Khazanah's overseas investment - including a stake in China's Alibaba Group - accounts for only around 15% of its total holdings compared with 44% five years ago, with the decline due in part to restrictions placed by the central bank on foreign outflows in order to protect the ringgit.

Having made its first loss in a decade, the realisable asset value of Khazanah's portfolio fell 13% to 136 billion ringgit ($32.51 billion) last year.

Managing Director Shahril Ridza Ridzuan told reporters earlier this month that Khazanah was targeting a pretax profit this year of at least 5 billion ringgit - the highest in eight years.

He told parliament's public accounts committee that profitability would be driven by returns from deals done last year or this year, including through initial public offerings of mobile software firm Phunware and fashion retailer Farfetch.

The fund is also working on cutting its operating costs by 30%-40% over the next few years.

Shahril said Khazanah should have a bigger overseas presence like funds in countries such as Norway and Singapore.

"So that essentially if something happens to your local economy, you still have outside income coming in," Shahril said in the report made public on Wednesday.

He also promised "lots of restructuring" in the fund's commercial portfolio without giving details. The commercial portfolio includes stakes in CIMB Group Holdings, Axiata Group, IHH Healthcare, Alibaba and some lesser-known listed and unlisted companies.

"Khazanah should have four to five years ago started to actually restructure the portfolio, exit some of the assets and reinvest back into other things," said Shahril, brought in last year by Prime Minister Mahathir Mohamad's government.

Decisions on strategic assets - such as state utility Tenaga Nasional, Malaysia Airlines, Malaysia Airports and Telekom Malaysia - were for the government to take.

Shahril said turning around Khazanah's fully-owned Malaysia Airlines was proving to be a big challenge. Without an industry consolidation, Khazanah will have to pump in more than 1 billion ringgit a year just to sustain the airline, he said.

The government said this week it had shortlisted four potential investors for the carrier, and according to a source with knowledge of the matter, the aim is to get a deal done by the first quarter of next year.

($1 = 4.1830 ringgit)

(Reporting by Krishna N. Das and Rozanna Latiff; by Simon Cameron-Moore)