LIONGLOBAL SOUTH EAST ASIA FUND

Transcription

1 For the financial year ended 31 December 2014 ANNUAL REPORT LIONGLOBAL SOUTH EAST ASIA FUND A member of the OCBC Group Lion Global Investors Ltd 65 Chulia Street #18-01 OCBC Centre, Singapore T: F: Co Reg No: D For more information, visit: lionglobalinvestors.com or ContactUs@lionglobalinvestors.com Lion Global Investors Limited. All rights reserved.

2 DIRECTORY Managers Lion Global Investors Limited 65 Chulia Street #18-01 OCBC Centre Singapore Directors of Lion Global Investors Limited Mr Ching Wei Hong (Chairman) Mr Norman Ip Ka Cheung (Deputy Chairman) Mr Gerard Lee How Cheng (CEO) Mr Cheong Jin Keat Mr Yoon Mun Thim Mr Tan Siew Peng Mr George Lee Lap Wah Trustee/Registrar HSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #10-02 HSBC Building Singapore Custodian The Hongkong and Shanghai Banking Corporation Limited 1 Queen s Road Central Hong Kong Independent Auditor PricewaterhouseCoopers LLP 8 Cross Street #17-00 PWC Building Singapore

3 PERFORMANCE OF THE FUND For the year ended 31 December 2014 Cumulative returns for the Fund are calculated up to 31 December 2014 in SGD terms, based on single pricing, with dividends reinvested net of all charges payable upon reinvestment. Time Period Fund Returns (%) LionGlobal South East Asia Benchmark* Returns (%) Fund - SGD Class 3 months months year years** years** years** Since Inception** (23 February 1996) Cumulative returns for the Fund are calculated up to 31 December 2014 in USD terms, based on single pricing, with dividends reinvested net of all charges payable upon reinvestment. Time Period Fund Returns (%) LionGlobal South East Asia Benchmark* Returns (%) Fund - USD Class 3 months months year years** years** years** Since Inception** (25 June 2004) Source: Morningstar/Lion Global Investors Ltd. * Benchmark: MSCI All Countries Far East Ex Japan: Since inception to 31 December 2005 MSCI Singapore/Malaysia/Philippines/Thailand/Indonesia: From 1 January 2006 to 30 April 2011 MSCI All Countries South East Asia Index: From 1 May 2011 ** Returns of more than 1 year are annualised. 1

4 REVIEW For the year ended 31 December 2014, the Fund returned 11.1%, while the benchmark MSCI All Countries South East Asia Index which returned 11.5%, in SGD terms. Top gainers in the region were the TIPs (Thailand, Indonesia and Philippines) markets while Singapore and Malaysia lagged. The political deadlock in Thailand has led to a drop in tourism revenue and private consumption while the National Council for Peace and Order approved a US$75 billion infrastructure plan to be implemented over the next 8 years. Domestic indicators point to a continued, gradual recovery. Investor confidence in Indonesia grew with newly-elected President Jokowi, who has reformed fuel subsidies, generating IDR trillion of fiscal savings for infrastructure investment. Consumerrelated stocks in Philippines outperformed in November 2014 as the sharp fall in oil prices is expected to drive private consumption growth. In Singapore, the property market down cycle continued with property tightening measures unlikely reverse in the near term. Malaysia experienced a double whammy of weaker palm oil and crude oil prices the main revenue drivers of the economy. Stock selection within the financial sector contributed positively to performance in The overweight in PTT and Airports of Thailand were the top performance contributors. 2

5 STRATEGY AND OUTLOOK Southeast Asian markets outperformed Asia ex-japan in 2014 due to strong performances in the high-beta TIPs markets. We expect this year will be tougher given moderating economic growth; high valuations and the strong USD. However, falling oil price is positive for Southeast Asian markets (except Malaysia, which is a net oil & gas exporter) and acts like fiscal stimulus for the economies consumers. While the middle class consumption story is very much intact, we expect growth momentum to moderate. With tighter liquidity, high household debt in Thailand and Malaysia, and low commodity prices, domestic consumption will not be as strong a driver of economic growth. Instead, government spending and investments will be the major theme in Governments will have to increase public spending, particularly in Indonesia and Thailand, as both have the political will, developmental need and fiscal flexibility to pump prime. Indonesian President Jokowi has publically highlighted his focus on building up infrastructure in the country. Thailand s junta government also needs to stimulate the lackluster domestic economy thru pump priming. We are looking to add to our position in Indonesia. We are bullish on Indonesia for the longer term as it has a clear funding structure in place to fund its infrastructure building ambitions. Removal of its fuel subsidies will free up savings for infrastructure spending, which has been much neglected for years. As of 27 February

6 DISCLOSURES ON THE FUND 1 For the financial year ended 31 December DISTRIBUTION OF INVESTMENTS AS AT 31 DECEMBER 2014 Percentage of total net assets attributable Fair Value to unitholders $ % a) By Asset Class Equities 19,785, Financial Derivatives at fair value 23 * Cash and cash equivalents 60, Net assets attributable to unitholders 19,845, b) By Credit Rating of Debt Securities Not applicable - - c) By Derivative Type Foreign exchange spot contracts 23 * The net realised losses and unrealised gains at the end of the year were $3,210 and $23 respectively. * denotes amount less than 0.1% 1 As required by Code on Collective Investment Schemes 4

7 2. TOP 10 HOLDINGS As at 31 December 2014 Percentage of total net assets attributable Fair Value to unitholders $ % DBS Group Holdings Limited 1,467, United Overseas Bank Limited 986, Singapore Telecommunications Limited 881, Tenaga Nasional Berhad 840, PT Bank Central Asia Tbk 736, Malayan Banking Berhad 657, PT Telekomunikasi Indonesia Tbk 620, Advanced information Service Public Company Limited - NVDR 491, Kasikornbank Public Company Limited - Foreign 464, RHB Capital Berhad 462,

8 As at 31 December 2013 Percentage of total net assets attributable Fair Value to unitholders $ % DBS Group Holdings Limited 1,474, United Overseas Bank Limited 1,321, Singapore Telecommunications Limited 955, Keppel Corporation Limited 923, Tenaga Nasional Berhad 872, Malayan Banking Berhad 762, Sapura Kencana Petroleum 603, Kasikornbank Public Company Limited - Foreign 543, PT Astra International Tbk 525, Singapore Exchange Limited 508, GLOBAL EXPOSURE The global exposure relating to derivative instruments is calculated using the commitment approach by converting the derivative positions into equivalent positions in the underlying assets embedded in those derivatives. The global exposure of the Fund to financial derivative instruments or embedded financial derivative instruments will not exceed 100% of the net asset value of the Fund at any time. 4. COLLATERAL Nil 5. SECURITIES LENDING OR REPURCHASE TRANSACTIONS Nil 6

9 6. INVESTMENT IN OTHER UNIT TRUSTS, MUTUAL FUNDS AND COLLECTIVE INVESTMENT SCHEMES Percentage of total net assets attributable to Fair Value unitholders $ % Ascendas Real Estate Investment Trust 214, BORROWINGS Nil 8. SOFT DOLLAR COMMISSION RECEIVED BY THE MANAGERS The soft dollar commissions from various brokers for the period were utilised on research and advisory services, economic and political analyses, portfolio analyses, market analyses, data and quotation analyses and computer hardware and software used for and in support of the investment process of fund managers. Goods and services received were for the benefit of the scheme and there was no churning of trades.these brokers also execute trades for other funds managed by the managers.the trades are conducted on best available terms and in accordance with best practices. 9. OTHER MATERIAL INFORMATION There is no other material information that will adversely impact the valuation of the Fund. 10. SUPPLEMENTAL INFORMATION ON UNDERLYING SUB-FUNDS Not applicable 7

10 REPORT OF THE TRUSTEE The Trustee is under a duty to take into custody and hold the assets of LionGlobal South East Asia Fund (the Fund ) in trust for the unitholders. In accordance with the Securities and Futures Act (Cap. 289), its subsidiary legislation and the Code on Collective Investment Schemes, the Trustee shall monitor the activities of the Manager for compliance with the limitations imposed on the investment and borrowing powers as set out in the Trust Deed in each annual accounting year and report thereon to unitholders in an annual report. To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Fund during the financial year covered by these financial statements, set out on pages 12 to 36, in accordance with the limitations imposed on the investment and borrowing powers set out in the Trust Deed. For and on behalf of the Trustee HSBC INSTITUTIONAL TRUST SERVICES (SINGAPORE) LIMITED Authorised signatory 26 March

11 STATEMENT BY THE MANAGER In the opinion of the directors of Lion Global Investors Limited, the accompanying financial statements set out on pages 12 to 36, comprising the Statement of Total Return, Statement of Financial Position, Statement of Movements of Unitholders Funds, Statement of Portfolio and Notes to the Financial Statements are drawn up so as to present fairly, in all material respects, the financial position of LionGlobal South East Asia Fund (the Fund ) as at 31 December 2014, and the total return and changes in unitholders funds for the year then ended in accordance with the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Singapore Chartered Accountants. At the date of this statement, there are reasonable grounds to believe that the Fund will be able to meet its financial obligations as and when they materialise. For and on behalf of directors of LION GLOBAL INVESTORS LIMITED GERARD LEE HOW CHENG CEO 26 March

12 INDEPENDENT AUDITOR S REPORT TO THE UNITHOLDERS OF LIONGLOBAL SOUTH EAST ASIA FUND (Constituted under a Trust Deed in the Republic of Singapore) We have audited the accompanying financial statements of LionGlobal South East Asia Fund (the Fund ), which comprise the Statement of Financial Position and Statement of Portfolio as at 31 December 2014, the Statement of Total Return and Statement of Movements of Unitholders Funds for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 12 to 36. Manager s Responsibility for the Financial Statements The Fund s Manager (the Manager ) is responsible for the preparation and fair presentation of these financial statements in accordance with the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Singapore Chartered Accountants, and for such internal control as the Manager determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. 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 the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Fund s preparation and fair presentation of the 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 Fund s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager, 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. 10

13 Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as at 31 December 2014 and the total return for the year then ended in accordance with the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Singapore Chartered Accountants. PricewaterhouseCoopers LLP Public Accountants and Chartered Accountants Singapore, 26 March

14 STATEMENT OF TOTAL RETURN For the financial year ended 31 December Note $ $ Income Dividends 674, ,372 Interest on cash and bank balances , ,427 Less: Expenses Audit fee 13,031 13,280 Custodian fees 12 12,660 15,156 Management fee 299, ,370 Professional fee 14,400 9,318 Registration fee 12 21,491 20,747 Transaction cost 71, ,294 Trustee fee 15,001 15,000 Valuation and administration fees 12 9,479 10,855 Miscellaneous expenses 17,417 36, , ,346 Net income 199, ,081 Net gains or losses on value of investments and financial derivatives Net gains/(losses) on investments 2,234,232 (58,928) Net (losses)/gains on foreign exchange contracts (3,187) 4,040 Net foreign exchange gains/(losses) 8,831 (49,637) 2,239,876 (104,525) Total return for the year before income tax 2,439, ,556 Less: Income tax 3 (45,103) (64,048) Total return for the year 2,394,488 58,508 12

15 STATEMENT OF FINANCIAL POSITION As at 31 December 2014 ASSETS Note $ $ Portfolio of investments 19,785,140 21,999,498 Receivables 5 63,556 52,745 Due from brokers 9-186,324 Financial derivatives at fair value Cash and bank balances 6 214, ,955 Total assets 20,063,176 22,744,664 LIABILITIES Payables 7 179, ,381 Due to brokers 9 38, ,458 Financial derivatives at fair value Total liabilities 218, ,258 EQUITY Net assets attributable to unitholders 10 19,845,172 22,072,406 13

16 STATEMENT OF MOVEMENTS OF UNITHOLDERS FUNDS For the financial year ended 31 December Note $ $ Net assets attributable to unitholders at the beginning of the financial year 22,072,406 24,163,180 Operations Change in net assets attributable to unitholders resulting from operations 2,394,488 58,508 Unitholders contributions/(withdrawals) Creation of units 3,077,408 11,063,540 Cancellation of units (7,699,130) (13,212,822) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (4,621,722) (2,149,282) Distributions Total decrease in net assets attributable to unitholders (2,227,234) (2,090,774) Net assets attributable to unitholders at the end of the financial year 10 19,845,172 22,072,406 14

17 STATEMENT OF PORTFOLIO As at 31 December 2014 By Geography (Primary) Percentage of total net assets attributable to Holdings at Fair value at unitholders at 31 December 31 December 31 December $ % QUOTED EQUITIES SINGAPORE DBS Group Holdings Limited 71,224 1,467, United Overseas Bank Limited 40, , Singapore Telecommunications Limited 226, , Singapore Exchange Limited 47, , Keppel Corporation Limited 39, , Genting Singapore Public Limited Company 300, , CapitaLand Limited 96, , Asian Pay Television Trust 351, , Sembcorp Marine Limited 91, , Raffles Medical Group Limited 73, , Keppel Land Limited 68, , Ascendas Real Estate Investment Trust 90, , Wilmar International Limited 56, , Noble Group Limited 155, , UOL Group Limited 15, , Golden Agri-Resources Limited 209,000 96, Pacific Radiance Limited 80,000 63, PACC Offshore Services Holdings Private Limited 100,000 54, ,704, * denotes amount less than 0.1% 15

18 Percentage of total net assets attributable to Holdings at Fair value at unitholders at 31 December 31 December 31 December $ % MALAYSIA Tenaga Nasional Berhad 160, , Malayan Banking Berhad 189, , RHB Capital Berhad 160, , MISC Berhad 147, , Axiata Group Berhad 141, , Genting Malaysia Berhad 186, , Sapura Kencana Petroleum Berhad 307, , CIMB Group Holdings Berhad 101, , IOI Corporation Berhad 105, , Sime Darby Berhad 52, , UMW Oil & Gas Corporation Berhad 179, , Alliance Financial Group Berhad 61, , Genting Berhad 23,700 79, Berjaya Sports Toto Berhad 59,844 79, ,315, INDONESIA PT Bank Central Asia Tbk 524, , PT Telekomunikasi Indonesia Tbk 2,023, , PT Gudang Garam Tbk 54, , PT Indofood CBP Sukses Makmur Tbk 215, , PT Astra International Tbk 378, , Bank Mandiri 244, , PT Indocement Tunggal Prakarsa Tbk 97, , PT Bank Rakyat Indonesia (Persero) Tbk 201, , PT Perusahaan Gas Negara Tbk 292, , Jasa Marga (Persero) 240, , PT Bank Tabungan Negara Tbk 1,228, , PT Blue Bird Tbk 111, , PT Tambang Batubara Bukit Asam Persero Tbk 79, , PT Semen Indonesia Persero Tbk 60, , PT Wijaya Karya Beton Tbk 669,300 93, PT Lippo Karawaci Tbk 662,500 72, ,123,

19 Percentage of total net assets attributable to Holdings at Fair value at unitholders at 31 December 31 December 31 December $ % THAILAND Advanced information Service Public Company Limited - NVDR 48, , Kasikornbank Public Company Limited - Foreign 50, , Charoen Pokphand Foods Public Company Limited - NVDR 352, , PTT Public Company Limited - NVDR 27, , Airports of Thailand Public Company Limited - NVDR 28, , Kasikornbank Public Company Limited - NVDR 30, , Siam Commercial Bank Public Company Limited - NVDR 35, , Jasmine International Public Company Limited - NVDR 833, , PTT Global Chemical Public Company Limited - NVDR 89, , Intouch Holdings Public Company Limited 42, , Bangkok Bank Public Company Limited - NVDR 16, , CP All Public Company Limited - NVDR 49,700 85, PTT Exploration & Production Public Company Limited - NVDR 12,644 57, PTT Exploration & Production Public Company Limited - Foreign 10,496 47, PTT Public Company Limited - Foreign 2,000 26, ,475,

20 Percentage of total net assets attributable to Holdings at Fair value at unitholders at 31 December 31 December 31 December $ % PHILIPPINES Banco de Oro Unibank Inc 91, , Philippine Long Distance Telephone 3, , Ayala Land Inc 199, , Ayala Corporation 7, , SM Prime Holdings Inc 240, , Metropolitan Bank and Trust Company 40, , ,166, Portfolio of investments 19,785, Other net assets 60, Net assets attributable to unitholders 19,845, By Geography (Summary) Percentage of total net assets attributable to unitholders at 31 December 31 December % % Singapore Malaysia Indonesia Thailand Philippines Portfolio of investments Other net assets Net assets attributable to unitholders

21 STATEMENT OF PORTFOLIO As at 31 December 2014 By Industry (Secondary) Percentage of total net assets Fair value at attributable to unitholders at 31 December 31 December 31 December $ % % Financial 7,589, Communications 3,049, Industrial 2,231, Consumer, Non-cyclical 1,882, Consumer, Cyclical 1,373, Real Estate 1,051, Energy 1,030, Utilities 1,028, Basic Materials 549, Portfolio of investments 19,785, Other net assets 60, Net assets attributable to unitholders 19,845,

22 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2014 These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1. GENERAL LionGlobal South East Asia Fund (the Fund ) is a unit trust constituted by a Deed of Trust dated 12 December 1995 together with its Supplemental Deeds thereon (thereafter referred to as Trust Deed ) between Lion Global Investors Limited (the Manager ) and HSBC Institutional Trust Services (Singapore) Limited (the Trustee ). The Trust Deed is governed by the laws of the Republic of Singapore. There are currently 3 classes of units established in respect of the Fund, namely 2 Singapore dollar-denominated Classes, Grandfathered Class and, SGD Class and a US dollar-denominated Class ( USD Class ). There are no material differences between the SGD Class Units and the USD Class Units save for the currency of denomination. The Grandfathered Class was established by the Manager solely in order for units in the LionGlobal Philippines Fund (which has been terminated) to be switched into the Grandfathered Class Units on 4 April 2013 at the offer price of S$ The Grandfathered Class is not currently being offered to investors. The management fee of both the SGD and USD Class is 1.5% per annum, and the management fee of the Grandfathered class is 1.0% per annum. Subscriptions and redemptions of the Fund are denominated in Singapore Dollar and United States Dollar. Investors may subscribe in United States Dollar at the applicable rate of exchange from Singapore Dollar. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation The financial statements have been prepared under the historical cost convention modified by the revaluation of financial assets at fair value through profit or loss, and in accordance with the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Singapore Chartered Accountants. (b) Recognition of Income Dividend income is recognised when the right to receive payment is established. 20

23 Interest income is recognised on a time proportion basis using the effective interest method. (c) Financial derivatives Financial derivatives are entered into for the purposes of efficient portfolio management, tactical asset allocation or specific hedging of financial assets held as determined by the Manager and in accordance with the provisions of the Trust Deed. Financial derivatives outstanding at the end of the financial year are measured at their fair values using the marked-to-market method, and the resultant gains and losses are taken up in the Statement of Total Return. (d) Distributions The Manager has the absolute discretion to determine whether a distribution is to be made. In such an event, an appropriate amount will be transferred to a distribution account, to be paid out on the distribution date. The amount shall not be treated as part of the property of the Fund. Distributions are accrued for at the reporting date if the necessary approvals have been obtained and a legal or constructive obligation has been created. (e) Investments Investments are classified as financial assets at fair value through profit or loss. (i) Initial recognition Purchases of investments are recognised on the trade date. Investments are recorded at fair value on initial recognition. (ii) Subsequent measurement Investments are subsequently carried at fair value. Net change in the fair value of investments are included in the Statement of Total Return in the year in which they arise. (iii) Derecognition Investments are derecognised on the trade date of disposal. The resultant realised gains and losses on the sales of investments are computed on the basis of the difference between the weighted average cost and selling price gross of transaction costs, and are taken up in the Statement of Total Return. 21

24 (f) Basis of valuation of investments The fair value of financial assets and liabilities traded in active markets is based on quoted market prices at the close of trading on the reporting date. The Fund utilises the last traded market price for both financial assets and financial liabilities where the last traded price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager will determine the point within the bid-ask spread that is most representative of fair value. (g) Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Receivables are initially recognised at their fair value and subsequently carried at amortised cost using the effective interest method. (h) Foreign currencies (i) Functional and presentation currency The Fund s investors are mainly from Singapore with the subscriptions and redemptions of the units denominated in Singapore dollars and United States dollars. The primary activity of the Fund is to invest in quoted or listed securities (including real estate investment trusts) in South East Asia, particularly in Indonesia, Malaysia, Singapore, Thailand, the Philippines, Hong Kong S.A.R. and other countries within the region. The performance of the Fund is measured and reported to the investors in Singapore dollars. The Manager considers the Singapore Dollar as the currency which most faithfully represents the economic effects of the underlying transactions, events and conditions. The Fund s functional and presentation currency is the Singapore Dollar. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the reporting date are recognised in the Statement of Total Return. Translation differences on non-monetary financial assets and liabilities such as equities are also recognised in the Statement of Total Return within the net gain or loss on investments. 22

25 3. INCOME TAX The Fund was granted the status of a Designated Unit Trust ( DUT ) in Singapore. Under the DUT Scheme, subject to certain conditions and reporting obligations being met, certain income of the DUT fund is not taxable in accordance with sections 35(12) and 35(12A) of the Income Tax Act. Such income includes: (a) gains or profits derived from Singapore or elsewhere from the disposal of securities; (b) interest (other than interest for which tax has been deducted under section 45 of the Income Tax Act); (c) dividends derived from outside Singapore and received in Singapore; (d) gains or profits derived from foreign exchange transactions, transactions in futures contracts, transactions in interest rate or currency forwards, swaps or option contracts and transactions in forwards, swaps or option contracts relating to any securities or financial index; (e) discount, prepayment fee, redemption premium and break cost from qualifying debt securities issued during the prescribed period; and (f) distributions from foreign unit trusts derived from outside Singapore and received in Singapore $ $ Singapore income tax 3,336 2,452 Overseas income tax 41,767 61,596 Total taxation 45,103 64,048 The Singapore income tax represents tax deducted at source for Singapore sourced dividends. The overseas income tax represents tax deducted at source on dividends derived from outside Singapore. 4. DISTRIBUTIONS The Manager does not propose any distribution to unitholders for the financial year ended 31 December 2014 (2013: Nil). 23

26 5. RECEIVABLES $ $ Amount receivable for creation of units 31,262 28,087 Dividends receivable 26,366 24,658 Other receivable 5,928-63,556 52, CASH AND BANK BALANCES The cash and bank balances are placed with a financial institution related to the Trustee. 7. PAYABLES $ $ Amount payable for cancellation of units 111, ,995 Amount due to the Manager 23,653 27,064 Amount due to the Trustee 7,425 5,816 Amount due to the Custodian 1,863 1,863 Amount due to the Registrar 5,391 6,000 Other payables 30,334 37, , , FINANCIAL DERIVATIVES AT FAIR VALUE Financial derivatives comprise foreign exchange spot contracts due for settlement within 3 days from reporting date. The contract or underlying principal amounts of these financial derivatives and their corresponding gross fair values at the reporting date are analysed below. 31 December 2014 Contract or underlying principal Fair value amount Asset Liability $ $ $ Foreign exchange spot contracts 38,

27 31 December 2013 Contract or underlying principal Fair value amount Asset Liability $ $ $ Foreign exchange spot contracts 257, DUE TO/FROM BROKERS $ $ Sales awaiting settlement - 186,324 Purchases awaiting settlement (38,104) (442,458) 10. UNITS IN ISSUE SGD/USD Grandfathered SGD/USD Grandfathered Class Class Class Class Units Units Units Units Units at beginning of the year 13,050,920 4,724,104 17,825,278 - Units created 2,028,686-2,262,483 7,787,198 Units cancelled (4,513,315) (935,608) (7,036,841) (3,063,094) Units at end of the year 10,566,291 3,788,496 13,050,920 4,724,104 of which, units denominated in - USD 1,984,631-2,146, SGD/USD Grandfathered SGD/USD Grandfathered Class Class Class Class $ $ $ $ Net assets attributable to unitholders 15,928,583 3,916,589 17,700,439 4,371,967 Net asset value per unit There is no difference between the net assets distributable to unitholders per the financial statements and the net assets attributable to unitholders for issuing/ redeeming units at the reporting date. 25

28 11. FINANCIAL RISK MANAGEMENT The Fund s activities expose it to a variety of market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Fund s overall risk management programme seeks to minimise potential adverse effects on the Fund s financial performance. The Fund may use financial futures contracts, options and/ or currency forward contracts subject to the terms of the Trust Deed to moderate certain risk exposures. Specific guidelines on exposures to individual securities and certain industries are in place for the Fund at any time as part of the overall financial risk management to reduce the Fund s risk exposures. The Fund s assets principally consist of investment in equity. They are held in accordance with the published investment policies of the Fund. The allocation of assets between the various types of investments is determined by the Manager to achieve their investment objectives. The following is a summary of the main risks and risk management policies: (a) Market risk Market risk is the risk of loss to the value of financial investments because of changes in market conditions like interest and currency rate movements and volatility in security prices. External factors such as changes in economic environment, consumption patterns and investor s expectation contribute to market risk which may have a significant impact on the asset s value. The Fund s investments are substantially dependent on changes in market prices. The Manager monitors the Fund s investments closely so as to assess changes in fundamentals and valuation. Although the Manager makes reasonable efforts in the choice of investments, events beyond reasonable control of the Manager could affect the prices of the underlying investments and hence the asset value of the Fund. Guidelines are set to reduce the Fund s risk exposures to market volatility such as diversifying the portfolio by investing across various geographies/industries. The Fund s market risk is affected primarily by three main components: changes in actual market prices, interest rate volatilities and foreign exchange movements. 26

29 (i) Price risk The Fund s sensitivity to the market is measured using its beta, a ratio that describes how the expected return of a portfolio is correlated to the return of the financial market as a whole. The daily fund price movement is measured against the price movement of the benchmark to derive the beta. As at 31 December 2014, the Fund s beta was 1.03 (2013: 0.97) which is calculated based on the daily returns over the preceding 12 months for the Fund and its benchmark (2013: based on the daily returns over the preceding 12 months for the Fund and its benchmark). The table below summarises the impact of increases/decreases from the Fund s underlying investments in equities on the Fund s net assets attributable to the unitholders as at 31 December 2014 and The analysis was based on the assumptions that the index components within the benchmark index increased/ decreased by a reasonable possible shift, with all variables held constant and that the fair value of the Fund s investments moved according to the beta. Impact of 5% (2013: 5%) movement in benchmark on net assets attributable to the unitholders Fund Benchmark $ $ LionGlobal South East Asia Fund MSCI AC South East Asia Index 1,018,935 1,066,976 27

30 (ii) Interest rate risk Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Investment funds that invest in equity securities may be subject to interest rate risk as any interest rate change may affect the equity risk premium though at varying degrees. To manage this risk, the Manager analyses how interest rate changes may affect different industries and securities and then seeks to adjust the Fund s portfolio investments accordingly. However, the effects of changes in interest rates on the Fund s portfolio may not be quantified as the relationship between interest rates and the value of the equity securities is indirect. Hence, no separate sensitivity analysis has been presented. (iii) Currency risk The Fund has monetary assets/liabilities denominated in currencies other than Singapore dollars and the Fund may be affected favourably or unfavourably by exchange rate regulations or changes in the exchange rates between the Singapore Dollar and such other currencies. The Fund may enter into foreign currency contracts designed to either hedge some or all of this exposure, or alternatively increase exposure to preferred foreign currencies. The table below summarises the Fund s exposure to key currencies at the end of the financial year. Monetary and non-monetary items have been taken into the account for the analysis. 28

31 31 December 2014 MYR IDR THB SGD Others Total $ $ $ $ $ $ Assets Portfolio of investments 4,315,970 4,123,728 3,475,073 6,704,183 1,166,186 19,785,140 Receivables 6,610-3,451 25,281 28,214 63,556 Cash and bank balances 14, , ,099 43, ,455 Total assets 4,336,745 4,123,729 3,480,976 6,883,563 1,238,138 20,063,151 Liabilities Payables ,672 11, ,898 Due to broker ,104 38,104 Total liabilities ,672 49, ,002 Net financial assets 4,336,745 4,123,729 3,480,976 6,714,891 1,188,808 19,845,149 Fair value of currency forwards and financial derivatives (37,514) 37, Net currency exposure 4,336,745 4,123,729 3,480,976 6,677,377 1,226, December 2013 MYR IDR THB SGD Others Total $ $ $ $ $ $ Assets Portfolio of investments 5,474,322 3,710,355 3,364,568 8,539, ,792 21,999,498 Receivables 5,266 1,644-44, ,745 Due from brokers 66, , ,324 Cash and bank balances 15, ,841 64, ,955 Total assets 5,562,090 3,712,000 3,364,569 9,010,211 1,095,652 22,744,522 Liabilities Payables ,995 15, ,381 Due to brokers - 225, , , ,458 Total liabilities - 225, , , , ,839 Net financial assets 5,562,090 3,486,682 3,256,966 8,796, ,729 22,072,683 Fair value of currency forwards and financial derivatives - 183,411 - (258,140) 74,452 (277) Net currency exposure 5,562,090 3,670,093 3,256,966 8,538,076 1,045,181 29

32 Equity investments are non-monetary financial assets and are exposed to both currency risk and price risk. As these financial assets are non-monetary, no separate sensitivity analysis has been performed to analyse currency risk. The impact of currency risk arising from these financial assets on the Fund s net asset value has been included in the above other price risk sensitivity analysis. The Fund s monetary assets/liabilities are measured for their sensitivity to exchange rate movements based on the balance of the monetary assets/ liabilities, forecasted exchange rate movements and the net asset value of the Fund. As of 31 December 2014 and 2013, the Fund s exposure to foreign currency fluctuations with respect to the monetary assets/liabilities is not considered to be significant and hence no sensitivity analysis on foreign currency risk has been presented. (b) Liquidity risk The Fund is exposed to daily redemption of units in the Fund. It therefore invests the majority of its assets in investments that are traded in an active market and can be readily disposed of. The table below analyses the Fund s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant. 31 December 2014 Less than 3 months- 1-5 Above 5 3 months 1 year years years $ $ $ $ Derivative financial instruments - inflow (566) outflow Payables 179, Due to broker 38,

33 31 December 2013 Less than 3 months- 1-5 Above 5 3 months 1 year years years $ $ $ $ Derivative financial instruments - inflow (74,456) outflow 74, Payables 229, Due to brokers 442, (c) Credit risk Credit risk is the risk that counterparty will fail to perform contractual obligations, either in whole or in part, under a contract. Concentrations of credit risk are minimised primarily by: -ensuring counterparties, together with the respective credit limits, are approved, -ensuring that transactions are undertaken with a large number of counterparties, and -ensuring that the majority of transactions are undertaken on recognised exchanges. All transactions in listed securities are settled/paid upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation. Credit risk also arises from cash and cash equivalents and assets held with financial institutions. 31

34 The Fund may also enter into derivatives to manage its exposures to currency risk and price risk, including foreign exchange forward contracts and options. Hence, the Fund is also exposed to the risk that its derivatives held with counterparties may not be recoverable in the event of any default by the parties concerned. The Manager minimises the Fund s credit risk by undertaking transactions with banks that are part of banking groups with good credit-ratings assigned by international credit rating agencies. The table below summarises the credit rating of banks and custodian in which the Fund s assets are held as at 31 December 2014 and December 2014 Credit rating ## Source of credit rating Custodian The Hongkong and Shanghai Banking Corporation Limited AA- S&P Bank The Hongkong and Shanghai Banking Corporation Limited AA- S&P 31 December 2013 Credit rating ## Source of credit rating Custodian The Hongkong and Shanghai Banking Corporation Limited A+ S&P Bank The Hongkong and Shanghai Banking Corporation Limited A+ S&P The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets. The credit ratings are based on the Long-Term Issuer Ratings published by the rating agency. ## Group credit ratings are presented for unrated subsidiaries. 32

35 (d) Capital management The Fund s capital is represented by the net assets attributable to unitholders. The Fund strives to invest the subscriptions of redeemable participating units in investments that meet the Fund s investment objectives while maintaining sufficient liquidity to meet unitholders redemptions. (e) Fair value estimation The Fund classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3). The following table analyses within the fair value hierarchy the Fund s financial assets and liabilities (by class) measured at fair value at 31 December 2014 and 2013: 31 December 2014 Level 1 Level 2 Level 3 Total Assets $ $ $ $ Financial assets designated at fair value through profit or loss - Quoted equities 19,785, ,785,140 Held for trading - Derivative financial instruments ,785, ,785,165 Liabilities Held for trading - Derivative financial instruments

36 31 December 2013 Level 1 Level 2 Level 3 Total Assets $ $ $ $ Financial assets designated at fair value through profit or loss - Quoted equities 21,999, ,999,498 Held for trading - Derivative financial instruments ,999, ,999,640 Liabilities Held for trading - Derivative financial instruments Investments whose values are based on quoted market prices in active markets, and therefore classified within Level 1, comprise active listed equities. The Fund does not adjust the quoted price for these instruments. Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include over-the-counter derivatives. Except for cash and cash balances which are classified as Level 1, the Fund s assets and liabilities not measured at fair value at 31 December 2014 and 2013 have been classified as Level 2. The carrying amounts of these assets and liabilities approximate their fair values as at the reporting date. 12. RELATED PARTY TRANSACTIONS Management fees are paid to the Manager, while trustee fee is paid to the Trustee. These fees paid or payable by the Fund shown in the Statement of Total Return and in the respective notes to the financial statements are on terms set out in the Trust Deed. In addition to the related party information shown elsewhere in the financial statements, the following significant transactions took place during the financial year between the Fund and related parties at terms agreed between the parties and within the provisions of the Trust Deed: 34

37 $ $ Brokerage on purchases and sales of investments charged by the ultimate holding company of the Manager 396 1,940 Interest income earned from a bank which is a related company of the Trustee Interest expenses incurred with a bank which is a related company of the Trustee 116 1,112 Transaction fees charged by the Trustee 15,354 26,644 Registration fees charged by a related company of the Trustee 21,491 20,747 Valuation and administration fees charged by the Trustee 9,479 10,855 Custodian fees charged by a related company of the Trustee 12,660 15,156 Bank service fees charged by a bank which is a related company of the Trustee 2,195 7,270 Cash transfer fees charged by a related company of the Trustee 9,576 21,692 35

38 13. FINANCIAL RATIOS % % Expense ratio 1 - SGD/USD class Grandfathered class Turnover ratio The expense ratio has been computed based on the guidelines laid down by the Investment Management Association of Singapore ( IMAS ). The calculation of the expense ratio at 31 December 2014 was based on total operating expenses divided by the average net asset value for the year. The total operating expenses do not include (where applicable) brokerage and other transactions costs, performance fee, interest expense, distribution paid out to unitholders, foreign exchange gains/losses, front or back end loads arising from the purchase or sale of other funds and tax deducted at source or arising out of income received. The Fund does not pay any performance fee. The average net asset value is based on the daily balances. Total operating expenses and average net asset value are as below: SGD SGD Total operating expenses (annualised in accordance with IMAS) - SGD/USD class $340,421 $409,277 - Grandfathered class $62,455 $82,314 Average net asset value - SGD/USD class $17,169,296 $21,056,853 - Grandfathered class $4,210,189 $5,685,913 2 The portfolio turnover ratio is calculated in accordance with the formula stated in the Code on Collective Investment Schemes. The calculation of the portfolio turnover ratio was based on the lower of the total value of purchases or sales of the underlying investments, being purchases of $5,073,140 (2013: purchases of $16,610,401) divided by the weighted average daily net asset value of $21,379,485 (2013: $25,292,972). 36

39 Disclaimer This publication is for information only. It is not an offer or solicitation for the purchase or sale of any securities/investments and does not have regard to your specific investment objectives, financial situation or particular needs. All applications for units in our funds must be made on application forms accompanying the prospectus. You should read the prospectus, available from Lion Global Investors Limited ( Lion Global Investors ) or any of its approved distributors, before deciding whether to subscribe for or purchase units of the Fund. Investments in the Fund are not obligations of, deposits in, guaranteed or insured by Lion Global Investors or any of its affiliates and are subject to investment risks including the possible loss of the principal amount invested. The value of units in the Fund and the income accruing to the units, if any, may rise or fall. Past performance, as well as any prediction, projection, or forecast on the economy, securities market, or the economic trends of the markets are not necessarily indicative of the future or likely performance of the funds. Any opinion or view presented is subject to change without notice. Accordingly, no warranty is given and no liability is accepted for any loss arising directly or indirectly as a result of you acting on any information, opinion, forecast, or estimate contained herein. You may wish to seek advice from a financial adviser before making a commitment to purchase the Fund. In the event that you choose not to seek advice from a financial adviser, you should consider carefully whether the Fund is suitable for you. Lion Global Investors, its related companies, their directors and/or employees (collectively known as Related Persons ) may have positions in the products mentioned in this publication. Lion Global Investors and its Related Persons may be engaged in purchasing or selling the products mentioned in this publication for themselves or their client. Lion Global Investors does not take into consideration the tax implications of the income earned as the tax position of each person is different. You are advised to seek independent tax advice on your personal tax position arising from investing in the product in question. Lion Global Investors Limited. All rights reserved. Lion Global Investors Limited is a Singapore incorporated company, and is not related to any corporation or trading entity that is domiciled in Europe or the United States (other than entities owned by its holdings companies). This publication may be translated into the Chinese language. In the event of any ambiguity, discrepancy or omission between the English and Chinese versions, the English version shall apply and prevail. In the event of any ambiguity, discrepancy or omission between this publication and the prospectus, the contents of the prospectus shall apply and prevail.

40 A member of the OCBC Group Lion Global Investors Ltd 65 Chulia Street #18-01 OCBC Centre, Singapore For more information, visit: lionglobalinvestors.com or Co Reg No: D