Investment-linked policy sub-funds. Annual report for the year ended 30 June 2014.

Transcription

1 Investment-linked policy sub-funds Annual report for the year ended 30 June MICA No: MCI (P) 076/09/2014

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 Independent Auditors Report to HSBC Insurance (Singapore) Pte. Limited 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 The objective of the Underlying Sub- is to invest for total return primarily in a diversified portfolio of Investment Grade and Non- 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. 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 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 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 and HSBC Insurance Ethical Global Equity. 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 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 and Transfer Agent from January 2014 i) HSBC Portfolios World Selection 1 ii) HSBC Portfolios World Selection 3 iii) HSBC Portfolios World Selection 5 Transfer Agency services have been transferred from RBC Investor Services Bank S.A to HSBC Securities Services (Luxembourg) S.A. with effect from 24 March 2014 i) HSBC Amanah s HSBC Amanah Global Equity* 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 3

5 Investment-linked Report: Updates * HSBC Amanah s HSBC Amanah Global Equity is no longer available from 18 November Changes to HSBC 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 has been 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. Changes to HSBC Insurance World Selection s HSBC Global Asset Management (Singapore) Limited has informed us of the following changes to HSBC Portfolios World Selection s, which HSBC Insurance World Selection 1, HSBC Insurance World Selection 3, HSBC Insurance World Selection 5 invest into. a) Amendments to the investment objective, additional information on the investment objective, policy, the use of financial derivative instruments, risk profile and investor profile of the Underlying Sub-s 5

7 Investment-linked Report: Updates The Board of Directors of HSBC Portfolios (the Board ) has decided to amend the investment objective of the sub-funds of HSBC Portfolios from 10 June 2014 to (i) enable investments to be made in fixed income and equity securities directly into the markets in addition to investments in collective investment schemes and (ii) reflect that the sub-funds of HSBC Portfolios primary currency exposure will be to the US dollar. Non US dollar investments may not necessarily be hedged to the US dollar and that portion of a sub-fund of HSBC Portfolios may therefore be subjected to currency risk. These changes, as well as additional information on the investment objective, policy, the use of financial derivative instruments, risk profile and investor profile for each of the sub-funds of HSBC Portfolios, will be disclosed in the HSBC Portfolios Prospectus. b) Change of investment vehicles On the recommendation of HSBC Global Asset Management (UK) Limited, (the Investment Adviser ), the Board has decided that the sub-funds of HSBC Portfolios, should be invested in more cost effective investment vehicles. These vehicles may include both passively and actively managed funds as well as direct investment in fixed income and equity securities. As a result, investments in third party investment vehicles will be reduced and there will be an increase in investment in funds and/or direct investment directly managed by the Investment Adviser and related parties. Asset allocation remains the main driver for performance and there will be no change to the sub funds of HSBC Portfolios risk profile. The implementation of these changes started on 10 June 2014 and has been completed on 31 July c) Amendment to the Charging Structure Currently, the Underlying Sub-s are being charged a fee which is fixed at an annual rate of 0.25% of the net asset value to cover operating, administrative and servicing expenses. The Board has decided to amend the HSBC Portfolios fee structure so as to ensure that the sub-funds of HSBC Portfolios will pay the actual expenses incurred by them. There will be no increase to the fee currently charged. As of 10 June 2014, the operation, administrative and servicing expenses borne by the subfunds of HSBC Portfolios will be capped to 0.25% per annum of the net asset value on a rolling basis of the share class. Where such actual expenses exceed the cap, no additional amount over the level of the cap will be borne by the investors. The actual fees paid by the sub-funds of HSBC Portfolios will be disclosed in the semi-annual and annual reports of the HSBC Portfolios. There has been no change to the Management Fee or any other charges. d) Introduction of a Pricing Adjustment With effect from 10 June 2014, the Board has decided to introduce a pricing adjustment policy. When investors buy or sell shares in a sub-fund of HSBC Portfolios the Investment Adviser may need to buy or sell the underlying investments. Without an adjustment in the net asset value per share to take account of this, all investors in the sub-fund of HSBC Portfolios must pay the associated costs of buying and selling these underlying investments. These costs can include, but are not limited to, bid-offer spreads, brokerage and taxes on transactions. The Board has therefore decided to introduce in the HSBC Portfolios Prospectus the powers to adjust, when in the interest of the investors, the net asset value per share by up to a 6

8 Investment-linked Report: Updates maximum of 2% when the net capital inflows or outflows exceed a predefined threshold agreed by The Board. The reason for this is to protect investors in a sub-fund of HSBC Portfolios from the transaction costs that are incurred by the sub-fund of HSBC Portfolios as a result of subscriptions or redemptions. This pricing adjustment is commonly referred to as semi-swinging pricing. Semi-swinging pricing is the proposed method to deal with this potential dilution in net asset value of the subfunds of HSBC Portfolios. With the application of the semi-swinging price, the effect on the net asset value of the sub-fund of HSBC Portfolios by investors buying or selling shares in it will be mitigated. 9. Change in benchmark name of Underlying Sub- of HSBC Insurance Ethical Global Sukuk in June 2014 Templeton Asset Management Limited has informed us on a change in benchmark name for Franklin Templeton Global Sukuk from "Dow Jones Citigroup Sukuk Index" to "Dow Jones Sukuk Index" in June This change was made by the index provider and there is no significant impact to unitholders. As HSBC Insurance Ethical Global Sukuk feeds 100% into Franklin Templeton Global Sukuk, the benchmark name of HSBC Insurance Ethical Global Sukuk will also be changed to Dow Jones Sukuk Index. 10. 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 Change of Registrar and Transfer Agent of the Underlying Sub-s of HSBC Insurance Asian Dividend Equity and HSBC Insurance Premium Property Equity with effect from 13 October 2014 Henderson Global Investors (Singapore) Limited informed us of the changes for the following Underlying Sub-s: Underlying Sub- i) Henderson Horizon Asian Dividend Income ii) Henderson Horizon Global Property Equities iii) Henderson Horizon Pan European Property Equities iv) Henderson Horizon Asia Pacific Property Equities Changes RBC Investor Services Bank SA ( RBC ) will be appointed as Registrar and Transfer Agent of the Henderson Horizon SICAV (umbrella funds) in replacement of BNP Paribas Securities Services Luxembourg Branch, with effect from 13 October

9 Investment-linked Report: Updates 12. Change in names of Underlying Sub-s of HSBC Insurance Asia Equity, HSBC Insurance China Balanced, HSBC Insurance Premium Balanced, HSBC Insurance Singapore Balanced and HSBC Insurance Singapore Bond with effect from 28 November 2014 HSBC Insurance ILP Subfund i) HSBC Insurance Asia Equity ii) HSBC Insurance China Balanced iii) iv) HSBC Insurance Premium Balanced HSBC Insurance Singapore Balanced v) HSBC Insurance Singapore Bond Underlying Sub- current name DWS Asia Premier Trust DWS Premier Investment DWS China Equity DWS Lion Bond DWS Premier Select Trust DWS Premier Investment DWS Singapore Equity DWS Lion Bond DWS Lion Bond Underlying Sub- new name Deutsche Asia Premier Trust Deutsche Premier Investment s Deutsche China Equity Deutsche Lion Bond Deutsche Premier Select Trust Deutsche Premier Investment s Deutsche Singapore Equity Deutsche Lion Bond Deutsche Lion Bond 8

10 Investment-linked Report: Performance Summary Performance Summary Cumulative Annualised 3-Mth 6-Mth 1-Year 3-Year 3-Year HSBC Insurance Asia Balanced 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 (0.34) (3.25) Benchmark * 3.37 (1.18) HSBC Insurance China Equity 1.95 (2.64) Benchmark * 4.60 (1.92) HSBC Insurance Climate Change Equity (1.50) (0.33) Benchmark * HSBC Insurance Emerging Europe Equity 7.81 (4.63) 7.03 (1.74) (0.58) Benchmark * 6.22 (0.91) 5.84 (12.51) (4.36) HSBC Insurance Emerging Markets Equity (0.36) (0.12) Benchmark * HSBC Insurance Ethical Global Equity Benchmark * HSBC Insurance Ethical Global Sukuk Benchmark * HSBC Insurance Europe Equity Benchmark * HSBC Insurance Global Bond Benchmark * HSBC Insurance Global Emerging Markets Bond Benchmark * HSBC Insurance Global Equity Benchmark * HSBC Insurance India Equity Benchmark *

11 Investment-linked Report: Performance Summary Cumulative Annualised 3-Mth 6-Mth 1-Year 3-Year 3-Year HSBC Insurance Japan Equity 6.60 (1.00) Benchmark * HSBC Insurance Pacific Equity Benchmark * HSBC Insurance Premium Balanced Benchmark * HSBC Insurance Premium Property Equity Benchmark * HSBC Insurance SGD Reserve (0.01) (0.02) (0.03) 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 (10.26) (11.40) (0.78) The has no benchmark * Refer to the respective funds for the benchmark used. 10

12 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. 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 11

13 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 Company Pte Ltd As at 30 Jun 2014 Offer Price S$ Bid Price S$ Size S$ 2.71 mil Units in Issue 3.27 mil The performance of equity markets this month has been predictably dull, and consistent with a World Cup filled, summer lull. The MSCI Asia ex Japan Index has gone nowhere, except in markets where there have been domestic or idiosyncratic drivers. India continues its upsurge post the massive Modi victory. While it is early days, the Modi government is executing well, and its initial policy actions are encouraging. The next important milestone will be the budget which when released in July, will set the tone for the market in the second half of the year. Taiwan is the only North Asian market to deliver positive return so far this year, while being the largest beneficiary of foreign investor flows. Emerging trends in wearable computing, internet of things, cloud etc. provide convenient reasons to invest, but the simple explanation is its leveraged export exposure to Developed Markets, plus a low base for comparison which have driven earnings surprises and multiple expansion this year. The upcoming new Apple product launches are also raising expectations, as tech companies enter the seasonally stronger second half of the year. Market Outlook and Investment Strategy ^ Although we express some caution of potential volatility ahead, we continue to believe the second half and indeed the whole of 2014 will be offered a positive return. China has been a major dampener for Asia so far this year, but it is likely to perform better in the second half. Premier Li Keqiang recently committed to a 7.5% GDP growth for Fixed asset investments have begun to pick up in recent months, while the most recent Purchasing Managers Index is ahead of expectations. The recent cuts in Required Reserve Ratios for selected banks are notable for the inconsequential number of non-selected banks. This is the start of looser monetary policy, and Chinese equities should have a less challenging time in the second half. Legg Mason Western Asset Global Bond Trust *Please refer to HSBC Insurance Global Bond on page 56 for the Investment and Market Review and the Market outlook and Investment Strategy. ^ Source: Western Asset Management Company Pte Ltd. 12

14 Investment-linked Report: HSBC Insurance Asia Balanced A) Performance I Cumulative Total Returns Since Inception 3-Mth 6-Mth 1-Year 3-Year 5-Year 10-Year HSBC Insurance Asia Balanced (12.81) Benchmark* II Average Annual Compounded Returns 3-Year 5-Year 10-Year Since Inception HSBC Insurance Asia Balanced (2.05) Benchmark* *70% MSCI AC Asia ex Japan + 30% Citigroup World Government Bond ex Japan Index (Hedged to S$) B) Disclosure I Allocation by Asset Class As at 30 Jun 2014 Asset Class % of NAV MV S$ mil Legg Mason Western Asset Asian Enterprise Trust Legg Mason Western Asset Global Bond Trust Total II Movement (01 Jul Jun 2014) S$ Subscription 715,950 Redemption 578,278 C) Underlying Disclosure (Legg Mason Western Asset Asian Enterprise Trust) I Allocation by Country As at 30 Jun 2014 Country % of NAV MV S$ mil China Singapore South Korea Taiwan Hong Kong India Philippines Malaysia Indonesia Others* Cash Total *Includes other countries and net assets and liabilities. 13

15 Investment-linked Report: HSBC Insurance Asia Balanced II Allocation by Industry As at 30 Jun 2014 Industry % of NAV MV S$ mil Consumer Information Technology Industrials Financials Real Estate Energy Utilities Construction/Materials Miscellaneous Healthcare Telecommunciation Cash Total III Allocation of Debt Securities by Credit Ratings As at 30 Jun 2014 IV Top Ten Holdings of Underlying As at 30 Jun 2014 % of NAV S$ mil Ezion Holdings Ltd Samsung Electronics Co Ltd Sun Hung Kai Properties Ltd Beijing Enterprises Water Group Ltd Bharat Forge Limited TPK Holding Co Ltd SK Hynix Inc Salcon Concepcion Industrial Corporation Galaxy Entertainment Group Top Ten Holdings of Underlying As at 30 Jun 2013 % of NAV S$ mil Ezion Holdings Ltd Shin Corporation PCL China Construction Bank H Shares Galaxy Entertainment Group Ltd CNOOC Ltd Osim International Ltd United Microelectronics United Spirits Ltd Samsung Electronics Co Ltd Hermes Microvision Inc V Exposure to Derivatives As at 30 Jun 2014 VI Borrowings of Net Asset Value As at 30 Jun 2014 *HBSC Insurance Asian Balanced invests 30% into Legg Mason Western Asset Global Bond Trust. Please refer to HSBC Insurance Global Bond on page 56 for the underlying fund disclosure on Legg Mason Western Asset Global Bond Trust under Section C. 14

16 Investment-linked Report: HSBC Insurance Asia Balanced D) Other Disclosure Items I Expense/Turnover Ratio Expense Ratio Turnover Ratio As at 30-Jun-14 As at 30-Jun-13 As at 30-Jun-14 As at 30-Jun-13 Underlying Level Legg Mason Western Asset Asian Enterprise Trust 1.74% 1.75% % % Legg Mason Western Asset Global Bond Trust 0.89% 0.87% % % ILP Sub- Level HSBC Insurance Asia Balanced 1.75% 1.75% 23.34% 26.79% II Related-Party Transactions III Material Information that will adversely impact the valuation of the ILP sub-fund 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. 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 commissions/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 105. For more information, please contact your financial consultant, call our Customer Service Hotline on , or visit our web site at 15

17 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 ^ Asian markets climbed a wall of worries in the last 12 months. Investor s mood dampened in ASEAN markets on fear of QE tapering while FUND FACTS Underlying DWS Asia Premier Trust Manager Deutsche Asset Management (Asia) Ltd Launch Date 31 Jan 1994 CPFIS/SRS* SRS CPFIS Risk Classification As at 30 Jun 2014 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. investors flight to safety saw rotational interest back to North Asia. Markets rallied but faltered towards the end of China began 2014 as the worst performing market on concerns of wealth management products. However, such negative sentiment quickly reversed after China cut reserve requirement ratio which led to a rally in the banking sector. Sectors that did well in 2013 started to give back their gains like the Macau gaming sector. Taiwan rallied led by the technology sector on the back of better Apple orders. Korea was impacted by the won appreciation but still rode high on tourism-related plays. Market Outlook and Investment Strategy ^ Markets took a turn with preference for what we termed old economy stocks. Sectors like financials and energy in China moved higher in recent months. However, we believe that growth sectors like internet and healthcare will rebound given their strong earnings growth profiles. We are cautiously optimistic that given the very little expectation on the Chinese economy, new economy stocks with more certainty of earnings growth may see a better 2H Taiwan has had a good run led by the technology sector amid better-than-expected demand. We believe there may still be some legs to this rally as the market anticipates iphone 6. For Korea, we remain optimistic on the trend of tourism, particularly as we enter the peak season of Chinese outbound tourists. ^ Source: Deutsche Asset Management (Asia) Ltd. A) Performance I Cumulative Total Returns Since Inception 3-Mth 6-Mth 1-Year 3-Year 5-Year 10-Year HSBC Insurance Asia Equity Benchmark* II Average Annual Compounded Returns 3-Year 5-Year Since 10-Year Inception HSBC Insurance Asia Equity Benchmark* *MSCI AC Far East ex Japan (TR) 16

18 Investment-linked Report: HSBC Insurance Asia Equity B) Disclosure I Allocation by Asset Class As at 30 Jun 2014 Asset Class % of NAV MV S$ mil DWS Asia Premier Trust Other assets Other liabilities (0.25) (0.20) Total II Movement (01 Jul Jun 2014) S$ Subscription 15,490,677 Redemption 11,590,320 C) Underlying Disclosure (DWS Asia Premier Trust) I Allocation by Country As at 30 Jun 2014 Country % of NAV MV S$ mil South Korea Cayman Islands Taiwan Hong Kong China Bermuda Malaysia Singapore Philippines Others* Total *Includes other countries and net assets and liabilities. II Allocation by Industry As at 30 Jun 2014 Industry % of NAV MV S$ mil Retail Semiconductors Electrical/Electronics Oil & Gas Real Estate Consumer Media Commercial Services Autos & Trucks Entertainment Banks Others* Total *Includes other industries and net assets and liabilities. III Allocation of Debt Securities by Credit Ratings As at 30 Jun 2014 IV Top Ten Holdings of Underlying As at 30 Jun 2014 % of NAV MV S$ mil Taiwan Semiconductor Manufacturing Corporation Ltd Naver Corporation Samsung Electronics Corporation Ltd China Gas Holdings Ltd Hotel Shilla Company Ltd China Minsheng Banking Company Ltd H Shares Consun Pharmaceutical Group Goldpac Group Ltd MediaTek Incorporation Hong Kong Exchanges and Clearing Ltd

19 Investment-linked Report: HSBC Insurance Asia Equity Top Ten Holdings of Underlying As at 30 Jun 2013 % of NAV MV S$ mil Samsung Electronics Corporation Ltd Taiwan Semiconductor Manufacturing Corporation Ltd Jardine Matheson Holdings Ltd Industrial & Commercial Bank of China H Shares UOL Group Ltd Comfortdelgro Corporation Ltd Tencent Holdings Ltd HTC Corporation Electricity Generating PCL Hyundai Motor Corporation Ltd V Exposure to Derivatives As at 30 Jun 2014 % of NAV - Market Value (S$) - Realised Gains / (Losses) (S$) (90,989) Unrealised Gains / (Losses) (S$) - VI Borrowings of Net Asset Value As at 30 Jun 2014 D) Other Disclosure Items I Expense/Turnover Ratios HSBC Insurance Asia Equity Underlying As at 30-Jun-14 As at 30-Jun-13 As at 30-Jun-14 As at 30-Jun-13 Expense Ratio 1.81% 1.81% 1.52% 1.52% Turnover Ratio 15.32% 12.99% % % II Related-Party Transactions III Material Information that will adversely impact the valuation of the ILP sub-fund 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 105. For more information, please contact your financial consultant, call our Customer Service Hotline on , or visit our web site at 18

20 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 ^ Tapering of quantitative easing had been started by the Feredal Reserve in January This process was mainly felt in the bond markets where yields rose significantly in 4Q 2013, while the yields came down FUND FACTS Underlying Sub- Manager HSBC Global Investment Managed Solutions - Asia Focused Income HSBC Global Asset Management (Singapore) Ltd Launch Date 28 Jan 2013 CPFIS/SRS SRS CPFIS Risk Classification As at 30 Jun 2014 Offer Price S$ Bid Price S$ Size S$ 1.37 mil Units in Issue 1.41 mil again in the 1H There were likely to be multiple causes of the move. The weak performance of the US economy in Q1 has combined with a reassessment of the likely level of interest rates over the long term to justify a lower current yield level, and inflation worldwide remains at extremely low levels. Market Outlook and Investment Strategy ^ Although low government bond yields can be explained by the low level of inflation and the fact that interest rates will not rise to the levels seen in previous cycles, current yields offer little value. If the global economy picks up momentum as expected in the coming months it is highly likely that yields will rise, causing bond prices to fall. Corporate bonds offer some protection against rising government bond yields but will still be affected if yields on government bonds rise sharply. Equity markets will derive support from an improved growth background but, having had such a strong run in recent years, may be vulnerable in an environment where bond yields are rising sharply. We have accumulated some cash in portfolios in the belief that bond yields are too low for the economic background and there will be better opportunities to buy in the months ahead. ^ Source : HSBC Global Asset Management (Singapore) Ltd A) Performance I Cumulative Total Returns HSBC Insurance Asia Focused Income II Average Annual Compounded Returns HSBC Insurance Asia Focused Income 3-Mth 6-Mth 1-Year 3-Year 5-Year Since 10-Year Inception N.A Year 5-Year Since 10-Year Inception N.A 1.86 This fund has no benchmark. B) Disclosure I Allocation by Asset Class As at 30 Jun 2014 Asset Class % of NAV MV S$ mil HSBC GIF Managed Solutions - Asia Focused Income Total

21 Investment-linked Report: HSBC Insurance Asia Focused Income II Movement (01 Jul Jun 2014) S$ Subscription 407,006 Redemption 530,674 C) Underlying Sub- Disclosure (HSBC GIF Managed Solutions - Asia Focused Income ) I Allocation by Country As at 30 Jun 2014 Country % of NAV MV S$ mil China Hong Kong Global Indonesia South Korea India Australia Singapore Others* Cash Total *Includes other countries. II Allocation by Industry As at 30 Jun 2014 Industry % of NAV MV S$ mil Asian Investment Grade Bond Asian High Dividend Asian HighYield Bond Global Emerging Market Local Debt Asian Local Currency Bond Cash & Others* Total *Includes other industries. III Allocation of Debt Securities by Credit Ratings As at 30 Jun 2014 Rating % of NAV MV S$ mil AAA AA AA A A A BBB BBB Non Rated Others* Total *Includes lower rated debt securities. IV Top Ten Holdings of Underlying Sub- As at 30 Jun 2014 % of NAV S$ mil HSBC Global Investment s - GEM Local Debt - ZD Class (USD) COSL Finance BVI Ltd 3.25% 06/09/ Doosan Infracore Co Ltd 3.25% 05/10/ Taiwan Semiconductor Mfg(2330) (RMT) Common NTD 10 (Barra) ICICI Bank Ltd/Dubai 4.7% 21/02/18 (US45112FAC05) Citic Bank Intl Ltd 3.875% 28/09/ Bank Negara Indonesia Lo 4.125% 27/04/ Nan Fung Treasury Ltd 4.5% 20/09/ SSG Resources Ltd 4.25% 04/10/22 (MTM) Bank Rakyat Indonesia 2.95% 28/03/

22 Investment-linked Report: HSBC Insurance Asia Focused Income Top Ten Holdings of Underlying Sub- As at 30 Jun 2013 % of NAV S$ mil HSBC Global Investment s - GEM Local Debt - ZD Class (USD) Korea Treasury Bond % 10/03/ Malaysian Government % 31/03/ Korea Treasury Bond % 10/09/ Singapore Government % 01/06/ Korea Treasury Bond % 10/06/ Philippines Government % 31/01/ Pertamina PT % 03/05/ Taiwan Semiconductor Manufacturing(2330)(RMT) Common NTD 10 (Barra) Singapore Government % 01/09/ V Exposure to Derivatives As at 30 Jun 2014 Derivatives are used for hedging purpose VI Borrowings of Net Asset Value As at 30 Jun 2014 D) Other Disclosure Items I Expense/Turnover Ratios HSBC Insurance Asia Focused Income Underlying Sub- As at 30-Jun-14 As at 30-Jun-13 As at 30-Jun-14 As at 30-Jun-13 Expense Ratio 1.69% 1.63% 1.69% 1.63% Turnover Ratio 27.11% 4.16% 49.44% 35.28% II Related-Party Transactions The HSBC-Insurance Asia Focused Income invests S$1.37 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 30 June 2014 amounts to S$10,027. III Material Information that will adversely impact the valuation of the ILP sub-fund IV Soft Dollar Commission Arrangement E) Financial Statements Refer to page 105. For more information, please contact your financial consultant, call our Customer Service Hotline on , or visit our web site at 21

23 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 Western Asset Asian Bond Trust. Investment and Market Review ^ The J.P. Morgan Asia Credit Index (JACI) was up 0.29% month-over-month (MoM), bringing year-todate (YTD) returns to 5.86%. The best performing FUND FACTS Underlying Legg Mason Western Asset Asian Bond Trust Manager Western Asset Management Company Pte Ltd Launch Date 6 Oct 2008 CPFIS/SRS SRS CPFIS Risk Classification As at 30 Jun 2014 Offer Price S$ Bid Price S$ Size S$ mil Units in Issue mil sector was non-investment-grade corporates, which returned 1.65% MoM, while the worst performing sector was investment-grade sovereigns, which saw losses of 1.07% MoM. Asian central banks have been a key anchor of stability, with more shifting towards a hawkish tone while keeping their powder dry to maintain the ability to respond to exogenous shocks. On the foreign-exchange side of the house, they have maintained a commitment to allow currencies to move with broader markets, intervening to smooth volatility at times and generally opting to keep foreign exchange reserves high. Market Outlook and Investment Strategy ^ Our long-term strategy has not changed, Month on Month, 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. But once the market absorbs the shift, solid fundamentals will again take hold, enabling us to ride out short bouts of volatility. Short-term technicals continue to point toward steeper curves in the longer term, though low inflation and strong fiscal positions should keep the belly of most government curves well anchored. We maintain our overweight in Asia, but maintain a nimble approach in the event that quick shifts require a timely response. In terms of duration, our overweights continue to remain in Singapore and Korea while maintaining tactical over weights in India and Indonesia. ^ Source : Western Asset Management Company Pte Ltd A) Performance I Cumulative Total Returns Since Inception 3-Mth 6-Mth 1-Year 3-Year 5-Year 10-Year HSBC Insurance Asian Bond Benchmark* II Average Annual Compounded Returns 3-Year 5-Year Since 10-Year Inception HSBC Insurance Asian Bond Benchmark* *US$ 3-month LIBOR (hedged to S$) 22

24 Investment-linked Report: HSBC Insurance Asian Bond B) Disclosure I Allocation by Asset Class As at 30 Jun 2014 Asset Class % of NAV MV S$ mil Legg Mason Western Asset Asian Bond Trust Total II Movement (01 Jul Jun 2014) S$ Subscription 8,173,262 Redemption 5,214,948 C) Underlying Disclosure (Legg Mason Western Asset Asian Bond Trust) I Allocation by Country As at 30 Jun 2014 Country % of NAV MV S$ mil Singapore South Korea Hong Kong China India Malaysia Indonesia Philippines Others* Cash Total *Includes other countries and net assets and liabilities. II Allocation by Industry As at 30 Jun 2014 Industry % of NAV MV S$ mil Financials Real Estate Government Miscellaneous Telecommunication Energy Oil and Gas Utilities Diversified Resources Internet Services Others* Cash Total *Includes other industries and net assets and liabilities. 23

25 Investment-linked Report: HSBC Insurance Asian Bond III Allocation of Debt Securities by Credit Ratings As at 30 Jun 2014 Rating % of NAV MV S$ mil A A A A A A AA Aa Aa B B B NR Others* Cash Total *Includes lower rated debt securities and net assets and liabilities. IV Top Ten Holdings of Underlying As at 30 Jun 2014 % 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/ Korean Treasury Bond Sr 1803 (Reg) 2.75% (Reg S) 18/09/ DBS Banks Ltd (Reg S) (Reg) FRN 15/07/ Oversea-Chinese Banking Corp Ltd (Reg S) 3.15% 11/03/ SK Broadband Co Ltd Ser (Reg S) 2.875% 29/10/ Oversea-Chinese Banking4% Perp Bank of East Asia Ltd Ser EMTN Var 13/09/ Hyflux Ltd (Reg S) Var Perp DBS Bank Ltd Ser MTN (Reg S) (Br) Var 14/02/ Top Ten Holdings of Underlying As at 30 Jun 2013 % of NAV S$ mil Korea Monetary Stab Bond 1408 (Reg) 2.82% 02/08/ Axiata SPV1 Labuan Ltd Ser EMTN 3.75% (Reg S) 18/09/ Galaxy Entertainment Group Ser HK 4.625% 16/12/ DBS Bank Ltd (Reg S) (Reg) FRN 15/07/ GLL IHT Pte Ltd Set MTN (Reg S) (Br) 4.1% 13/05/ Oversea-Chinese Banking 4% Perp Sarawak International (Reg) 5.5% 03/08/ MIE Holdings Corp EMTN (Reg S) (Reg) 6.875% 06/02/ JGSH Philippines Ltd (Reg S) 4.375% 23/1/ Bank of East Asia Ltd Ser EMTN Var 13/09/ V Exposure to Derivatives As at 30 Jun 2014 % of NAV 0.42% Market value (S$) 208,313 Realised Gains / (Losses) (S$) - Unrealised Gains / (Losses) (S$) 208,313 VI Borrowings of Net Asset Value As at 30 Jun 2014 D) Other Disclosure Items I Expense/Turnover Ratios HSBC Insurance Asian Bond Underlying As at 30-Jun-14 As at 30-Jun-13 As at 30-Jun-14 As at 30-Jun-13 Expense Ratio 1.29% 1.26% 1.25% 1.23% Turnover Ratio 24.74% 25.74% 49.81% 67.63% 24