EASTSPRING INVESTMENTS

Transcription

1 SOCIÉTÉ D INVESTISSEMENT À CAPITAL VARIABLE LUXEMBOURG AUDITED ANNUAL REPORT AS AT DECEMBER 31, , Boulevard Royal L-2449 Luxembourg Grand Duchy of Luxembourg R.C.S Luxembourg B No subscription can be received on the basis of this report. Subscriptions can be accepted only on the basis of the current Prospectus of the SICAV.

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3 TABLE OF CONTENTS Directory, Administration and Management 2 General Information 4 Report of the Board of Directors 5 Report of the Investment Manager 6 Report of the Réviseur d Entreprises agréé 9 Combined Statement of Net Assets 11 Combined Statement of Operations and Changes in Net Assets 22 Statement of Changes in Shares Outstanding 33 Statistics 43 Statement of Investments Eastspring Investments Asia Pacific Equity Fund ( * ) ( Asia Pacific Equity Fund ) 54 Eastspring Investments Asian Bond Fund ( Asian Bond Fund ) 56 Eastspring Investments Asian Dynamic Fund ( * ) ( Asian Dynamic Fund ) 70 Eastspring Investments Asian Equity Fund ( Asian Equity Fund ) 72 Eastspring Investments Asian Equity Income Fund ( Asian Equity Income Fund ) 75 Eastspring Investments Asian High Yield Bond Fund ( Asian High Yield Bond Fund ) 77 Eastspring Investments Asian Infrastructure Equity Fund ( * ) ( Asian Infrastructure Equity Fund ) 82 Eastspring Investments Asian Local Bond Fund ( Asian Local Bond Fund ) 84 Eastspring Investments Asian Low Volatility Equity Fund ( Asian Low Volatility Equity Fund ) 91 Eastspring Investments Asian Property Securities Fund (1) ( Asian Property Securities Fund ) 94 Eastspring Investments Asian Smaller Companies Fund ( * ) ( Asian Smaller Companies Fund ) 96 Eastspring Investments Asian Total Return Bond Fund ( * ) ( Asian Total Return Bond Fund ) 98 Eastspring Investments China Equity Fund ( China Equity Fund ) 100 Eastspring Investments Developed and Emerging Asia Equity Fund ( * ) ( Developed and Emerging Asia Equity Fund ) 102 Eastspring Investments Dragon Peacock Fund ( Dragon Peacock Fund ) 104 Eastspring Investments Emerging Europe, Middle East and Africa Dynamic Fund ( * ) ( Emerging Europe, Middle East and Africa Dynamic Fund ) 106 Eastspring Investments European Investment Grade Bond Fund ( European Investment Grade Bond Fund ) 108 Eastspring Investments Global Emerging Markets Bond Fund ( * ) ( Global Emerging Markets Bond Fund ) 117 Eastspring Investments Global Emerging Markets Customized Equity Fund ( * ) ( Global Emerging Markets Customized Equity Fund ) 130 Eastspring Investments Global Emerging Markets Dynamic Fund ( Global Emerging Markets Dynamic Fund ) 133 Eastspring Investments Global Equity Navigator Fund ( * ) ( Global Equity Navigator Fund ) 135 Eastspring Investments Global Low Volatility Equity Fund ( * ) ( Global Low Volatility Equity Fund ) 136 Eastspring Investments Global Market Navigator Fund ( Global Market Navigator Fund ) 144 Eastspring Investments Global Multi Asset Income Plus Growth Fund ( * ) ( Global Multi Asset Income Plus Growth Fund ) 162 Eastspring Investments Global Technology Fund ( * ) ( Global Technology Fund ) 177 Eastspring Investments Greater China Equity Fund ( Greater China Equity Fund ) 179 Eastspring Investments Hong Kong Equity Fund ( Hong Kong Equity Fund ) 181 Eastspring Investments India Discovery Fund ( * ) ( India Discovery Fund ) 183 Eastspring Investments India Equity Fund ( India Equity Fund ) 184 Eastspring Investments Indonesia Equity Fund ( Indonesia Equity Fund ) 185 Eastspring Investments Japan Dynamic Fund ( Japan Dynamic Fund ) 186 Eastspring Investments Japan Equity Fund ( * ) ( Japan Equity Fund ) 187 Eastspring Investments Japan Fundamental Value Fund ( * ) ( Japan Fundamental Value Fund ) 189 Eastspring Investments Japan Smaller Companies Fund ( * ) ( Japan Smaller Companies Fund ) 191 Eastspring Investments Latin American Equity Fund ( * ) ( Latin American Equity Fund ) 192 Eastspring Investments Malaysia Equity Fund ( * ) ( Malaysia Equity Fund ) 194 Eastspring Investments North American Value Fund ( North American Value Fund ) 195 Eastspring Investments Pan European Fund ( * ) ( Pan European Fund ) 197 Eastspring Investments Philippines Equity Fund ( * ) ( Philippines Equity Fund ) 199 Eastspring Investments Thailand Equity Fund ( * ) ( Thailand Equity Fund ) 200 Eastspring Investments US Bond Fund ( * ) ( US Bond Fund ) 202 Eastspring Investments US Corporate Bond Fund ( US Corporate Bond Fund ) 206 Eastspring Investments US Equity Income Fund ( * ) ( US Equity Income Fund ) 216 Eastspring Investments US High Investment Grade Bond Fund ( US High Investment Grade Bond Fund ) 218 Eastspring Investments US High Yield Bond Fund ( US High Yield Bond Fund ) 223 Eastspring Investments US Investment Grade Bond Fund ( US Investment Grade Bond Fund ) 233 Eastspring Investments US Strategic Income Bond Fund ( * ) ( US Strategic Income Bond Fund ) 240 Eastspring Investments US Total Return Bond Fund ( * ) ( US Total Return Bond Fund ) 249 Eastspring Investments Vietnam Equity Fund ( * ) ( Vietnam Equity Fund ) 256 Eastspring Investments World Value Equity Fund ( World Value Equity Fund ) 257 Notes to the Financial Statements 263 Appendices 283 Annex 300 ( * ) Not authorized in Hong Kong and not available to Hong Kong residents. (1) This Sub-Fund is not authorized by the Hong Kong Securities and Futures Commission under the Code on REITs, but is authorized under the Code on Unit Trusts and Mutual Funds. Such authorization is not a recommendation or endorsement of the Sub-Fund nor does it guarantee the commercial merits of the Sub-Fund or its performance. It does not mean the Sub-Fund is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors. Furthermore, the dividend/payout policy of this Sub-Fund is not representative of the dividend/payout policy of the underlying REITs. 1

4 DIRECTORY, ADMINISTRATION AND MANAGEMENT Board of Directors Chairman Mr Peter Martin LLOYD Independent Director Former Chief Actuary Prudential Corporation Asia United Kingdom Directors Mr Guy Robert STRAPP Chief Executive Officer Eastspring Investments Mrs Francine KEISER Independent Director Grand Duchy of Luxembourg Mr Manuel HAUSER (resigned January 1, 2018) Independent Director Grand Duchy of Luxembourg Mr Thomas NUMMER (appointed January 1, 2018) Independent Director Grand Duchy of Luxembourg Administration and Management Registered office 26, Boulevard Royal L-2449 Luxembourg Grand Duchy of Luxembourg Management Company Eastspring Investments (Luxembourg) S.A. 26, Boulevard Royal L-2449 Luxembourg Grand Duchy of Luxembourg Board of Directors of the Management Company Mr Guy Robert STRAPP Chief Executive Officer Eastspring Investments Mrs Michele Mi-Kyung BANG Deputy Chief Executive Officer Eastspring Investments Mr Hendrik Gerrit RUITENBERG Executive Officer Eastspring Investments (Luxembourg) S.A. Conducting Officers of the Management Company Mr Hendrik Gerrit RUITENBERG Executive Officer Eastspring Investments (Luxembourg) S.A. Mr Christophe BÉCUE Compliance Officer Eastspring Investments (Luxembourg) S.A. Administration and Management (continued) Auditor of the Management Company KPMG Luxembourg, Société coopérative 39, Avenue John F. Kennedy L-1855 Luxembourg Grand Duchy of Luxembourg Investment Manager Eastspring Investments (Singapore) Limited 10 Marina Boulevard #32-01 Marina Bay Financial Centre Tower 2 Singapore Investment Sub-Managers For European Investment Grade Bond Fund, Pan European Fund and World Value Equity Fund (for investments in Europe): M&G Investment Management Limited Laurence Pountney Hill, London EC4R 0HH United Kingdom For Global Technology Fund: Henderson Global Investors Limited 4 Broadgate, London EC2M 2DA United Kingdom For China Equity Fund, Greater China Equity Fund and Hong Kong Equity Fund: Eastspring Investments (Hong Kong) Limited (1) 13/F, One International Financial Centre 1 Harbour View Street Central, Hong Kong For Global Market Navigator Fund (for investments in high yield bonds), Global Multi Asset Income Plus Growth Fund (for investments in high yield bonds), North American Value Fund, US Bond Fund, US Corporate Bond Fund, US Equity Income Fund, US High Investment Grade Bond Fund, US High Yield Bond Fund, US Investment Grade Bond Fund, US Strategic Income Bond Fund, US Total Return Bond Fund and World Value Equity Fund (for investments in the US): PPM America, Inc. 225 West Wacker Drive, Suite 1200 Chicago, Illinois United States of America (1) Until October 1, With effect from October 2, 2017, Eastspring Investments (Hong Kong) Limited ceased to be the investment submanager of Eastspring Investments Hong Kong Equity Fund and Eastspring Investments (Singapore) Limited remains the sole investment manager. 2

5 DIRECTORY, ADMINISTRATION AND MANAGEMENT (continued) Administration and Management (continued) Global Distributor Eastspring Investments (Singapore) Limited 10 Marina Boulevard #32-01 Marina Bay Financial Centre Tower 2 Singapore Depositary, Central Administration, Registrar and Transfer Agent and Listing Agent (2) The Bank of New York Mellon SA/NV Luxembourg Branch 2-4, rue Eugène Ruppert L-2453 Luxembourg Grand Duchy of Luxembourg Auditor of the SICAV KPMG Luxembourg, Société coopérative 39, Avenue John F. Kennedy L-1855 Luxembourg Grand Duchy of Luxembourg Legal Advisor Clifford Chance 10, Boulevard G.-D. Charlotte L-1011 Luxembourg Grand Duchy of Luxembourg (2) Listing agent of the SICAV in relation to the listing of its Shares on the Luxembourg Stock Exchange. 3

6 GENERAL INFORMATION Current Prospectus Copies of Eastspring Investments (the SICAV ) Articles of Association and Prospectus dated August 2017 and KIID may be obtained, free of charge, from the Registered Office of the SICAV. Please refer to the Prospectus dated August 2017 to have the current applicable terms and conditions. The SICAV is governed by the Luxembourg Law dated December 17, 2010, as amended (the 2010 Law ). The SICAV complies with the provisions of the Directive 2009/65/EC of the European Parliament and of the Council of July 13, 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS). Annual General Meeting The annual general meeting of Shareholders of the SICAV will be held at the registered office of the SICAV or at such other place in Luxembourg on the second Friday of April in each year at 11 a.m., or if any such day is not a business day in Luxembourg, on the next following business day in Luxembourg. Notices of all general meetings will be sent to the holders of registered Shares by post 8 days prior to the meeting at their addresses in the register of Shareholders. The notices of all general meetings of Shareholders may be published in any newspapers as the Board of Directors may decide. Report and Accounts The financial year-end of the SICAV will be the last day of December of each year. Audited annual reports will be published within 4 months after the financial year-end and unaudited semi-annual reports will be published within 2 months after the end of the relevant period. Such reports will be made available at the Registered Office of the SICAV during normal business hours. Publication of Prices The Net Asset Value ( NAV ) and the Issue, Conversion and Redemption Prices of the Shares in any Sub-Fund will be made public and available at the website of the Management Company ( and at the Registered Office of the SICAV. Prices for the Share classes listed on the Luxembourg Stock Exchange are available on the Bourse de Luxembourg ( At year-end, the following share classes were listed on the Euro MTF market segment of the Luxembourg Stock Exchange: Asian Bond Fund Class A DM Asian Bond Fund Class C US High Yield Bond Fund Class A DM US High Yield Bond Fund Class C Purchases and Sales A detailed list of investments purchased and sold for any Sub-Fund during the year/period is available upon request, free of charge, from the Registered Office of the SICAV. 4

7 REPORT OF THE BOARD OF DIRECTORS As at December 31, 2017 Dear Shareholders, I. Financial Statements The Directors would like to submit to you their report and the audited financial statements for the year ended December 31, The audited financial statements are set out on pages 10 to 52 of this Annual Report, with results for the year appearing in the Combined Statement of Net Assets on pages 10 to 20 and the Combined Statement of Operations and Changes in Net Assets on pages 21 to 31. II. Activities during the year During the past year, the SICAV launched twenty six additional Classes of Shares and three new Sub-Funds. One Sub-Fund closed. As at December 31, 2017, equalled USD billion for a total of 50 Sub-Funds and 340 Classes of Shares. The performance of each Sub-Fund is provided in the Investment Manager report (pages 6 to 8) with further details included in Appendix 3. III. Board of Directors The Directors of the SICAV are listed on page 2. Three of the four Directors, serving as at December 31, 2017, are independent directors and free from any business or other relationship which could materially interfere with the exercise of their independent judgment. The Board of Directors has delegated the management and operation of the SICAV to Eastspring Investments (Luxembourg) S.A., (the Management Company ). The Management Company is entrusted with the day-to-day management of the SICAV, with responsibility for performing directly or by way of delegation all operational functions relating to the SICAV s investment management, administration, risk management and marketing of the Sub-Funds. The Directors are formally responsible for the Annual Report and the financial statements for each financial year, which are required under general principles to give a true and fair view of the state of affairs of the SICAV. On January 1, 2018 Mr Manuel Hauser resigned from the Board of Directors in order to fully concentrate on his other business interests. At the same date the remaining Board members decided to appoint Mr Thomas Nummer as a replacement until the next meeting of shareholders. This decision has been made by way of cooptation. The Board would like to thank Mr Manuel Hauser for his contribution since The Board of Directors would like to take this opportunity to thank the Shareholders for their on-going support. Luxembourg, March

8 REPORT OF THE INVESTMENT MANAGER As at December 31, 2017 Dear Shareholders Dear Directors 2017 was a stellar year for equities. Supportive macroeconomic conditions, strong corporate earnings and attractive headline valuations underpinned numerous rallies across the globe. On top of these conditions, high levels of liquidity induced investors to shrug off political concerns and propel many markets, even the expensive ones, to all-time highs. Volatility was at record lows. Reversing the pattern evident in 2012 to 2015, when investors abandoned the emerging for the developed markets, 2017 s rallies were driven mostly by emerging rather than developed markets while in the sector league, technology stocks topped the tables. Equities were driven by Momentum and Growth factors while High Dividend and Value lagged. Strong corporate earnings proved to be a major catalyst with both developed and emerging markets showing solid profit growth. The corporate balance sheet restructuring and cutting of the last five years translated into higher earnings and boosted investor confidence in the profit forecasts. Markets also got a boost from soft global inflation data. As the year progressed, it became evident that core inflation in the US, Eurozone and Japan seemed set to either remain subdued or fall short of target. Investors took this as a sign that monetary policy tightening would be gradual. As it turned out, both the European Central Bank and the Bank of Japan left rates unchanged while the US Federal Reserve hiked rates thrice in line with its guidance. While equities stood out as 2017 s clear winner, bonds turned in a better-than-expected performance, supported by a relatively benign interest rate environment and ample liquidity. And much like the previous year, tighter spreads prevailed while better valuations seen at the longer-duration and higher-yielding ends of the bond universe led to higher yielding bonds outperforming their sovereign counterparts. Asia and Emerging bond markets benefitted from renewed portfolio inflows as the demand for yield and income continued to hold up. Throughout 2017, global liquidity levels remained abundant. Even the US Fed s move to commence tapering in October did little to dent sentiment. Both the European Central Bank and the Bank of England also hinted at similar claw backs at some point in time in Stronger US economic data and the passage of President Trump s landmark tax bill dominated headlines as the year closed. US equities surged to record highs on expectations that tax cuts will further boost corporate earnings. This bounce in confidence rippled out into other major markets. At the same time, growing confidence in the US economy caused US Treasury yields to drift higher and the market-implied probability of multiple rate hikes in 2018 rose. Looking ahead, the conditions fueling 2017 s Risk On investor rush seem intact. Within equities, there is still room for emerging markets earnings and margins to accelerate more rapidly than their global peers. Moreover, valuations are still supportive. From a fixed income perspective, emerging and Asian local currency bonds offer longer-term opportunities as the rate hikes and the liquidity claw backs in the developed markets are expected to be muted and gradual. Many of 2017 s rally drivers have not run out of steam, although rotational buying is starting to appear. The fundamental story remains intact; economic and earnings growth forecasts are solid, and liquidity is abundant. That said, the year is not without its dangers but short of structural threats, such as resurgent inflation (unlikely) or a central bank misstep (possible but also unlikely), the tactical threats (rising interest rates), do not appear life threatening (although they could trigger sell-offs similar to the market correction seen in February). 6

9 REPORT OF THE INVESTMENT MANAGER As at December 31, 2017 (continued) Entity Name Reference Index* Inception Date 1Y Fund 1Y Reference Index 3Y Fund 3Y Reference Index 5Y Fund 5Y Reference Index Since Inception Fund Since Inception Reference Index Asia Pacific Equity Fund Class A MSCI AC Asia Pacific ex Japan Index 07-Feb Asian Bond Fund Class A JP Morgan Asia Credit Index 01-Mar Asian Dynamic Fund Class A MSCI AC Asia ex Japan Index 07-Feb Asian Equity Fund Class A MSCI AC Asia ex Japan Index 26-Aug Asian Equity Income Fund Class A MSCI AC Asia Pacific ex Japan Index 05-Sep Asian High Yield Bond Fund Class A JACI - Non Investment Grade 09-Jul Asian Infrastructure Equity Fund Class A MSCI AC Asia ex Japan Custom Index 01-Oct Asian Local Bond Fund Class A Markit iboxx ALBI ex-china Onshore, 05-Sep ex-china Offshore ex-taiwan Net of Tax Custom Index Asian Low Volatility Equity Fund Class A MSCI AC Asia Pacific ex Japan Index 23-Nov Asian Property Securities Fund Class A GPR Customized Asia Pacific (Ex Japan) 28-Feb Property Index Asian Smaller Companies Fund Class A MSCI AC Asia ex-japan Small 2-Aug Cap Index Asian Total Return Bond Fund Class A - 31-Oct China Equity Fund Class A MSCI China 10/40 Index 02-Jul Developed And Emerging Asia Equity - 19-May Fund Class E Dragon Peacock Fund Class A 50% MSCI China Index + 50% MSCI 30-Jun India Index Emerging Europe, Middle East And Africa Dynamic Fund Class A MSCI EM EMEA Index 15-Jun European Investment Grade Bond Fund Class A E Global Emerging Markets Bond Fund Class A Global Emerging Markets Customized Equity Fund Class E Global Emerging Markets Dynamic Fund Class A The BofA Merrill Lynch Euro Corporate Index 17-Oct JP Morgan Emerging Markets Bond 15-Jun Index Global Diversified Index Customized Emerging Markets Index 19-May MSCI Emerging Markets Index 15-May Global Equity Navigator Fund Class A - 15-Jun Global Low Volatility Equity Fund Class D MSCI ACWI Minimum Volatility Index 01-Oct Global Market Navigator Fund Class A - 26-Mar Global Multi Asset Income Plus Growth Fund Class D Global Technology Fund Class A 50% MSCI AC World Index + 50% JP Morgan Global Aggregate Bond Index MSCI AC World Information Technology Index 01-Mar Aug Greater China Equity Fund Class A MSCI Golden Dragon Index 23-Feb Hong Kong Equity Fund Class A MSCI Hong Kong Index 02-Jul India Discovery Fund Class A MSCI India Index 05-Jul India Equity Fund Class A MSCI India Index 02-Jul Indonesia Equity Fund Class A MSCI Indonesia 10/40 Index 02-Jul Japan Dynamic Fund Class A MSCI Japan Index 07-Feb Japan Equity Fund Class A S&P Topix 150 Index 07-Feb Japan Fundamental Value Fund Class D FTSE Japan Index 02-Sep Japan Smaller Companies Fund Class A Russell Nomura Mid-Small Index 26-Mar Latin American Equity Fd Class A MSCI EM Latin America Index 30-Apr Malaysia Equity Fund Class A MSCI Malaysia Index 02-Jul North American Value Fund Class A S&P 500 Value Index 31-Aug Pan European Fund Class A MSCI Europe Index 26-Aug Philippines Equity Fund Class A Philippines Stock Exchange Composite 02-Jul Index Thailand Equity Fund Class A SET50 Index 02-Jul US Bond Fund Class A^ Barclays Capital U.S. Aggregate Bond 30-Nov Index US Corporate Bond Fund Class A^ Barclays Capital Credit Most Conservative 07-Feb % Issuer Cap Bond Index US Equity Income Fund Class A S&P 500 Index 30-Jun US High Investment Grade Bond Fund Class A US High Yield Bond Fund Class A US Investment Grade Bond Fund Class A The BofA Merrill Lynch U.S. Corporates, A2 Rated and above Index The BofA Merrill Lynch US High Yield Constrained Index The BofA Merrill Lynch U.S. Corporates, BBB3 - A3 Rated Index US Strategic Income Bond Fund Class D 45% Barclays US Aggregate Index + 45% Barclays US High Yield Index + 10% Barclays Global Aggregate ex-usd Index 16-Dec Aug Mar Jun

10 REPORT OF THE INVESTMENT MANAGER As at December 31, 2017 (continued) Entity Name Reference Index* Inception Date 1Y Fund 1Y Reference Index 3Y Fund 3Y Reference Index 5Y Fund 5Y Reference Index Since Inception Fund Since Inception Reference Index US Total Return Bond Fund Class D Barclays Capital U.S. Aggregate Index 15-Jun Vietnam Equity Fund Class J FTSE Vietnam All Share Index 02-Jul World Value Equity Fund Class A MSCI World Index 09-Dec Source: Eastspring Investments (Singapore) Limited, bid-to-bid, net income reinvested, as at 31 December Note: Returns are annualised for periods over 1 year. * The Reference Index is disclosed for comparison purposes only. Details of any historical changes in Reference Indices are not disclosed. The Reference Index for the hedged share classes, if any, is calculated on a hedged basis. The Sub-fund has no dedicated Reference Index. ^ The Benchmark presents the index which the Sub-Fund is managed as at December 31, The Benchmark for the hedged share classes, if any, is calculated on a hedged basis. 8

11 To the Shareholders of Eastspring Investments 26, Boulevard Royal L-2449 Luxembourg Grand Duchy of Luxembourg KPMG Luxembourg, Société coopérative 39, Avenue John F. Kennedy L-1855 Luxembourg Tel.: Fax: info@kpmg.lu Internet: REPORT OF THE REVISEUR D ENTREPRISES AGREE Report on the audit of the financial statements Opinion We have audited the accompanying financial statements of Eastspring Investments and each of its sub-funds ( the Fund ), which comprise the combined statement of net and statement of investments as at December 31, 2017 and the combined statement of operations and changes in net for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of Eastspring Investments and each of its sub-funds as at December 31, 2017, and of the results of their operations and changes in their net for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements. Basis for opinion We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession ( Law of 23 July 2016 ) and with International Standards on Auditing ( ISAs ) as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier ( CSSF ). Our responsibilities under the Law of 23 July 2016 and ISAs are further described in the «Responsibilities of Réviseur d Entreprises agréé for the Audit of the Financial Statements» section of our report. We are also independent of the Fund in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the financial statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information The Board of Directors of the Fund is responsible for the other information. The other information comprises the information stated in the annual report but does not include the financial statements and our report of Réviseur d Entreprises agréé thereon. Our opinion on the financial statements 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, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements 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 this other information, we are required to report this fact. We have nothing to report in this regard. Responsibilities of Board of Directors of the Fund for the financial statements The Board of Directors of the Fund is responsible for the preparation and fair presentation of these financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements, and for such internal control as the Board of Directors of the determines 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, the Board of Directors of the Fund is responsible for assessing the Fund s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors of the Fund either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so. Responsibilities of the Réviseur d Entreprises agréé for the audit of the financial statements The objectives of our audit 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 a report of Réviseur d Entreprises agréé that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF 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. 9

12 KPMG Luxembourg, Société coopérative 39, Avenue John F. Kennedy L-1855 Luxembourg Tel.: Fax: info@kpmg.lu Internet: As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, 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. Obtain an understanding of internal control relevant to the audit 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. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors of the Fund. Conclude on the appropriateness of the Board of Directors of the Fund s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of Réviseur d Entreprises agréé to the related disclosures in the financial statements 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 report of Réviseur d Entreprises agréé. However, future events or conditions may cause the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance 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. Luxembourg, March 23, 2018 KPMG Luxembourg Société coopérative Cabinet de révision agréé S. Smets 10

13 Combined Statement of Net Assets As at December 31, 2017 (continued) Asia Pacific Equity Fund Asian Bond Fund Asian Dynamic Fund Asian Equity Fund Asian Equity Income Fund Note USD USD USD USD USD Assets Investment in securities at 846,256,487 3,207,518,992 70,282, ,718, ,716,417 Unrealised appreciation/(depreciation) 151,653,181 72,789,436 10,900,879 70,114,796 75,672,712 Investments in securities at market value 2(a) 997,909,668 3,280,308,428 81,183, ,832, ,389,129 Cash at bank 11,686,673 15,552,673 2,219,215 7,163,673 13,281,091 Cash equivalents* (186) 45,012,159 (3,278) (1,427) Amounts receivable on sale of investments - 1,126,250 1,433,976 Amounts receivable on subscriptions 6,246,649 6,785, ,197 8,096,252 Interest and dividends receivable, net 2,051,694 33,674, ,671 1,054,628 1,402,514 Unrealised appreciation on futures contracts 2(c), 10 Unrealised appreciation on forward foreign exchange contracts 2(c), 11 2,355,392 10,277 2,603,607 Other Total 1,017,894,498 3,383,688,150 83,646, ,071, ,205,142 Liabilities Cash owed to bank Amounts payable on purchase of investments 6,166,148 7,907,717 Amounts payable on redemptions 65,021 6,241,280 9,300 7,801,186 4,566,849 Unrealised depreciation on futures contracts 2(c), 10 Unrealised depreciation on forward foreign exchange contracts 2(c), 11 Market value of credit default swaps 2(d), 12 Management fees payable 3 1, ,060 7, , ,811 Tax and expenses payable 626, ,087 30, , ,597 Total liabilities 692,708 13,178,575 47,835 8,576,001 12,730,974 Total net asset value prior to dilution 1,017,201,790 3,370,509,575 83,598, ,495, ,474,168 Adjustment due to dilution 2(g) Total net asset value after dilution 1,017,201,790 3,370,509,575 83,598, ,495, ,474,168 * Cash equivalents consist of time deposits and unrealised gains or losses on spot contracts. The accompanying notes form an integral part of these financial statements. 11

14 Combined Statement of Net Assets As at December 31, 2017 (continued) Asian High Yield Bond Fund Asian Infrastructure Equity Fund Asian Local Bond Fund Asian Low Volatility Equity Fund Asian Property Securities Fund Note USD USD USD USD USD Assets Investment in securities at 183,997,718 31,771,615 2,612,008, ,369,245 8,641,297 Unrealised appreciation/(depreciation) 3,012,186 3,183,095 30,746,197 27,812, ,465 Investments in securities at market value 2(a) 187,009,904 34,954,710 2,642,754, ,181,359 9,591,762 Cash at bank 1,677, ,354 9,757,365 6,839, ,193 Cash equivalents* 4,101,370 60,237,546 (910) 44 Amounts receivable on sale of investments 335,656 4,885,000 49,215 Amounts receivable on subscriptions 82,473 39, , ,587 16,400 Interest and dividends receivable, net 2,690, ,672 27,507, ,334 31,984 Unrealised appreciation on futures contracts 2(c), ,938 Unrealised appreciation on forward foreign exchange contracts 2(c), , ,187 Other 574 Total 196,429,719 35,675,021 2,746,179, ,721,598 9,821,598 Liabilities Cash owed to bank Amounts payable on purchase of investments 298,362 6,025,158 84,625 Amounts payable on redemptions 46, , ,319 82,989 5,300 Unrealised depreciation on futures contracts 2(c), 10 Unrealised depreciation on forward foreign exchange contracts 2(c), ,010 Market value of credit default swaps 2(d), 12 Management fees payable 3 91,364 32,501 43,374 26, Tax and expenses payable 60, , ,673 34,665 8,161 Total liabilities 496, ,884 7,246, ,030 98,597 Total net asset value prior to dilution 195,933,023 35,209,137 2,738,932, ,577,568 9,723,001 Adjustment due to dilution 2(g) Total net asset value after dilution 195,933,023 35,209,137 2,738,932, ,577,568 9,723,001 * Cash equivalents consist of time deposits and unrealised gains or losses on spot contracts. 12 The accompanying notes form an integral part of these financial statements.

15 Combined Statement of Net Assets As at December 31, 2017 (continued) Asian Smaller Companies Fund (1) Asian Total Return Bond Fund (1) Developed and Emerging Asia Equity Fund China Equity Fund Dragon Peacock Fund Note USD USD USD USD USD Assets Investment in securities at 72,405,129 73,617, ,380,273 3,063,663, ,969,347 Unrealised appreciation/(depreciation) 4,609, ,151 58,879, ,648,119 41,700,285 Investments in securities at market value 2(a) 77,014,791 73,729, ,259,664 3,681,311, ,669,632 Cash at bank 3,956,212 1,178,144 2,676,285 80,887,285 5,765,194 Cash equivalents* (6) 1, Amounts receivable on sale of investments 628, ,902 Amounts receivable on subscriptions 3,664, ,568 Interest and dividends receivable, net 60, ,399 8,367,212 53,336 Unrealised appreciation on futures contracts 2(c), 10 Unrealised appreciation on forward foreign exchange contracts 2(c), 11 1,485,154 Other 220 Total 81,659,462 75,722, ,085,993 3,770,566, ,436,632 Liabilities Cash owed to bank Amounts payable on purchase of investments 850,772 1,246,642 Amounts payable on redemptions 3,411, ,527 Unrealised depreciation on futures contracts 2(c), 10 Unrealised depreciation on forward foreign exchange contracts 2(c), ,473 Market value of credit default swaps 2(d), 12 Management fees payable ,854 11, ,587 Tax and expenses payable 438,583 9, ,799 5,253,460 1,592,364 Total liabilities 438, ,537 4,637,854 5,265,307 4,020,120 Total net asset value prior to dilution 81,220,589 75,604, ,448,139 3,765,300, ,416,512 Adjustment due to dilution 2(g) Total net asset value after dilution 81,220,589 75,604, ,448,139 3,765,300, ,416,512 (1) New Sub-Fund launched, see Note 1. * Cash equivalents consist of time deposits and unrealised gains or losses on spot contracts. The accompanying notes form an integral part of these financial statements. 13

16 Combined Statement of Net Assets As at December 31, 2017 (continued) Emerging Europe, Middle East and Africa Dynamic Fund European Investment Grade Bond Fund Global Bond Navigator Fund (2) Global Emerging Markets Bond Fund Note USD EUR USD USD Assets Investment in securities at 234,373, ,091, ,648,963 Unrealised appreciation/(depreciation) 18,947,966 12,205,913 30,227,080 Investments in securities at market value 2(a) 253,321, ,297,114 1,001,876,043 Cash at bank 9,103,570 34,271,725 23,162 7,331,828 Cash equivalents* 15,610,491 Amounts receivable on sale of investments Amounts receivable on subscriptions 600,000 1,800,200 1,282,242 Interest and dividends receivable, net 350,910 8,696,961 14,503,913 Unrealised appreciation on futures contracts 2(c), 10 Unrealised appreciation on forward foreign exchange contracts 2(c), 11 54,492 1,513,786 Other Total 263,376, ,120,492 23,162 1,042,118,303 Liabilities Cash owed to bank 3,400,225 Amounts payable on purchase of investments Amounts payable on redemptions 1,042,524 Unrealised depreciation on futures contracts 2(c), ,867 Unrealised depreciation on forward foreign exchange contracts 2(c), 11 Market value of credit default swaps 2(d), 12 Management fees payable ,108 Tax and expenses payable 75,650 93,872 23, ,837 Total liabilities 75, ,465 23,162 4,638,694 Total net asset value prior to dilution 263,300, ,896,027 1,037,479,609 Adjustment due to dilution 2(g) Total net asset value after dilution 263,300, ,896,027 1,037,479,609 (2) Sub-Fund liquidated, see Note 1. * Cash equivalents consist of time deposits and unrealised gains or losses on spot contracts. 14 The accompanying notes form an integral part of these financial statements.

17 Combined Statement of Net Assets As at December 31, 2017 (continued) Global Emerging Markets Customized Equity Fund (3) Global Emerging Markets Dynamic Fund Global Equity Navigator Fund Global Low Volatility Equity Fund Global Market Navigator Fund Note USD USD USD USD USD Assets Investment in securities at 1,865,249, ,672,758 72,529, ,383, ,445,886 Unrealised appreciation/(depreciation) 282,563,238 73,825,549 9,224,848 25,311,433 7,611,692 Investments in securities at market value 2(a) 2,147,813, ,498,307 81,754, ,694, ,057,578 Cash at bank 37,596,520 7,285, ,078 2,172,251 2,213,600 Cash equivalents* (960) 11 5 Amounts receivable on sale of investments Amounts receivable on subscriptions 10,305 2,338 Interest and dividends receivable, net 5,331,163 1,275,171 57, , ,404 Unrealised appreciation on futures contracts 2(c), 10 Unrealised appreciation on forward foreign exchange contracts 2(c), 11 3,907 Other Total 2,190,739, ,068,844 81,979, ,098, ,891,489 Liabilities Cash owed to bank 514 Amounts payable on purchase of investments Amounts payable on redemptions 49,708 41,300 Unrealised depreciation on futures contracts 2(c), 10 Unrealised depreciation on forward foreign exchange contracts 2(c), 11 Market value of credit default swaps 2(d), 12 Management fees payable 3 15, ,896 Tax and expenses payable 2,783, ,415 17,529 56,763 32,276 Total liabilities 2,783, ,434 17,539 58,081 78,472 Total net asset value prior to dilution 2,187,956, ,548,410 81,961, ,040, ,813,017 Adjustment due to dilution 2(g) Total net asset value after dilution 2,187,956, ,548,410 81,961, ,040, ,813,017 (3) Sub-Fund changed its name, see Note 1. * Cash equivalents consist of time deposits and unrealised gains or losses on spot contracts. The accompanying notes form an integral part of these financial statements. 15

18 Combined Statement of Net Assets As at December 31, 2017 (continued) Global Multi Asset Income Plus Growth Fund Greater China Equity Fund Global Technology Fund Hong Kong Equity Fund India Discovery Fund Note USD USD USD USD USD Assets Investment in securities at 137,306,487 90,333, ,741,160 1,129,966,164 3,647,973 Unrealised appreciation/(depreciation) 16,287,355 62,933,503 38,930, ,397, ,939 Investments in securities at market value 2(a) 153,593, ,267, ,672,132 1,359,363,946 4,207,912 Cash at bank 1,213,224 7,330,860 2,357,661 9,479, ,868 Cash equivalents* 1,393 (117) Amounts receivable on sale of investments 1,184 1,029,619 Amounts receivable on subscriptions 659,299 47, ,929 Interest and dividends receivable, net 596,393 35,677 55, ,960 Unrealised appreciation on futures contracts 2(c), 10 Unrealised appreciation on forward foreign exchange contracts 2(c), 11 19,733 Other Total 155,403, ,295, ,162,689 1,370,181,055 4,374,396 Liabilities Cash owed to bank 3 Amounts payable on purchase of investments 196,875 4,131,972 Amounts payable on redemptions 74,625 2,233,437 4,392 35,301 Unrealised depreciation on futures contracts 2(c), 10 Unrealised depreciation on forward foreign exchange contracts 2(c), 11 Market value of credit default swaps 2(d), 12 Management fees payable ,818 86,605 9,885 4,957 Tax and expenses payable 25,141 29,041 45, , ,513 Total liabilities 25, ,487 2,562,763 4,364, ,771 Total net asset value prior to dilution 155,378, ,077, ,599,926 1,365,816,562 4,232,625 Adjustment due to dilution 2(g) 386,585 Total net asset value after dilution 155,378, ,463, ,599,926 1,365,816,562 4,232,625 * Cash equivalents consist of time deposits and unrealised gains or losses on spot contracts. 16 The accompanying notes form an integral part of these financial statements.

19 Combined Statement of Net Assets As at December 31, 2017 (continued) India Equity Fund Indonesia Equity Fund Japan Dynamic Fund Japan Equity Fund Japan Fundamental Value Fund Note USD USD JPY JPY JPY Assets Investment in securities at 129,859, ,366, ,491,311,577 33,894,881,647 61,523,633,064 Unrealised appreciation/(depreciation) 41,358,426 24,074,443 52,514,547,304 4,208,872,923 9,576,519,596 Investments in securities at market value 2(a) 171,217, ,440, ,005,858,881 38,103,754,570 71,100,152,660 Cash at bank 2,098,153 3,605,578 3,141,157, ,524, ,981,646 Cash equivalents* 1,670,395 (2,111,782) (5,041,796) Amounts receivable on sale of investments 336, ,063,641 62,937,385 Amounts receivable on subscriptions 558, ,270 3,637,683, ,628, ,474,249 Interest and dividends receivable, net 3, , ,193,827 24,263,099 38,333,004 Unrealised appreciation on futures contracts 2(c), 10 Unrealised appreciation on forward foreign exchange contracts 2(c), Other 153 Total 174,213, ,700, ,303,627,453 38,887,058,836 72,229,837,494 Liabilities Cash owed to bank 1 Amounts payable on purchase of investments 608,204,853 12,503,610 Amounts payable on redemptions 605,143 1,187,988 2,317,564, ,322, ,568,259 Unrealised depreciation on futures contracts 2(c), 10 Unrealised depreciation on forward foreign exchange contracts 2(c), ,119,036 2,963,897 Market value of credit default swaps 2(d), 12 Management fees payable 3 32,175 84, ,933,239 5,535,699 2,761,720 Tax and expenses payable 3,242,737 87,791 60,355,627 6,618,031 8,933,282 Total liabilities 3,880,055 1,360,588 3,458,176, ,440, ,766,871 Total net asset value prior to dilution 170,333, ,340, ,845,450,471 38,716,618,798 71,682,070,623 Adjustment due to dilution 2(g) Total net asset value after dilution 170,333, ,340, ,845,450,471 38,716,618,798 71,682,070,623 * Cash equivalents consist of time deposits and unrealised gains or losses on spot contracts. The accompanying notes form an integral part of these financial statements. 17

20 Combined Statement of Net Assets As at December 31, 2017 (continued) Japan Smaller Companies Fund Latin American Equity Fund Malaysia Equity Fund North American Value Fund Note JPY USD USD USD Assets Investment in securities at 32,833,604,156 46,659,370 4,937,073 2,640,207,758 Unrealised appreciation/(depreciation) 4,842,369,634 1,634,317 76, ,353,065 Investments in securities at market value 2(a) 37,675,973,790 48,293,687 5,013,079 3,153,560,823 Cash at bank 243,556,948 1,771,560 14,409 5,760,668 Cash equivalents* 86,268 (2,270) (125) Amounts receivable on sale of investments 12,867,084 Amounts receivable on subscriptions 131,568, , ,510 6,252,923 Interest and dividends receivable, net 15,589, ,650 14,350 4,089,942 Unrealised appreciation on futures contracts 2(c), 10 Unrealised appreciation on forward foreign exchange contracts 2(c), ,885 Other 9,375 Total 38,079,642,521 50,796,854 5,220,723 3,169,668,116 Liabilities Cash owed to bank Amounts payable on purchase of investments 499,998 Amounts payable on redemptions 47, ,980 Unrealised depreciation on futures contracts 2(c), 10 Unrealised depreciation on forward foreign exchange contracts 2(c), 11 Market value of credit default swaps 2(d), 12 Management fees payable 3 22,382,685 6,188 1, Tax and expenses payable 4,912,698 25,372 6, ,121 Total liabilities 27,295, ,730 7,519 1,144,879 Total net asset value prior to dilution 38,052,347,138 50,218,124 5,213,204 3,168,523,237 Adjustment due to dilution 2(g) Total net asset value after dilution 38,052,347,138 50,218,124 5,213,204 3,168,523,237 * Cash equivalents consist of time deposits and unrealised gains or losses on spot contracts. 18 The accompanying notes form an integral part of these financial statements.

21 Combined Statement of Net Assets As at December 31, 2017 (continued) Pan European Fund Philippines Equity Fund Thailand Equity Fund US Bond Fund Note USD USD USD USD Assets Investment in securities at 54,547,240 50,501,133 9,536,571 40,539,815 Unrealised appreciation/(depreciation) 11,250,755 4,977,710 3,040, ,477 Investments in securities at market value 2(a) 65,797,995 55,478,843 12,576,775 41,001,292 Cash at bank 2,129, , ,076 59,583 Cash equivalents* 1,117 (7) (1) Amounts receivable on sale of investments 8,916 Amounts receivable on subscriptions 540, , , Interest and dividends receivable, net 52,865 35,383 12, ,440 Unrealised appreciation on futures contracts 2(c), 10 Unrealised appreciation on forward foreign exchange contracts 2(c), 11 72,119 Other 3,479 5,720 Total 68,521,765 56,572,823 13,063,134 41,335,620 Liabilities Cash owed to bank 1 Amounts payable on purchase of investments 49,681 Amounts payable on redemptions 18,398 9, ,843 90,571 Unrealised depreciation on futures contracts 2(c), 10 Unrealised depreciation on forward foreign exchange contracts 2(c), 11 Market value of credit default swaps 2(d), 12 Management fees payable 3 40,967 23,863 6,829 15,373 Tax and expenses payable 15,436 26,820 11,619 17,009 Total liabilities 74,802 60, , ,953 Total net asset value prior to dilution 68,446,963 56,512,404 12,762,162 41,212,667 Adjustment due to dilution 2(g) 77,849 Total net asset value after dilution 68,446,963 56,512,404 12,840,011 41,212,667 * Cash equivalents consist of time deposits and unrealised gains or losses on spot contracts. The accompanying notes form an integral part of these financial statements. 19

22 Combined Statement of Net Assets As at December 31, 2017 (continued) US High US High US Investment US Corporate Bond Fund US Equity Income Fund (1) Investment Grade Bond Fund Yield Bond Fund Grade Bond Fund Note USD USD USD USD USD Assets Investment in securities at 4,569,483,421 50,770, ,446,897 1,760,568, ,620,940 Unrealised appreciation/(depreciation) 144,095,781 6,309,462 2,325,296 13,642,549 18,142,644 Investments in securities at market value 2(a) 4,713,579,202 57,079, ,772,193 1,774,210, ,763,584 Cash at bank 3,573 2,502,195 Cash equivalents* 5, ,052 (30,381) 839 Amounts receivable on sale of investments Amounts receivable on subscriptions 19,333, ,972 42,216, ,267 Interest and dividends receivable, net 34,360,694 68,272 1,365,475 26,793,591 3,525,037 Unrealised appreciation on futures contracts 2(c), 10 19,750 27,796 Unrealised appreciation on forward foreign exchange contracts 2(c), 11 4,545,263 48,311, ,430 Other Total 4,771,824,280 57,151, ,842,637 1,891,501, ,283,953 Liabilities Cash owed to bank 40,905,717 3,434,503 4,425,260 Amounts payable on purchase of investments Amounts payable on redemptions 3,385, ,638 31,739,274 1,689,192 Unrealised depreciation on futures contracts 2(c), ,000 Unrealised depreciation on forward foreign exchange contracts 2(c), 11 Market value of credit default swaps 2(d), ,139 Management fees payable 3 333, , , ,135 Tax and expenses payable 626,580 8,159 32, , ,322 Total liabilities 45,392,107 8, ,016 36,509,263 6,340,909 Total net asset value prior to dilution 4,726,432,173 57,143, ,377,621 1,854,992, ,943,044 Adjustment due to dilution 2(g) Total net asset value after dilution 4,726,432,173 57,143, ,377,621 1,854,992, ,943,044 (1) New Sub-Fund launched, see Note 1. * Cash equivalents consist of time deposits and unrealised gains or losses on spot contracts. 20 The accompanying notes form an integral part of these financial statements.