Investment-linked policies sub-funds. Semi-annual unaudited report for the six months ended 31 December 2013.

Transcription

1 Investment-linked policies sub-funds Semi-annual unaudited report for the six months ended 31 December MICA No: MCI (P) 069/09/2013

2 Investment-linked Report Contents Updates Performance Summary Notes to the fund disclosures HSBC Insurance Asia Balanced HSBC Insurance Asia Equity HSBC Insurance Asia Focused Income HSBC Insurance Asian Bond HSBC Insurance Asian Dividend Equity HSBC Insurance China Balanced HSBC Insurance China Equity HSBC Insurance Climate Change Equity HSBC Insurance Emerging Europe Equity HSBC Insurance Emerging Markets Equity HSBC Insurance Ethical Global Equity HSBC Insurance Ethical Global Sukuk HSBC Insurance Europe Equity HSBC Insurance Global Bond HSBC Insurance Global Emerging Markets Bond HSBC Insurance Global Equity HSBC Insurance India Equity HSBC Insurance Japan Equity HSBC Insurance Pacific Equity HSBC Insurance Premium Balanced HSBC Insurance Premium Property Equity HSBC Insurance SGD Reserve HSBC Insurance Singapore Balanced HSBC Insurance Singapore Bond HSBC Insurance World Selection s Financial Statements Notes to the financial statements

3 Investment-linked Report: Updates Updates 1. Changes to HSBC Insurance Global Emerging Markets Bond (Change in Investment Objective for HSBC Global Investment s Global Emerging Markets Bond) The investment objective of HSBC Global Investment s Global Emerging Markets Bond (the Underlying Sub- ), which HSBC Insurance Global Emerging Markets Bond invests all, or substantially all of its assets into, has been changed from 16 September The amendments to the investment objective of the fund are intended to clarify the potential concentration of investments in non-investment grade securities of a single sovereign issuer and Amendments are highlighted in bold as shown in the table below: Prior to 16 September 2013 From 16 September 2013 The objective of the Underlying Sub- is to invest for total return primarily in a diversified portfolio of Investment Grade and Non- Investment Grade rated fixed income (e.g. bonds) and other similar securities either issued by companies which have their registered office in Emerging Markets around the world, primarily or guaranteed by governments, government agencies and supranational bodies of Emerging Markets. The Underlying Sub- may also invest in financial derivative instruments such as futures, forward (including non-deliverable forwards), swaps, options, credit default swaps, as well as other structured products. The Underlying Sub- intends to use such financial derivative instruments for, inter alia, return enhancement, hedging, tax advantage access to instruments and whenever the Investment Adviser believes the investments in financial derivative instruments will assist the Underlying Sub- in achieving its investment objective. The objective of the Underlying Sub- is to invest for total return primarily in a diversified portfolio of Investment Grade and Non-Investment Grade rated fixed income (e.g. bonds) and other similar securities either issued by companies which have their registered office in Emerging Markets around the world, primarily denominated in US dollars, or which are issued or guaranteed by governments, government agencies and supranational bodies of Emerging Markets. The Underlying Sub- may invest more than 10% and up to 30% of its net assets in securities issued by and/or guaranteed by a single sovereign issuer with a Non- Investment Grade credit rating. This is due to the fact that the Underlying Sub- s reference benchmark, the JP Morgan Emerging Market Bond Index, may contain sovereign issuers that may decide to invest in a specific non-investment grade sovereign issuer and/or to overweight (in relation to the reference benchmark) a particular Non-Investment Grade sovereign issuer. The Non-Investment Grade sovereign issuers that the Underlying Sub- may invest up to 30% of its net assets in include, but are not limited to, Venezuela, Turkey and the Philippines. However, this list may change at any time as a result of: changes in credit ratings, changes in the Underlying Sub- s benchmark weights, the Investment Adviser s decision to allocate a higher or lower proportion of the Underlying Sub- s net assets to a particular benchmark constituent and/or market movements. 2

4 Investment-linked Report: Updates The Underlying Sub- may also invest in financial derivative instruments such as futures, forwards (including non-deliverable forwards), swaps, options, credit defaults swaps, as well as other structured products. The Underlying Sub- intends to use such financial derivative instruments for, inter alia, return enhancement, hedging, tax-efficient access to instruments and whenever the Investment Adviser believes the investment in financial derivative instruments will assist the Underlying Sub- in achieving its investment objectives. 2. Changes in the Underlying Sub-s of HSBC Insurance India Equity, HSBC Insurance Global Emerging Markets Bond, HSBC Insurance Asia Focused Income, HSBC Insurance World Selection 1, HSBC Insurance World Selection 3, HSBC Insurance World Selection 5 HSBC Asset Management (Singapore) Limited has informed us of the changes for the following Underlying Sub-s: Underlying Sub- i) HSBC Global Investment s Indian Equity ii) HSBC Global Investment s Global Emerging Markets Bonds iii) HSBC Global Investment s Asia Focused Income i) HSBC Portfolios World Selection 1 ii) HSBC Portfolios World Selection 3 iii) HSBC Portfolios World Selection 5 i) HSBC Amanah s HSBC Amanah Global Equity* Changes HSBC Securities Services (Luxembourg) S.A. has been appointed to provide some of the delegated services for HSBC Global Investment s and the transfer will take place as follows: Administration Agent from 26 August 2013 Depository Bank from 25 November 2013 Registrar from January 2014 Transfer Agent with effect from 24 March 2014 Transfer Agency services will be transferred from RBC Investor Services Bank S.A to HSBC Securities Services (Luxembourg) S.A. with effect from 24 March 2014 HSBC Securities Services (Luxembourg) S.A has been appointed to undertake central administration services commencing from 16 September HSBC Securities Services (Luxembourg) S.A will also undertake depository and custody services commencing 25 November 2013 and undertake central transfer agency and shareholder services from a date to be determined by the Board of Directors of HSBC Amanah s. *HSBC Amanah s HSBC Amanah Global Equity is no longer available from 18 November

5 Investment-linked Report: Updates 3. Changes to HSBC Insurance India Equity (Change of Investment Adviser for HSBC Global Investment s Indian Equity) The Investment Adviser for HSBC Global Investment s Indian Equity which HSBC Insurance India Equity invests all, or substantially all of its assets into, has been changed from HSBC Global Asset Management (Singapore) Limited to HSBC Global Asset Management (Hong Kong) Limited with effect from 16 September Change in ILP Sub- Names With effect from 18 November 2013, the following ILP Sub-s have been renamed to help customers easily identify ILP Sub-s: ILP Sub- name New ILP Sub- name (effective from 18 Nov 2013) 1 HSBC-Link Asia Balanced HSBC Insurance Asia Balanced 2 HSBC-Link Asia Equity HSBC Insurance Asia Equity 3 HSBC-Link Asia Focused Income HSBC Insurance Asia Focused Income 4 HSBC-Link Asian Bond HSBC Insurance Asian Bond 5 HSBC-Link Asian Dividend Equity HSBC Insurance Asian Dividend Equity 6 HSBC-Link China Balanced HSBC Insurance China Balanced 7 HSBC-Link China Equity HSBC Insurance China Equity 8 HSBC-Link Climate Change Equity HSBC Insurance Climate Change Equity 9 HSBC-Link Ethical Global Equity HSBC Insurance Ethical Global Equity 10 HSBC-Link Ethical Managed HSBC Insurance Ethical Global Sukuk 11 HSBC-Link Emerging Europe Equity HSBC Insurance Emerging Europe Equity 12 HSBC-Link Emerging Markets Equity HSBC Insurance Emerging Markets Equity 13 HSBC-Link Europe Equity HSBC Insurance Europe Equity 14 HSBC-Link Global Bond HSBC Insurance Global Bond 15 HSBC-Link Global Emerging Markets Bond HSBC Insurance Global Emerging Markets Bond 16 HSBC-Link Global Equity HSBC Insurance Global Equity 17 HSBC-Link India Equity HSBC Insurance India Equity 18 HSBC-Link Japan Equity HSBC Insurance Japan Equity 19 HSBC-Link Pacific Equity HSBC Insurance Pacific Equity 20 HSBC-Link Premium Balanced HSBC Insurance Premium Balanced 21 HSBC-Link Premium Property Equity HSBC Insurance Premium Property Equity 22 HSBC-Link SGD Reserve HSBC Insurance SGD Reserve 23 HSBC-Link Singapore Balanced HSBC Insurance Singapore Balanced 24 HSBC-Link Singapore Bond HSBC Insurance Singapore Bond 25 HSBC-Link World Selection 1 HSBC Insurance World Selection 1 26 HSBC-Link World Selection 3 HSBC Insurance World Selection 3 27 HSBC-Link World Selection 5 HSBC Insurance World Selection 5 4

6 Investment-linked Report: Updates 5. Changes to HSBC Insurance Ethical Global Equity, HSBC Insurance Ethical Global Sukuk and HSBC Insurance Ethical Asia Equity. The changes to HSBC Insurance Shariah Compliant s are summarised as follows: Prior to 18 November 2013 From 18 November 2013 HSBC-Link Ethical Global Equity Underlying Sub-: HSBC Amanah s - HSBC Amanah Global Equity Management Fee: 1.6% per annum Included under CPF Investment Scheme: Yes, under Ordinary Account. HSBC Insurance Ethical Global Equity Underlying Sub-: Franklin Templeton Shariah s - Templeton Shariah Global Equity Management Fee: 1.5% per annum Included under CPF Investment Scheme: Yes, under Ordinary Account. HSBC-Link Ethical Managed Underlying Sub-: Not applicable. Managed as a discretionary investment vehicle Management Fee: 1.5% per annum Included under CPF Investment Scheme: Yes, but no new subscriptions. HSBC Insurance Ethical Global Sukuk Underlying Sub-: Franklin Templeton Shariah s -Franklin Templeton Global Sukuk Management Fee: 1.3% per annum Delisted from CPF Investment Scheme HSBC-Link Ethical Asia Equity No longer available from 18 November Change in name of Sub-Manager for DWS Premier Select Trust The Sub-Manager of the Underlying of HSBC Insurance Premium Balanced, DWS Investment GmbH has been renamed to Deutsche Asset & Wealth Management Investment GmbH with effect from 1 September Update in the Central Provident Investment Scheme ( CPFIS ) status of HSBC Insurance India Equity HSBC Insurance India Equity will be delisted from the CPFIS with effect from 1 March 2014, as a result of the Underlying Sub-, HSBC Global Investment s Indian Equity being delisted from CPFIS at the same time. In view of this change, HSBC Insurance India Equity will no longer be able to accept new CPF monies from 1 March 2014 onwards and will no longer comply with CPF Investment Guidelines. 8. Update of Benchmark Performance for HSBC Insurance China Equity HSBC Insurance (Singapore) Pte. Limited has revised the benchmark performance of "Since Inception" figure for HSBC Insurance China Equity. This revision is to correct the inaccurate benchmark performance previously presented. Please be assured that the performance and Net Asset Value (NAV) of this ILP sub-fund have not been affected by this revision. The revised benchmark performance is now reflected in this latest version of semi-annual unaudited report ended 31 December

7 Investment-linked Report: Updates 9. Update on Turnover Ratio HSBC Insurance (Singapore) Pte. Limited has revised the turnover ratios for all ILP sub funds, to reflect the turnover ratios based on the lower of purchases or sales for the 12 months preceding the reporting date as a percentage of the daily average Net Asset Value in the semi-annual unaudited report. This revision is to correct the turnover ratios for all ILP sub-funds previously reflected in all our semi-annual unaudited reports. The turnover ratios of all ILP sub-funds were computed using a period of 6 months although it was stated in the semi-annual unaudited report that these ratios were computed using a period of 12 months. Please be assured that the performance and Net Asset Value (NAV) of the ILP sub-funds have not been affected by this revision. The revised turnover ratios for ILP sub-funds are now reflected in this latest version of semi-annual unaudited report ended 31 December Update on Benchmark Performance of HSBC Insurance Premium Property Equity The fund manager of HSBC Insurance Premium Property Equity, Henderson Global Investors (Singapore) Limited has informed HSBC Insurance (Singapore) Pte Limited of a revision to benchmark data. This revision is to correct the benchmark performance presented previously. The performance and Net Asset Value (NAV) of the ILP sub-funds have not been affected by this revision. Revised benchmark performance data is now reflected in all disclosure documents and Henderson Global Investors (Singapore) Limited has put in place enhanced controls to prevent a similar occurrence. Any queries on the revised benchmark performance, please contact HSBC Insurance Customer Service Hotline at

8 Investment-linked Report: Performance Summary Performance Summary 3-Mth (%) 6-Mth (%) 1-Year (%) 3-Year (%) HSBC Insurance Asia Balanced (4.34) Benchmark * HSBC Insurance Asia Equity Benchmark * HSBC Insurance Asia Focused Income The has no benchmark HSBC Insurance Asian Bond Benchmark * HSBC Insurance Asian Dividend Equity Benchmark * HSBC Insurance China Balanced Benchmark * HSBC Insurance China Equity (1.97) Benchmark * HSBC Insurance Climate Change Equity Benchmark * HSBC Insurance Emerging Europe Equity (9.12) 3.61 Benchmark * (0.78) 6.82 (1.14) (9.27) HSBC Insurance Emerging Markets Equity (5.25) Benchmark * (7.42) HSBC Insurance Ethical Global Equity Benchmark * HSBC Insurance Ethical Global Sukuk Benchmark * HSBC Insurance Europe Equity Benchmark * HSBC Insurance Global Bond (0.13) 0.09 (2.06) Benchmark * (0.75) HSBC Insurance Global Emerging Markets Bond Benchmark * HSBC Insurance Global Equity Benchmark * HSBC Insurance India Equity (10.68) (35.59) Benchmark * (1.49) (26.32) 7

9 Investment-linked Report: Performance Summary 3-Mth (%) 6-Mth (%) 1-Year (%) 3-Year (%) HSBC Insurance Japan Equity Benchmark * HSBC Insurance Pacific Equity (0.02) Benchmark * HSBC Insurance Premium Balanced Benchmark * HSBC Insurance Premium Property Equity Benchmark * HSBC Insurance SGD Reserve (0.02) 0.14 Benchmark * HSBC Insurance Singapore Balanced Benchmark * HSBC Insurance Singapore Bond Benchmark * HSBC Insurance World Selection The has no benchmark HSBC Insurance World Selection The has no benchmark HSBC Insurance World Selection 5 (5.65) (0.06) The has no benchmark * Refer to the respective funds for the benchmark used. 8

10 Investment-linked Report: Notes to the fund disclosures Notes to the fund disclosures 1. Performance figures Performance figures are calculated using bid-to-bid prices, with any income or dividends reinvested and in Singapore dollars. The performance figures are calculated on a cumulative basis, and not on an average annual compounded basis. 2. Expense ratio Expense ratios are calculated in accordance with IMAS guidelines for the disclosure on expense ratios. The expense ratio does not include (where applicable) charges for insurance coverage, brokerage and other transaction costs, performance fee, foreign exchange gains or losses, front or back end loads arising from the purchase or sale of collective investment schemes and tax deducted at source or arising out of income received. 3. Turnover ratio Turnover ratios represent the number of times per year that a dollar of assets is invested and is calculated based on the lower of purchases or sales for the 12 months preceding the reporting date expressed as a percentage of the daily average Net Asset Value. 4. Abbreviations Used CPFIS: GDP: Ltd: MV: : NAV: OA: SA: SRS: Central Provident Investment Scheme Gross Domestic Product Limited Market Value Not Applicable Net Asset Value Ordinary Account Special Account Supplementary Retirement Scheme 9

11 Investment-linked Report: HSBC Insurance Asia Balanced HSBC Insurance Asia Balanced Objective HSBC Insurance Asia Balanced seeks to achieve capital growth over the medium to longer term by investing primarily 70% of the portfolio asset value in Asian equities and 30% in high quality debt securities of major bond market. The invests substantially all or all its assets primarily 70% into the Legg Mason Western Asset Asian Enterprise Trust and 30% into the Legg Mason Western Asset Global Bond Trust. Legg Mason Western Asset Asian Enterprise Trust Investment and Market Review ^ FUND FACTS Underlying s Manager Launch Date 1 Nov 2007 CPFIS/SRS SRS CPFIS Risk Classification 70%: Legg Mason Western Asset Asian Enterprise Trust 30%: Legg Mason Western Asset Global Bond Trust Western Asset Management Singapore Pte Ltd As at 31 Dec 2013 Offer Price S$ Bid Price S$ Size S$ 2.50 mil Units in Issue 3.20 mil Most markets in the Asia Pacific region ended the year on a modestly positive note. However, the bulk of the gains were negated by currency losses in US$ terms with the benchmark MSCI Asia- Pacific ex-japan Index closing the year flat. The sequential downward revision to earnings estimates through the year, principally on the back of China s uncertain economic growth trajectory, was the main drag to regional market performance. Korea bore the brunt of the sharp depreciation of the Japanese Yen. The exports dependent market traded largely sideways through the year with the Korean government struggling to implement any meaningful measures to revitalize domestic consumption. Over in Taiwan, the breath of winners was narrow although the market ended on a firm note. With the Japanese government firmly set on depreciating the yen further into the new year, the prognosis will continue to look challenging for the two tech-centric markets. We are likely to remain underweight in both markets. Market Outlook and Investment Strategy ^ The Asia-Pacific ex-japan markets are now trading at valuation points that historically suggest strong potential for favorable absolute returns. The combination of PE multiple expansion coupled with good double digits earnings growth are healthy ingredients that can potentially engender strong market performance in The favorable global backdrop also looks conducive for robust performance among small to mid-cap stocks. Any sharp rise in long term rates can potentially create temporary setbacks for the markets but the long term underpinnings for the regional markets appear firmly buttressed. Legg Mason Western Asset Global Bond Trust *Please refer to HSBC Insurance Global Bond on page 50 for the Investment and Market Review and the Market outlook and Investment Strategy. ^ Source: Western Asset Management Singapore Pte Ltd. A) Performance 3-Mth (%) 6-Mth (%) 1-Year (%) 3-Year (%) 5-Year (%) 10-Year (%) Since Inception (%) HSBC Insurance Asia Balanced (4.34) (17.71) Benchmark* (2.75) *70% MSCI AC Asia ex Japan + 30% Citigroup World Government Bond ex Japan Index 10

12 Investment-linked Report: HSBC Insurance Asia Balanced B) Disclosure I Allocation by Asset Class As at 31 Dec 2013 Asset Class % of NAV MV S$ mil Legg Mason Asian Enterprise Trust Legg Mason Global Bond Trust Other assets Other liabilities (0.88) (0.02) Total II Movement (01 Jul Dec 2013) S$ Subscription 372,461 Redemption 290,927 C) Underlying Disclosure (Legg Mason Western Asset Asian Enterprise Trust) I Allocation by Country As at 31 Dec 2013 Country % of NAV MV S$ mil China South Korea Singapore Hong Kong Taiwan India Philippines Indonesia Malaysia Thailand Cash Total II Allocation by Industry As at 31 Dec 2013 Industry % of NAV MV S$ mil Consumer IT Industrials Financials Energy Real Estate Construction/Materials Healthcare Telecommunication Cash Total III Allocation of Debt Securities by Credit Ratings As at 31 Dec 2013 IV Top Ten Holdings of Underlying As at 31 Dec 2013 % of NAV S$ mil Ezion Holdings Ltd Samsung Electronics Co. Ltd Sun Hung Kai Properties Ltd China Life Co - H Shares Orion Corp Co Hermes Microvision Inc Tencent Holdings Ltd Tech Mahindra Ltd Shenzhou International Group Mahindra & Mahindra Financial Services Ltd

13 Investment-linked Report: HSBC Insurance Asia Balanced Top Ten Holdings of Underlying As at 31 Dec 2012 % of NAV S$ mil Samsung Electronics Co. Ltd Ezion Holdings Ltd China Construction Bank H Shares Galaxy Entertainment Group Ltd Modern International OSIM International Ltd Hermes Microvision Inc S M Entertainment Co Chailease Holding Co. Ltd Fubon Financial Holding Co V Exposure to Derivatives As at 31 Dec 2013 VI Borrowings of Net Asset Value As at 31 Dec 2013 *HBSC Insurance Asian Balanced invests 30% into Legg Mason Global Bond Trust. Please refer to HSBC Insurance Global Bond on page 50 for the underlying fund disclosure on Legg Mason Global Bond Trust under Section C. D) Other Disclosure Items I Expense/Turnover Ratio Expense Ratio Turnover Ratio As at 31-Dec-13 As at 31-Dec-12 As at 31-Dec-13 As at 31-Dec-12 Underlying Level Legg Mason Western Asset Asian Enterprise Trust 1.76% 1.75% % % Legg Mason Western Asset Global Bond Trust 0.88% 0.88% % % ILP Sub- Level HSBC Insurance Asia Balanced 1.76% 1.73% 22.71% 20.81% II Related-Party Transactions III Material Information 12

14 Investment-linked Report: HSBC Insurance Asia Balanced IV Soft Dollar Commission Agreement The Manager currently does not but shall be entitled to receive and enter into soft-dollar commissions/arrangements in respect of the Underlying. The sub-manager currently receives and enters into soft-dollar commissions/arrangements in respect of the. The Manager and Sub-Manager will comply with applicable regulatory and industry standards on soft-dollars. The soft-dollar commissions which the Sub-Manager receives and which the Manager may receive include include specific advice as to the advisability of dealing in, or the value of any investments, research and advisory services, economic and political analyses, portfolio analyses including valuation and performance measurements, market analyses, data and quotation services, computer hardware and software or any other information facilities to the extent that they are used to support the investment decision making process, the giving of advice, or the conduct of research or analysis, and custodial service in relation to the investments managed for clients. Soft-dollar commissions received shall not include travel, accommodation, entertainment, general administrative goods and services, general office equipment or premises, membership fees, employees salaries or direct money payment. The Manager and Sub-Manager will not accept or enter into soft dollar cmmissions/arrangements unless such soft-dollar commissions/arrangements would, in the opinion of the Manager or Sub-Manager (as the case may be), assist it in its management of the Trust, provided that it shall ensure at all times that best execution is carried out for the transactions, and that no unnecessary trades are entered into in order to qualify for such soft-dollar commissions/arrangements. E) Financial Statements Refer to page 94. For more information, please contact your financial consultant, call our Customer Service Hotline on , or visit our web site at 13

15 Investment-linked Report: HSBC Insurance Asia Equity HSBC Insurance Asia Equity Objective HSBC Insurance Asia Equity seeks to achieve capital appreciation in the medium to long-term through investment in equity and equity-related securities issued by companies which are listed on the stock exchanges of Asia. investments are made by way of a feeder fund, which invests substantially all or all its assets in the DWS Asia Premier Trust. Investment and Market Review ^ The review period saw investors flee ASEAN in preference for North Asia on concerns of QE FUND FACTS Underlying DWS Asia Premier Trust Manager Deutsche Asset Management (Asia) Ltd Launch Date 31 Jan 1994 CPFIS/SRS SRS CPFIS Risk Classification Higher Risk - Narrowly Focused As at 31 Dec 2013 Offer Price S$ Bid Price S$ Size S$ mil Units in Issue mil *Note: With effect from 28 June 2010, the has been delisted from CPFIS. tapering and the current account deficit in Indonesia. North Asian markets were boosted by better than expected economic data from China. For ASEAN, an earlier calm brought about stabilizing bond yields and currency did not sail through for the TIPs market (Thailand, Indonesia and Philippines) as investors sought to sell down these markets on fears of QE tapering. The sell-down was compounded further in Thailand, the worst performing market on political uncertainties yet again. For the Philippines, devastating Typhoon Haiyan will hurt GDP growth. Market Outlook and Investment Strategy ^ In Asia, investors remain focused on the reform hopes coming out from China s Third Plenary. We have lesser reasons to be cautious on equities as we have less external shocks to worry of. Fears of QE tapering we believe have now being largely priced in. We continue to overweight Hong Kong/China as our bottom-up ideas look appealing particularly on what we see as the new economic drivers of China being healthcare, environment and Internet sectors. We continue to narrow our underweight in Korea as signs of improving domestic consumption should bode well for the market with the support of attractive valuation. For ASEAN, the Philippines remains an overweight as we still believe in the strength of its economy. Also, we are cautiously optimistic that the political debacle in Thailand will eventually be resolved. ^ Source: Deutsche Asset Management (Asia) Ltd. A) Performance 3-Mth 6-Mth 1-Year 3-Year 5-Year Since 10-Year Inception (%) (%) (%) (%) (%) (%) (%) HSBC Insurance Asia Equity Benchmark* *MSCI AC Far East ex Japan (SGD) B) Disclosure I Allocation by Asset Class As at 31 Dec 2013 Asset Class % of NAV MV S$ mil DWS Asia Premier Trust Other assets Other liabilities (0.89) (0.69) Total II Movement (01 Jul Dec 2013) Subscription 8,712,187 Redemption 4,991,338 14

16 Investment-linked Report: HSBC Insurance Asia Equity C) Underlying Disclosure (DWS Asia Premier Trust) I Allocation by Country As at 31 Dec 2013 Country % of NAV MV S$ mil Cayman Islands South Korea China Hong Kong Bermuda Taiwan Malaysia Singapore Thailand Indonesia Others* Total *Includes other countries and net assets and liabilities. II Allocation by Industry As at 31 Dec 2013 Industry % of NAV MV S$ mil Electric Equipment Retail Banks Internet Services Semiconductors Entertainment Oil & Gas Automobile City Gas Finance Diversified Resources Food & Beverage Autos & Trucks Real Estate Others* Total *Includes other industries and net assets and liabilities. III Allocation of Debt Securities by Credit Ratings As at 31 Dec 2013 IV Top Ten Holdings of Underlying As at 31 Dec 2013 % of NAV MV S$ mil Samsung Electronics Co. Ltd Taiwan Semiconductor Manufacturing Co. Ltd China Gas Holdings Ltd Industrial & Commercial Bank of China H Shares Tencent Holdings Ltd Naver Corporation SJM Holdings Ltd Geely Automobile Holdings Ltd Ajisen China Holdings Ltd China Minsheng Banking Company Ltd. H Shares

17 Investment-linked Report: HSBC Insurance Asia Equity Top Ten Holdings of Underlying As at 31 Dec 2012 % of NAV MV S$ mil Samsung Electronics Co. Ltd Fraser & Neave Ltd Taiwan Semiconductor Manufacturing Co. Ltd Industrial & Commercial Bank of China H Shares Hyundai Motor Co Capitaland Ltd Jardine Matheson Holdings Ltd HTC Co Wharf Holdings Ltd Luk Fook Holdings International Ltd V Exposure to Derivatives As at 31 Dec 2013 % of NAV - Market Value (S$) - Realised Gains / (Losses) (S$) (154,808) Unrealied Gains / (Losses) (S$) - VI Borrowings of Net Asset Value As at 31 Dec 2013 D) Other Disclosure Items I Expense/Turnover Ratios (%) HSBC Insurance Asia Equity Underlying As at 31-Dec-13 As at 31-Dec-12 As at 31-Dec-13 As at 31-Dec-12 Expense Ratio 1.82% 1.82% 1.53% 1.53% Turnover Ratio 14.90% 10.90% % % II Related-Party Transactions III Material Information IV Soft Dollar Commission Arrangement Soft dollar commissions are benefits accorded to Manager by their brokers, usually in the form of research, advisory, analysis and data services, computer hardware or software used for and/or in support of the investment process. The Manager s policy on soft dollar commissions is as follows: - the goods and services received would assist in the provision of investment services and advices or related services to the unit trust; - transactions are executed on the best available terms; and - the Manager does not engage in unnecessary trades in order to qualify for soft dollar commissions. Soft dollar commissions were received from the Manager s panel of soft dollar brokers which executed transactions for the unit trust and other funds managed by the Managers. E) Financial Statements Refer to page 94. For more information, please contact your financial consultant, call our Customer Service Hotline on , or visit our web site at 16

18 Investment-linked Report: HSBC Insurance Asia Focused Income HSBC Insurance Asia Focused Income Objective HSBC Insurance Asia Focused Income seeks to provide income and moderate capital growth through an active asset allocation in a diversified portfolio of fixed income and equity securities as well as money market and cash instruments. investments are made by way of a feeder fund, which invests substantially all, or all its assets in the HSBC Global Investment s - Managed Solutions Asia Focused Income. Investment and Market Review ^ US monetary policy was a focus for markets during H2. Federal Reserve produced a surprise by not tapering in September, only to announce in December that they would reduce purchases from USD85bn per FUND FACTS Underlying Sub- HSBC Global Investment Managed Solutions - Asia Focused Income Manager HSBC Global Asset Management (Singapore) Ltd Launch Date 28 Jan 2013 CPFIS/SRS CPFIS Risk Classification SRS As at 31 Dec 2013 Offer Price S$ Bid Price S$ Size S$ 1.50 mil Units in Issue 1.64 mil month to USD75bn per month starting in January The result of this process was mainly felt in the bond markets where yields rose significantly, producing generally negative returns for the year as a whole across fixed income asset classes. Market Outlook and Investment Strategy ^ Even after the strong performance of 2013 equities continue to look set to produce the best total returns over the long term. And with the global economy performing steadily and investors likely to continue to invest in equities in the face of low cash and bond returns, there is no reason at present to expect the short term to differ from the long term profile and see weakness in equities. ^ Source : HSBC Global Asset Management (Singapore) Ltd A) Performance 3-Mth 6-Mth 1-Year 3-Year 5-Year Since 10-Year Inception (%) (%) (%) (%) (%) (%) (%) HSBC Insurance Asia Focused Income (4.16) This fund has no benchmark. B) Disclosure I Allocation by Asset Class As at 31 Dec 2013 Asset Class % of NAV MV S$ mil HSBC GIF Managed Solutions - Asia Focused Income Other liabilities (1.34) (0.02) Total II Movement (1 Jul Dec 2013) S$ Subscription 251,490 Redemption 147,674 17

19 Investment-linked Report: HSBC Insurance Asia Focused Income C) Underlying Sub- Disclosure (HSBC GIF Managed Solutions - Asia Focused Income) I Allocation by Country As at 31 Dec 2013 Country % of NAV MV S$ mil China Hong Kong South Korea Global Indonesia India Australia Singapore Others* Cash Total *Includes other countries and net assets and liabilities. II Allocation by Industry As at 31 Dec 2013 Industry % of NAV MV S$ mil Asian investment grade bond Asian high dividend equities Asian high yield bond Asian local currency Global emerging market local debt Cash and others* Total *Includes other industries and net assets and liabilities. III Allocation of Debt Securities by Credit Ratings As at 31 Dec 2013 Rating % of NAV MV S$ mil (For Asian fixed income portfolio only*) AAA AA A BBB BB B CCC Non Rated Total *The Asian fixed income portfolio includes Asian investment grade bonds, Asian high yield bonds and Asia local currency bonds. IV Top Ten Holdings of Underlying Sub- As at 31 Dec 2013 % of NAV S$ mil HSBC Global Investment s - GEM Local Debt - ZD Class (USD) Korea Treasury Bond 4% 10/03/ Korea Treasury Bond 5.75% 10/09/ Pertamina PT 4.875% 03/05/ Bank Negara Indonesia Lo 4.125% 27/04/ Bestgain Real Estate 2.625% 13/03/ Korea Treasury Bond 3.75% 10/06/ Doosan Infracore Co Ltd 3.25% 05/10/ Bank Rakyat Indonesia 2.95% 28/03/ Malaysian Government 3.492% 31/03/ V Exposure to Derivatives As at 31 Dec 2013 VI Borrowings of Net Asset Value As at 31 Dec

20 Investment-linked Report: HSBC Insurance Asia Focused Income D) Other Disclosure Items I Expense/Turnover Ratios HSBC Insurance Asia Focused Underlying Sub- Income As at 31 Dec 2013 As at 31 Dec 2013 Expense Ratio 1.61% 1.61% Turnover Ratio 14.98% 87.07% Note: This ILP fund was launched on 28 January Thus, the top ten holdings, expense ratio and turnover ratio for the underlying sub-fund as at 31 Dec 2012 is not available. II Related-Party Transactions The HSBC Insurance Asia Focused Income invests S$1.51 million, equivalent to % of its net asset value in HSBC GIF Managed Solutions - Asia Focused Income, which is managed by HSBC Global Asset Management (Singapore) Ltd. The management fees earned by HSBC Global Asset Management (Singapore) Ltd from 01 July 2013 to 31 December 2013 amounts to S$5,074. III Material Information IV Soft Dollar Commission Arrangement E) Financial Statements Refer to page 94. For more information, please contact your financial consultant, call our Customer Service Hotline on , or visit our web site at 19

21 Investment-linked Report: HSBC Insurance Asian Bond HSBC Insurance Asian Bond Objective HSBC Insurance Asian Bond seeks to maximize returns over the long term by investing mainly in the bond markets of Asia s developing economies. There is no target industry or sector. investments are by way of a feeder fund, which invests substantially all or all its assets in the Legg Mason Asian Bond Trust. Investment and Market Review ^ FUND FACTS Underlying Legg Mason Western Asset Asian Bond Trust Manager Western Asset Management Singapore Pte Ltd Launch Date 6 Oct 2008 CPFIS/SRS SRS CPFIS Risk Classification As at 31 Dec 2013 Offer Price S$ Bid Price S$ Size S$ Mil Growth in Asia has largely been in line with market Units in Issue Mil expectations. Inflationary pressures have been mostly contained with a few exceptions. Unemployment remains benign across Asia. PMI prints have suggested that production remains in demand with data figures largely in expansionary territory. Domestic demand has been a key driver for growth in South Asia and will be a crucial component for growth going forward. Market Outlook and Investment Strategy ^ Market reactions over the past months are a result of heavy positioning and an adjustment to a post taper world, though with increasing differentiation as investors recognize the fundamental strength in Asian economies with current account surpluses, strong domestic growth drivers and prudent fiscal policies. However, market reactions have also highlighted the risks building up in economies perceived as vulnerable to a sharp reversal of confidence. While excessive adjustments of currencies and outflows will cause revaluations of assets, Asia stands in a better position to ride out such shocks. Our long-term strategy has not changed MoM as strong fundamentals continue to fuel our convictions within the region. Inflationary pressures are well within or below mandated boundaries and the overall strength of balance sheets will provide support for Asian government yields going forward. Short-term technicals continue to point toward higher rates in the near term. But once the market absorbs the shift, solid fundamentals will again take hold, enabling us to ride out short bouts of volatility. We maintain our overweight in Asia, but maintain a nimble approach in the event that quick shifts require a timely response. ^ Source : Legg Mason Asset Management Singapore Pte Ltd A) Performance 3-Mth 6-Mth 1-Year 3-Year 5-Year Since 10-Year Inception (%) (%) (%) (%) (%) (%) (%) HSBC Insurance Asian Bond Benchmark* *US$ 3-month LIBOR (hedged to S$) B) Disclosure I Allocation by Asset Class As at 31 Dec 2013 Asset Class % of NAV MV S$ mil Legg Mason Western Asset Asian Bond Trust Total II Movement (01 Jul Dec 2013) S$ Subscription 4,935,869 Redemption 2,928,758 20

22 Investment-linked Report: HSBC Insurance Asian Bond C) Underlying Disclosure (Legg Mason Asian Bond Trust) I Allocation by Country As at 31 Dec 2013 Country % of NAV MV S$ mil Singapore South Korea Hong Kong China Malaysia India Indonesia Philippines Others* Cash Total *Includes other countries and net assets and liabilities. II Allocation by Industry As at 31 Dec 2013 Industry % of NAV MV S$ mil Financials Real Estate Miscellaneous Energy Consumer Telecommunication Diversified Resources Government Utilities Electrical & Electronic Shipping Cash Total III Allocation of Debt Securities by Credit Ratings As at 31 Dec 2013 Rating % of NAV MV S$ mil Aa Aa AA A A A A A Baa Baa Baa Others* Total *Includes cash holdings and net assets and liabilities IV Top Ten Holdings of Underlying As at 31 Dec 2013 % of NAV S$ mil Korea Monetary Stab Bond 1408 (Reg) 2.82% 02/08/ Axiata SPV1 Labuan Ltd Ser EMTN EMTN 3.75% (Reg S) 18/09/ Right Century Ltd Ser HK 1.85% 03/06/ DBS Banks Ltd (Reg S) (Reg) FRN 15/07/ MIE Holdings Corp EMTN EMTN (Reg S) 6.875% 06/02/ SK Broadband Co Ltd Ser (Reg S) 2.875% 29/10/ Oversea-Chinese Banking 4% Perp GLL IHT Pte Ltd Set MTN (Reg S) (Br) 4.1% 13/05/ Sarawak International (Reg) 5.5% 03/08/ HSBC Singapore EMTN (Reg S) (Br) 2.25% 05/06/

23 Investment-linked Report: HSBC Insurance Asian Bond Top Ten Holdings of Underlying As at 31 Dec 2012 % of NAV S$ mil Legg Mason Western Asset China Bond Korea Monetary Stab Bond 1408 (Reg) 2.82% 02/08/ Sumitomo Mitsui Banking 4.85% 01/03/ Overseas-Chinese Banking 4% Perp Malaysia T-Bill Ser /01/ Sarawak International 5.5% 03/08/ Petronas Capital Ltd 5.25% 12/08/ Bank of East Asia Ltd Ser EMTN 13/09/ DBS Bank Ltd Ser MTN 14/02/ Stats Chippac Ltd 7.5% 12/08/ V Exposure to Derivatives As at 31 Dec 2013 % of NAV (0.86%) Market value (S$) (468,860) Realised Gains / (Losses) (S$) - Unrealised Gains / (Losses) (S$) (468,860) VI Borrowings of Net Asset Value As at 31 Dec 2013 D) Other Disclosure Items I Expense/Turnover Ratios HSBC Insurance Asian Bond Underlying As at 31-Dec-13 As at 31-Dec-12 As at 31-Dec-13 As at 31-Dec-12 Expense Ratio 1.29% 1.28% 1.25% 1.26% Turnover Ratio 28.61% 19.11% 55.29% 73.90% II Related-Party Transactions III Material Information IV Soft Dollar Commission Arrangement E) Financial Statements Refer to page 95. For more information, please contact your financial consultant, call our Customer Service Hotline on , or visit our web site at 22

24 Investment-linked Report: HSBC Insurance Asian Dividend Equity HSBC Insurance Asian Dividend Equity Objective HSBC Insurance Asian Dividend Equity seeks to achieve an above-benchmark dividend yield from a portfolio of Asian stocks with a focus on value and long-term capital appreciation. investments are made by way of a feeder fund, which invests substantially all or all its assets in the Henderson Horizon - Asian Dividend Income. Investment and Market Review ^ FUND FACTS Underlying Sub- Henderson Horizon Asian Dividend Income Manager Henderson Global Investors (Singapore) Ltd Launch Date 26 May 2008 CPFIS/SRS CPFIS Risk Classification SRS As at 31 Dec 2013 Offer Price S$ Bid Price S$ Size S$ 1.64 mil Units in Issue 1.54 mil Asian markets performed well in the six months to 31 December 2013 rising 9.9% in US dollar total return terms. The markets recovered very sharply in the period under review following a sharp sell-off in May and June 13 when investors shifted away from perceived riskier assets in anticipation of tapering of the Quantitative easing programme in the US. The weakening currencies in India and Indonesia were driven by a worsening growth outlook which was compounded by trade and current account deficits. China and Hong Kong were two of the best performing markets in the period supported by a positive economic reform agenda announced in November following the Third Plenum in China. This aimed at improving medium term growth prospects by addressing sustainability of growth through supply side reforms. The areas highlighted for key reforms were market deregulation and financial reform alongside SOE reform and anti-corruption initiatives. Market Outlook and Investment Strategy ^ During the period we continued to find attractive opportunities in China, adding companies which offer unique business models with compelling valuations and yield and are set to benefit from the increase in Chinese disposable income. We also initiated a position in Japan for the first time in a number of years following some very strong results from the banking sector. Overall our positive view on Asia is unchanged in the medium to long term as we continue to see attractive company valuations and improving macroeconomic trends in key markets such as China. However external factors have the potential to unsettle Asian markets in the short term. We continue to focus on attractive names with strong capital upside and growing yield characteristics and use short term volatility to add to our preferred names. ^ Source : Henderson Global Investors (Singapore) Ltd. A) Performance 3-Mth 6-Mth 1-Year 3-Year Since 5-Year 10-Year Inception (%) (%) (%) (%) (%) (%) (%) HSBC Insurance Asian Dividend Equity Benchmark* *MSCI All Countries Asia Pacific ex Japan Index B) Disclosure I Allocation by Asset Class As at 31 Dec 2013 Asset Class % of NAV MV S$ mil Henderson Horizon - Asian Dividend Income Total

25 Investment-linked Report: HSBC Insurance Asian Dividend Equity II Movement (01 Jul Dec 2013) S$ Subscription 391,635 Redemption 106,211 C) Underlying Sub- Disclosure (Henderson Horizon - Asian Dividend Income ) I Allocation by Country As at 31 Dec 2013 Country % of NAV MV S$ mil China Australia South Korea Taiwan Singapore Hong Kong Thailand Japan India Others* Total *Includes other countries and net assets and liabilities. II Allocation by Industry As at 31 Dec 2013 Industry % of NAV MV S$ mil Financials Industrials Consumer Discretionary Telecommunication Services Information Technology Materials Energy Consumer Staples Total III Allocation of Debt Securities by Credit Ratings As at 31 Dec 2013 IV Top Ten Holdings of Underlying Sub- As at 31 Dec 2013 % of NAV MV S$ mil Bank of China Ltd SK Telecom Hyundai Motor Taiwan Cement Shanghai Industrial Holdings SJM Grand Korea Leisure Sinopec Engineering Group Charoen Pokphand Foods Taiwan Semiconductor Manufacturing Top Ten Holdings of Underlying Sub- As at 31 Dec 2012 % of NAV MV S$ mil Bank of China Ltd Krung Thai Bank Digital China Holdings Ltd Charoen Pokphand Foods Shanghai Industrial Holdings Telecom New Zealand SK Telecom NWS Holdings Suncorp Kangwon Land Inc

26 Investment-linked Report: HSBC Insurance Asian Dividend Equity V Exposure to Derivatives As at 31 Dec 2013 VI Borrowings of Net Asset Value As at 31 Dec 2013 D) Other Disclosure Items I Expense/Turnover Ratios HSBC Insurance Asian Dividend Equity Underlying Sub- As at 31-Dec-13 As at 31-Dec-12 As at 31-Dec-13 As at 31-Dec-12 Expense Ratio 2.26% 2.23% 1.96% 1.98% Turnover Ratio 14.11% 12.37% 22.53% 34.79% II Related-Party Transactions III Material Information IV Soft Dollar Commission Arrangement E) Financial Statements Refer to page 95. For more information, please contact your financial consultant, call our Customer Service Hotline on , or visit our web site at 25

27 Investment-linked Report: HSBC Insurance China Balanced HSBC Insurance China Balanced Objective HSBC Insurance China Balanced seeks to achieve capital appreciation in the long-term by investing 70% of its assets into a diversified portfolio of equity and equity-related securities in China including Hong Kong and 30% of its remaining assets into quality investment grade bonds of Singapore and major bond markets. The invests substantially all or all its assets primarily 70% into the DWS China Equity and 30% into the DWS Lion Bond. DWS China Equity FUND FACTS Underlying 70%: DWS China Equity 30%: DWS Lion Bond Manager Deutsche Asset Management (Asia) Ltd Launch Date 26 May 2008 CPFIS/SRS SRS CPFIS Risk Classification As at 31 Dec 2013 Offer Price S$ Bid Price S$ Size S$ 1.40 mil Units in Issue 1.36 mil Investment and Market Review ^ Chinese shares started to rebound in July after the PBOC injected liquidity into the interbank market to bring down the rates. In November, the market rallied further with positive response to the better-thanexpected reform plans announced by the government after the Third Plenum. IT sector outperformed the most, led by the strong rally of Internet stocks, together with 4G-related plays especially smart-phone producers. Healthcare stocks were under pressure in the third quarter after the government decided to crack down bribery activities in the industry, but rebounded strongly in the fourth quarter with robust growth outlook intact despite the anti-bribery campaign. Utility stocks also performed strongly, led by environmental-protection stocks as the government was more determined to tackle the pollution issue in China. Market Outlook and Investment Strategy ^ Looking ahead, we expect GDP growth to ease from around 7.6% yoy in 2013 to around 7.5% yoy in 2014, with slower investment growth, relatively solid consumption growth and some moderate upturn in the export sector supported by the global economic recovery. We expect monetary policy to remain relatively accommodative in 2014 with inflation well contained. The government s policy emphasis in 2014 will be maintaining steady economic growth while implementing structural reforms (especially administrative, financial and fiscal reforms) which are essential for China to achieve long-term sustainable economic growth. We will focus on investment themes that benefit from reforms (e.g. second-child policy, financial market liberalization, SOE reform), as well as high-growth sectors such as healthcare, auto, environmental protection, IT, and infrastructure-related. DWS Lion Bond *Please refer to HSBC Insurance Singapore Bond on page 83 for the Investment and Market Review and the Market Outlook and Investment Strategy. ^ Source: Deutsche Asset Management (Asia) Ltd. A) Performance 3-Mth (%) 6-Mth (%) 1-Year (%) 3-Year (%) 5-Year (%) 10-Year (%) Since Inception (%) HSBC Insurance China Balanced Benchmark* (1.23) *70% MSCI China Index and 30% 6-month Singapore Inter-bank Offer Rate (SIBOR) minus 12.5 basis points. 26