LionGlobal Investment Fund III

Transcription

1 LionGlobal Investment Fund III - LionGlobal Vietnam Fund Semi-Annual Report For the half year ended 30 June 2012

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

3 PERFORMANCE OF THE FUND For the half-year ended 30 June 2012 Cumulative returns for the Fund are calculated up to 30 June 2012 in SGD terms, based on single pricing, with dividends reinvested net of all charges payable upon reinvestment. Time Period Fund Returns (%) LionGlobal Vietnam Fund - SGD Class Benchmark** Returns (%) (FTSE Vietnam Index) 3 months months year years* years* Since Inception* (2 February 2007) Cumulative returns for the Fund are calculated up to 30 June 2012 in USD terms, based on single pricing, with dividends reinvested net of all charges payable upon reinvestment. Time Period Fund Returns (%) LionGlobal Vietnam Fund - USD Class Benchmark** Returns (%) (FTSE Vietnam Index) 3 months months year years* years* Since Inception* (2 February 2007) Source: Morningstar/Lion Global Investors Ltd * Returns of more than 1 year are annualised ** Benchmark: VN Index: Inception April 2012 FTSE Vietnam Index: From May

4 FUND AND MARKET REVIEW For the half-year ended 30 June 2012, the Fund gained 23.9%, outperforming the benchmark FTSE Vietnam Index which rose 19.3%, in Singapore Dollar terms. Lower inflationary pressures and the easing of monetary policy by the State Bank of Vietnam drove markets higher in the first half of the year. However, due to tightening measures implemented by the Government in 2011 as well as excessive liquidity in the system, GDP growth figures in the first half of the year experienced a sharp contraction, increasing by only 4.4% on a year on year basis. The outperformance of the Fund came from virtually every sector, with only the Utility sector detracting from performance. The main contributors to performance came from the Materials, Industrial and Financial sectors. These higher beta industries and companies which were sold down last year made a strong recovery on the back of cheap valuations and increasing confidence. STRATEGY AND OUTLOOK Inflation has come off sharply in the first half of 2012, with the latest reading in June at 6.9% year on year, compared to 20.8% during the same period last year. For the full year, inflation is expected to continue to moderate, with estimates averaging from mid to high single-digit figures. With inflationary fears waning, investors are now focused on a recovery in domestic demand, a solution to the high non-performing loan issues in the banking system and the divestment of non-core assets by the state owned enterprises. While some of these challenges will take time to resolve, it is believed that the market will start to react positively to signs of any slight improvement in these issues. Until then, the domestic equity market is likely to continue to remain range bound. The Vietnamese stock market has a lower correlation to the European and US markets and is more domestically driven. This is partly due to the daily traded value being dominated by local investors, and also due to Vietnamese exports being viewed as more inelastic to global demand, given that they are concentrated on lower value-added products, which are perceived as basic necessities. The Fund s strategy is focused on a bottom-up, stock selection process focusing on the best of breed companies in their respective sectors. The Manager also likes quality consumer companies which will benefit from Vietnam s rising consumer affluence and the spending power of its large and young population. 2

5 DISCLOSURES ON THE FUND 1 For the half year ended 30 June 2012 (unaudited) 1. DISTRIBUTION OF INVESTMENTS AS AT 30 JUNE 2012 a) By Asset Class Percentage of total net assets attributable to Fair Value unitholders $ % Equities 61,013, Cash and cash equivalents 2,193, Net assets attributable to unitholders 63,206, b) By Credit Rating of Debt Securities Not applicable c) By Derivative Type Not applicable 1 As required by the Code on Collective Investment Schemes. 3

6 2. TOP 10 HOLDINGS As at 30 June 2012 Percentage of total net assets attributable to Fair Value unitholders $ % Vingroup Joint Stock Company 7,871, Masan Group 6,760, Joint Stock Company Bank for Foreign Trade Of Vietnam 4,710, Vietnam Joint Stock Commercial Bank for Industry and Trade 4,357, Sacombank 3,695, Baoviet Holdings 3,288, Hoa Phat Group Joint Stock Company 3,242, Hoang Anh Gia Lai Group Joint Stock Company 3,128, Petrovietnam Fertilizer & Chemicals Joint Stock Company 2,591, Petrovietnam Drilling And Well Services Joint Stock Company 2,574,

7 As at 30 June 2011 Percentage of total net assets attributable to Fair Value unitholders $ % Vincom Joint Stock Company 5,408, Baoviet Holdings 5,339, Masan Group 4,910, FPT Corporation 3,126, Petrovietnam Drilling & Well Services Joint Stock Company 3,024, Petrovietnam Fertilizer & Chemical Joint Stock Company 2,477, Hoa Phat Group Joint Stock Company 2,436, Vietnam Joint Stock Commercial Bank 2,433, Joint Stock Commercial Bank For Foreign Trade Of Vietnam 1,929, Saigon Thuong Tin Commercial Stock Bank 1,359, GLOBAL EXPOSURE The global exposure relating to derivative instruments is calculated using the commitment approach by converting the derivative positions into equivalent positions in the underlying assets embedded in those derivatives. The global exposure of the Fund to financial derivative instruments or embedded financial derivative instruments will not exceed 100% of the net asset value of the Fund at any time. 4. COLLATERAL Nil 5. SECURITIES LENDING OR REPURCHASE TRANSACTIONS Nil 5

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

9 STATEMENT OF TOTAL RETURN For the half year ended 30 June 2012 (unaudited) For the half For the half year ended year ended 30 June June 2011 Note $ $ Income Dividends 1,083,378 1,106,534 Interest 44 12,158 1,083,422 1,118,692 Less: Expenses Audit fee 8,162 6,604 Custodian fees 32,077 51,793 Management fee 444, ,900 Professional fees 6,539 5,455 Registration fee 13,452 15,793 Trustee fee 11,855 11,287 Valuation and administration fees 11,855 11,287 Miscellaneous expenses 7, , , ,584 Net income 547, ,108 Net gains or losses on investments Net realised gains/(losses) on investments 41,466 (9,470,802) Net realised losses on financial derivatives (53,499) - Net change in fair value of investments 10,561,956 (5,385,088) Net foreign exchange losses (46,075) (185,395) 10,503,848 (15,041,285) Total return/(deficit) for the period before income tax 11,051,439 (14,692,177) Less: Income tax 3 - (1,203) Total return/(deficit) for the period after income tax before distribution 11,051,439 (14,693,380) Less: Distribution Total return/(deficit) for the period 11,051,439 (14,693,380) The accompanying notes form an integral part of these financial statements. 7

10 BALANCE SHEET As at 30 June 2012 (unaudited) ASSETS As at As at 30 June December 2011 Note $ $ Portfolio of investments 61,013,905 40,699,696 Receivables 5 720, ,795 Due from brokers 67,364 - Cash and bank balances 6 2,718,554 2,003,322 Total assets 64,520,315 43,044,813 LIABILITIES Payables 7 459, ,236 Due to brokers 854,135 - Net assets attributable to unitholders 8 63,206,919 42,797,577 Total liabilities 64,520,315 43,044,813 The accompanying notes form an integral part of these financial statements. 8

11 PORTFOLIO STATEMENT As at 30 June 2012 (unaudited) By Industry (Primary) Percentage of total net assets attributable to Holdings at Fair value at unitholders at 30 June June June 2012 $ % QUOTED EQUITIES FINANCIAL Vingroup Joint Stock Company 1,546,447 7,871, Joint Stock Commercial Bank for Foreign Trade Of Vietnam 2,643,861 4,710, Vietnam Joint Stock Commercial Bank for Industry and Trade 3,577,646 4,357, Sacombank 2,759,430 3,695, Baoviet Holdings 1,238,940 3,288, Hoang Anh Gia Lai Group Joint Stock Company 1,857,383 3,128, Tu Liem Urban Development Joint Stock Company 815,820 1,028, Songda Urban & Industrial Zone Investment & Development Company 195, , Vietnam Export Import Bank 337, , Saigon Secs Incorporation 300, , ,257, * denotes amount less than 0.1% The accompanying notes form an integral part of these financial statements. 9

12 Percentage of total net assets attributable to Holdings at Fair value at unitholders at 30 June June June 2012 $ % CONSUMER, NON-CYCLICAL Masan Group 1,115,610 6,760, Kinh Do Corporation 600,000 1,472, Southern Seed Corporation 613,143 1,226, Vietnam Dairy Product Corporation 195,000 1,016, Societe de Bourbon Tay Ninh 279, , Phu Nhuan Jewelry Joint Stock Company 100, , Tuong An Vegetable Oil Joint Stock Company 33,190 86, Vinh Long Cereal and Food Corporation 115,000 84, Imexpharm Pharmaceutical Joint Stock Company 21,998 50, DHG Pharmaceutical Joint Stock Company 605 2,200 * 11,251, INDUSTRIAL Hoa Phat Group Joint Stock Company 2,229,790 3,242, Development Investment Construction Corporation 1,755,760 1,744, Refrigeration Electrical Engineering Corporation 1,300,000 1,244, Becamex Infrastructure Development Joint Stock Company 1,750,000 1,145, Gemadept Corporation 726,330 1,065, Doan Xa Port Joint Stock Company 257, , ,809, * denotes amount less than 0.1% The accompanying notes form an integral part of these financial statements. 10

13 Percentage of total net assets attributable to Holdings at Fair value at unitholders at 30 June June June 2012 $ % BASIC MATERIALS Petrovietnam Fertilizer & Chemicals Joint Stock Company 1,250,216 2,591, Dong Phu Rubber Joint Stock Company 350,660 1,104, Binh Dinh Minerals Company 99, , Hon An Joint Stock Company 318, , Tien Phong Plastic Joint Stock Company 54, , Bim Son Cement Joint Stock Company * H.A.I Joint Stock Company 6 7 * 4,283, ENERGY Petrovietnam Drilling & Well Services Joint Stock Company 1,173,840 2,574, COMMUNICATIONS FPT Corporation 878,720 2,508, UTILITIES Petrovietnam Low Pressure Gas Joint Stock Company 250, , CONSUMER, CYCLICAL Danang Rubber Joint Stock Company 1,048,920 1,652, Dam Sen Water Park Corporation 88, , Cat Loi Joint Stock Company 7 6 * 1,827, Portfolio of investments 61,013, Other net assets 2,193, Net assets attributable to unitholders 63,206, * denotes amount less than 0.1% The accompanying notes form an integral part of these financial statements. 11

14 By Industry (Summary) Percentage of total net assets attributable to unitholders at 30 June December 2011 % % Financial Consumer, Non-Cyclical Industrial Basic Materials Energy Communications Utilities Consumer, Cyclical Portfolio of investments Other net assets Net assets attributable to unitholders The accompanying notes form an integral part of these financial statements. 12

15 PORTFOLIO STATEMENT As at 30 June 2012 (unaudited) By Geography (Secondary) Percentage of total net assets Fair value at attributable to unitholders at 30 June June December 2011 $ % % Vietnam 61,013, Portfolio of investments 61,013, Other net assets 2,193, Net assets attributable to unitholders 63,206, The accompanying notes form an integral part of these financial statements. 13

16 NOTES TO THE FINANCIAL STATEMENTS For the half year ended 30 June 2012 (unaudited) These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1. GENERAL LionGlobal Investment Funds III is an umbrella fund constituted by a Deed of Trust dated 8 December 2006 together with its Supplemental Deeds thereon (thereafter referred to as Trust Deed ) between Lion Global Investors Limited (the Managers ) and RBC Dexia Trust Services Singapore Limited (the Trustee ). The Trust Deed is governed by the laws of the Republic of Singapore. With effect from 1 July 2011, RBC Dexia Trust Services Singapore Limited retired as the Trustee of the Fund and the new Trustee is HSBC Institutional Trust Services (Singapore) Limited. The only sub-fund under LionGlobal Investment Funds III as at 30 June 2012 is LionGlobal Vietnam Fund (the Fund ). 2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation The financial statements have been prepared under the historical cost convention modified by the revaluation of financial assets at fair value through profit or loss, and in accordance with the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Certified Public Accountants of Singapore ( ICPAS ). (b) Recognition of income Dividend income is recognised when the right to receive payment is established. Interest income is recognised on a time proportion basis using the effective interest method. 14

17 (c) Financial derivatives Financial derivatives are entered into for the purposes of efficient portfolio management, tactical asset allocation or specific hedging of financial assets held as determined by the Managers and in accordance with the provisions of the Trust Deed. Financial derivatives outstanding at the end of the financial period are measured at their fair values using the marked-to-market method, and the resultant gains and losses are taken up in the Statement of Total Return. (d) Distribution The Managers have the absolute discretion to determine whether a distribution is to be made. In such an event, an appropriate amount will be transferred to a distribution account to be paid out on the distribution date. The amount shall not be treated as part of the property of the Fund. (e) Investments Investments are classified as financial assets at fair value through profit or loss. (i) Initial recognition Purchases of investments are recognised on the trade date. Investments are recorded at fair value on initial recognition. (ii) Subsequent measurement Investments are subsequently carried at fair value. Net change in the fair value of investments are included in the Statement of Total Return in the period in which they arise. (iii) Derecognition Investments are derecognised on the trade date of disposal. The resultant realised gains and losses on the sales of investments are computed on the basis of the difference between the weighted average cost and selling price net of transaction costs, and are taken up in the Statement of Total Return. 15

18 (f) Basis of valuation of investments The fair value of investments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price for investments held by the Fund is the current market quoted bid price. Accrued interest is included in the fair value of the fixed income instrument. (g) Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Receivables are initially recognised at their fair value and subsequently carried at amortised cost using the effective interest method. (h) Foreign currencies (i) Functional and presentation currency The Fund s investors are mainly from Singapore with the subscriptions and redemptions of the units denominated in Singapore dollars and United States dollars. The primary activity of the Fund is to invest in authorised investments which are equities, equity-related instruments (including, without limitation, interests in property funds) and securities in Vietnamese incorporated companies or institutions, as well as in companies or institutions which although not incorporated in Vietnam, have operations in, exposure to, or derived part of their revenue from Vietnam, and the Indo-China region (which includes, but is not limited to, Cambodia, Laos and Myanmar). The Fund may also invest in short-term fixed income securities listed or traded on recognised markets within the Indo-China region. The performance of the Fund is measured and reported to the investors in Singapore dollars. The Managers consider the Singapore Dollar as the currency which most faithfully represents the economic effects of the underlying transactions, events and conditions. The Fund s functional and presentation currency is the Singapore Dollar. 16

19 (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period/year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Total Return. Translation differences on nonmonetary financial assets and liabilities such as equities are also recognised in the Statement of Total Return within the fair value net gain or loss. 3. INCOME TAX The Fund was granted the status of a Designated Unit Trust and, therefore, the following income is exempted from tax in accordance with Section 35(12) and (12A) of the Income Tax Act (Cap 134): (a) (b) (c) (d) (e) gains or profits derived from Singapore or elsewhere from the disposal of securities; interest (other than interest for which tax has been deducted under Section 45 of the Income Tax Act); dividends derived from outside Singapore and received in Singapore; gains or profits derived from foreign exchange transactions, transactions in futures contracts, transactions in interest rate or currency forwards, swaps or option contracts and transactions in forwards, swaps or option contracts relating to any securities or financial index; and distributions from foreign unit trusts derived from outside Singapore and received in Singapore. For the half For the half year ended year ended 30 June 30 June $ $ Overseas income tax - 1,203 The overseas income tax represents tax deducted at source on dividends derived from outside Singapore. 17

20 4. DISTRIBUTION The Managers do not propose any distribution to unitholders for the financial period ended 30 June 2012 (30 June 2011: Nil). 5. RECEIVABLES 30 June 31 December $ $ Amount receivable for creation of units 624, ,238 Dividends receivable 96,189 50, , , CASH AND BANK BALANCES The cash and bank balances are placed with a financial institution related to the Trustee. 7. PAYABLES 30 June 31 December $ $ Amount payable for cancellation of units 341, ,131 Amount due to the Managers 76,707 54,913 Amount due to the Trustee 8,442 4,632 Amount due to the Custodian 4,767 4,931 Amount due to the Registrar 6,412 3,241 Other payables 21,510 22, , ,236 18

21 8. NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 30 June 31 December $ $ At beginning of financial period/year 42,797,577 61,366,134 Operations Change in net assets attributable to unitholders resulting from operations 11,051,439 (23,245,916) Unitholders' contributions/(withdrawals) Creation of units 39,056,933 27,037,657 Cancellation of units (29,699,030) (22,360,298) Change in net assets attributable to unitholders resulting from net creation and cancellation of units 9,357,903 4,677,359 Total increase/(decrease) in net assets attributable to unitholders 20,409,342 (18,568,557) At end of financial period/year 63,206,919 42,797,577 Units in issue (see Note 9) 179,477, ,325,996 Net assets attributable to unitholders per unit Reconciliation of net assets attributable to unitholders per unit for issuing/ redeeming units at financial period/year-end and the net assets attributable to unitholders per unit per the financial statements: 30 June 31 December $ $ Net assets attributable to unitholders per unit for issuing/redeeming units Effect of adopting bid prices as fair value (0.001) (0.002) Net assets attributable to unitholders per unit per the financial statements

22 Quoted investments have been valued at the current bid prices in accordance with the recommendations of Statement of Recommended Accounting Practice 7. For the purpose of the net assets attributable to unitholders per unit calculation for the issuance and redemption of units, quoted investments are stated at the last available transacted price, in accordance with the Code on Collective Investment Schemes. 9. UNITS IN ISSUE 30 June 31 December Units Units Units at beginning of the period/year 151,325, ,112,270 Units created 108,604,003 75,016,818 Units cancelled (80,452,536) (62,803,092) Units at end of the period/year 179,477, ,325,996 of which, units denominated in - USD 60,244,795 45,480, FINANCIAL RISK MANAGEMENT The Fund s activities expose it to a variety of market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Fund s overall risk management programme seeks to minimise potential adverse effects on the Fund s financial performance. The Fund may use financial futures contracts, options and/or currency forward contracts subject to the terms of the Trust Deed to moderate certain risk exposures. Specific guidelines on exposures to individual securities and certain industries are in place for the Fund at any time as part of the overall financial risk management to reduce the Fund s risk exposures. The Fund s assets principally consist of equity investments. They are held in accordance with the published investment policies of the Fund. The allocation of assets between the various types of investments is determined by the Managers to achieve their investments objectives. The following is a summary of the main risks and risk management policies: (a) Market risk Market risk is the risk of loss to the value of financial investments because of changes in market conditions like interest and currency rate movements and volatility in security prices. External factors such as changes in economic environment, consumption patterns, and investor s expectation contribute to market risk which may have a significant impact on the asset s value. 20

23 (i) The Fund s investments are substantially dependent on changes in market prices. The Managers monitor the Fund s investments closely so as to assess changes in fundamentals and valuation. Although the Managers make reasonable efforts in the choice of investments, events beyond reasonable control of the Managers could affect the prices of the underlying investments and hence the asset value of the Fund. Guidelines are set to reduce the Fund s risk exposures to market volatility such as diversifying the portfolio by investing across various geographies/ industries. The Fund s market risk is affected by three main components: changes in actual market prices, interest rate volatilities and foreign exchange movements. Price risk The Fund s sensitivity to the market is measured using its beta, a ratio that describes how the expected return of a portfolio is correlated to the return of the financial market as a whole. The daily Fund price movements are measured against the daily price movements of the benchmark to derive the beta. As at 30 June 2012, the Fund s beta was 0.77 (31 December 2011: 0.91) which is calculated based on the daily returns over the preceding 12 months for the Fund and its benchmark (31 December 2011: Based on the daily returns over the preceding 12 months for the Fund and its benchmark). The table below summarises the impact of increases/decreases from the Fund s underlying investments in equities on the Fund s net assets attributable to the unitholders as at 30 June 2012 and 31 December The analysis was based on the assumptions that the index components within the benchmark increased/decreased by a reasonable possible shift, with all variables held constant and that the fair value of the Fund s investments moved according to the beta. Impact of 12% (31 December 2011: 8%) movement in benchmark on net assets attributable to the unitholders 30 June 31 December Fund Benchmark $ $ LionGlobal Vietnam Fund VN Index 5,840,319 3,115,664 21

24 (ii) Interest rate risk Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Investment funds that invest in equity securities may be subject to interest rate risk as any interest rate change may affect the equity risk premium though at varying degrees. To manage this risk, the Managers analyse how interest rate changes may affect different industries and securities and then seeks to adjust the Fund s portfolio investments accordingly. However, the effects of changes in interest rates on the Fund s portfolio may not be quantified as the relationship between interest rates and the value of the equity securities is indirect. Hence, no separate sensitivity analysis has been presented. (iii) Currency risk The Fund has monetary financial assets/liabilities denominated in currencies other than Singapore dollars and the Fund may be affected favourably or unfavourably by exchange rate regulations or changes in the exchange rates between the Singapore Dollar and such other currencies. The Fund may enter into foreign currency contracts designed to either hedge some or all of this exposure, or alternatively increase exposure to preferred foreign currencies. The tables below summarise the Fund s exposure to key currencies at the end of the financial period/year. Monetary and non-monetary items have been taken into the account for the analysis. 22

25 30 June 2012 VND USD SGD Total $ $ $ $ Assets Portfolio of investments 61,013, ,013,905 Receivables 96, , , ,492 Due from brokers 67, ,364 Cash and bank balances 2,198, ,983 15,713 2,718,554 Total assets 63,376, , ,274 64,520,315 Liabilities Payables - 42, , ,261 Due to brokers 854, ,135 Net assets attributable to unitholders ,206,919 63,206,919 Total liabilities 854,135 42,611 63,623,569 64,520,315 Net financial assets/ (liabilities) 62,522, ,114 (63,312,295) Fair value of currency forwards and financial derivatives Currency exposure 62,522, ,114 (63,312,295) 31 December 2011 VND USD SGD Others Total $ $ $ $ $ Assets Portfolio of investments 40,699, ,699,696 Receivables 50,557 65, , ,795 Cash and bank balances 830, ,839 1,036,399 9,037 2,003,322 Total assets 41,580, ,780 1,261,696 9,037 43,044,813 Liabilities Payables - 112, , ,236 Net assets attributable to unitholders ,797,577-42,797,577 Total liabilities - 112,565 42,932,248-43,044,813 Net financial assets/ (liabilities) 41,580,300 81,215 (41,670,552) 9,037 Fair value of currency forwards and financial derivatives Currency exposure 41,580,300 81,215 (41,670,552) 9,037 23

26 (b) Equity/Mutual Fund investments are non-monetary financial assets and are exposed to both currency risk and price risk. As these financial assets are non-monetary, no separate sensitivity analysis has been performed to analyse currency risk. The impact of currency risk arising from these financial assets on the Fund s net asset value has been included in the above price risk sensitivity analysis. The Fund s monetary assets/liabilities are measured for their sensitivity to exchange rate movements based on the balance of the monetary assets/liabilities, forecasted exchange rate movements and the net asset value of the Fund. As of 30 June 2012 and 31 December 2011, the Fund s exposure to foreign currency fluctuations with respect to the monetary assets/ liabilities is not considered to be significant and hence no sensitivity analysis on foreign currency risk has been presented. Liquidity risk The Fund is exposed to daily redemption of units in the Fund. It therefore invests the majority of its assets in investments that are traded in an active market and can be readily disposed of. The tables below analyse the Fund s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant. 30 June 2012 Less than 3 months- 1-5 Above 5 3 months 1 year years years $ $ $ $ Payables 459, Due to brokers 854, Net assets attributable to unitholders* 63,206, December 2011 Less than 3 months- 1-5 Above 5 3 months 1 year years years $ $ $ $ Payables 247, Net assets attributable to unitholders* 42,797, * Net assets attributable to unitholders are repayable on demand. 24

27 (c) Credit risk Credit risk is the risk that counterparty will fail to perform contractual obligations, either in whole or in part, under a contract. Concentrations of credit risk are minimised primarily by: ensuring counterparties, together with the respective credit limits, are approved, ensuring that transactions are undertaken with a large number of counterparties, and ensuring that the majority of transactions are undertaken on recognised exchanges. All transactions in listed securities are settled/paid upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation. Credit risk also arises from cash and cash equivalents and assets held with financial institutions. The Fund may also enter into derivatives to manage its exposures to currency risk and equity risk, including foreign exchange forward contracts and options. Hence, the Fund is also exposed to the risk that its derivatives held with counterparties may not be recoverable in the event of any default by the parties concerned. The Managers minimise the Fund s credit risk by undertaking transactions with banks that are part of banking groups with good credit-ratings assigned by international credit rating agencies. 25

28 The tables below summarise the credit rating of banks and the custodian in which the Fund s assets are held as at 30 June 2012 and 31 December June 2012 Credit rating ## Source of credit rating Custodian HSBC Institutional Trust Services (Singapore) Limited A+ S&P Bank The Hongkong and Shanghai Banking Corporation Limited A+ S&P 31 December 2011 Credit rating ## Source of credit rating Custodian HSBC Institutional Trust Services (Singapore) Limited A+ S&P Bank The Hongkong and Shanghai Banking Corporation Limited A+ S&P The credit ratings are based on the Long-Term Issuer Ratings published by the rating agency. The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets. ## Group credit ratings are presented for subsidiaries. (d) Capital management The Fund s capital is represented by the net assets attributable to unitholders. The Fund strives to invest the subscriptions of redeemable participating units in investments that meet the Fund s investment objectives while maintaining sufficient liquidity to meet unitholders redemptions. 26

29 11. RELATED PARTY TRANSACTIONS With effect from 1 July 2011, RBC Dexia Trust Services Singapore Limited retired as the Trustee of the Fund and the new Trustee is HSBC Institutional Trust Services (Singapore) Limited. In addition to the related party information shown elsewhere in the financial statements, the following significant transactions took place during the financial period between the Fund and related parties at terms agreed between the parties and within the provisions of the Trust Deed: 30 June 30 June $ $ Interest income earned from a bank which is a related company of the Manager 4 - Interest expenses incurred with a bank which is a related company of the Trustee HSBC Institutional Trust Services (Singapore) Limited Transaction fees charged by the Trustee HSBC Institutional Trust Services (Singapore) Limited 9,545 - Registration fee charged by a related company of the Trustee RBC Dexia Trust Service Singapore Limited - 15,793 HSBC Institutional Trust Services (Singapore) Limited 13,452 - Valuation and administration fees charged by the Trustee RBC Dexia Trust Service Singapore Limited - 11,287 HSBC Institutional Trust Services (Singapore) Limited 11,855 - Bank service fees charged by a bank which is a related company of the Trustee HSBC Institutional Trust Services (Singapore) Limited 4,471-27

30 12. FINANCIAL RATIOS 30 June 30 June % % Expense ratio Portfolio turnover ratio The expense ratio does not include (where applicable) brokerage and other transaction costs, performance fee, interest expense, distribution paid out to unitholders, foreign exchange gains/losses, front or back end loads arising from the purchase or sale of other funds and tax deducted at source or arising out of income received. The Fund does not pay any performance fee. 2 The portfolio turnover ratio is calculated in accordance with the formula stated in the Code on Collective Investment Schemes. 28

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

32 Lion Global Investors Limited 65 Chulia Street #18-01, OCBC Centre Singapore TEL: (65) FAX: (65) Co Reg No: D A member of the OCBC Group