For All For Life - Prudential BSN Takaful delivered New Business growth on Annual Contribution Equivalent ... education continuity and ... who was the Bank Negara Malaysia

TAkAFUlINk FUNDS REPORT 2016Takafulink Reports and Statementsfor the year ended 31 December 2016

For All For Life

Contents2 CEO’s Message

5 Fund Objectives

6 Investment Review

12 Fund Performance

13 Investment Outlook

15 Financial Highlights

27 Statement of Assets and Liabilities

31 Statement of Changes in 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 2016 of Prudential BSN Takaful Berhad. This report is also available on our website at www.prubsn.com.my.

Takafulink Funds Report 2016 1

PruBSN Warisan

Ensuringfamily survival

Nominate yourown beneficiary

High non-medicallimit

BENEFITS

*Terms & conditions apply

Can she stand onher own withoutyou one day?

PruBSN Warisan

KelangsunganHidup Keluarga

Hibah

Had Tanpa PemeriksaanPerubaan Yang Tinggi

MANFAAT

*Tertakluk pada Terma & Syarat

Mampukan diaberdikari tanpamusatu hari nanti

Takafulink Funds Report 20162

CEO’S MESSAGE

2016 marked an exciting year for us at PruBSN. With a team that has endured these challenges with tenacity and persistence, it gives me great pleasure to share the latest edition of our Takafulink Funds Report. I hope this report will be a valuable guide as you plan for your long-term financial needs and goals.

The international markets were volatile through 2016 with global political development fuelling uncertainties in the Malaysia market as well. Irrespective of this volatility, Malaysia’s economy grew by 4.2% in 2016 and is expected to remain on a moderate growth path at 4.5% in 2017. Correspondingly, our achievements in the industry and close insights on the economic and regulatory changes have positioned us as trusted experts in the takaful industry.

“ We delivered New Business growth on Annual Contribution Equivalent (ACE)1 of 4.3% against last year at RM446 million and a market share of 32.5% as at 31 December 2016.”


CEO’S MESSAGE

We delivered New Business growth on Annual Contribution Equivalent (ACE)1 of 4.3% against last year at RM446 million and a market share of 32.5% as at 31 December 2016. This maintained us as the Number One Family Takaful Operator in the country for six consecutive years.

Since our inception, we remain focused to provide protection and savings opportunities that meet the growing needs of Malaysians today. With the evolving markets, adaptability is a competitive advantage. In 2016, we introduced an improved Vision and Mission as the beacon to guide the company through these refreshed objectives.

2016 also saw various initiatives by the company which contributed more inventive solutions to the market, adding on to our impressive list of ‘firsts’ in the industry. We introduced PruBSN Warisan, another innovative plan which reinforced our position as an industry leader. PruBSN Warisan is an investment-linked takaful plan that provides a high sum covered to accommodate the need of leaving a legacy behind for loved ones in the form of hibah (gift) should the unfortunate happen. As part of the launch, we provided engaging and broad activities to promote hibah takaful across a diverse mix of medias. This awareness programme has been a renowned success. Within the first 3 months of launching, approximately 11,600 people have benefited from this awareness programme by subscribing to PruBSN Warisan, with approximately RM5.2 billion worth of protection guaranteed to their nominated beneficiaries, the highest in Prudential Group history.

Like our customers, we are enthused by new technologies. We created PruBSN Touch, a customer portal equipped with the e-Certificate facility, to enable our customers to update personal details, print annual returns, review certificate details, view contribution payment and policy status. We also launched our e-payment platform which offers our certificate holders the flexibility to make payments online. These innovations are reflective of our efforts to harness technology in a way that can genuinely benefit our customers and aligns to the government’s ongoing initiative to digitise financial transactions.

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.


CEO’S MESSAGE

Apart from creating benefits for our investors and shareholders, we strive to deliver economic and social benefits for the communities in which we operate. Through our charity investment arm PruBSN Prihatin, we initiated Project Surprise with a mission to give hope to children cancer patients nationwide by granting their wishes. We have also disbursed a substantial amount of zakat and charity funds for the communities we support to provide basic living needs, education continuity and assisting those suffering from critical illness. As an extension to our Corporate Social & Zakat Responsibility programmes, we work together with Prudential’s Regional charity investment arm, Prudence Foundation, for the post-disaster relief and rebuilding missions in Bantayan, Philippines and Quang Binh, Vietnam last year.

Our focused efforts and disciplined execution of our core strategies has gained us multiple industry award wins under our belt. Last year, PruBSN was awarded the Most Outstanding Takaful Company at the 13th Kuala Lumpur Islamic Finance Forum as well as conferred 24 awards including ‘Best Takaful Operator for Agency Family Takaful Business’ by the Malaysian Takaful Association.

We look forward to your continued support as we elevate and take on new challenges to serve you better. I would like to express my earnest appreciation for your loyalty and continued patronage with PruBSN. My extended gratitude goes to our fully committed shareholders who have worked closely with me to ensure financial security is made accessible to all Malaysians and their families. Wishing you every success in 2017!

With my very best wishes,

Aman ChowlaChief Executive Officer Prudential BSN Takaful


FUND OBJECTIVESThe 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.

There is no change in the investment objectives and strategies for all funds during the year.


INVESTMENT REVIEW

Equity Market

The start of 1Q2016 was a very volatile period for global equity markets as investors fretted over the state of the United States (“US”) economy, weak oil prices with seemingly little impact on oil production, and continued concerns over China’s stock market rout. China lifted the ruling that regulators put in place in 2015 to now allow shareholders with holdings exceeding 5% and insiders to sell their stakes. China’s Securities Regulatory Commission (“CSRC”) introduced the use of circuit breakers in an attempt to tame the wild gyrations of the market, but had the opposite reaction, resulting in increased selling pressure triggering the circuit breaker many times in the first week of trading, until the CSRC abandoned it four days later. This was further complicated by weakness in the US Dollar (“USD”) as expectations for the US Federal Reserve to continue their hawkish stance diminished significantly early February due to the tighter financial conditions. Given the sharply lower oil prices, the Malaysian government announced a recalibrated Budget 2016 in an effort to maintain fiscal discipline. The 4Q2015 results reporting season ended with consensus adjusting down 2015 earnings to a contraction of 2%-3%, and 2016 earnings per share (“EPS”) is now expected to grow by 5%-6% year-on-year (“yoy”), down from 7%-8% at the beginning of 2016. The Malaysian Ringgit (“RM”) strengthened from RM4.29/USD at the end of 4Q2015 to RM3.90/USD by end of 1Q2016. Foreign institutional investors were net buyers of Malaysian equities for the 1Q2016 of RM5.7billion, after six consecutive quarters of net foreign outflow. Crude oil prices also rebounded from the low of USD27.10 per barrel in January 2016, to end the quarter at USD38.34 per barrel as production from shale oil production in the US started showing signs of declining.

Markets consolidated early in 2Q2016 amidst steadily higher crude oil prices and volatility in currencies against the USD. After months of uncertainty regarding the possibility of a BREXIT, US interest rate hike and slower economic data from China, global markets corrected sharply towards the end of the 2Q2016 as the unexpected happened: on the 23 June 2016, United Kingdom (“UK”) voted to leave the European Union. Panic selling ensued but markets quickly rebounded thereafter as UK’s Prime Minister stepped down following the result, and investors digest the mechanics of how UK will leave the European Union, and how it will be a long drawn out affair. The demand for safe haven currencies took hold, and the Japanese Yen strengthened below Yen100/USD intraday near the end of June (strengthening about 16% year to date), whilst the British Pound depreciated by 10% year to date. Domestically, Malaysia trended down during the 2Q2016 despite the stronger crude oil prices which bounced back from USD40 per barrel to USD50 per barrel during the quarter. Investor sentiment was weak following the concerns over the technical default on the 1Malaysia Development Berhad (“1MDB”) bond which missed a payment given the dispute between the issuer (1MDB) and the guarantor (International Petroleum Investment Co), which led to speculation over potential cross defaults and putting sovereign ratings at risk. Even the announcement of Datuk Muhammad Ibrahim, who was the Bank Negara Malaysia (“BNM”) deputy governor, as the new governor of BNM failed to excite the market. 1Q2016 results season was once again a disappointment, and consensus has cut 2016 earnings by 4.5%, and now expects 2016 earnings to still grow by 1.3%. However, despite the weak earnings growth outlook, the Malaysian economy remained fairly resilient in light of the external volatilities such as BREXIT.


Investment Review

Equity Market (continued)

In 3Q2016 global markets enjoyed a decent rally on the back of expected continued global efforts to ensure accommodative monetary policy is still on the agenda. European markets stabilised somewhat as there was a quick resolution to the UK Prime Minister’s position that was vacated by David Cameron due to the BREXIT outcome. Towards the end of the 3Q2016, the launch of Apple’s iPhone 7 was well received with stock of the new model all sold out within a couple of days post launch. Samsung Electronics were badly affected by the recall of their latest Galaxy Note 7 due to the incidences of exploding batteries. The US Presidential debate was also in focus as the race between the two candidates remained tight five weeks before the elections. Crude oil prices rebounded as Organisation of the Petroleum Exporting Countries (“OPEC”)’s meeting in Algiers saw an agreement of sorts to freeze production. Malaysian equities corrected early 3Q2016 on the back of negative news flow from the announcement by the US Department of Justice filing a civil suit to seize assets tied to 1MDB, under the Kleptocracy Asset Recovery Initiative. Fitch Ratings downgraded Petronas’ Long Term Foreign and Local Currency Issuer Default Ratings (“IDRs”) to A- from A, but affirmed their short term foreign currency IDR at F1. The outlook on the Long Term IDRs is Stable. The 2Q2016 results season delivered yet another round of lower than expected earnings, resulting in consensus downgrade of Malaysian earnings growth for 2016 to approximately -2% yoy, the third year of negative growth. The 3Q2016 ended with more focus on the upcoming 2017 Budget, and concerns over whether Malaysia’s fiscal deficit target of 3.1% for 2016 would be met.

4Q2016 was a volatile one for global markets. UK’s parliament debated on their exit from the European Union, as the Sterling Pound fell to a low against the USD and Euro. In November, the surprise win by Mr Trump in the US Presidential Elections gave rise to global uncertainties, which saw the Asia Pacific regional markets correct sharply, in anticipation potential negative trade policies to be enacted. The US equity market, after a brief but sharp decline post elections, rallied to all-time highs as investors are hopeful that talks of a corporate tax cut and increased fiscal spending will stimulate the economy. In December, the US Federal Reserve raised the target range for the Federal Funds Rate at 0.5-0.75% as expected, and the Federal Open Market Committee (“FOMC”) gave indications of more interest rate hikes to come. Oil prices rallied as non-OPEC members agreed to reduce output, on top of the output cut agreed by OPEC members. Malaysian equities started 4Q2016 off well with concerns over meeting fiscal deficit targets allayed somewhat leading up to the Budget 2017 announcement. Foreign investors’ concerns were heightened when BNM reiterated that onshore banks are not to facilitate offshore banks with non-deliverable forwards (“NDFs”) which they attributed speculation on the Ringgit and the highly volatile movements in the exchange rate of late. The MYR continued its downwards trend ending the 4Q 2016 at RM4.4862/USD, prompting BNM to come out with measures early in the month to restrict exporters from apparent hoarding of USD.


Investment Review

Equity Market (continued)

The FBM Emas Shariah (FBMS) Index closed the year under review at 12,014.42 points, down 6.142%. The broader FBM Emas (FBMEMAS) Index closed the period under review lower by 2.77%. The MSCI Asia Pacific ex-Japan Index rose by 3.74% in USD terms1.

Sukuk Market Review

Bank Negara Malaysia (“BNM”) maintained the Overnight Policy Rate (“OPR”) at 3.25% throughout the first half of 2016 as BNM believes that the monetary policy stance remained accommodative and supportive of economic activity. However, BNM noted the downside risks in the global economic and financial environment and was closely monitoring and assessing their implications on domestic price stability and growth to ensure that the stance was consistent with the sustainable growth of the Malaysian economy. Separately, BNM reduced the Statutory Reserve Requirement (“SRR”) from 4.00% to 3.50% effective 1 February to ensure sufficient liquidity in the financial system.

At the Monetary Policy Committee (“MPC”) meeting on 13 July 2016, BNM unexpectedly reduced the OPR by 25 basis points (“bps”) to 3.00% from 3.25%. BNM’s move to reduce the OPR was seen as a pre-emptive move by the central bank as BNM expects growth momentum in the major economies to moderate in the second half of the year coupled with increasing downside risks in light of possible repercussions from the European Union referendum in the UK. Following the rate cut in July, BNM kept the OPR at 3.00% in the subsequent MPC meetings for 2016. BNM anticipates the domestic economy to remain robust and to grow between 4%-4.5% for 2016 but global uncertainties could weigh on the growth. Nevertheless, BNM expects domestic demand to be the main driver of growth while private consumption is expected to be supported by stable wage and employment growth. Overall investment is expected to be supported by the on-going implementation of infrastructure projects and capital spending in the manufacturing and services sectors. Exports are projected to remain weak following more subdued demand from Malaysia’s key trading partners.

Headline inflation eased from 2.7% year-on-year (“yoy”) in December 2015 to 1.8% yoy in November 2016. The drop was mainly driven by a fall in transportation costs (-1.5% yoy), communications (-2.7% yoy) and clothing inflation (-0.5% yoy). On the other hand, food and non-alcoholic beverages inflation was relatively stable at 3.9% yoy in December 2015 and 3.8% yoy in November 2016. For 2017, headline inflation is expected to increase due to the removal of subsidies coupled with higher energy prices as oil price has rebounded up from around USD 41 per barrel in January to around USD53 per barrel as at end December 2016.

1Source: Bloomberg: World indices


Investment Review

Sukuk Market Review (continued)

In his budget speech in October, the Prime Minister unveiled 2017 national budget with the theme “Accelerating Growth, Ensuring Fiscal Prudence, Enhancing Well-being of the Rakyat”. Overall, fiscal consolidation remains on track as the Government plans to achieve a budget deficit at RM40.3billion or 3.0% of Gross Domestic Product (“GDP”) in 2017. The Government expects revenue in 2016 to ease lower to RM212.6billion (2015: RM219.1billion) mainly due to lower collection of petroleum related revenue following lower crude oil prices. However, this impact is expected to be cushioned by improved Government Service Tax (“GST”) collection. Furthermore, the Government expects revenue collection to improve by 3% in 2017 on the back of larger tax revenue from corporate income tax collection. Separately, the Government expects the Malaysian economy to gain some traction to grow between 4.0-5.0% in 2017 as the Government expects that growth will remain private sector-driven, supported by quicker expansions in private consumption and private investment with added support from public spending and continued recovery in exports.

The surprise win by the Republican presidential nominee Donald Trump in the recent United States Presidential Election in November 2016 spurred a broad flight to safety around the globe. Investors were left unsettled over the future of the American and global economy based on the economic policies that were advocated by Trump throughout his presidential campaign. Trump’s future policies indicate higher fiscal spending and tax cuts which may lead to more debt supply and higher yields. Separately, the market-implied chance of a US Federal Reserve (“Fed”) hike increased after Trump’s triumph as investors now expects the Fed to continue its monetary tightening path in December 2016 and 2017 onwards.

In December 2016, the Fed raised its key interest rates by 25bps to between 0.50%-0.75%. The Fed’s move to raise interest rate was widely expected by the market as the Fed has been signalling for a rate hike for nearly a year since the Fed last raised interest rate in December 2015 from a record low near zero set during the 2008 financial crisis. The Federal Open Market Committee (“FOMC”)’s recent action signalled that the Fed believe that the US economy has improved over the past year and expect that the US economic activity will continue expand at a moderate pace with improving labour market conditions.

For the period under review, the 3-year, 5-year, 10-year and 15-year sovereign sukuk yields changed by +31bps, -4bps, -15bps and +3bps to 3.66%, 3.80%, 4.37% and 4.65% respectively. In 1Q2016, sovereign sukuk yields drifted lower after BNM reduced the SRR from 4.00% to 3.50% effective 1 February to ensure sufficient liquidity in the financial system. Furthermore, yields continued to trend downwards after a dovish statement by the FOMC which indicated a very gradual path of rate hike in 2016. Sovereign sukuk yields continued to fall across all tenors at the end of the second and third quarter of 2017, following United Kingdom’s Referendum on 23 June 2016 to withdraw from European Union and after BNM unexpectedly cut the OPR by 0.25% to 3.00% in July 2016’s MPC meeting. However, sovereign sukuk yields spiked higher in November after the Republican presidential nominee Donald Trump won the recent US Presidential Election. Investors were left unsettled over the future of the American and global economy based on the economic policies that were advocated by Trump throughout his presidential campaign. Furthermore, yields were traded higher on the expectation of higher Fed rate hike as the Fed are now forecasting three rate increases in 2017 instead of two rate hikes as previously projected.


Investment Review

Sukuk Market Review (continued)

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 new Malaysian Ringgit (“MYR”) Corporate issuances in 2016 were relatively flat around RM71bilion of which approximately 25% was conventional and 75% was Islamic. Major primary issuances were from the government guaranteed, power, toll roads and banking sectors. Major issuances include RM9billion from Danainfra, RM5.5billion from Sarawak Hydro, RM4.2billion from Cagamas and RM3.6billion from Lebuhraya Duke Fasa-3.

Asia-Pacific ex-Japan

Asian equity markets ended 2016 slightly higher despite several unexpected global events throughout the year. On a year-on-year basis, Thailand’s Stock Exchange of Thailand (“SET”), Korea’s Korean Composite Stock Price Indices (“KOSPI”) and Hong Kong’s Hang Seng were notable gainers while Malaysia, Vietnam, and Philippines ended the year in the red.

The negative sentiment from 2015 carried over into 2016. After the Chinese circuit breaker spooked markets on the first trading day, investors, fretted over a weakening Chinese economy and currency, collapsing oil price and disappointing US earnings season. There was a minute amount of relief as global equity markets rallied on the final trading day of the January 2016 when the Bank of Japan surprised markets with negative interest rates. As the year progressed, Asia equities were lifted by the People’s Bank of China’s (“PBoC”) decision to cut reserve requirements in March 2016 and a global rush towards resource stocks. Association of Southeast Asia Nations (“ASEAN”), however, bucked the uptrend as a weaker Chinese economy and domestic issues weighed on sentiment. The unexpected UK referendum outcome in June 2016 triggered a spike in volatility but markets rebounded quickly. As risk abated, July 2016 marked record flows into Emerging Market (“EM”) assets and EM Asia equities rose accordingly.

But as the year drew to a close, Chinese equities lagged following the sharp bond market decline after authorities announced more stringent monetary policies. Indian equities also had a volatile month as the impact of demonetisation continued to unnerve investors. Bucking the downward trend, ASEAN equities generally rose, led by Indonesia as Fitch revised its rating outlook to positive.

All in, sentiment towards the Asian equity markets were very much driven by US news. The protectionist rhetoric from the new president, fears of higher interest rates, and a stronger USD had prompted investors to leave emerging market equities. The outflows were exacerbated by the Fed’s December meeting, which raised the US interest rate by twenty-five basis points, and the Fed signalling that interest rates might be raised three more times in 2017.


Investment Review

Global Market2016 started on a weak note as fears about a Chinese economic slowdown and a depreciating RenMinBi (“RMB”) sparked a global sell-off. Oil prices also plunged to a low of $27.10 a barrel on the back of excess supply and low demand. This promoted the sell down of energy related sectors and raised the likelihood of high yield bond defaults.

In a surprise move, the Bank of Japan introduced negative interest rates to counter a global slowdown and consequently rates of developed countries dived as investors of Japanese government bonds bought into relatively higher yielding sovereign debt. In a similar vein, the European Central Bank extended quantitative easing in Europe and further reduced interest rates. The United States (“US”) Federal Reserve also held rates constant in March, signalling global factors played a role in its decision to pause.

At the halfway mark, the unexpected result of the United Kingdom (“UK”) referendum took centre stage and caused an increase in risk aversion. Global equities sold off and the Sterling took a beating. On the other hand, gold prices rose and government bond yields fell lower as investors piled into safe haven assets.

The unexpected Trump victory dominated headlines as the year drew to a close. Developed market equities surged while bonds sold off as investors bet on Trump’s possible reflationary policies. US equities surged into record territory while bond yields rose very quickly as investors rotated into risk-on assets. Subsequently the US Federal Reserve finally raised rates and indicated a more aggressive pace of tightening in 2017.

As a result of the Trump effect and the steeper pace of rising rates in the US, the US Dollar surged to multi-year highs and decimated Emerging Market assets (which had a stellar year until the US elections), with the exception of Brazil and Russia; both these markets thrived on recovering oil prices supported by a historic agreement to curb production between The Organization of the Petroleum Exporting Country (“OPEC”) and Non-OPEC.


FUND PERFORMANCE

Takafulink Dana EkuitiAs at 31 December 2016, the Fund’s Net Asset Value per unit depreciated by -3.88% to RM2.09467 as compared to RM2.17916 as at 31 December 2015.

Since inception (1 December 2006), the Fund registered a positive return of 109.32%.

Takafulink Dana BonAs at 31 December 2016, the Fund’s Net Asset Value per unit increased to RM1.46903 from RM1.40081 as at 31 December 2015, recording a return of 4.87% for the period under review.


Takafulink Dana UrusAs at 31 December 2016, the Net Asset Value per unit of the Takafulink Dana Urus was RM1.95231 compared to RM1.99378 as at 31 December 2015, recording a negative return of 2.08% for the period under review.


Takafulink Dana Ekuiti DinastiAs at 31 December 2016, the Fund’s Net Asset Value per unit appreciated by 9.49% to RM1.58865 as compared to RM1.45091 as at 31 December 2015.

Since inception (5 April 2010), the Fund registered a positive return of 58.86%.


INVESTMENT OUTlOOk

Equity2017 will likely be another year of volatility. 2017 is slated to witness many elections and some of the key ones to monitor include: Hong Kong’s Chief Executive Election, France’s Presidential Election, Iran’s Presidential Election, and Germany’s Election. Malaysia may also opt for an early general election as well, with the deadline being end April/early May 2018. UK may still invoke Article 50 in March 2017, and potential changes in ruling political parties in coming European elections will add uncertainty to the mix.

Malaysia’s blossoming relationship with China will likely have a bigger influence on the construction and property sector in the months to come – although the ultimate multiplier effect on the Malaysian economy has yet to be determined. The finer details as to which portions will be farmed out to local contractors have yet to be unveiled. Consumption should hold up, going into 2017 with higher BR1M payments to more recipients. The higher crude oil prices will help provide some relief to the government’s fiscal balance, as well as improved agriculture output as El Nino should be behind us. However with consumer the resilient driver of growth, a sharply weaker ringgit will have a negative impact on disposable incomes as much of our food and beverage items are imported, and dampen consumer confidence in general.

We remain relatively cautious, looking for opportunity to accumulate fundamentally sound stocks on weakness.

SukukIt will be a new beginning for the US as Donald Trump was sworn in as the 45th President of the United States on 20 January 2017. Donald Trump will officially take over from President Barack Obama and his inauguration may mark the start of a new wave of uncertainty across the global economy. His new policies may result a higher fiscal spending and tax cuts which may lead to more debt supply and higher US treasury yields in the US. Furthermore, there are doubts on the fate of current trade treaties and partnership that have been signed with the US. However, these new policies are yet to be finalised and investors will closely monitor any new official announcement that he may make once he is sworn in as the new US president.


Investment Outlook

Sukuk (continued)

On 14 December 2016, the Fed set the new target range for the federal funds rate at 0.5% to 0.75%, up from 0% to 0.25%. The hike was the second change since the rate was lowered to near zero in December 2008. The Fed also released an updated forecast as the Fed is now forecasting three rate increases in 2017 instead of two rate hikes as previously projected according to the new “dot plot” of rate projections. This new path implies that the Fed is now ready to raise interest rates as the Fed may have taken into consideration the effects of the incoming Trump administration’s promises of tax cuts, spending and deregulation. However, the Fed would continue to monitor the economic expansion and labour market indicators before hiking its rates.

Going forward, BNM will be focusing on providing support for the sustainability of economic growth in the months ahead. BNM expects inflation to remain relatively stable in 2017 given the environment of low global energy and commodity prices, and generally subdued global inflation. We believe that BNM would leave the OPR rate unchanged, and that any possibility of a rate change will be data-dependent on external uncertainties and domestic growth.

We expect the fixed income market to be volatile in 2017 given the rising uncertainty in the global economic condition and political backdrop. MYR performance, monetary policy tightening by the Fed, China’s growth, and political developments in Europe will be the key risk factors in 2017 which may impact to the domestic sovereign sukuk market. On the domestic corporate sukuk segment, we are still cautious of rising risks of rating downgrades and defaults in the credit market amidst the protracted slow environment. On the supply side, we believe that corporates will remain cautious towards expansion or capex spending in 2017 given uncertainties surrounding global and local economic outlook and may hold their plans to tap into the corporate sukuk market.

Asia-Pacific ex-JapanAsian equities remain very cheap relative to their long term averages and relative to developed markets of the West. Investing at these valuations has historically been a very attractive entry point. We are now seeing improving economic growth supported by a pick up in earnings delivery across Asia which has been driving improving sentiment for the region’s shares.

Global MarketHeading into 2017, there are signs of a broadening economic recovery across regions but some key risks include a disorderly unwind of high private sector leverage in China, a more hawkish than expected shift of US monetary policy and rising US-China tensions.


FINANCIAl HIGHlIGHTS

Comparative Performance Table for financial year ended 31 December 2016

Takafulink Dana EkuitiDescription 2016 2015 2014 2013 2012 % % % % %

EquityAutomotive 1.42 2.02 4.03 4.04 -Banking & Finance 4.26 3.81 2.00 2.81 -Building Materials 0.45 - - - 0.33 Conglomerates 10.16 10.10 10.12 8.74 6.29 Construction 3.84 3.20 4.37 5.45 4.59 Consumer Products 2.79 3.13 7.82 2.10 1.50 Health Care 9.34 10.19 - - -Takaful - - 1.31 1.05 -Manufacturing - - 1.82 0.57 3.78 Media - - 0.10 - 0.32 Motor - - - - 1.56 Oil & Gas 13.76 10.68 11.06 22.82 19.02 Plantation 8.84 5.49 8.07 10.04 7.04 Power 11.00 10.77 9.59 9.93 7.83 Property 6.52 6.36 6.71 4.09 5.70 Services - - - - 2.49 Technology 1.50 2.16 1.80 1.11 1.50 Telecommunications 16.65 21.26 22.94 25.06 28.45 Transportation 4.90 5.50 3.34 0.85 - 95.43 94.67 95.08 98.66 90.40 Cash and Islamic Deposits 6.54 6.37 5.68 3.46 12.21 Other Assets 0.29 0.35 0.46 0.79 0.37 Total liabilities (2.26) (1.39) (1.22) (2.91) (2.98)Total 100.00 100.00 100.00 100.00 100.00



Takafulink Dana EkuitiDescription 2016 2015 2014 2013 2012 % % % % %

Total Net Asset Value (RM) 782,472,204 676,457,441 557,891,215 444,277,106 313,674,835Units in Circulation 373,553,331 310,420,558 269,098,535 216,923,836 176,298,428NAV Per Unit (RM) 2.09467 2.17916 2.07319 2.04808 1.77923 Highest NAV per unit (RM) 2.17909 2.23588 2.14104 2.05432 1.77923Lowest NAV per unit (RM) 2.05017 1.93892 1.95167 1.69330 1.51099 Total Return (+)- Capital Growth (3.88%) 5.11% 1.23% 15.11% 16.61%

Average Annual Return – Fund (+)PeriodOne year (3.88%) 5.11% 1.23% 15.11% 16.61%Three years 0.75% 6.99% 10.76% 13.35% 14.19%Five years 6.54% 9.15% 11.65% 18.47% 5.55%

Average Annual Return – Benchmark: FTSE-Bursa Malaysia Emas Shariah Index (FBMSHA) PeriodOne year (6.14%) 2.35% (4.17%) 13.29% 11.85%Three years (2.72%) 3.57% 6.68% 9.07% 10.63%Five years 3.13% 4.94% 8.01% 17.01% 1.81%

Financial Highlights



Takafulink Dana Ekuiti Fund Performance

(40.00)

(20.00)

Date

% C

hang

e Si

nce

Ince

ptio

n

0.00

20.00

40.00

60.00

80.00

140.00

120.00

100.00

(40.00)

(20.00)

0.00

20.00

40.00

60.00

80.00

120.00

140.00

100.00

% %

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

+ 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

Dec-

06

Apr-0

7

Aug-

07

Dec-

07

Apr-0

8

Aug-

08

Dec-

08

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Feb-

12

Oct

-12

Jun-

12

Feb-

13

Jun-

13

Oct

-13

Feb-

14

Jul-1

4

Nov

-14

Mar

-15

Jul-1

5

Nov

-15

Mar

-16

Jul-1

6

Dec-

16



Takafulink Dana BonDescription 2016 2015 2014 2013 2012 % % % % %

Sukuk:- Sukuk 81.78 91.22 88.84 89.97 83.00- Government 1.50 1.72 1.92 2.59 5.14- Quasi Government 15.42 4.14 4.71 6.04 7.92Cash and Islamic Deposits 0.60 2.45 3.95 0.86 3.27Other Assets 1.11 0.83 0.95 0.91 1.16Total Liabilities (0.41) (0.36) (0.37) (0.37) (0.49)Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 68,157,730 59,926,292 53,317,726 39,738,109 38,783,817Units in Circulation 46,396,573 42,779,802 39,403,967 30,454,959 29,789,395NAV Per Unit (RM) 1.46903 1.40081 1.35311 1.30482 1.29095Highest NAV per unit (RM) 1.48039 1.40170 1.35459 1.32384 1.29095Lowest NAV per unit (RM) 1.40096 1.35325 1.30083 1.28849 1.23189Total Return (+)- Capital Growth 4.87% 3.53% 3.70% 0.22% 5.70%





Takafulink Dana BonDescription 2016 2015 2014 2013 2012 % % % % %

Average Annual Return – Fund (+)PeriodOne year 4.87% 3.53% 3.70% 0.22% 5.70%Three years 4.03% 2.76% 3.18% 3.58% 5.35%Five years 3.59% 3.59% 3.98% 4.24% 4.57%

Average Annual Return – Benchmark: MBB 1 month Tier 1 Islamic Deposit-i ratePeriodOne year 3.30% 3.09% 2.89% 2.75% 2.84%Three years 3.09% 2.91% 2.83% 2.84% 2.76%Five years 2.97% 2.90% 2.78% 2.63% 2.66%


Takafulink Dana Bon Fund Performance

(10.00)

Date

% C

hang

e Si

nce

Ince

ptio

n

% %

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


TDB MBB 1 Month Tier 1 Islamic Deposit Rate

(5.00)

5.00

0.00

10.00

15.0020.00

25.00

30.00

35.00

40.0045.00

50.00

(10.00)

(5.00)

5.00

0.00

10.00

15.0020.00

25.00

30.00

35.00

40.0045.00

50.00

Dec-

06

Apr-0

7

Aug-

07

Dec-

07

Apr-0

8

Aug-

08

Dec-

08

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Feb-

12

Oct

-12

Jun-

12

Feb-

13

Jun-

13

Oct

-13

Feb-

14

Jul-1

4

Nov

-14

Mar

-15

Jul-1

5

Nov

-15

Mar

-16

Jul-1

6

Dec-

16




Takafulink Dana UrusDescription 2016 2015 2014 2013 2012 % % % % %

Investment in -Takafulink Dana Ekuiti Fund 80.05 79.11 77.32 77.43 82.48Takafulink Dana Bon Fund 19.95 20.89 22.68 22.57 17.52Other Assets - - - - 0.01Total Liabilities - - - - (0.01)Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 215,046,447 195,840,723 166,801,352 127,408,086 90,908,575Units in Circulation 110,149,953 98,226,016 87,659,334 68,180,347 54,410,831NAV Per Unit(RM) 1.95231 1.99378 1.90284 1.86869 1.67078Highest NAV per unit (RM) 2.00153 2.02576 1.94914 1.87235 1.67078Lowest NAV per unit (RM) 1.91101 1.81783 1.80062 1.60699 1.45690Total Return (+)- Capital Growth (2.08%) 4.78% 1.82% 11.85% 13.90%




Takafulink Dana UrusDescription 2016 2015 2014 2013 2012 % % % % %

Average Annual Return –Fund (+)PeriodOne year (2.08%) 4.78% 1.82% 11.85% 13.90%Three years 1.47% 6.07% 9.06% 11.05% 12.21%Five years 5.88% 7.88% 9.98% 15.34% 5.27%

Average Annual Return –Benchmark: 80% FBMSHA + 20% 1 Month Maybank Tier 1 Islamic Deposit ratePeriodOne year (4.28%) 2.61% (2.76%) 11.18% 10.05%Three years (1.52%) 3.52% 5.96% 7.76% 8.98%Five years 3.16% 4.54% 6.95% 14.03% 2.12%




Takafulink Dana Urus Fund Performance

(20.00)

Date

% C

hang

e Si

nce

Ince

ptio

n

0.00

20.00

40.00

60.00

120.00

100.00

80.00

0.00

20.00

40.00

60.00

120.00

80.00

100.00

(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

Apr-0

7

Aug-

07

Dec-

07

Apr-0

8

Aug-

08

Dec-

08

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Feb-

12

Oct

-12

Jun-

12

Feb-

13

Jun-

13

Oct

-13

Feb-

14

Jul-1

4

Nov

-14

Mar

-15

Jul-1

5

Nov

-15

Mar

-16

Jul-1

6

Dec-

16



Takafulink Dana Ekuiti DinastiDescription 2016 2015 2014 2013 2012 % % % % %

Investment in - Eastspring Investments Dinasti Equity Fund 100.91 100.76 100.38 102.23 99.27Cash and Islamic Deposits 0.20 0.31 0.33 - 1.52Other Assets 0.37 0.24 0.20 0.74 0.99Total liabilities (1.48) (1.31) (0.91) (2.97) (1.78)Total 100.00 100.00 100.00 100.00 100.00

Total Net Asset Value (RM) 31,872,838 24,417,988 17,713,152 14,001,888 8,838,416Units in Circulation 20,062,820 16,829,444 14,470,661 11,866,743 8,242,370NAV Per Unit (RM) 1.58865 1.45091 1.22407 1.17993 1.07231Highest NAV per unit (RM) 1.63542 1.53505 1.23372 1.18820 1.07328Lowest NAV per unit (RM) 1.26837 1.22329 1.09389 0.99548 0.93124Total Return (+) - Capital Growth 9.49% 18.53% 3.75% 10.03% 10.55%



Takafulink Dana Ekuiti DinastiDescription 2016 2015 2014 2013 2012 % % % % %

Average Annual Return – Fund (+)PeriodOne year 9.49% 18.53% 3.75% 10.03% 10.55%Three years 10.42% 10.60% 8.06% 2.55% n/aFive years 10.37% 5.81% n/a n/a n/a

Average Annual Return – Benchmark: Dow Jones IslamicMarket Greater China IndexPeriodOne year 8.51% 16.97% 9.91% 18.04% 6.75%Three years 11.74% 14.92% 12.83% 2.96% n/aFive years 12.76% 7.01% n/a n/a n/a



Takafulink Dana Ekuiti Dinasti Fund Performance

(10.00)

0.00

Date

% C

hang

e Si

nce

Ince

ptio

n

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

(10.00)

% %

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


TDED Dow Jones Islamic Market Greater China Index

Apr-1

0

Sep-

10

Jan-

11

Jun-

11

Oct

-11

Feb-

12

Jul-1

2

Nov

-12

Apr-1

3

Aug-

13

Dec-

13

May

-14

Sep-

14

Feb-

15

Jun-

15

Oct

-15

Mar

-16

Dec-

16

Jun-

16



STATEMENT OF ASSETS AND lIABIlITIESas at 31 December 2016

Takafulink Dana Ekuiti 2016 2015 RM % RM %

InvestmentsShariah-compliant Securities 746,717,426 95.43 640,393,765 94.67

Cash and Islamic Deposits 51,175,977 6.54 43,136,755 6.37Cash at bank 25,977 0.00 16,755 0.00Islamic Deposits 51,150,000 6.54 43,120,000 6.37

Tax Assets 1,178 0.00 1,178 0.00Other Assets 2,269,110 0.29 2,335,235 0.35

Dividend Receivable 2,250,133 0.28 2,309,822 0.34Accrued Profit 18,977 0.01 25,413 0.01

Total Assets 800,163,691 102.26 685,866,933 101.39Provision for Deferred Tax (3,697,069) (0.47) (7,145,809) (1.06)Provision for Taxation (280,648) (0.04) (138,283) (0.02)Other Liabilities (13,713,770) (1.75) (2,125,400) (0.31)

Due to Stockbroking Companies (12,653,674) (1.62) (1,213,297) (0.18)Other Liabilities (1,060,096) (0.13) (912,103) (0.13)

Total liabilities (17,691,487) (2.26) (9,409,492) (1.39)

Net Asset Value of the Fund 782,472,204 100.00 676,457,441 100.00

Participants FundCapital 636,346,870 81.33 502,453,863 74.28Generated Income Carried Forward 146,125,334 18.67 174,003,578 25.72

Total Participants Fund 782,472,204 100.00 676,457,441 100.00

Net Asset Value Per Unit (RM) 2.09467 2.17916

NUMBER OF UNITS 373,553,331 310,420,558


Takafulink Dana Bon 2016 2015 RM % RM %

Investments Sukuk 67,274,401 98.70 58,165,426 97.06

Cash and Islamic Deposits 409,975 0.60 1,477,610 2.47Cash at bank 29,975 0.04 17,610 0.03Islamic Deposits 380,000 0.56 1,460,000 2.44

Other Assets 758,739 1.11 499,624 0.83

Total Assets 68,443,115 100.41 60,142,660 100.36Provision for Taxation (239,434) (0.35) (220,815) (0.37)Provision for Deferred Tax (16,781) (0.02) 29,595 0.05Other Liabilities (29,170) (0.04) (25,148) (0.04)

Total liabilities (285,385) (0.41) (216,368) (0.36)





NUMBER OF UNITS 46,396,573 42,779,802

Statement of Assets and Liabilitiesas at 31 December 2016



Takafulink Dana Urus 2016 2015 RM % RM %

Investments in - Takafulink Dana Ekuiti Fund 172,144,253 80.05 154,928,117 79.11Takafulink Dana Bon Fund 42,902,588 19.95 40,914,978 20.89

Total Assets 215,046,841 100.00 195,843,095 100.00Other Liabilities (394) (0.00) (2,372) (0.00)

Total liabilities (394) (0.00) (2,372) (0.00)





NUMBER OF UNITS 110,149,953 98,226,016


Takafulink Dana Ekuiti Dinasti 2016 2015 RM % RM %

Investments in -Eastspring Investments Dinasti Equity Fund 32,164,187 100.91 24,604,081 100.76Cash At Bank 62,140 0.20 76,131 0.31Other Assets 117,345 0.37 57,934 0.24

Total Assets 32,343,672 101.48 24,738,146 101.31Provision for Taxation (77,966) (0.24) - -Provision for Deferred Tax (306,273) (0.96) (231,094) (0.95)Other Liabilities (86,595) (0.27) (89,064) (0.36)

Total liabilities (470,834) (1.48) (320,158) (1.31)


Participants Fund Capital 23,343,680 73.24 18,675,387 76.48Generated Income Carried Forward 8,529,158 26.76 5,742,601 23.52



NUMBER OF UNITS 20,062,820 16,829,444



Takafulink Dana Ekuiti 2016 2015 RM RM

Net Asset Value at beginning of year 676,457,441 557,891,215Amounts received from units created 746,867,965 535,038,418Amounts paid for units cancelled (612,974,958) (447,437,097)Excess of (Outgo) over Income/Excess of Income over Outgo (27,878,244) 30,964,905Value of fund at end of year 782,472,204 676,457,441

STATEMENT OF CHANGES IN NET ASSET VAlUEfor the financial year ended 31 December 2016


Takafulink Dana Bon 2016 2015 RM RM

Net Asset Value at beginning of year 59,926,292 53,317,726Amounts received from units created 17,005,594 12,907,879Amounts paid for units cancelled (11,761,171) (8,289,898)Excess of Income over Outgo 2,987,015 1,990,585Value of fund at end of year 68,157,730 59,926,292

Statement of Changes in Net Asset Valuefor the financial year ended 31 December 2016


Takafulink Dana Urus 2016 2015 RM RM

Net Asset Value at beginning of year 195,840,723 166,801,352Amounts received from units created 146,166,940 109,599,164Amounts paid for units cancelled (122,711,224) (89,065,507)Excess of (Outgo) over Income/Excess of Income over Outgo (4,249,992) 8,505,714Value of fund at end of year 215,046,447 195,840,723



Takafulink Dana Ekuiti Dinasti 2016 2015 RM RM

Net Asset Value at beginning of year 24,417,988 17,713,152Amounts received from units created 25,152,171 19,383,410Amounts paid for units cancelled (20,483,878) (16,080,362)Excess of Income over Outgo 2,786,557 3,401,788Value of fund at end of year 31,872,838 24,417,988



Takafulink Dana Ekuiti 2016 2015 RM RM

Net Shariah-compliant Investment Income 20,032,005 18,762,657Profit Income 1,272,521 851,536Dividend income 18,759,484 17,911,121

Profits on Disposal of Shariah-compliant Securities 6,685,426 7,644,621Unrealised Capital Gain - 25,020,502Total Income 26,717,431 51,427,780Investment Management Fees (10,620,403) (9,163,509)Loss on Disposal of Shariah-compliant Securities (4,390,164) (6,767,620)Unrealised Capital Loss (42,706,748) -Provision for taxation 3,147,168 (4,507,139)Other Outgo (25,528) (24,607)

Bank Charges (618) (687)Custodian Charges (23,675) (23,018)Good & Services Tax Charges (1,235) (902)

Total Outgo (54,595,675) (20,462,875)Excess of (Outgo) over Income/Excess of Income over Outgo (27,878,244) 30,964,905

Generated Income Brought Forward 174,003,578 143,038,673Amount Available for Distribution - -Generated Income carried forward 146,125,334 174,003,578

STATEMENT OF INCOME & EXPENDITUREfor the financial year ended 31 December 2016


Statement of Income & Expenditurefor the financial year ended 31 December 2016

Takafulink Dana Bon 2016 2015 RM RM

Net Shariah-compliant Investment Income 3,141,173 2,796,253Profits on Disposal of Shariah-compliant Securities 3,824 -Unrealised Capital Gain 579,699 -Total Income 3,724,696 2,796,253Investment Management Fees (322,236) (289,837)Loss on Disposal of Shariah-compliant Securities (145,053) -Loss on redemption (9,254) (38,290)Unrealised Capital Loss - (301,524)Provision for taxation (257,733) (172,766)Other Outgo (3,405) (3,251)Total Outgo (737,681) (805,668)Excess of Income over Outgo 2,987,015 1,990,585

Generated Income Brought Forward 9,980,429 7,989,844Amount Available for Distribution - -Generated Income carried forward 12,967,444 9,980,429



Takafulink Dana Urus 2016 2015 RM RM

Net Shariah-compliant Investment Income 2,615,783 2,317,132Profits on Disposal 4,509,295 6,707,798Other Income 10,260 -Unrealised Capital Gain - 1,837,277Total Income 7,135,338 10,862,207Investment Management Fees (2,633,063) (2,356,493)Unrealised Capital Loss (8,752,267) -Total Outgo (11,385,330) (2,356,493)Excess of (Outgo) over Income/Excess of Income over Outgo (4,249,992) 8,505,714

Generated Income Brought Forward 43,844,180 35,338,466Amount Available for Distribution - -Generated Income Carried Forward 39,594,188 43,844,180


Takafulink Dana Ekuiti Dinasti 2016 2015 RM RM

Net Shariah-compliant Investment Income 482,768 399,735Profit On Disposal - -Unrealised Capital Gain 1,879,465 3,502,137Other Income 974,575 -Total Income 3,336,808 3,901,872Investment Management Fees (396,827) (327,762)Provision for taxation (153,150) (172,089)Other Outgo (274) (233)Total Outgo (550,251) (500,084)Excess of Income over Outgo 2,786,557 3,401,788

Generated Income Brought Forward 5,742,601 2,340,813Amount Available for Distribution - -Generated Income Carried Forward 8,529,158 5,742,601



NOTES TO THE ACCOUNTS

1. Summary of Significant Accounting Policiesa. Basis of Accounting

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

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

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

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

b. Investments

Quoted investments are valued at the closing market prices at the end of the financial year. Unquoted sukuk are valued at the prevailing prices quoted by financial institutions for year 2015 and a local pricing and valuation agency beginning 1 April 2016.

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

c. Dividend Income

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

d. Profit Income

Profit income is recognised on an accrual basis.

e. Gains/losses on Disposal of Investments

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


Notes to the Accounts

1. Summary of Significant Accounting Policies (continued)f. Investment Management Fees

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

g. Fee Rebate

This 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 Equivalents

Cash 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 CommissionsThe 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 2016, the Funds had no contingent liabilities or commitments.

5. All amounts are stated in Ringgit Malaysia.


STATEMENTS BY DIRECTORSIn the opinion of the Directors, the Takafulink Funds (‘Funds’) financial statements set out on pages 27 to 40, comprising the Statements of Assets and Liabilities as at 31 December 2016 and the related Statements of Income and Expenditure and Statements of Changes in Net Asset Value for the financial year ended 31 December 2016 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:

Gan leong Hin

Datuk Adinan bin Maning

Kuala Lumpur,21 March 2017


INDEPENDENT AUDITORS’ REPORT to the unitholders of Prudential BSN Takaful Berhad’s Takafulink Funds(Company No. 740651-H) (Incorporated in Malaysia)

Report on the Audit of the Financial Statements Opinion

We have audited the financial statements of Takafulink Funds of Prudential BSN Takaful Berhad (“the Manager”), which comprise the Statements of Assets and Liabilities as at 31 December 2016, the Statements of Changes in Net Asset Value and the Statements of Income and Expenditure for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 27 to 40.

In our opinion, the accompanying financial statements for the year ended 31 December 2016 are prepared, in all material respects, in accordance with the accounting policies set out in Note 1 to the financial statements and the Guidelines on Investment-Linked Insurance/Takaful Business (BNM/RH/GL 010-15).

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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


INDEPENDENT AUDITORS’ REPORTto the unitholders of Prudential BSN Takaful Berhad’s Takafulink Funds(Company No. 740651-H) (Incorporated in Malaysia)

Emphasis of Matter

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

Information Other than the Financial Statements and Auditors’ Report Thereon

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

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

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

Responsibilities of the Directors for the Financial Statements

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

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


Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriatein the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Takafulink Funds.

• Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelateddisclosures made by the Directors.

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

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




Other Matter

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

kPMG PlT(LLP 0010081-LCA & AF 0758)Chartered Accountants

Petaling Jaya,21 March 2017

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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