Investment Manager:

CIMB-Principal Asset Management Berhad

(March 2012)

How has the Fund performed recently compared to its peers and are there any particular stocks or areas where the Fund is performing well?

For the fourth quarter to December 2011, the WSFAP was up 3.01% in USD terms while the benchmark Dow Jones Islamic Asia Pacific (ex Japan) Index, rose 2.20%.  Hence, the fund out-performed the benchmark by 0.81% (note: both the benchmark and the WSFAP performances were measured from 27 September 2011 to 23 December 2011 due to weekly valuation).

We have overweight positions in the offshore marine and oil and gas sectors and these were the primary reasons for the Fund’s out-performance.  From a country perspective, positive attributes of stock selections in the Singapore (mostly from the offshore marine sector) and Hong Kong (mostly from the oil and gas sector) markets contributed most to the out-performance.

Investors can often be unfamiliar with the term Shariah funds.  What do Shariah funds offer to investors that conventional funds do not?

The primary difference is the Shariah funds are prohibited from investing in companies that do not comply with Islamic principles.  This means that conventional financial institutions, companies that engage in gambling, selling firearms, food and beverages that have pork and alcohol content etc are excluded from investment universe.  There is also a secondary screening of the financial health of a company considered for selection, for example its debt ratio, gearing ratio etc.

A growing number of non-Muslim investors are becoming interested in Shariah funds. Do you think there is a potential limit of popularity of Shariah funds among non-Muslim investors or could they one day be as popular as conventional funds?

We believe that Shariah products will transcend religious boundaries and, given time, will gain popularity among non-Muslims. Shariah products can be grouped with other ethical investment products such as those promoting clean energy and protecting the global environment.  Indeed, these ethically positive products are gaining popularity as the general public becomes increasingly aware of investing responsibly.

How do you approach the geographical diversification of the Fund’s portfolio considering it invests over a wide region rather than one single country? Which countries have the biggest potential for an investor and why?

For the near term, we think, the North Asia markets have the most latitude of out-performance. These markets have done relative poorly in 2011. They are more leveraged to the global economies and poised for a recovery.

The Fund has a significant allocation in Australia, particularly in its mining industry. Do you see any risks to demand for metals and other commodities from Australia because of problems in Europe and a possible slowdown in growth in China?

Mining sector is very diverse field.  Some parts of it might do well while others could underperform. For instance, we are positive on the oil and gas sector and will likely remain overweight in this sector.  Nevertheless, some commodities like iron ore could be affected by the slowdown in China and the European debt crisis.  We will use our skills and knowledge to avoid the potential underperformers.

Much has been said in recent months of problems in the Chinese economy. Do you think the Chinese economy is in for a ‘hard-landing’ and if so, what strategy have you adopted, or will you adopt, to limit its impact on the Fund?

We don’t think the Chinese economy will undergo a severe ‘hard-landing’.  The Chinese authorities have sufficient ammunition at their disposal to combat the imbalances in their economy.  While the Chinese economy might not achieve double digit growth in 2012, the Chinese government should be able to engineer growth of 6% to 8%, barring any shocks from external factors.

Without doubt the Chinese economy has its fair share of negative issues for the government to wrestle with. However, many of these negative factors are well known, i.e. over-leveraged local governments and an overheated property market.  And these negative factors should have been largely discounted by the sharp fall in equity prices over the last two years.  We tend to take this adversity as an opportunity to accumulate quality companies at reasonable prices and over the medium term this will yield attractive returns.

How badly would Asia Pacific countries’ markets and economies be affected if Europe tips into recession this year e.g. by a slump in demand for goods exported from Asia?

The Asia Pacific (AP) countries would likely be affected, if Europe tips into a recession.  However, most AP countries are well equipped to deal with a recession in the western world.  Growth will slow but most AP countries could ease monetary or fiscal policies to buffer the contraction from Europe.

In light of this, are governments in the region looking at rebalancing their economies to be less reliant on exports?

The answer is definitely a “Yes”.  Rising income in AP countries means consumers have more resources and a higher propensity to spend.  For instance, Chinese GDP grew at about 10% in 2011 while the contribution from net exports (export less import) to GDP growth was negligible.  A large part of the growth was driven by a double digit increase in consumer spending.

For some time many Asian economies have benefited from cheaper labour compared to other parts of the world. But with wages rising in the region, especially in China, are countries likely to lose a competitive advantage? And if so, what does this mean for investors?

China and many of its AP counterparts are all experiencing inevitable “growing pains”.  Rising labour costs are part and parcel of an economy obtaining a developed status.  The Chinese, like many of their cousins in the Tiger economies, will need to continue to innovate and differentiate themselves.  Productivity gains and automation, for example, can moderate the effect of higher labour costs.  For investors this offers both risks and opportunities.  We will sift out those companies that are able to innovate and consistently able to lower costs and gain market share from their competitors.  Moreover, China is increasingly viewed as a potential consumer market rather than just a manufacturing base.  The enormous market potential is one most CEOs of multinational concerns cannot afford to ignore.   China should remain a premier manufacturing base as economies of scale and benefits of market access outweigh higher costs in the next few years.

How do you see the prospects for markets in the Asia Pacific region in the next six months?

Equity markets in the AP region will remain volatile in the immediate few months as the headline news from Europe will continue to dominate market sentiment.  After the steep correction last year, a large part of the negative effect from the European debt crisis could be discounted.  As the year progresses and the debt crisis stabilises, AP markets should resume a steady ascent.  We will take advantage of market volatility to accumulate good companies at lower prices and add value to the portfolio.

IMPORTANT NOTE: This report has been prepared for information only, and it does not represent either an offer to purchase or subscribe to shares of any Cell, or an advertisement for countries where the Cells are not registered for sale. Argyll Investment Services Limited and World Shariah Funds PCC Ltd (the „WSF“) are licensed and regulated by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 as amended. Company Registration Number: 51802. WSF believes that the information is correct at the date of production while obtained from carefully selected sources considered to be reliable. No warranty or representation is given to this effect and no liability can be assumed for the correctness or accuracy of the given information which may be subject to change at any time, without notice. Past performance provides neither a guarantee, nor an indication of future performance. Value of the shares and return they generate can fall as well as rise. Currency fluctuations, either up or down, may also affect value of the investment. Due to continuing market volatility and exchange rate fluctuations, the performance may be subject to significant changes over a short-term period. Investors should be aware that shares in the financial instruments entail investment risks, including the possible loss of the invested capital. Performance is usually calculated on the basis of the relevant NAV unless stated otherwise. Performance shown does not take account of any fees and costs associated with subscribing or redeeming shares. It is assumed that all dividends were reinvested. The full documentation required to make an investment, including the Scheme Particulars is available and may be obtained through Argyll Investment Services Limited or www.wsff unds.com. Before investing in any WSF Cells investors should contact their financial adviser / legal adviser / tax adviser and refer to all relevant documents relating to the WSF and its particular Cell(s), such as the latest annual report and Offering Memorandum and relevant Supplement that specify the particular risks associated with the Cell, together with any specific restrictions applying, and the basis of dealing. In the event investors choose not to seek advice from a financial adviser / legal adviser / tax adviser, they should consider whether the WSF is a suitable investment for them.