Investment-linked policy sub-funds MICA (P) 009/09/2010

Transcription

1 MICA (P) 009/09/2010 Investment-linked policy sub-funds Annual report for the year ended 30 June 2010

2 Investment-linked Fund Report Contents Fund Updates 2 Fund Performance Summary 5 Notes to the fund disclosures 7 Global Leaders Fund 8 HSBC-Link Asia Balanced Fund 11 HSBC-Link Asia Equity Fund 15 HSBC-Link Asian Bond Fund 19 HSBC-Link Asian Dividend Equity Fund 22 HSBC-Link China Balanced Fund 25 HSBC-Link China Equity Fund 29 HSBC-Link Climate Change Equity Fund 32 HSBC-Link Commodity Fund 35 HSBC-Link Emerging Europe Equity Fund 38 HSBC-Link Emerging Markets Equity Fund 41 HSBC-Link Ethical Asia Equity Fund 44 HSBC-Link Ethical Capital Protected Fund 47 HSBC-Link Ethical Global Equity Fund 50 HSBC-Link Europe Equity Fund 53 HSBC-Link GEM Balanced Fund 56 HSBC-Link Global Bond Fund 59 HSBC-Link Global Equity Fund 62 HSBC-Link India Equity Fund 65 HSBC-Link Japan Equity Fund 68 HSBC-Link Pacific Equity Fund 71 HSBC-Link Premium Balanced Fund 74 HSBC-Link Premium Property Equity Fund 77 HSBC-Link SGD Reserve Fund 82 HSBC-Link Singapore Balanced Fund 85 HSBC-Link Singapore Bond Fund 89 HSBC-Link World Selection Funds 93 Independent Auditors Report to HSBC Insurance (Singapore) Pte. Limited 99 Financial Statements 101 Notes to the financial statements 110 1

3 Investment-linked Fund Report: Fund Updates Fund Updates 1. Changes relating to the underlying funds of HSBC-Link China Equity Fund and HSBC-Link India Equity Fund The HSBC-Link China Equity Fund and HSBC-Link India Equity Fund invest all or substantially all of its assets into the HSBC Global Investment Funds Chinese Equity and HSBC Global Investment Funds India Equity respectively. Both the HSBC Global Investment Funds Chinese Equity and HSBC Global Investment Funds India Equity are sub-funds of HSBC Global Investment Funds ( HSBC GIF ), an open-ended investment company with an umbrella structure. It was established in Luxembourg under the laws of the Grand Duchy of Luxembourg and HSBC Investment Funds (Luxembourg) S.A. is appointed as the Management Company of HSBC GIF. The directors of HSBC GIF have decided on the following: With effect from 1 July 2009, the Management Company will be entitled to collect a fee of up to 10% of the securities lending gross fees payable to the Company. Implementation of the Luxembourg regulations: (i) (ii) Article 11 of the Grand Ducal regulation of 8 February 2008 and CSSF Circular 08/356 which relates to the rules applicable to undertakings for collective investment when using techniques and instruments relating to transferable securities and money market instruments; The HSBC Global Investment Funds Chinese Equity and HSBC Global Investment Funds India Equity may for the purpose of generating additional capital or income or for reducing costs or risks a) enter, either as purchaser or seller, into optional as well as non optional repurchase transactions and b) engage in securities lending transactions. This notice is for information only and no action is required. 2. Change in benchmark of Henderson Horizon Fund Pan European Property Equities Fund (HSBC-Link Premium Property Equity Fund) The HSBC-Link Premium Property Equity invests 25% of its assets into the Henderson Horizon Fund - Pan European Property Equities Fund. The remaining assets are invested primarily 50% into the Henderson Horizon Fund Global Property Equities Fund and 25% into the Henderson Horizon Fund Asia- Pacific Property Equities Fund. With effect from 1 July 2009, the benchmark of the Henderson Horizon Fund - Pan European Property Equities Fund has been changed to FTSE EPRA/NAREIT* Developed Europe Capped Index TRI. Hence, the benchmark of the Fund has been changed from FTSE EPRA/NAREIT 50% Global Total Return Index + 25% Pure Asia total net dividend Index (Capital constrained) + 25% Europe (UK Restricted) to FTSE EPRA/NAREIT 50% Global Total Return Index + 25% Pure Asia total net dividend Index (Capital constrained) + 25% Developed Europe Capped Index TRI. * European Public Real Estate Association/ National Association of Real Estate Investment Trusts Total Return Index (net income) Previously known as FTSE EPRA/NAREIT 50% Global Total Return Index + 25% Pure Asia total net dividend Index (Capital constrained) + 25% Europe (UK Restricted) 2

4 Investment-linked Fund Report: Fund Updates 3. Appointment of Sub-Manager of DWS Asia Premier Trust (HSBC-Link Asia Equity Fund) The HSBC-Link Asia Equity Fund invests all or substantially all of its assets into the DWS Asia Premier Trust. With effect from 1 September 2009, Harvest Global Investments Limited has been appointed by the Manager as the sub-manager for the DWS Asia Premier Trust. 4. Change in Sub-Manager of DWS China Equity Fund (HSBC-Link China Balanced Fund) The HSBC-Link China Balanced Fund invests all or substantially all of its assets, primarily 70% into the DWS China Equity Fund and 30% into the DWS Lion Bond Fund. With effect from 1 September 2009, they will be appointing Harvest Global Investments Limited, who has replaced the existing sub-manager, Deutsche Asset Management (Hong Kong) Limited, to act as the sub-manager for the DWS China Equity Fund. 5. Change in Name of Fund Manager With effect from 1 October 2009, the Fund Manager, Legg Mason International Equities (Singapore) Pte Limited has changed the name of their company to Legg Mason Asset Management Singapore Pte Limited. 6. Appointment of Sub-Manager of DWS Premier Investments Funds DWS Singapore Equity Fund (HSBC-Link Singapore Balanced Fund) The HSBC-Link Singapore Balanced Fund invests all or substantially all of its assets, primarily 70% into the DWS Singapore Equity Fund and 30% into the DWS Lion Bond Fund. With effect from 10 December 2009, Manulife Asset Management (Singapore) Pte Ltd has been appointed by the Manager as the sub-manager for the DWS Premier Investments Funds - DWS Singapore Equity Fund. 7. Change in benchmark of Legg Mason Asian Enterprise Trust (HSBC-Link Asia Balanced Fund) The HSBC-Link Asia Balanced Fund invests all or substantially all of its assets, primarily 70% into the Legg Mason Asian Enterprise Trust and 30% into the Legg Mason Global Bond Trust. With effect from 1 February 2010, the benchmark of the Legg Mason Asian Enterprise Trust has been changed from MSCI AC Far East (ex Japan) to MSCI AC Asia (ex Japan). The rationale for the benchmark change is that the new benchmark better reflects the investment universe of the Fund. 8. Addition of new Funds The following funds have been added to HSBC Insurance Investment-Linked Funds: Fund Name Effective Date HSBC-Link Pacific Equity Fund 1 April 2010 HSBC-Link World Selection 1 Fund 1 April 2010 HSBC-Link World Selection 3 Fund 1 April 2010 HSBC-Link World Selection 5 Fund 1 April Cessation of new and recurring subscriptions into Schroder Alternative Solutions Commodity Fund (HSBC-Link Commodity Fund) The HSBC-Link Commodity Fund invests all or substantially all of its assets into Schroder Alternative Solutions Commodity Fund (the Underlying Sub-Fund ). With effect from 1 April 2010, no further subscriptions (both new and recurring) can be made into the HSBC-Link Commodity Fund. 3

5 Investment-linked Fund Report: Fund Updates 10. Change in CPF Status of DWS Asia Premier Trust (HSBC-Link Asia Equity Fund) The HSBC-Link Asia Equity Fund invests all or substantially all of its assets into DWS Asia Premier Trust. With effect from 28 June 2010, DWS Asia Premier Trust has ceased to be included under the CPF Investment Scheme. As such, HSBC-Link Asia Equity Fund will no longer be able to accept new CPF subscriptions. 11. Investment Objectives of HSBC GIF Chinese Equity and HSBC GIF Indian Equity (HSBC-Link China Equity Fund and HSBC-Link India Equity Fund) The HSBC-Link China Equity Fund and HSBC-Link India Equity Fund invest all or substantially all of its assets into HSBC Global Investment Funds Chinese Equity and HSBC Global Investment Funds India Equity Fund (collectively known as Underlying Sub-Funds) respectively. The Board of Directors of HSBC Global Investment Funds has decided to clarify the investment objectives and policies of the Underlying Sub-Funds by replacing where relevant, the reference to investment of two-thirds of the assets by a reference to investment primarily in certain types of assets. These changes are effective from 1 February 2010 and are designed to make the investment objectives and policies easier to understand but do not have any impact on the management of the Underlying Sub-Funds. The latest version of the investment objective of the below HSBC Insurance Investment-Linked Funds will read as follows: HSBC-Link China Equity Fund The objective of the Fund is to seek long-term capital growth by investing primarily in a well diversified portfolio of investments in equity and equity equivalent securities of companies which have their registered office in, and with an official listing on a major stock Sub-Funds Investment Objectives and Policies exchange or other Regulated Market of the People s Republic of China ("China"), including Hong Kong SAR, as well as those companies which carry out a preponderant part of their business activities in China. There are no capitalisation restrictions, and it is anticipated that the Underlying Sub-Fund will seek to invest across a range of capitalisations. HSBC-Link India Equity Fund The objective of the Fund is to seek long-term capital growth by investing primarily in a diversified portfolio of investments in equity and equity equivalent securities of companies which have their registered office in, and with an official listing on a major stock exchange or other Regulated Market of India, as well as those companies which carry out a preponderant part of their business activities in India. Whilst there are no capitalisation restrictions, it is anticipated that the Underlying Sub-Fund will seek to invest across a range of market capitalisations with a bias to medium and large companies. 4

6 Investment-linked Fund Report: Fund Performance Summary Fund Performance Summary 3-Mth (%) 6-Mth (%) 1-Year (%) 3-Year (%) Global Leaders Fund (13.43) (13.28) 0.81 (46.24) Benchmark * (12.61) (10.06) 6.85 (35.53) HSBC-Link Asia Balanced Fund (6.36) (7.58) Benchmark* (4.35) (4.33) HSBC-Link Asia Equity Fund (7.18) (8.84) (20.28) Benchmark * (5.32) (4.89) (14.33) HSBC-Link Asian Bond Fund Benchmark * HSBC-Link Asian Dividend Equity Fund (6.98) (7.32) 4.49 Benchmark * (4.99) (4.14) HSBC-Link China Balanced Fund (4.61) (7.64) 4.23 Benchmark * (3.19) (4.38) 5.51 HSBC-Link China Equity Fund (7.38) (10.49) 1.69 (22.35) Benchmark * (4.93) (6.80) 7.61 (2.94) HSBC-Link Climate Change Equity Fund (12.79) (15.42) (0.66) Benchmark * (12.79) (10.34) 6.30 HSBC-Link Commodity Fund (7.11) (10.49) (3.35) The Fund has no benchmark due to its absolute return nature. HSBC-Link Emerging Europe Equity Fund (15.32) (9.56) Benchmark * (6.45) HSBC-Link Emerging Markets Equity Fund (9.50) (9.73) (17.90) Benchmark * (8.50) (6.69) (15.39) HSBC-Link Ethical Asia Equity Fund (4.78) (4.37) (19.22) Benchmark * (4.50) (3.02) (12.97) HSBC-Link Ethical Capital Protected Fund (9.85) (9.52) 1.75 (14.63) Benchmark * (5.45) (6.00) (3.52) (18.48) HSBC-Link Ethical Global Equity Fund (12.62) (11.80) 4.37 (36.19) Benchmark * (12.34) (10.60) 6.10 (30.11) HSBC-Link Europe Equity Fund (16.54) (19.42) (3.10) (44.60) Benchmark * (15.31) (17.18) 1.95 (44.00) HSBC-Link GEM Balanced Fund (4.81) (4.52) Benchmark * (5.16) (3.37) HSBC-Link Global Bond Fund (0.95) (2.72) (2.91) Benchmark * (2.98) (5.00) (4.40) HSBC-Link Global Equity Fund (15.67) (15.16) 1.37 Benchmark * (12.76) (10.32) 6.30 HSBC-Link India Equity Fund (3.22) (0.11) (2.46) Benchmark * (0.65) (0.05) 5

7 Investment-linked Fund Report: Fund Performance Summary 3-Mth (%) 6-Mth (%) 1-Year (%) 3-Year (%) HSBC-Link Japan Equity Fund (8.14) (0.97) 2.12 (38.00) Benchmark * (9.26) (2.04) (3.17) (36.22) HSBC-Link Pacific Equity Fund Benchmark * HSBC-Link Premium Balanced Fund (2.38) (1.74) (15.12) Benchmark * (3.81) (3.34) 9.82 (12.24) HSBC-Link Premium Property Equity Fund (8.89) (7.63) Benchmark * (3.50) (2.15) HSBC-Link SGD Reserve Fund Benchmark * HSBC-Link Singapore Balanced Fund (1.29) (2.86) Benchmark * 0.04 (1.03) HSBC-Link Singapore Bond Fund Benchmark * HSBC-Link World Selection 1 Fund The Fund has no benchmark HSBC-Link World Selection 3 Fund The Fund has no benchmark HSBC-Link World Selection 5 Fund The Fund has no benchmark * Refer to the respective funds for the benchmark used. 6

8 Investment-linked Fund 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. 2. Expense ratio Expense ratios are stated on an annualized basis and calculated in accordance with IMAS guidelines for the disclosure on expense ratios. The expense ratio does not include insurance coverage, brokerage and other transaction costs, performance fee, 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. 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 lesser of purchases or sales for the 12 months preceding the reporting date expressed as a percentage of the daily average Net Asset Value. 4. UCITS III Scheme Under the Practice Note ID 1/06 issued by the Monetary Authority of Singapore on 2 May 2006, the underlying funds of the following are on the UCITS III Scheme: Global Leaders Fund HSBC-Link Asian Dividend Fund HSBC-Link China Equity Fund HSBC-Link Emerging Markets Equity Fund HSBC-Link Ethical Capital Protected Fund HSBC-Link Emerging Europe Equity Fund HSBC-Link World Selection 1 Fund HSBC-Link World Selection 5 Fund HSBC-Link Europe Equity Fund HSBC-Link India Equity Fund HSBC-Link Japan Equity Fund HSBC-Link Premium Property Equity Fund HSBC-Link Global Equity Fund HSBC-Link Climate Change Equity Fund HSBC-Link World Selection 3 Fund 5. Abbreviations Used CPFIS: GDP: Ltd: MV: : NAV: OA: SA: SRS: Central Provident Fund Investment Scheme Gross Domestic Product Limited Market Value Not Applicable Net Asset Value Ordinary Account Special Account Supplementary Retirement Scheme 7

9 Investment-linked Fund Report: Global Leaders Fund Global Leaders Fund Fund Objective Global Leaders Fund seeks to achieve longterm capital growth. Fund s investments are not confined or concentrated in any particular geographic region or market. Fund investments are made by way of a feeder fund, which invests substantially all or all its assets in the DWS Global Equity Focus Fund. Investment and Market Review ^ FUND FACTS Underlying Fund DWS Global Equity Focus Fund Fund Manager Deutsche Asset Management (Asia) Ltd Launch Date 28 Feb 1997 CPFIS/SRS OA/SRS CPFIS Risk Higher Risk - Broadly Classification Diversified As at 30 Jun 2010 Offer Price S$ Bid Price S$ Fund Size S$ mil Units in Issue mil Global equity markets rallied over the past 12 months leaving the MSCI World standing at 1041 points at the end of the reporting period. In particular during the first three quarters improving company results and macroeconomic lead indicators were the main drivers of positive stock market performance. Global growth concerns on the back of increasing sovereign debt risks as well as a moderating Chinese economy and a weakening US consumer led to a sell off during the last quarter erasing some of the previous gains. Market Outlook and Investment Strategy ^ We believe that the stock market rally during the last 12 months reflects the market s assessment that the worst of the financial crisis lies behind us. Having said this, the strong sell off during Q2 10 indicates the market s disbelief of a lasting global economic recovery going forward. Equity market valuations will therefore receive further support, should positive second order effects of a self sustained recovery continue to emerge as a result of the ongoing unfolding of fiscal and monetary stimulus measures in the real economy. We will therefore pay in particular close attention to company sales growth, inventory build and increased capex going forward while monitoring the development of private sector consumption, selected exit strategies from quantitative easing by various central banks as well as any additional fiscal austerity packages which could temper economic growth prospects. ^ Source: Deutsche Asset Management (Asia) Ltd A) Fund Performance 3-Mth 6-Mth 1-Year 3-Year 5-Year 10-Year Since Inception (%) (%) (%) (%) (%) (%) (%) Global Leaders Fund (13.43) (13.28) 0.81 (46.24) (33.80) (55.36) (4.47) Benchmark* (12.61) (10.06) 6.85 (35.53) (14.72) (23.41) *MSCI World Index (SGD) B) Fund Disclosure I Allocation by Asset Class As at 30 Jun 2010 Asset Class % of NAV MV S$ mil DWS Global Equity Focus Fund Other assets Other liabilities (0.23) (0.08) Total II Fund Movement (01 Jul Jun 2010) S$ Subscription 4,026,069 Redemption 3,734,631 8

10 Investment-linked Fund Report: Global Leaders Fund C) Underlying Fund Disclosure (DWS Global Equity Focus Fund) I Allocation by Country As at 30 Jun 2010 Country % of NAV MV S$ mil United States Germany United Kingdom Switzerland France Japan Netherlands Hong Kong Bermuda Ireland Mexico Cash Others* Total *Includes other countries and net assets and liabilities. II Allocation by Industry As at 30 Jun 2010 Industry % of NAV MV S$ mil Financials Information Technology Industrials Materials Consumer Staples Energy Consumer Discretionary Health Care Telecommunication Services Cash Total III Allocation of Debt Securities by Credit Ratings IV Top Ten Holdings of Underlying Fund As at 30 Jun 2010 % of NAV MV S$ mil Newmont Mining Corp Swatch Group AG Hewlett-Packard Co JPMorgan Chase & Co Henkel AG & Co. KGAA ING Groep NV Komatsu Ltd Microsoft Corp Mastercard Inc Linde AG Top Ten Holdings of Underlying Fund As at 30 Jun 2009 % of NAV MV S$ mil Nestle SA Linde AG BP PLC E.ON AG Microsoft Corp Allianz SE Japan Tobacco INC Thermo Fisher Scientific INC Abbott Laboratories Nippon Telegraph & Telephone Corp

11 Investment-linked Fund Report: Global Leaders Fund V Exposure to Derivatives VI Borrowings of Net Asset Value D) Other Disclosure Items I Expense/Turnover Ratios Global Leaders Fund Underlying Fund As at 30-Jun-10 As at 30-Jun-09 As at 31-Dec-09 As at 30-Jun-09 Expense Ratio (Annualised) 1.77% 1.78% 1.50%* 1.51% Turnover Ratio (Annualised) 9.89% 10.70% 81.00% % *As at 31 Dec The audited expense ratio of DWS Global Equity Focus Fund for the financial year ended 30 Jun 2010 is not available. II Related-Party Transactions Deposits and cash balances maintained with HSBC Bank as at 30 June 2010 amounted S$56,490. III Material Information IV Soft Dollar Commission Arrangement E) Financial Statements Refer to page 101. For more information, please contact your financial planner, call our Customer Service Hotline on , or visit our web site at 10

12 Investment-linked Fund Report: HSBC-Link Asia Balanced Fund HSBC-Link Asia Balanced Fund Fund Objective HSBC-Link Asia Balanced Fund 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 Fund invests substantially all or all its assets primarily 70% into the Legg Mason Asian Enterprise Trust and 30% into the Legg Mason Global Bond Trust. FUND FACTS Underlying Fund Fund Manager Launch Date 1 Nov 2007 CPFIS/SRS SRS CPFIS Risk Classification 70%: Legg Mason Asian Enterprise Trust 30%: Legg Mason Global Bond Trust Legg Mason Asset Management Singapore Pte Ltd As at 30 Jun 2010 Legg Mason Asian Enterprise Trust Offer Price S$ Investment and Market Review ^ Bid Price S$ Fund Size S$ 1.59 mil The second quarter has been one to forget for Units in Issue 2.09 mil Asian equity investors. That said, the correction in Asian stock markets appear to have run its course just as the World Cup got underway. The World Cup season is traditionally associated with low turnover and erratic trading. Asian stock markets have accordingly made a stealth comeback on modest volumes, but not without considerable volatility. Meanwhile, several notable policy initiatives introduced during this lull period hint at how Asian governments (especially China and India) are thinking positively about their economies and stock markets. The most significant news this month is the People s Bank of China (PBOC) announcement to end the Renminbi s effective peg to the dollar, reverting henceforth to a more flexible exchange rate policy pegged to a basket of currencies. The move was no doubt aimed at averting trade wars and appeasing global leaders ahead of the G20 meeting. Regardless, this initiative is positive, and it is what investors want. Market Outlook and Investment Strategy ^ There is an air of despondency in the developed world regarding the state of government finances. Governmental commitment to addressing growing fiscal deficits has been called into question. Governments are attempting to play Robin Hood to plug the gap-mining tax in Australia, banking tax and taxes on bonuses elsewhere. This is not the case in Asia. Important policy initiatives are being pursued with long term interests in mind. Growing double dip talk may keep investors on the sidelines, but there is no denying the fact that Asia has a solid investment case that has become attractively priced again by the end of the second quarter. Legg Mason Global Bond Trust *Please refer to HSBC Link Global Bond Fund on page 59 for the Investment and Market Review and the Market outlook and Investment Strategy. ^ Source: Legg Mason Asset Management Singapore Pte Ltd A) Fund Performance 3-Mth (%) 6-Mth (%) 1-Year (%) 3-Year (%) 5-Year (%) 10-Year (%) Since Inception (%) HSBC-Link Asia Balanced Fund (6.36) (7.58) (19.73) Benchmark* (4.35) (4.33) (19.92) *70% MSCI AC Asia ex Japan + 30% Citigroup World Government Bond ex Japan Index 11

13 Investment-linked Fund Report: HSBC-Link Asia Balanced Fund B) Fund Disclosure I Allocation by Asset Class As at 30 Jun 2010 Asset Class % of NAV MV S$ mil Legg Mason Asian Enterprise Trust Legg Mason Global Bond Trust Total II Fund Movement (01 Jul Jun 2010) S$ Subscription 443,908 Redemption 254,985 C) Underlying Fund Disclosure (Legg Mason Asian Enterprise Trust) I Allocation by Country As at 30 Jun 2010 Country % of NAV MV S$ mil Hong Kong South Korea China Taiwan India Singapore Indonesia Malaysia Cash Total II Allocation by Industry As at 30 Jun 2010 Industry % of NAV MV S$ mil Industrials Financials Consumer IT Real Estate Energy Telecommunications Services Pharmaceuticals Construction/Materials Others* Cash Total *Includes other industries and net assets and liabilities. III Allocation of Debt Securities by Credit Ratings As at 30 Jun 2010 Legg Mason Asian Enterprise Trust does not invest in any debt securities. IV Top Ten Holdings of Underlying Fund As at 30 Jun 2010 % of NAV S$ mil Samsung Electronic Co. Ltd China Mobile Ltd Industrial and Commercial Bank of China Ltd H Shares Astra International Inc Tata Motors Ltd Genting Singapore Plc BYD Co Ltd H Shares Formosa Epitaxy Inc Hon Hai Precision Industry Synnex Tech International Corp

14 Investment-linked Fund Report: HSBC-Link Asia Balanced Fund Top Ten Holdings of Underlying Fund As at 30 Jun 2009 % of NAV S$ mil Samsung Electronics Co. Ltd Industrial and Commercial Bank of China Ltd China Construction Bank China Mobile Ltd BYD Co Ltd Sun Hung Kai Properties Ltd Straits Asia Resources Ltd Goldman Sachs Intl (Bajaj Hindusthan Ltd.) Call Wts 14/05/ Novatek Microelectronics Ltd Yuanta Financial Holding Co. Ltd V Exposure to Derivatives As at 30 Jun 2010 % of NAV (0.01)% Market value (S$) (14,230) Realised Gains / (Losses) (S$) - Unrealised Gains / (Losses) (S$) (14,230) VI Borrowings of Net Asset Value As at 30 Jun 2010 *HBSC-Link Asian Balanced Fund invests 30% into Legg Mason Global Bond Trust. Please refer to HSBC-Link Global Bond Fund on page 59 for the underlying fund disclosure on Legg Mason Global Bond Trust under Section C. D) Other Disclosure Items I Expense/Turnover Ratio Expense Ratio(Annualised) Turnover Ratio (Annualised) As at 30-Jun-10 As at 30-Jun-09 As at 30-Jun-10 As at 30-Jun-09 Underlying Fund Level Legg Mason Asian Enterprise Trust 1.86% 1.86% % % Legg Mason Global Bond Trust 0.93% 0.95% % % ILP Sub-Fund Level HSBC-Link Asia Balanced Fund 1.81% 1.81% 16.88% 24.92% II Related-Party Transactions III Material Information IV Soft Dollar Commission Agreement Legg Mason Asset Management Singapore Pte. Limited (The Manager) shall be entitled to and currently do receive and enter into soft dollar commissions or arrangements in respect of the Fund. The Manager will comply with applicable regulatory and industry standards on soft dollar commissions or arrangements. The soft dollar commissions or arrangements include specific advice as to the advisability of dealing in, or as to 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 services in relation to the investments managed for clients. Soft dollar commissions or arrangements shall not include travel, accommodation, entertainment, general administrative goods and services, general office equipment or premises, membership fees, employees salaries or direct money payments. The Manager will not accept or enter into soft dollar commissions or arrangements unless (a) such soft dollar commissions or arrangements would, in the opinion of the Manager, assist the Manager in its management of the relevant Fund, (b) the Manager shall ensure at all times that transactions are 13

15 Investment-linked Fund Report: HSBC-Link Asia Balanced Fund executed on the best available terms taking into account the relevant market at the time for transactions of the kind and size concerned, and (c) no unnecessary trades are entered into in order to qualify for such soft dollar commissions or arrangements. All goods and services acquired with the soft dollar commission were for the benefit of the Fund. The broker(s), who has executed trades for other schemes managed by the Manager, had executed the trades on best available terms and there was no churning of trades. E) Financial Statements Refer to page 101. For more information, please contact your financial planner, call our Customer Service Hotline on , or visit our web site at 14

16 Investment-linked Fund Report: HSBC-Link Asia Equity Fund HSBC-Link Asia Equity Fund Fund Objective HSBC-Link Asia Equity Fund 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. Fund 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 ^ Asian equities markets were in a sweet spot phase for 2H09 registering strong returns on FUND FACTS Underlying Fund DWS Asia Premier Trust Fund Manager Deutsche Asset Management (Asia) Ltd Launch Date 31 Jan 1994 CPFIS/SRS OA/SRS CPFIS Risk Classification Higher Risk - Narrowly Focused As at 30 Jun 2010 Offer Price S$ Bid Price S$ Fund Size S$ mil Units in Issue mil *Note: With effect from 28 June 2010, the Fund has been delisted from CPFIS. attractive valuation, record low interest rate and strong economic recovery. Currency appreciation in Asia markets further aided the returns. Financials, consumer and technology were among the best performers, led by low interest rate and various government stimulus programs such as China s rural consumption stimulus and Korean auto subsidies program. The telecom and utilities sectors were clear underperformers on the back of increased risk appetite. First half 2010 was a much different picture, with MSCI Far East Free Ex Japan index having 2 sharp and swift corrections, one in January and the other in May. China tightening, coupled with EU sovereign debt problems, tension in Korean Peninsula fears triggered profit taking. The fund achieved a return of 13.54% (NAV-to-NAV basis) versus the benchmark which returned 16.94% during the period under review. Stock selection effect was positive 42 basis point while, the main detraction came from cash drag of 150 basis points. Stock selection in China, Taiwan, Singapore and Thailand was positive while Korea, Malaysia and Indonesia detracted. Market Outlook and Investment Strategy ^ While we are of the view that global economy is not going into double-dip, we think growth expectations have some room to normalize. The bulk of Asian earnings revision may be concentrated in the next several months and likely direction is southwards, we see opportunity to reposition back in market post adjustment. We retain our preference for domestic over external sectors in Asia as there are signs of inventory indigestion and new orders slow down. We are positioning portfolios towards more domestic related sectors such as consumer discretionary and staples and telecoms which we believe will be more resilient to any slowdown, in favor of more external demand driven sectors such as technology, energy and materials. Within financials, we prefer insurance, bank relative to real estates in view of rising Asia interest rates. ^ Source: Deutsche Asset Management (Asia) Ltd A) Fund Performance 3-Mth 6-Mth 1-Year 3-Year 5-Year Since 10-Year Inception (%) (%) (%) (%) (%) (%) (%) HSBC-Link Asia Equity Fund (7.18) (8.84) (20.28) Benchmark* (5.32) (4.89) (14.33) *MSCI AC Far East ex Japan in (SGD) B) Fund Disclosure I Allocation by Asset Class As at 30 Jun 2010 Asset Class % of NAV MV S$ mil DWS Asia Premier Trust Other assets Other liabilities (0.10) (0.05) Total

17 Investment-linked Fund Report: HSBC-Link Asia Equity Fund II Fund Movement (01 Jul Jun 2010) Subscription 16,360,529 Redemption 9,000,694 C) Underlying Fund Disclosure (DWS Asia Premier Trust) I Allocation by Country As at 30 Jun 2010 Country % of NAV MV S$ mil Hong Kong South Korea Taiwan China Singapore Malaysia Indonesia Bermuda Cayman Islands United Kingdom Others* (10.09) (7.30) Total *Includes other countries and net assets and liabilities. II Allocation by Industry As at 30 Jun 2010 Industry % of NAV MV S$ mil Banks Electric/Electron Telecommunication Services Oil/Gas Insurance Computer/Software Finance Semiconductors Food and beverage Chemical Departmental Stores Property Real Estate/Development Manufacturing Iron/steel Entertainment Industrials Mining Electronic Others* Total *Includes other industries and net assets and liabilities. III Allocation of Debt Securities by Credit Ratings IV Top Ten Holdings of Underlying Fund As at 30 Jun 2010 % of NAV MV S$ mil Samsung Electronics Co. Ltd China Mobile Ltd China Construction Bank H Shares CNOOC Ltd Cheung Kong Holdings Ltd Taiwan Semiconductor Manufacturing Co. Ltd China Life Insurance Posco United Overseas Bank Ltd Industrial and Commercial Bank of China Ltd. H Shares

18 Investment-linked Fund Report: HSBC-Link Asia Equity Fund Top Ten Holdings of Underlying Fund As at 30 Jun 2009 % of NAV MV S$ mil China Mobile Ltd Samsung Electronics Co. Ltd Industrial and Commercial Bank of China Ltd China Construction Bank Taiwan Semiconductor Manufacturing Co. Ltd China Life Insurance Hon Hai Precision Industry DBS Group Holdings Ltd Formosa Plastics Corporation BOC Hong Kong (Holdings) Ltd V Exposure to Derivatives As at 30 Jun 2010 % of NAV - Market Value (S$) - Realised Gains / (Losses) (S$) (88,006) Unrealied Gains / (Losses) (S$) - VI Borrowings of Net Asset Value D) Other Disclosure Items I Expense/Turnover Ratios (%) HSBC-Link Asia Equity Fund Underlying Fund As at 30-Jun-10 As at 30-Jun-09 As at 30-Jun-10 As at 30-Jun-09 Expense Ratio (Annualised) 1.91% 1.87% 1.65% 1.62% Turnover Ratio (Annualised) 18.09% 18.28% % % II Related-Party Transactions III Material Information IV Soft Dollar Commission Arrangement The Managers may receive or enter into soft-dollar commissions or arrangements in respect of the Trust. The Managers will comply with applicable regulations and industry standards on soft-dollars. The softdollar commissions that the Managers may receive 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 or arrangements received will not include travel, accommodation, entertainment, general administrative goods and services, general office equipment or premises, membership fees, employees' salaries or direct money payments. The Managers will not accept or enter into soft dollar commissions or arrangements unless such softdollar commissions or arrangements would, in the opinion of the Managers, assist in their management of the Trust, provided that the Managers will ensure at all times that the relevant transactions are executed on the best available terms taking into account the relevant market at the time for transactions of the kind and size concerned, and that no unnecessary trades are entered into in order to qualify for such softdollar commissions or arrangements. The Managers may directly or indirectly through their affiliates within the Deutsche Asset Management Group enter into arrangements with the brokers, to transfer, either immediately or after a time delay, portions of the payments they receive for the purchase or sale of assets to third parties that will then provide research or analytical services to the Managers. These arrangements (called "commissionsharing agreements") are used by the Managers for the purpose of managing the Trust. The Managers 17

19 Investment-linked Fund Report: HSBC-Link Asia Equity Fund shall use the services specified above in accordance with the conditions set out in paragraphs above. E) Financial Statements Refer to page 101. For more information, please contact your financial planner, call our Customer Service Hotline on , or visit our web site at 18

20 Investment-linked Fund Report: HSBC-Link Asian Bond Fund HSBC-Link Asian Bond Fund Fund Objective HSBC-Link Asian Bond Fund 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. Fund 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 Fund Legg Mason Asian Bond Trust Fund Manager Legg Mason Asset Management Singapore Pte Ltd Launch Date 6 Oct 2008 CPFIS/SRS SRS CPFIS Risk Classification As at 30 Jun 2010 Offer Price S$ Bid Price S$ Fund Size S$ 2.65 Mil Units in Issue 1.87 Mil Asian markets performed well in June, reversing May s losses, but investors continued to worry about ongoing challenges in Europe, proposed financial reform legislation in the United States and the possibility of a double-dip recession. Most Asian equities (excluding China) outperformed fixed-income for the month. The HSBC Asian Local Bond Index returned 0.93%: local bonds saw positive returns that were partially offset by currency movements. Asian external bonds (as measured by the JPMorgan Asian Credit Index) returned 1.42% as spreads increased nearly 24 basis points (bps) over comparable US Treasuries (UST). External corporate issues beat out sovereign and quasi-sovereign issues, and higher-risk, lower-rated issues outperformed their investment-grade counterparts. Market Outlook and Investment Strategy ^ Many global investors have become increasingly concerned about a potential double-dip recession, and have begun to doubt the strength of the recovery. We find such fears exaggerated and continue to believe that Asian growth will continue, albeit at a slower pace. Other regions, despite headline fears, show some recovery. In Asia, the rising incomes of Chinese laborers are driving more private consumption, benefiting exports from other Asian countries and demand for US exports. Asian countries are likely to see a recovery in investments as China looks abroad for sourcing raw materials and foreign companies look to diversify their labor-intensive manufacturing bases. Unlike the more fiscally constrained developed countries, many Asian countries also enjoy the policy flexibility to provide additional stimulus if needed. We believe actual tightening will be modest and country specific. Policy-makers in Asia are mindful of the global growth climate and the likely impact of yuan appreciation benefiting a few countries that trade extensively with China. Our relative optimism of the fundamental soundness in Asia leads us to believe that Asian currencies and bond markets will perform well against other fixed-income sectors. ^ Source : Legg Mason Asset Management Singapore Pte Ltd A) Fund Performance 3-Mth 6-Mth 1-Year 3-Year 5-Year Since 10-Year Inception (%) (%) (%) (%) (%) (%) (%) HSBC-Link Asian Bond Fund Benchmark* *Customised JP Morgan Asian Credit Index, Sovereign & Quasi Sovereign, fully hedged into SGD B) Fund Disclosure I Allocation by Asset Class As at 30 Jun 2010 Asset Class % of NAV MV S$ mil Legg Mason Asian Bond Trust Other assets Total II Fund Movement (01 Jul Jun 2010) S$ Subscription 3,124,397 Redemption 1,770,258 19

21 Investment-linked Fund Report: HSBC-Link Asian Bond Fund C) Underlying Fund Disclosure (Legg Mason Asian Bond Trust) I Allocation by Country As at 30 Jun 2010 Country % of NAV MV S$ mil South Korea Philippines Indonesia Malaysia Hong Kong Singapore India Others* Cash Total *Includes other countries and net assets and liabilities. II Allocation by Industry As at 30 Jun 2010 Industry % of NAV MV S$ mil Financials Government Electrical & Electronics Oil & Gas Diversified Resources Telecommunication Services Mining Real Estate Energy Utilities Forestry Others* Cash Total *Includes other industries and net assets and liabilities. III Allocation of Debt Securities by Credit Ratings As at 30 Jun 2010 Rating % of NAV MV S$ mil AAA A A A A BBB BBB BBB Baa Baa BB BB BB Ba Ba B B Be B B Unrated Others* Total *Includes cash holdings and net assets and liabilities 20

22 Investment-linked Fund Report: HSBC-Link Asian Bond Fund IV Top Ten Holdings of Underlying Fund As at 30 Jun 2010 % of NAV S$ mil National Power Corp 6.875% 02/11/ Indonesia Govt Bond 6.625% 17/02/ Philippines Govt Bond 6.375% 15/01/ Sarawak International 5.5% 03/08/ Sk Telecom Co Ltd 6.625% 20/07/ Indonesia Govt Bond 8.5% 12/10/ Petronas Capital Ltd 7.875% 22/05/ Shinhan Bank 4.375% 15/09/ United Overseas Bank Ltd Var 03/09/ Korea Treasury Bond Ser % 10/09/ Top Ten Holdings of Underlying Fund As at 30 Jun 2009 % of NAV S$ mil National Power Corp 6.875% 11/ Philippine Govt Bond 9.5% 02/ Indonesia Govt Bond 6.625% 02/ Philippine Govt Bond % 03/ India Govt Bond 7.37%04/ Philippine Govt Bond 6.375% 01/ Indonesia Govt Bond 8.5% 10/ Sarawak International 5.5% 08/ Indonesia Govt Bond 6.875% 03/ Korea Development Bank 8% 01/ V Exposure to Derivatives As at 30 Jun 2010 % of NAV 2.83% Market value (S$) 911,850 Realised Gains / (Losses) (S$) - Unrealised Gains / (Losses) (S$) 911,850 VI Borrowings of Net Asset Value As at 30 Jun 2010 D) Other Disclosure Items I Expense/Turnover Ratios HSBC-Link Asian Bond Fund Underlying Fund As at 30-Jun-10 As at 30-Jun-09 As at 30-Jun-10 As at 30-Jun-09 Expense Ratio (Annualised) 1.26% 1.35% 1.26% 1.35% Turnover Ratio (Annualised) % 28.28% 69.97% 53.99% II Related-Party Transactions III Material Information IV Soft Dollar Commission Arrangement E) Financial Statements Refer to page 102. For more information, please contact your financial planner, call our Customer Service Hotline on , or visit our web site at 21

23 Investment-linked Fund Report: HSBC-Asian Dividend Equity Fund HSBC-Link Asian Dividend Equity Fund Fund Objective HSBC-Link Asian Dividend Equity Fund seeks to achieve an above-benchmark dividend yield from a portfolio of Asian stocks with a focus on value and long-term capital appreciation. Fund investments are made by way of a feeder fund, which invests substantially all or all its assets in the Henderson Horizon Fund - Asian Dividend Income Fund. Investment and Market Review ^ FUND FACTS Underlying Fund Henderson Horizon Fund Asian Dividend Income Fund Fund Manager Henderson Global Investors (Singapore) Ltd Launch Date 26 May 2008 CPFIS/SRS CPFIS Risk Classification SRS As at 30 Jun 2010 Offer Price S$ Bid Price S$ Fund Size S$ 0.44 mil Units in Issue 0.50 mil The second quarter of 2010 was a weak period for Asian equities. The economic and social distress in some of the peripheral European countries and weaker US economic numbers led to concerns over the sustainability of the recovery in developed economies.the Asian economies continued to post strong growth numbers, resulting in interest rate rises in India, Taiwan, and Malaysia and more administrative tightening measures in China. These measures to reign in excess are necessary to avoid overly loose fiscal conditions, but nevertheless provided some added uncertainty for equity investors. The best performing markets were Indonesia, India, and the Philippines, while Australia and Taiwan were the laggards. These performance differentials reflect investors favouring domestic sectors while remaining skeptical of those economies more exposed to the global cycle. The portfolio outperformed over the period, mainly due to the significant underweighting in Australia, which was by far the worst performing country. This positive allocation was somewhat mitigated, however, by weakness resulting from our overweight position in Taiwan and zero exposure to India. Portfolio positioning did not materially change over the quarter. The fund s focus is still on domestic sectors with a bias towards China. We added China Construction Bank to the portfolio to diversify our Chinese financials weighting and initiated a position in China Forestry; this is a small- to medium-sized company that is at the forefront of consolidating a very fragmented industry in China. The company has strong growth prospects in an industry strongly supported by the government. We also took positions in Taiwanese companies TSMC and Yuanta Financial. To fund these purchases, we sold IAG in Australia (following poor results) and Jinro in Korea. Lastly, we sold ST Engineering in Singapore following a strong run of performance. Market Outlook and Investment Strategy ^ We expect markets to remain volatile as investors digest economic data and the fall out from the peripheral economies in Europe. However, Asian markets look attractive in the medium term and we will look to add to positions as opportunities arise ^ Source : Henderson Global Investors (Singapore) Ltd A) Fund Performance 3-Mth 6-Mth 1-Year 3-Year Since 5-Year 10-Year Inception (%) (%) (%) (%) (%) (%) (%) HSBC-Link Asian Dividend Equity Fund (6.98) (7.32) 4.49 (8.72) Benchmark* (4.99) (4.14) (7.15) *MSCI All Countries Asia ex Japan Index B) Fund Disclosure I Allocation by Asset Class As at 30 Jun 2010 Asset Class % of NAV MV S$ mil Henderson Horizon Fund - Asian Dividend Income Fund Total

24 Investment-linked Fund Report: HSBC-Asian Dividend Equity Fund II Fund Movement (01 Jul Jun 2010) S$ Subscription 275,310 Redemption 77,527 C) Underlying Fund Disclosure (Henderson Horizon Fund - Asian Dividend Income Fund) I Allocation by Country As at 30 Jun 2010 Country % of NAV MV S$ mil China Hong Kong Singapore Australia Taiwan Korea Thailand Indonesia Others* Total *Includes other countries and net assets and liabilities. II Allocation by Industry As at 30 Jun 2010 Industry % of NAV MV S$ mil Financials Information Technology Health Care Energy Industrials Consumer Discretionary Energy Others* Total *Includes other industries and net assets and liabilities. III Allocation of Debt Securities by Credit Ratings IV Top Ten Holdings of Underlying Fund As at 30 Jun 2010 % of NAV MV S$ mil Industrial and Commercial Bank of China Ltd Bank of China Ltd Kasikornbank Frgn Fraser & Neave Ltd Telstra Corp. Ltd KT Corp. ADS BOC Hong Kong Holdings Ltd SK Telecom Co. Ltd. ADS Telekomunikasi Indonesia Advanced Info Service Public Co. Ltd Top Ten Holdings of Underlying Fund As at 30 Jun 2009 % of NAV MV S$ mil Bank Of China Ltd China Mobile Industrial and Commercial Bank Of China Ltd DBS Bank Kasikornbank Frgn Singapore Technologies Engineering Ltd Taiwan Mobile Bangkok Bank Frgn The Link Real Estate Investment Trust QBE Insurance Group Ltd

25 Investment-linked Fund Report: HSBC-Asian Dividend Equity Fund V Exposure to Derivatives % of NAV 11.63% Market value (S$) 212,732 Realised Gains / (Losses) (S$) 508,746 Unrealised Gains / (Losses) (S$) - VI Borrowings of Net Asset Value D) Other Disclosure Items I Expense/Turnover Ratios HSBC-Link Asian Dividend Equity Fund Underlying Fund As at 30-Jun-10 As at 30-Jun-09 As at 30-Jun-10 As at 30-Jun-09 Expense Ratio (Annualised) 2.36% 2.36% 2.06% 2.06% Turnover Ratio (Annualised) 20.11% 35.87% 55.18% 64.55% II Related-Party Transactions III Material Information IV Soft Dollar Commission Arrangement E) Financial Statements Refer to page 102. For more information, please contact your financial planner, call our Customer Service Hotline on , or visit our web site at 24

26 Investment-linked Fund Report: HSBC-Link China Balanced Fund HSBC-Link China Balanced Fund Fund Objective HSBC-Link China Balanced Fund 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 Fund invests substantially all or all its assets primarily 70% into the DWS China Equity Fund and 30% into the DWS Lion Bond Fund. DWS China Equity Fund FUND FACTS Underlying Fund 70%: DWS China Equity Fund 30%: DWS Lion Bond Fund Fund Manager Deutsche Asset Management (Asia) Ltd Launch Date 26 May 2008 CPFIS/SRS SRS CPFIS Risk Classification As at 30 Jun 2010 Offer Price S$ Bid Price S$ Fund Size S$ 0.38 mil Units in Issue 0.40 mil Investment and Market Review ^ China shares were very volatile during the period. While market continued the rally in the second half of 2009 on global recovery prospects, worries on rising inflation in China as well as subsequent tightening policies imposed by Chinese government had triggered profit-taking in late 2009 and early Moreover, European sovereign credit crisis also raised overall risk premium for equity markets, leading to substantial outflows from emerging markets in the month of April and May. Cyclical stocks underperformed the most, especially materials, followed by property stocks, as property transaction volume shrank significantly after the government announced austerity measures to cool down property prices. In the mean time, consumer stocks outperformed the most during the period, partly due to inflationary expectation, and partly due to the government s favorable policies to support domestic consumption. Healthcare sector also outperformed strongly, with its robust growth outlook fuelled by the nation-wide reform of medical system which intended to allow more people to enjoy basic medical services. Our overweight in consumer and healthcare sectors contributed positively to performance. Market Outlook and Investment Strategy ^ Although sequentially China will see slower growth in the second half of the year, we are confident that overall GDP growth will still be robust, exceeding 8%. We expect more price cuts by property developers in the second half of the year, which should help boost transaction volume, and subsequently stimulating property-related consumption. Moreover, we are likely to see much less tightening policy in the second half of the year. Although market sentiment could be subdued in the near term with continued uncertainty in global markets, we believe the anticipation of more appreciation of RMB will continue to attract global fund flows to China shares. Going forward, we will continue to underweight materials, shipping, and export-related stocks given the uncertainty in global economic growth, while focusing our investment on domestic consumption stories (e.g. consumer, 3G-related). DWS Lion Bond Fund *Please refer to HSBC-Link Singapore Bond Fund on page 89 for the Investment and Market Review and the Market Outlook and Investment Strategy. ^ Source: Deutsche Asset Management (Asia) Ltd A) Fund Performance 3-Mth (%) 6-Mth (%) 1-Year (%) 3-Year (%) 5-Year (%) 10-Year (%) Since Inception (%) HSBC-Link China Balanced Fund (4.61) (7.64) Benchmark* (3.19) (4.38) 5.51 (3.24) *70% MSCI China Index and 30% 6-month Singapore Inter-bank Offer Rate (SIBOR) minus 12.5 basis points 25