajj or Umrah, build an education or retirement fund or to save for a dream home.

1 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 premium on business written during the year.

2 Lipper IM is a Thomson Reuters company and a global leader dedicated to supplying mutual fund information, analytical tools and commentary that are widely recognised as the industry standard.

CEO’S MESSAGE

4


We apply the same high level commitment when it comes to supporting the communities in which we operate. For four years through our flagship CSR programme, A-Book, A-Child, A-Week, we have worked closely with young people in need to learn to read and expand their minds and horizons. We have also committed nearly RM1 million in 2014 towards developing communities from the lower household income involving primary schoolchildren, university students, single parent and cancer patients. Following the worst-ever flood disaster in Malaysia’s East Coast, we immediately activated relief efforts whereby besides financial aid, our employees and agents helped purchase, pack and transport basic necessities and food supplies directly to the victims. We are currently working very hard to formulate immediate relief post-disaster with focus on our staff, agents and customers, and assisting them in whatever manner feasible during this truly challenging period.

All of these efforts have gained us wider recognition at local and international levels early in the year. We achieved unprecedented wins in 13 categories at the coveted Malaysian Takaful Association’s Takaful Starnite Awards, in addition to receiving two more industry-level awards namely Best Takaful Institution by The Asset Magazine in Hong Kong and Best Takaful Operator (Asia) by CPI Financial in Dubai.

It is a compelling time to be in this industry given the pace of innovation and boundless opportunities to realise the market potential for takaful. Looking ahead, we will constantly strive for ways to improve and deepen our involvement in every aspect of our business, so that we will remain your trusted protection partner. Thank you once again for being a part of our journey.

If you wish to find out more information about Takafulink Funds Report, please refer to www.prubsn.com.my, or simply reach out to us at [email protected] or 03 2053 7188.

Now let’s see what we can achieve together for 2015.

CEO’S MESSAGE

5


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

6


INVESTMENT REVIEW

Equity Market

Global markets had a weak start to 1Q2014 and the FBM Shariah Emas Index (FBMS) was not spared by the regional sell-off due to fears of weak emerging market currencies and the potential contagion effect. The Malaysian Ringgit depreciated by almost 2% month-on-month against the US Dollar as at end January 2014. However, the Malaysian equity market rebounded but gains were capped as the February reporting season was not very encouraging. By end 1Q2014, the news of the disappearance of MH370 resulted in some weakness, but the FBMS managed to recoup some of the losses.

The US equity markets corrected early 2Q2014 on concerns that valuations for technology stocks were too high following the start of the earnings reporting season, however, rebounded soon after to end the quarter on a high note, hitting new highs during the quarter. Investors in Malaysia continued to focus on small cap stocks, however there was some consolidation mid 2Q2014 when the corporate earnings released during the quarter were not inspiring with many coming in below expectations in the Automotive and Oil and Gas sectors. Nevertheless, the FBMS continued its uptrend in tandem with global markets, hitting new highs during the period.

3Q2014 started off with a correction in the US markets, in tandem with global markets, on the back of weaker corporate results reported. Global markets continued to be on edge during the month due to the heightened geo-political risk with the conflict in Gaza region and the increasing tensions with Russia post the MH17 tragedy. In Malaysia, corporates that released their financial results during the period were generally either in line or disappointing versus consensus expectations, with disappointing results from key sectors such as oil and gas, banking and finance, and plantation. Equity markets ended lower by the end of the 3Q2014 on the back of concerns of the timing over the US Federal Reserve rate hikes, and global growth concerns starting to weigh on sentiment.

7


Investment Review

Equity Market (continued)

4Q2014 started off weak globally, as investors were concerned over the continued conflict in Iraq and Ukraine and the Ebola health scare. However Wall Street rebounded sharply on the back of better US corporate earnings and improving economic data both from the US and Euro zone. Global equity markets remained volatile for most of 4Q2014 as investors witnessed sharp declines in crude oil prices on the back of OPEC’s decision to maintain their output levels, and the strength of the US Dollar against most currencies. 4Q2014 was a weak quarter for Malaysia as the sharply lower oil prices and weaker currency saw the FBMS dip below the 12,000 level which was last seen in Aug 2013. Corporate earnings reported in 4Q2014 remained disappointing and the oil and gas sector in particular was under a lot of pressure with the weak crude oil prices, and the negative implications on future capex for the industry. Malaysia ended 4Q2014 on a sad note, with yet another airline tragedy, the crash of Air Asia flight QZ8501 from Surabaya, Indonesia to Singapore.

The FBMS closed the year under review at 12,507.03 points, down 4.17%. The broader FBM Emas Index closed the period under review lower by 6.13%. The MSCI Asia Pacific ex-Japan Index declined by 0.2% in USD terms1.

Sukuk MarketIn the first half of 2014, Malaysia’s economic growth performed strongly on surging exports, growing 6.2% yoy and 6.5% yoy in the first and second quarters respectively. Inflation was also relatively elevated in the range of 3.2% – 3.5% in the first 6 months of 2014, on supply disruptions and higher domestic costs. Additionally, Malaysia’s household debt reached a relatively high level of about 87% of GDP by end 2013 – this concern was alluded to in BNM’s MPC meeting on 8 July, where it expressed concern about a continued build up of financial imbalances.

At the MPC meeting on 10 July, BNM raised the OPR by 25 basis points to 3.25%, which marked the first OPR change since July 2011. The MPC decided to adjust the degree of monetary accommodation on firm growth prospects and inflation remaining above its long run average. The adjustment also aimed to address broader economic and financial imbalances that could undermine the Malaysian economy’s growth prospects.

1Source: Bloomberg: World indices

8


Investment Review

Sukuk Market (continued)

At the MPC meeting on 18 September, BNM maintained the OPR at 3.25%, opting to monitor the balance of risks surrounding growth and inflation as well as the risks of destabilising financial imbalances before making any further changes to the OPR. At the MPC meeting on 6 November, BNM again maintained the OPR at 3.25% on a more cautious outlook for economic growth and moderating inflationary conditions. Expectations of a hike in OPR are now deferred to second half 2015. If economic growth turns out to be weaker than expected, the timing of a rate hike is tilted towards further delays.

Headline inflation eased from 3.2% yoy in December 2013 to 3.0% in November 2014. The drop was mainly driven by a fall in food and non alcoholic beverages inflation, which fell from 4.5% yoy in December 2013 to 2.9% yoy in November 2014. Inflation is projected to edge higher in 2015 on domestic cost factors, particularly the introduction of the Goods and Service Tax. The absence of external price pressures and more moderate demand conditions are expected to mitigate the impact of these cost factors on inflation.

The price of crude oil continued falling in December after its dramatic collapse in November on OPEC’s decision not to cut production to support prices. Falling oil prices have fuelled concerns that the Malaysian government’s target to reduce the fiscal deficit to 3% of GDP in 2015 from 3.5% in 2014 will prove more difficult to achieve as it may negatively impact the Malaysian economy and fiscal position if Petronas cuts back on its dividend payments to the government.

Falling oil prices could also hurt Malaysia’s current account surplus, which came in at RM7.6bn as at September 2014, the lowest since June 2013. The ringgit fell to its lowest level in more than 5 years by early January 2015. A weakening ringgit could temper foreign investors’ appetite for Malaysian government securities going forward. Foreign holdings of Malaysian debt securities dropped 5.8% (~RM14.5bn) in November 2014 to RM236.5bn, the largest drop since September 2011.

For the period under review, the 3-, 5- and 10-year sovereign sukuk yields changed by 29bps, 2bps and -22bps close at 3.67%, 3.98% and 4.21% respectively. Shorter tenure MGII rose during the year on the OPR hike by BNM in July as well as the falling oil price in late 2014, which fuelled concerns that the government would fail to achieve its deficit target.

Corporate sukuk yields generally moved in tandem with sovereign sukuk yields, albeit at a lag. Activities in the corporate fixed income market were supported by ample liquidity and a stable credit environment.

On the supply front, total outstanding MYR issuances at the end of December 2014 stood at about RM1,111bn, of which approximately 48% was conventional and 52% was Islamic. 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 23%. Major primary issuances were from the banking, and power sectors as well as government guaranteed issuances. Major issuances included RM7.6bn from DanaInfra Nasional Berhad, RM5.1bn from Malayan Banking and RM4.5bn from Perbadanan Tabung Pendidikan Tinggi Nasional.

9


Investment Review

Asia-Pacific ex-Japan MarketsAsia ex-Japan markets started the year in the red on emerging market meltdown fears. Improving data from India and Indonesia subsequently boosted stocks in the region. On a year to date basis, Asia ex-Japan fared better than Japan and Europe as measured by the MSCI Ac Asia ex-Japan index in USD terms.

Indonesia, Philippines and India were the top three markets in 2014. Improving macro conditions, positive election outcomes and the optimism over reform plans by the new leaders in India and Indonesia lifted these markets. Indonesia’s fuel price hike too led to positive reaction on the stock market. The Philippines gained throughout the year on stronger fundamentals which led to a one-notch rating upgrade by Standard & Poor to BBB.

Korea, Malaysia and Australia were 2014’s worst performers. Korea was affected by the Yen depreciation as it tarnished the attractiveness of Korean exports. Malaysia’s oil exporter status was behind the market’s dismal show as oil prices plunged. A falling Aussie dollar, declining commodity prices and concerns of a slowdown in China affected the Australian market.

The Thai market benefitted from improving confidence following the political stability post military coup but succumbed to profit-taking towards year end. China on the other hand rose in the last quarter of the year buoyed by expectations of further monetary easing following the People’s Bank of China’s surprise rate cut in November, the first since 2012. Taiwan’s equity market saw interest in the second half of the year due to a pick up in the technology cycle.

Global Market2014 began on a sombre note. The scaling back of the quantitative easing programme by the US Federal Reserve and renewed growth concerns in China undermined confidence in emerging markets. The sell down in emerging market assets sparked a global contagion. Subsequently, a reaffirmation from central banks of continuing easy monetary policies and signs of stabilisation in emerging markets lifted sentiment across the globe.

Nonetheless the year was marked by bouts of volatility. Rising geopolitical tensions, namely Russia’s intervention in Ukraine and the deepening unrest in Middle East coupled with disappointing growth and profits in Europe, China and Japan triggered intermittent sell-offs. As the year drew to a close, political tensions in Greece, the economic crisis in Russia and plunging oil prices send global markets lower.

10


Investment Review

Global Market (continued)

The intermittent sell-offs exposed value in a number of stocks; across regional Asia, there were strong valuation signals. Names linked to the global cycle were sold initially due to shorter term concerns for global growth. The valuation gap between defensive and cyclical stocks continued to remain wide.

Against this environment, global equities, as reflected by MSCI World, only rose by 5% in USD terms. US equities were 2014’s top performers led by indications of a nascent economic recovery and expectations that interest rates will remain low for longer. Over in Asia, star performers Indonesia, Philippines and India led the region higher. Positive election outcomes in India and Indonesia and improving macro conditions underpinned equities in these markets. Rating agency, Standard & Poor raised the Philippines sovereign rating by one-notch to BBB in recognition of the country’s strong fiscal and balance of payment metrics.

Meanwhile Japan equities had a challenging year, underpinned by lacklustre economic growth. Bank of Japan’s surprise move in October to expand its quantitative easing programme fuelled a rally in domestic equities. As a result, Japan had a good year in Yen terms but posted losses in USD terms. European equities too posted losses, plagued by the region’s high unemployment and growth woes. Speculation over whether the European Central Bank will implement additional stimulus was another factor driving market volatility in Europe during the second half of the year.

One of 2014’s biggest surprises was the decline in global bond yields. Instead of the anticipated rise in US interest rates, 10-year Treasuries rallied. Shrinking flows of government debt instruments may have also helped lower yields against a backdrop of growing liquidity. Asian local rates experienced declines (generally in tandem with US bond yields). In some Asian markets, domestic factors aided the rallies. On the whole the Asian USD bond market delivered a strong gain underpinned by coupon income while unexpected declines in longer term US interest rates also helped lift performance. Most Asian currencies too slid against the US dollar in 2014. While the US dollar was a beneficiary of the optimism surrounding the US economy, various unique reasons caused Asian currencies to depreciate throughout the year.

11


FUND PERFORMANCE

Takafulink Dana Ekuiti

As at 31 December 2014, the Fund’s Net Asset Value per unit appreciated by 1.23% to RM2.0732 as compared to RM2.0481 as at 31 December 2013.

Since inception (1 December 2006), the Fund registered a positive return of 107.17%.

Takafulink Dana Bon

As at 31 December 2014, the Fund’s Net Asset Value per unit increased to RM1.3531 from RM1.3048 as at 31 December 2013, recording a return of 3.70% for the period under review.


Takafulink Dana Urus

As at 31 December 2014, the Net Asset Value per unit of the Takafulink Dana Urus was RM1.9028 compared to RM1.8687 as at 31 December 2013, recording a return of 1.82% for the period under review.


Takafulink Dana Ekuiti Dinasti

As at 31 December 2014, the Fund’s Net Asset Value per unit appreciated by 3.75% to RM1.2241 as compared to RM1.1799 as at 31 December 2013.

Since inception (5 April 2010), the Fund registered a positive return of 22.41%.

12


INVESTMENT OUTLOOK

Equity Market

Global markets may continue to be volatile in 2015 with less predictable monetary policy decisions, continued weaker commodity prices, and increased geo-political risks. However, the US economic data of late has been stronger than expected, and other major economies seem to show tentative signs of turning around.

Domestically, 2015 will likely see continued softening of consumer demand, as consumers become more cautious on spending with the weaker currency, and the impending GST implementation. However, the lower crude oil prices whilst may not be beneficial for the Malaysian government’s revenue, should provide some reprieve to the cost of living for the man on the street as petrol and diesel are now pegged to market prices.

Despite our overall cautious view on the Malaysia market next year, we believe the difficult steps the government is taking towards fiscal consolidation is a necessary one. Nevertheless the impending rate hike in the US mid 2015 will add pressure to an already weak ringgit, and equities with high foreign holdings may continue to see selling pressure. Barring any unforeseen shocks, we expect the corporate earnings growth to drive a better market performance in the second half. We remain mindful of the risks of the weakness of the ringgit, continued foreign outflows, and how long crude oil prices will remain below USD60/bbl.

Sukuk Market

At the MPC meeting on 6 November, BNM maintained the OPR at 3.25%. The MPC stated that the current stance of monetary policy is accommodative and is appropriate given the developments in monetary and financial conditions. Bank Negara appears more dovish than at its September meeting, and expectations of a hike in OPR are now deferred to second half of 2015. If economic growth turns out to be weaker than expected, the timing of a rate hike is tilted towards further delays.

Inflation is projected to trend higher and remain above its long term average in 2015 due to domestic cost factors. However, the absence of external price pressures and more moderate demand conditions should mitigate the impact of the cost factors on inflation.

13


Investment Outlook

Sukuk Market (continued)

The price of crude oil continued falling in December after its dramatic collapse in November on OPEC’s decision not to cut production to support prices. Falling oil prices have fuelled concerns that the Malaysian government’s target to reduce the fiscal deficit to 3% of GDP in 2015 from 3.5% in 2014 will prove more difficult to achieve as it may negatively impact the Malaysian economy and fiscal position if Petronas cuts back on its dividend payments to the government.

Falling oil prices could also hurt Malaysia’s current account surplus, which came in at RM7.6bn, the lowest since June 2013.The ringgit fell to its lowest level in more than 5 years by early January 2015. The weak ringgit is likely to temper foreign investors’ appetite for Malaysian government securities going forward. Foreign holdings of Malaysian debt securities dropped 5.8%, the most since September 2011, to RM236.5bn in November from RM251bn in October.

In its statement after their December meeting, the Federal Open Market Committee expressed that it can be “patient” in normalising “the stance of monetary policy”. Its “considerable time” wording which appeared in previous statements was dropped. Subsequently, Fed Chair Janet Yellen clarified that the Fed is “unlikely to begin normalisation process for at least the next couple of meetings”, and that the timing of any interest rate increase was “contingent on economic conditions”. The US labour market continues to recover, but inflation remains relatively mild. Muted inflation figures, which could persist on the falling oil price, have triggered some speculation that the Fed may adopt a more dovish stance than it itself foresaw a few months ago. However, market expectations remain that that Fed will raise rates in 2015.

We expect the fixed income market to remain volatile due to geopolitical risks, currency volatility and monetary policy normalisation. Commodity prices, especially CPO and LNG, MYR performance and GST implementation in April 2015 are key influences on the MYR fixed income market in 2015.

14


Investment Outlook

Asia-Pacific ex-Japan Markets

In 2015, we expect markets to continue their volatile performance given the mixed global macroeconomic news. Asian corporate earnings are geographically diverse. Earnings upside through 2015 and beyond are underpinned by a steadily improving global growth environment. As a whole Asia Pacific equity valuations remain below their long-term average which, combined with significant valuation disparities within countries and sectors, provides many stock specific investment opportunities. More significantly, we can identify a growing number of stocks that are not only out-of-favour but are also extremely cheap, (and which continue to get cheaper). We are generally finding these cheap names in the cyclical stocks.

Global Market

With the US quantitative easing over and the US Federal Reserve closer to its first rate hike, 2015 looks set to be another interesting year. While the Fed’s move has been well anticipated, it could prove challenging should the Fed raise rates more rapidly than anticipated. Such a move would likely be disruptive for bonds, select currencies and expensive sectors of the global equity markets that have benefited from the existing zero interest rate regime.

That said, falling oil and robust US growth will likely support corporate profits and enhance the attractiveness of global equities in 2015. Bonds on the other hand may experience heightened volatility as US rate hike fears wax and wane. Nonetheless the shape and pace of rate increases do matter. In this “soft” cycle, bond carry should provide a decent source of return, while opportunities in select Asian bonds should provide “alpha” return enhancements.

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FINANCIAL HIGHLIGHTS

Comparative Performance Tablefor financial year ended 31 December 2014

Takafulink Dana EkuitiDescription 2014 2013 2012 2011 2010 % % % % %

EquityAutomotive 4.03 4.04 – – –Banking & Finance 2.00 2.81 – – 0.30 Building Materials – – 0.33 0.27 2.24 Conglomerates 10.12 8.74 6.29 5.93 9.37 Construction 4.37 5.45 4.59 5.09 13.72 Consumer Products 7.82 2.10 1.50 3.01 1.55 Industrial – – – 4.68 2.66 Takaful 1.31 1.05 – – –Manufacturing 1.82 0.57 3.78 – – Media 0.10 – 0.32 – 0.90 Motor – – 1.56 – 1.91 Oil & Gas 11.06 22.82 19.02 22.50 11.86 Plantation 8.07 10.04 7.04 10.39 13.16 Power 9.59 9.93 7.83 0.92 8.41 Property 6.71 4.09 5.70 3.38 4.90 Services – – 2.49 – – Technology 1.80 1.11 1.50 – 2.25 Telecommunications 22.94 25.06 28.45 23.85 16.72 Transportation 3.34 0.85 – 3.82 6.56 Water – – – – 0.15 95.08 98.66 90.40 83.84 96.66 Cash and Islamic Deposits 5.68 3.46 12.21 17.03 4.00 Other Assets 0.46 0.79 0.37 0.49 0.71 Total Liabilities (1.22) (2.91) (2.98) (1.36) (1.37)

Total 100.00 100.00 100.00 100.00 100.00

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Financial Highlights


Description 2014 2013 2012 2011 2010 % % % % %

Total Net Asset Value (RM) 557,891,215 444,277,106 313,674,835 203,868,447 141,289,501Units in Circulation 269,098,535 216,923,836 176,298,428 133,612,489 100,463,328NAV Per Unit (RM) 2.073 2.048 1.779 1.526 1.406Highest NAV per unit (RM) 2.141 2.054 1.779 1.526 1.415Lowest NAV per unit (RM) 1.952 1.693 1.511 1.296 1.149Total Return (+)– Capital Growth 1.23% 15.11% 16.61% 8.49% 17.70%

Average Annual Return – Fund (+)PeriodOne year 1.23% 15.11% 16.61% 8.49% 17.70%Three years 10.76% 13.35% 14.19% 20.24% 1.17%Five years 11.65% 18.47% 5.55% 8.46% n/a

Average Annual Return – Benchmark:FTSE – Bursa Malaysia Emas Shariah Index (FBMSHA)PeriodOne year (4.17%) 13.29% 11.85% 2.41% 18.20%Three years 6.68% 9.07% 10.63% 20.08% (1.53%)Five years 8.01% 17.01% 1.81% 7.04% n/a

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Takafulink Dana Ekuiti Fund Performance

(40.00)

(20.00)

Dec-

06

Jun-

07

Dec-

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Jun-

08

Dec-

08

Date

% C

hang

e Si

nce

Ince

ptio

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Jun-

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Jun-

11

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Jun-

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Dec-

12

Jun-

13

Dec-

13

Jun-

14

Dec-

14

0.00

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40.00

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80.00

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% %

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

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

TDE FBMSHA

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Takafulink Dana Bon

Description 2014 2013 2012 2011 2010 % % % % %

Sukuk: – Sukuk 88.84 89.97 83.00 66.88 60.36 – Government 1.92 2.59 5.14 13.28 25.18 – Quasi Government 4.71 6.04 7.92 7.56 5.81 Cash and Islamic Deposits 3.95 0.86 3.27 12.48 8.98 Other Assets 0.95 0.91 1.16 0.71 0.65Total Liabilities (0.37) (0.37) (0.49) (0.91) (0.98)

Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 53,317,726 39,738,109 38,783,817 37,630,097 23,791,465 Units in Circulation 39,403,968 30,454,959 29,789,395 30,549,422 20,258,545 NAV Per Unit (RM) 1.353 1.305 1.302 1.232 1.174 Highest NAV per unit (RM) 1.355 1.324 1.302 1.232 1.174 Lowest NAV per unit (RM) 1.301 1.288 1.232 1.175 1.114 Total Return (+)– Capital Growth 3.70% 0.22% 5.70% 4.89% 5.47%



19


Takafulink Dana Bon

Description 2014 2013 2012 2011 2010 % % % % %


Average Annual Return – Benchmark:MBB 1 month Tier 1 Islamic Deposit ratePeriodOne year 2.89% 2.75% 2.84% 2.93% 2.51%Three years 2.83% 2.84% 2.76% 2.52% 2.51%Five years 2.78% 2.63% 2.66% 2.68% n/a



20


Takafulink Dana Bon Fund Performance

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


TDB MBB 1 Month Tier 1 Islamic Deposit Rate

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(5.00)

0.00

5.00

10.00

15.00

20.00

25.00

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35.00

40.00

Dec-

06

Jun-

07

Dec-

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Jun-

08

Dec-

08

Jun-

09

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Jun-

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Dec-

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Jun-

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Dec-

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Dec-

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Jun-

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21



Description 2014 2013 2012 2011 2010 % % % % %

Investment in – Takafulink Dana Ekuiti Fund 77.32 77.43 82.48 71.71 82.35 Takafulink Dana Bon Fund 22.68 22.57 17.52 28.29 17.65 Cash and Islamic Deposits – – – – – Other Assets – – 0.01 – 0.01Total Liabilities (0.00) (0.00) (0.01) – (0.01)

Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 166,801,352 127,408,086 90,908,575 61,186,502 39,683,534Units in Circulation 87,659,334 68,180,347 54,410,831 41,711,100 29,079,728NAV Per Unit (RM) 1.903 1.869 1.671 1.467 1.365 Highest NAV per unit (RM) 1.949 1.872 1.671 1.467 1.371Lowest NAV per unit (RM) 1.801 1.607 1.457 1.302 1.150 Total Return (+) – Capital Growth 1.82% 11.85% 13.90% 7.49% 15.39%



22



Description 2014 2013 2012 2011 2010 % % % % %


Average Annual Return – Benchmark: 80% FBMSHA + 20% 1 Month Maybank Tier 1 Islamic Deposit ratePeriodOne year (2.76%) 11.18% 10.05% 2.29% 15.06%Three years 5.96% 7.76% 8.98% 16.38% (0.69%)Five years 6.95% 14.03% 2.12% 6.34% n/a



23


Takafulink Dana Urus Fund Performance

(20.00)

Date

% C

hang

e Si

nce

Ince

ptio

n

0.00

20.00

40.00

60.00

100.00

80.00

0.00

20.00

40.00

60.00

100.00

80.00

(20.00)

%%

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

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-

14

Dec-

13

Jun-

14

24



Description 2014 2013 2012 2011 2010 % % % % %

Investment in –Eastspring Investments Dinasti Equity Fund 100.38 102.23 99.27 98.54 97.29 Cash and Islamic Deposits 0.33 – 1.52 0.93 0.64 Other Assets 0.20 0.74 0.99 1.24 3.43 Total Liabilities (0.91) (2.97) (1.78) (0.70) (1.36)

Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 17,713,152 14,001,888 8,838,416 4,523,965 1,465,272Units in Circulation 14,470,661 11,866,743 8,242,370 4,663,788 1,339,304NAV Per Unit (RM) 1.224 1.180 1.072 0.970 1.094 Highest NAV per unit (RM) 1.234 1.188 1.073 1.148 1.123 Lowest NAV per unit (RM) 1.094 0.995 0.931 0.931 0.932 Total Return (+)– Capital Growth 3.75% 10.03% 10.55% (11.34%) 9.41%



25



Description 2014 2013 2012 2011 2010 % % % % %

Average Annual Return – Fund (+)PeriodOne year 3.75% 10.03% 10.55% (11.34%) 9.40%Three years 8.06% 2.55% n/a n/a n/aFive years n/a n/a n/a n/a n/a

Average Annual Return – Benchmark:Dow Jones Islamic Market Greater China IndexPeriodOne year 9.91% 18.04% 6.75% (16.48%) 8.66%Three years 12.83% 2.96% n/a n/a n/aFive years n/a n/a n/a n/a n/a



26


Takafulink Dana Ekuiti Dinasti Fund Performance

(10.00)

5.00

Date

% C

hang

e Si

nce

Ince

ptio

n

0.00

5.00

10.00

15.00

20.00

25.00

30.00

40.00

35.00

(10.00)

5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

40.00

35.00

% %

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


TDED Dow Jones Islamic Market Greater China Index

Apr-1

0

Aug-

10

Dec-

10

Apr-1

1

Aug-

11

Dec-

11

Apr-1

2

Aug-

12

Dec-

12

Apr-1

3

Aug-

13

Dec-

14

Dec-

13

Aug-

14

Apr-1

4

27


STATEMENT OF ASSETS AND LIABILITIES

as at 31 December 2014


2014 2013 RM % RM %

InvestmentsShariah-compliant Shares 530,435,272 95.08 438,326,692 98.66

Cash and DepositsCash at Bank 10,304 0.00 10,984 0.00 Islamic Deposits 31,720,000 5.68 15,390,000 3.46

Tax Assets 256,263 0.05 155,561 0.04Other Assets 2,303,846 0.41 3,323,923 0.75

Dividend Receivable 2,300,661 – 1,630,060 0.37Due from Stockbroking Companies – – 1,626,273 0.37Accrued Profit 3,185 – 67,590 0.01

Total Assets 564,725,685 101.22 457,207,160 102.91 Provision for Deferred Tax (2,588,368) (0.46) (3,631,641) (0.82)Provision for Taxation (2,076,216) (0.37) (1,364,222) (0.31)Other Liabilities (2,169,886) (0.39) (7,934,191) (1.78)

Total Liabilities (6,834,470) (1.22) (12,930,054) (2.91)

Net Asset Value of the Fund 557,891,215 100.00 444,277,106 100.00

Participants FundCapital 414,852,542 74.36 307,294,045 69.17Generated Income Carried Forward 143,038,673 25.64 136,983,061 30.83

Total Participants Fund 557,891,215 100.00 444,277,106 100.00

Net Asset Value Per Unit (RM) 2.07319 2.04808

NUMBER OF UNITS 269,098,535 216,923,836

28


Statement of Assets and Liabilitiesas at 31 December 2014

Takafulink Dana Bon

2014 2013 RM % RM %

InvestmentsSukuk 50,899,980 95.47 39,180,302 98.60

Cash and DepositsCash at Bank 13,997 0.03 12,986 0.03Islamic Deposits 2,090,000 3.92 330,000 0.83

Other Assets 510,607 0.95 362,472 0.91 Total Assets 53,514,584 100.37 39,885,760 100.37Provision for Taxation (177,519) (0.33) (131,798) (0.33)Provision for Deferred Tax 2,737 0.00 3,874 0.01Other Liabilities (22,076) (0.04) (19,727) (0.05)

Total Liabilities (196,858) (0.37) (147,651) (0.37)


Participants FundCapital 45,327,882 85.01 33,522,969 84.36Generated Income Carried Forward 7,989,844 14.99 6,215,140 15.64



NUMBER OF UNITS 39,403,968 30,454,959

29



2014 2013 RM % RM %

Investments in –Takafulink Dana Ekuiti Fund 128,974,462 77.32 98,650,054 77.43Takafulink Dana Bon Fund 37,831,421 22.68 28,761,105 22.57

Total Assets 166,805,883 100.00 127,411,159 100.00 Other Liabilities (4,531) (0.00) (3,073) (0.00)



Participants FundCapital 131,462,886 78.81 94,689,199 74.32 Generated Income Carried Forward 35,338,466 21.19 32,718,887 25.68



NUMBER OF UNITS 87,659,334 68,180,347


30



2014 2013 RM % RM %

Investments in –Eastspring Investments Dinasti Equity Fund 17,780,175 100.38 14,313,584 102.23 Cash at Bank 59,488 0.33 198 0.00Other Assets 35,531 0.20 104,047 0.74

Total Assets 17,875,194 100.91 14,417,829 102.97 Provision for Taxation (7,865) (0.05) – –Provision for Deferred Tax (91,009) (0.51) (65,140) (0.47)Other Liabilities (63,168) (0.35) (350,801) (2.50)



Participants FundCapital 15,372,339 86.78 12,375,544 88.38 Generated Income Carried Forward 2,340,813 13.22 1,626,344 11.62



NUMBER OF UNITS 14,470,661 11,866,743


31


STATEMENT OF CHANGES IN NET ASSET VALUEfor the financial year ended 31 December 2014


2014 2013 RM RM

Net Asset Value at beginning of year 444,277,106 313,674,835

Amounts received from units created 415,464,855 276,362,259 Amounts paid for units cancelled (307,906,358) (200,176,232)Excess of income over outgo 6,055,612 54,416,244

Value of fund at end of year 557,891,215 444,277,106

32


Statement of Changes in Net Asset Valuefor the financial year ended 31 December 2014

Takafulink Dana Bon

2014 2013 RM RM


Amounts received from units created 32,205,743 53,917,848 Amounts paid for units cancelled (20,400,830) (53,071,501)Excess of income over outgo 1,774,704 107,945


33



2014 2013 RM RM


Amounts received from units created 116,984,280 77,682,610Amounts paid for units cancelled (80,210,593) (53,563,312)Excess of income over outgo 2,619,579 12,380,213



34




2014 2013 RM RM


Amounts received from units created 19,719,638 16,768,201Amounts paid for units cancelled (16,722,843) (12,851,440)Excess of income over outgo 714,469 1,246,711


35


STATEMENT OF INCOME & EXPENDITURE

for the financial year ended 31 December 2014


2014 2013 RM RM

Net Shariah-compliant Investment Income 15,207,032 12,400,111Profit Income 902,900 1,107,129 Dividend Income 14,304,132 11,292,982

Profits on Disposal 31,948,418 14,511,736 Shariah-compliant Securities 31,948,418 14,511,736

Unrealised Capital Gain – 38,495,317

Total Income 47,155,450 65,407,164 Investment Management Fees (7,441,752) (5,492,525)Loss on Disposal (6,898,613) (2,951,894)

Shariah-compliant Securities (6,898,613) (2,951,894)Unrealised Capital Loss (26,403,719) –Provision for Taxation (328,140) (2,500,042)Other Outgo (27,614) (46,459)

Bank Charges (747) (1,408)Disposal for Charitable Causes – (22,196)Custodian Charges (26,867) (22,855)

Total Outgo (41,099,838) (10,990,920)

Excess of Income over Outgo 6,055,612 54,416,244

Generated Income Brought Forward 136,983,061 82,566,817 Amount Available for Distribution – – Generated Income Carried Forward 143,038,673 136,983,061

36


Takafulink Dana Bon

2014 2013 RM RM

Net Shariah-compliant Investment Income 2,253,066 2,111,362Profit Income 2,253,066 2,111,362

Profits on Disposal 138,239 110,087Shariah-compliant Securities 138,239 110,087

Unrealised Capital Gain 28,429 –

Total Income 2,419,734 2,221,449Investment Management Fees (234,941) (231,843)Loss on Disposal (7,040) (403,150)

Shariah-compliant Securities (7,040) (403,150)Loss on redemption (165,276) – Unrealised Capital Loss – (1,065,702)Provision for Taxation (234,579) (407,286) Other Outgo (3,194) (5,523)

Total Outgo (645,030) (2,113,504)

Excess of Income over Outgo 1,774,704 107,945

Generated Income Brought Forward 6,215,140 6,107,195 Amount Available for Distribution – –Generated Income Carried Forward 7,989,844 6,215,140

Statement of Income & Expenditurefor the financial year ended 31 December 2014

37



2014 2013 RM RM

Net Shariah-compliant Investment Income 1,841,450 1,367,894Profits on Disposal 8,350,895 5,264,105Unrealised Capital Gain – 7,128,846

Total Income 10,192,345 13,760,845 Investment Management Fees (1,894,319) (1,380,632)Unrealised Capital Loss (5,678,447) –

Total Outgo (7,572,766) (1,380,632)

Excess of Income over Outgo 2,619,579 12,380,213

Generated Income Brought Forward 32,718,887 20,338,674 Amount Available for Distribution – – Generated Income Carried Forward 35,338,466 32,718,887


38




2014 2013 RM RM

Net Shariah-compliant Investment Income 276,639 197,576Profits on Disposal 98,313 –Unrealised Capital Gain 646,721 1,263,391

Total Income 1,021,673 1,460,967 Investment Management Fees (227,239) (163,370)Provision for Taxation (79,680) (50,536)Other Outgo (285) (350)

Total Outgo (307,204) (214,256)

Excess of Income over Outgo 714,469 1,246,711

Generated Income Brought Forward 1,626,344 379,633Amount Available for Distribution – –Generated Income Carried Forward 2,340,813 1,626,344

39


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

40


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 2014, the Funds had no contingent liabilities or commitments.

5. All amounts are stated in Ringgit Malaysia.

Notes to the Accounts

41


In the opinion of the Directors, the Takafulink Funds (‘Funds’) financial statements set out on pages 36 to 49, comprising the Statements of Assets and Liabilities as at 31 December 2014 and the related Statements of Income and Expenditure and Statements of Changes in Net Asset Value for the financial year ended 31 December 2014 together with the notes thereto, have been prepared, in all material respects in accordance with the accounting policies set out in Note 1 to the financial statements and Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL 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,23 March 2015

STATEMENT BY DIRECTORS

42


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 2014, 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 27 to 40.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements in accordance with the accounting policies set out in Note 1 to the financial statements and Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL 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’ REPORTto the unitholders of Takafulink Funds

43


43


Opinion

In our opinion, the financial statements as of 31 December 2014 and for the year then ended have been prepared, in all material respects in accordance with the accounting policies set out in Note 1 to the financial statements and 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,23 March 2015

Independent Auditors’ Reportto the unitholders of Takafulink Funds

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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