SEB Fund 2 A LUXEMBOURG MUTUAL INVESTMENT FUND UN-AUDITED SEMI-ANNUAL REPORT. June 30, SEB Asset Management S.A.

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1 SEB Fund 2 A LUXEMBOURG MUTUAL INVESTMENT FUND UN-AUDITED SEMI-ANNUAL REPORT June 30, 2006 Subscriptions cannot be received on the basis of financial reports. Subscriptions are valid only if made on the basis of the current prospectus, supplemented by the latest annual report and the most recent semi-annual report if published thereafter. SEB Asset Management S.A. Promoted by: SEB AB (publ), STOCKHOLM

2 SEB Fund 2 TABLE OF CONTENTS Page(s) Organisation 3 4 General Information 5 Report of the Board of Directors 6 Schedule of Investments 7 9 Statement of Net Assets 10 Statistical Information 10 Notes to the Financial Statements Notes to the EU Savings Tax Directive 13 2

3 ORGANISATION Promoter: Management Company and Central Administration: Registrar and Transfer Agent: Board of Directors of the Management Company: SEB AB (publ) Kungsträdgårdsgatan 8 S Stockholm SEB Asset Management S.A. 6a, circuit de la Foire Internationale L-1347 Luxembourg SEB Fund Services S.A. 6a, circuit de la Foire Internationale L-1347 Luxembourg Chairman Thomas Ericsson Head of SEB Asset Management Sweden COO Stockholm Vice-Chairman Thomas Nahmer, CFA Managing Director of SEB Invest GmbH Frankfurt am Main (until June 1, 2006) Executive member Rudolf Kömen Head of SEB Asset Management S.A. Luxembourg Members Pontus Bergekrans Global Head of Sales and Products of SEB Asset Management Stockholm (until June 1, 2006) Barbro Lilieholm Head of Legal of SEB Asset Management Stockholm Management: Investment Manager: Custodian Bank: Independent Auditor of the Fund and of the Management Company: Rudolf Kömen, Luxembourg Renzo Sechi, Luxembourg Schroder Investment Management Limited Gresham Street 31 UK-London EC2V 7QA Skandinaviska Enskilda Banken S.A. (Former SEB Private Bank S.A./ name changed on June 1, 2006) 6a, circuit de la Foire Internationale L-1347 Luxembourg PricewaterhouseCoopers S.à r.l. Réviseur d entreprises 400, route d Esch L-1471 Luxembourg 3

4 ORGANISATION Distributors and Principal Paying Agents: In Luxembourg Skandinaviska Enskilda Banken S.A. (Former SEB Private Bank S.A./ name changed on June 1, 2006) 6a, circuit de la Foire Internationale L-1347 Luxembourg In Sweden SEB AB (publ) Kungsträdgårdsgatan 8 S Stockholm In Germany SEB AG Ulmenstrasse 30 D Frankfurt am Main and all branches, subsidiaries and affiliates, acting as the distributors of the Fund s units Listing Agent: Legal Advisor: Fortis Banque Luxembourg S.A. 50, avenue J. F. Kennedy L-2951 Luxembourg Dr. Pierre Berna Avocat à la Cour 16a, boulevard de la Foire L-1528 Luxembourg 4

5 GENERAL INFORMATION SEB Fund 2 (hereafter the Fund ) is an Undertaking for Collective Investment in Transferable Securities ( UCITS ), set up as a mutual investment fund ( Fonds Commun de Placement ) governed by part I of the Luxembourg Law on Undertakings for Collective Investment ( the Law ) of December 20, The Fund, which was set up on April 21, 1986 for an undetermined duration, is managed by SEB Asset Management S.A. (the Management Company ) acting also as Central Administration. The current Management Regulations have been deposited with the Trade Register of the district court in Luxembourg and the relating notice has been published in the Mémorial C, Recueil des Sociétés et Associations, on February 14, The Management Company is governed by Chapter 13 of the Law and was established on July 15, 1988 with subsequent publication in the Mémorial C, taking place on August 16, The main objective of the Fund is to gain the greatest possible return observing a well balanced risk level. The Fund has long term investment horizons. In order to achieve its main objective, the Fund s portfolio will be focused primarily on gaining return from the Asian and Pacific equity markets. At present, one Sub-Fund is at the unitholders disposal: SEB Fund 2 - SEB Asia ex. Japan Fund. For each Sub-Fund, the Management Company may decide to issue two classes of units: Capitalisation units ( C units) Distribution units ( D units). The D units may pay a dividend. The C units will capitalise income, with the result that their value will become greater than that of D units, in the proportion of the dividends paid to the D units. Currently, only C units are offered for the Sub-Fund. The net asset value per unit as well as the issue and redemption prices, which are computed daily on bank business days in Luxembourg and in Sweden, can be obtained from the registered offices of the Management Company, the Custodian Bank and the Paying Agents. In addition, the net asset value, issue and redemption prices are published daily in the International Herald Tribune until June 30, As from July 1, 2006, the publication will take place in The Wall Street Journal Europe. Furthermore, prices are as well published in the German newspaper Börsen-Zeitung. Financial reports of the Fund are published annually and semi-annually. These reports, as well as the sales prospectus, the management regulations and all information concerning the Fund are available for the unitholders at the registered offices of the Management Company, the Custodian Bank or every Paying Agent. 5

6 REPORT OF THE BOARD OF DIRECTORS TO THE UNITHOLDERS OF SEB Fund 2 - SEB Asia ex. Japan Fund The Sub-Fund s performance The Sub-Fund s net asset value fell by 3.1 percent during the period, if expressed in SEK. The Sub-Fund s benchmark index without dividend fell by 4.1 percent, while the index including dividend fell by 2.9 percent. The share selection in Hong Kong, Indonesia and Singapore worked in the Sub-Fund s favour, while shares in Korea and Thailand had a negative impact on the Sub-Fund s performance. Hong Kong Exchanges in Hong Kong boosted the Sub-Fund s performance significantly. The company also felt the benefit of imminent stock exchange listings in China. Ping An Insurance, which was favoured by factors such as good premium income, also made a positive contribution to the Sub-Fund s performance. Indonesian Perusahaan Gas Negara, helped by a step-up in demand for gas as an alternative fuel, made a similar positive contribution. MFS Technology and City Developments in Singapore had a positive impact on the Sub-Fund s performance. MFS Technology looks likely to benefit from the merger with MFlex. Korean Hyundai Motor and LG Philips made a negative contribution to the Sub-Fund s performance. Hyundai Motor was clouded by concern over whether export profits would be constrained by a rising South Korean WON, while LG Philips fell victim to falling prices of displays. In Thailand, Land & Houses was hit by political unrest and flagging consumer confidence. In Indonesia, we sold our holding in PT Telekomunikasi, with the company s profit write-downs reflected in its share price, and invested in PT Astra International, which has an attractive valuation and is expected to benefit from falling interest rates. We invested in the technology shares ZTE Corporation and Satayam Computer Services and topped up our holding in CNOOC, as the danger of rising tension in the Middle East may affect oil supplies. Weak currencies had a negative impact on the Sub-Fund, expressed in SEK. The Sub-Fund s net asset value per unit expressed in USD increased by 7.1 percent. Present strategy We are focusing on stable Asian consumer and financial shares, but remain cautious about the industry sector and cyclical shares. We are also adopting a cautious attitude to many electricity, water and gas companies, which are negatively affected by rising interest rates. Future prospects Rising interest rates and a potential slowdown in growth may affect the market in the medium term. Lower US consumption also signifies a certain risk. Valuations still appear to be attractive in Asia. Asian dividends are providing sound valuation support and are expected to continue to rise. August 2, 2006 THE BOARD OF DIRECTORS Note: Performances mentioned in this report are historical and are not indicative of future results. 6

7 SEB Fund 2 - SEB Asia ex. Japan Fund SCHEDULE OF INVESTMENTS Security denomination Total holdings Purchases Sales Unit Market % of as at during the during the price value in net reporting reporting USD assets period period Transferable securities admitted to an official stock exchange Shares China China Construction Bank 2,566,000 2,566,000 - HKD ,172, China Mobile 778, ,500 - HKD ,447, CNOCC 4,619,000 4,619,000 - HKD ,687, Cosco Pacific 2,224, ,000 - HKD ,925, Total China 14,232, Hong Kong ASM Pacific Technology 519, ,000 15,000 HKD ,529, Hang Lung Group 1,291, ,000 79,000 HKD ,792, HK Exchanges and Clearing 630, ,000 HKD ,051, HSBC Hldg 274,000 48,800 12,400 HKD ,801, Kerry Properties 834,500-39,500 HKD ,841, Li & Fung 1,542, , ,000 HKD ,116, Ping An Insurance 1,759, , ,500 HKD ,333, Shangri La Asia 2,214, ,000 - HKD ,261, Swire Pacific 793,500 69,500 22,500 HKD ,188, Wharf Hldgs 871,000 58,000 - HKD ,095, ZTE Corporation 138, ,000 - HKD , Total Hong Kong 41,448, Indonesia Astra Intl 2,923,000 2,923,000 - IDR 9, ,077, Bank Central Asia 2,892, ,000 3,095,000 IDR 4, ,280, Bank Rakyat Indonesia 1,076,500 1,076,500 - IDR 4, , Medco Energy International 5,507,000 2,008, ,000 IDR 3, ,215, Perusahaan Gas Negara 1,556,500-2,120,500 IDR 11, ,891, United Tractors 3,239, ,500 IDR 5, ,889, Total Indonesia 10,831, Malaysia Astro All Asia Networks 886, ,600 MYR ,090, Bumiputra Commerce Hldg 2,441, , ,400 MYR ,955, Genting 241, ,000 - MYR ,555, SP Setia 1,479,100 1,091,200 - MYR ,522, Tenaga Nasional 1,245, ,175 - MYR ,121, Total Malaysia 11,246,

8 SEB Fund 2 - SEB Asia ex. Japan Fund SCHEDULE OF INVESTMENTS Security denomination Total holdings Purchases Sales Unit Market % of as at during the during the price value in net reporting reporting USD assets period period Singapore City Development 703,000 61,000 78,000 SGD ,157, Cosco Corp Singapore 1,401,000 1,401,000 - SGD ,116, Datacraft Asia 259, ,000 - USD , Development Bank of Singapore 444,000 20,000 23,000 SGD ,083, Jardine Matheson Holdings 185,200 70,800 - USD ,259, Sembcorp Industries 954, ,000 - SGD ,955, Singapore Telecommunications 1,228, ,000 - SGD ,973, UOL Group 1,011, , ,000 SGD ,828, Venture 231,000-56,000 SGD ,548, Total Singapore 21,167, South Korea Cheil Communication 10,370 2,870 - KRW 189, ,071, Hana Financial Group 59,800 64,530 4,730 KRW 44, ,811, Hyundai Development Company 76,280 31,250 17,440 KRW 41, ,297, Hyundai Motor 89,500 27,630 - KRW 80, ,605, Kookmin Bank 132,383 18,350 15,460 KRW 78, ,886, Pusan Bank 110, ,740 - KRW 12, ,412, Samsung Electronics 25,990 5,150 3,820 KRW 603, ,522, Samsung Electronics 6,340 1,150 - KRW 463, ,094, Shinhan Financial 125,430 24,760 - KRW 44, ,884, Shinsegae 11,004 1, KRW 475, ,510, You Eal Electronics 46, KRW 7, , Total South Korea 59,476, Thailand Advanced Info Service 909,600 1,108, ,000 THB ,144, Bangkok Bank 1,567, ,800 - THB ,352, Land and House 21,242,800 8,110,300 - THB ,923, PTT 357, , ,300 THB ,118, True 142, USD Total Thailand 12,539, Taiwan Catcher Technology 128, ,000 78,000 TWD ,356, Cathay Life Insurance 1,375,000 1,375,000 - TWD ,007, E.Sun Financial Hldg 3,835, ,000 - TWD ,559, Far EasTone Telecommunications 764, TWD , Fubon Financial Hldg 3,098,000 1,225,000 1,140,000 TWD ,679, Hon Hai Precision Industry 1,127, , ,000 TWD ,965, MediaTek 299,136-50,000 TWD ,772, Novatek Microelectronics 629, , ,000 TWD ,052, Siliconware Precision 2,705, ,000 1,042,000 TWD ,326, Taiwan Cellular 2,992, ,000 - TWD ,976, Taiwan Semiconductor 6,761, , ,000 TWD ,197, Tong Yang Industry 958, TWD , Total Taiwan 42,651,

9 SEB Fund 2 - SEB Asia ex. Japan Fund SCHEDULE OF INVESTMENTS Security denomination Total holdings Purchases Sales Unit Market % of as at during the during the price value in net reporting reporting USD assets period period United States of America LG.Philips LCD 240, ,324 64,480 USD ,374, Satyam Computer 47,300 47,300 - USD ,585, Total United States of America 5,959, Total shares USD 219,552, Total transferable securities admitted to an official stock exchange USD 219,552, Total portfolio USD 219,552, Cash at banks Cash at banks 3,128, Total cash at banks 3,128, Other assets Dividends receivable 871, Other receivables 535, Total other assets 1,407, Other liabilities Management Fee, Taxe d'abonnement -336, Other liabilities -390, Total other liabilities -727, Total net assets as at June 30, 2006 USD 223,360, A list of changes in the assets held during the year under review, which are not listed in the schedule of investments, is available free of charge from SEB Asset Management S.A. The accompanying notes are an integral part of these financial statements. 9

10 SEB Fund 2 STATEMENT OF NET ASSETS SEB Asia ex. Japan Fund USD Assets Portfolio at cost 170,801, Unrealised appreciation 52,559, Portfolio at market value (note 1) 223,360, Cash at banks 3,128, Other assets 1,407, Total assets 227,896, Total liabilities -727, TOTAL NET ASSETS 227,169, SEB Fund 2 STATISTICAL INFORMATION SEB Asia ex. Japan Fund USD Number of "C" units outstanding as at June 30, ,821, Total net assets as at June 30, ,169, as at December 31, ,299, as at December 31, ,613, Net asset value per "C" unit as at June 30, as at December 31, as at December 31, Dividend paid 2006 NIL The accompanying notes are an integral part of these financial statements. 10

11 SEB Fund 2 NOTES TO THE FINANCIAL STATEMENTS Note 1. SIGNIFICANT ACCOUNTING POLICIES The financial statements are presented in accordance with Luxembourg regulations relating to Undertakings for Collective Investment. Investments: a) Transferable securities and money market instruments, which are officially listed on the stock exchange, are valued at the last available price; b) Transferable securities and money market instruments, which are not officially listed on a stock exchange, but which are traded on another regulated market are valued at a price no lower than the bid price and no higher than the ask price at the time of the valuation and at which the Management Company considers to be an appropriate market price; c) Transferable securities and money market instruments quoted or traded on several markets are valued on the basis of the last available price of the principal market for the transferable securities or money market instruments in question, unless these prices are not representative. d) In the event that such prices are not in line with market condition, or for securities and money market instruments other than those covered in a), b) and c) above for which there are no fixed prices, these securities and money market instruments, as well as other assets, will be valued at the current market value as determined in good faith by the Management Company, following generally accepted valuation principles verifiable by auditors. e) Liquid assets are valued at their nominal value plus accrued interest. Results on sales of securities are determined by the average cost method. Currency translation: All assets denominated in a different currency to the respective Fund s currency are converted into this respective fund s currency at the last available average exchange rate. Separate accounts are maintained for each Sub-Fund in the currency in which the net asset value of the units to which it relates is expressed (the accounting currency). Transactions denominated in a currency other than the accounting currency are recorded on the basis of exchange rates prevailing on the date they occur or accrue to the Sub-Fund. Assets and liabilities, expressed in a currency other than the accounting currency, are translated on the basis of exchange rates ruling at the balance sheet date. The financial statements of the Fund are the aggregate of the financial statements of the different Sub-Funds which, where applicable, are translated into US dollars at the year-end exchange rate., the exchange rates were as follows: 1 HKD = USD 1 IDR = USD 1 KRW = USD 1 MYR = USD 1 SGD = USD 1 THB = USD 1 TWD = USD 11

12 SEB Fund 2 NOTES TO THE FINANCIAL STATEMENTS Income: Interest is recognised on an accrual basis. Note 2. MANAGEMENT FEE In payment of its services, the Management Company receives a commission at an annual rate of 1.75% of the Sub- Fund s net assets. A twelfth of this rate is being payable at the end of each month and based on the average net assets of the Sub-Fund calculated daily during the relevant month. The Management Company pays accounting, administration, custodian and all other charges and fees on behalf of the Fund, except for taxes, bank and brokerage fees for transactions in securities making up the Fund s portfolio as well as transaction fees on transfers referring to redemption of units. Note 3. TAXES The Fund is not subject to any Luxembourg taxes on income or capital gains under existing legislation. The Fund is, however, subject to the taxe d'abonnement which is charged at the rate of 0.05% per annum, based on the net assets of the Fund at the end of each calendar quarter. The tax is calculated daily and paid quarterly. Note 4. CHANGES IN PORTFOLIO COMPOSITION Details of purchases and sales of investments are available, free of charge, from the registered office of the Management Company of the Fund. 12

13 NOTES TO THE EU SAVINGS TAX DIRECTIVE The Council of the European Union adopted on June 3, 2003 a Council Directive 2003/48/EC on the taxation of savings income in the form of interest payments (the "Savings Tax Directive") under which Member States of the European Union ("Member States") will be required to provide tax authorities of another Member State with details of payment of interest or other similar income paid by a person within its jurisdiction to an individual resident in that other Member State. Austria, Belgium and the Grand Duchy of Luxembourg have opted alternatively for a withholding tax system for a transitional period in relation to such payments. The Luxembourg law of June 21, 2005 implemented the Savings Directive into Luxembourg law (the "Savings Directive Law"). Pursuant to the Savings Directive Law, from July 1, 2005 until June 30, 2008, the withholding tax rate on interests will be 15% and from July 1, 2008 until June 30, 2011, the withholding tax will be 20% rising to 35% from July 2011 onwards. Article 9 of the Savings Directive Law provides that no withholding tax will be withheld if the beneficial owner expressly authorizes the paying agent to report information in accordance with the provisions of the Savings Directive Law. Dividends distributed by a Sub-Fund will be subject to the Savings Tax Directive if more than 15% of the relevant Sub- Fund's assets are invested in debt claims as defined in the Savings Directive Law. Proceeds realised by unitholders on the disposal of units will be subject to such reporting or withholding if more than 40% of the relevant Sub-Fund's assets are invested in debt claims as defined by the Savings Directive Law. The determination of the portion of debt claims has been carried out based on an asset test. Key dates for this asset test were and The average percentage of debt claims is as follows: SEB Fund 2 - SEB Asia ex. Japan Fund: 2.26% Thus, for the period , SEB Asia ex. Japan Fund is excluded from the Savings Tax Directive. 13