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CAYMAN NATIONAL PENSION FUND

FINANCIAL STATEMENTS

SEPTEMBER 30, 2013


FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

CONTENTS

Page

Independent Auditor’s Report 1

Statement of Net Assets Available to Participants for Benefits 2

Statement of Comprehensive Income 3

Statement of Changes in Net Assets Available to Participants for Benefits 4

Statement of Cash Flows 5

Notes to Financial Statements 6 - 25

PricewaterhouseCoopers , 5th Floor Strathvale House, P.O. Box 258, Grand Cayman, KY1- 1104, Cayman IslandsT: +1 (345) 949 7000, F: +1 (345) 949 7352, www.pwc.com/ky

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Independent auditor’s report

To the Board of Trusteesof Cayman National Pension Fund

Report on the financial statementsWe have audited the accompanying financial statements of Cayman National Pension Fund (the“Plan”), which comprise the statement of net assets available to participants for benefits as atSeptember 30, 2013 and the statements of comprehensive income, changes in net assets available toparticipants for benefits and cash flows for the year then ended, and notes, comprising a summary ofsignificant accounting policies and other explanatory information.

Management’s responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of these financial statements inaccordance with International Financial Reporting Standards, and for such internal control asmanagement determines is necessary to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with International Standards on Auditing. Those standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial positionof the Plan as at September 30, 2013, and its financial performance and its cash flows for the yearthen ended in accordance with International Financial Reporting Standards.

March 3, 2014

The accompanying notes form an integral part of these financial statements.

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STATEMENT OF NET ASSETS AVAILABLE TO PARTICIPANTS FOR BENEFITS

AS AT SEPTEMBER 30, 2013

(Expressed in Cayman Islands dollars)

Year endedSeptember 30,

2013 2012

ASSETSCash and cash equivalents (Notes 3 and 9) 531,301 463,772Due from broker (Note 9) 18,038 744,029Financial assets at fair value through profit or loss (Notes 4 and 9) 39,275,110 33,326,229Loans and receivables (Notes 4 and 5) 2,155,233 2,137,733Dividend receivables 47,602 41,332

Total assets $42,027,284 $36,713,095

LIABILITIESAccounts payable and accrued expenses (Note 6) 47,222 69,136Prepaid contributions 282,916 280,585Redemptions payable 184,177 99,749

Liabilities 514,315 449,470

EquityNet assets available to participants for benefits (Note 8) 41,512,969 36,263,625

Total liabilities and equity $42,027,284 $36,713,095

Net asset value per unit based on22,712,942.89 (2012: 21,727,047.08) units outstanding (Note 8) $ 1.828 $ 1.669

Approved for issuance on behalf of Cayman National Fund Services Ltd. by:

Susan Levy & Jill Anderson..................................................March 3, 2014

Approved for issuance on behalf of the Cayman National Pension Fund’s Board of Trustees by:

Ian Phillips..................................................March 3, 2014

Stuart Dack..................................................March 3, 2014


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STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED SEPTEMBER 30, 2013



2013 2012

RevenueInterest income 107,941 315,943Dividend income 548,214 508,803Net realised gain/(losses) on investments 144,729 ( 44,248)Net realised losses on foreign currency transactions ( 22,715) ( 26)Net change in unrealised appreciation on investments 3,224,308 3,949,267

Total revenue 4,002,477 4,729,739

ExpensesAdministrator fees (Note 7) 217,725 150,497Audit fees 32,950 32,595Government fees 33,360 45,000Trustee fees 2,250 2,250Sundry 35,092 38,363

Total expenses 321,377 268,705

Withholding tax on dividends 134,891 139,213

Net increase in net assets available to participants for benefits/netcomprehensive income $ 3,546,209 $ 4,321,821


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STATEMENT OF CHANGES IN NET ASSETS AVAILABLE TO PARTICIPANTS FOR BENEFITS




2013 2012

Net increase in net assets available to participants for benefits/netcomprehensive income 3,546,209 4,321,821

Contributions and transfers inEmployers - contributions and transfers in 1,890,906 1,629,189Employees - contributions and transfers in 1,684,794 1,630,614

Total contributions and transfers in 3,575,700 3,259,803

Benefits paid to holders of units and transfers out ( 1,872,565) ( 2,038,354)

Net increase in net assets available to participants for benefits 5,249,344 5,543,270

Net assets available to participants for benefits, beginning of year 36,263,625 30,720,355

Net assets available to participants for benefits, end of year $41,512,969 $36,263,625


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STATEMENT OF CASH FLOWS




2013 2012

Cash flows from operating activitiesNet increase in net assets available to participants for benefits/netcomprehensive income 3,546,209 4,321,821Adjustments to reconcile net increase/(decrease) in net assets from operations availableto participants for benefits to net cash provided by/(used in) operating activities:

Amortization of bond premium 263,159 ( 79,576)Net realised (gains)/losses on financial assets and liabilities at fair valuethrough profit and loss ( 144,729) 44,248

Net change in unrealised appreciation on financial assets and liabilitiesat fair value through profit and loss ( 3,224,308) ( 3,949,267)

Decrease in due from broker 725,991 132,131Decrease/(increase) in loans and receivables ( 17,500) 272,294Decrease in interest receivable 1,817 48,977Increase in dividend receivable ( 6,270) ( 41,332)(Decrease)/increase in accounts payable and accrued expenses ( 21,914) 40,209

Net cash provided by operating activities 1,122,455 789,505

Cash flows from investing activitiesPurchase of investments ( 9,593,496) ( 9,989,426)Proceeds from sale of investments 6,748,676 8,215,050

Net cash used in investing activities ( 2,844,820) ( 1,774,376)

Cash flows from financing activitiesEmployee contributions 1,685,960 1,640,184Employer contributions 1,892,072 1,641,610Benefits paid to participants and transfers out ( 1,788,138) ( 2,044,021)

Net cash provided by financing activities 1,789,894 1,237,773

Net increase in cash and cash equivalents 67,529 252,902

Cash and cash equivalents, beginning of year 463,772 210,870

Cash and cash equivalents, end of year $ 531,301 $ 463,772

Supplementary information on cash flows from operating activities

Interest received $ 372,917 $ 364,920

Dividends received (gross) $ 541,944 $ 467,471

Withholding tax paid $( 134,891) $( 139,213)


NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2013


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1. Description of the Plan

General: The Cayman National Pension Fund (the “Plan”) is a defined contribution pension plan that commencedoperations on June 1, 1997. The Plan replaced the Cayman National Corporation Pension Fund defined benefit planand was formed in anticipation of new regulatory requirements under the National Pensions Law of the CaymanIslands. The revised Law and regulations were issued on July 21, 1998. The Plan was registered under the NationalPensions Law (the “Law”) with the Office of the Superintendent of Pensions (Registration number OSP4/03/B/002)with effect from June 1, 1998. The registered office of the Plan is Suite 6201, 62 Forum Lane, Camana Bay P.O.Box 30239, Grand Cayman KY1-1201.

The Plan was formed by Declaration of Trust (the “Trust Deed”) by four directors of Cayman National Trust Co.Ltd. (“CNT”) on June 9, 1998 for the sole purpose of providing pension benefits to the beneficiaries in accordancewith the Plan. CNT was appointed the administrator of the Plan by the Board of Trustees (“the Trustees”). The Planis administered by Cayman National Fund Services Ltd. (“the Administrator”). The Administrator and CNT arewholly owned subsidiaries of Cayman National Corporation Ltd.

The investment policies of the Plan, which are based on the National Pensions Regulations modified to includevarious exceptions approved by the Superintendent of Pensions, are designed to provide a reasonable expectation ofa fair return or appreciation without undue risk of loss or impairment of capital. Such results, however, cannot beguaranteed.

At September 30, 2013, 18.47% (2012: 20.02%) of the membership comprised employees of the Cayman NationalGroup of Companies. Other members include unitholders located in the Cayman Islands.

Description of the Plan: The Plan is a defined contribution plan whereby amounts provided at retirement for eachmember of the Plan are based on the accumulated contributions made on the member's behalf and accumulatedinvestment earnings on those contributions after deduction of administrative expenses. Employees can voluntarilymake additional contributions.

Contributions: As outlined in the Law, members of the Plan generally contribute at least 5% of earnings.Employers are required to match the employee's contributions up to 5% of the annual pensionable earnings.

Vesting: Members are immediately vested with their contributions and the employer's matching contributions,together with the actual earnings thereon.

Retirement benefits: The normal retirement date shall not be later than one year after a person has attained sixtyyears of age. Upon retirement or termination of employment, members are entitled to deferred benefits inaccordance with the Law and may require the Administrator to pay an amount equal to the commuted value of suchbenefits:

1. to another pension plan; or2. into a prescribed retirement savings arrangement; or3. for the purchase of life annuity; or4. to the member, if the commuted value is less than $5,000

Early retirement is available at age 50 under the Plan.



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1. Description of the Plan (continued)

Refund options: Refund options available to member comprise the following:

1. transfer funds to another pension provider;2. to the member, upon termination of employment if the commuted value is less than $5,0003. to the member, if the commuted value is greater than $5,000 and all of the following conditions have been met:

- a member’s employment is terminated and- the member ceases to reside in the Cayman Islands for a period of two years or- if no contributions have been made to a pension plan by or on behalf of the member for a period of two

years they can request refund after they cease to reside in the Cayman Islands for a period of six months.

Transfer options: The Cayman Islands Pensions Law was amended in November 2011 to allow members towithdraw up to $35,000 from their pension plan to purchase a home, construct a home, pay off an existing mortgageor purchase a parcel of residential land. During the year, approximately $214,785 (2012: $220,413) was withdrawnin relation to this amendment.

2. Significant accounting policies

The financial statements of the Plan have been prepared in accordance with International Financial ReportingStandards (“IFRS”). The financial statements have been prepared under the historical cost convention, as modifiedby the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair valuethrough profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accountingestimates. It also requires the Trustees to exercise its judgment in the process of applying the Plan’s accountingpolicies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimatesare significant to the financial statements are disclosed in Note 4.

All references to net assets throughout this document refer to net assets attributable to holders of Participating Unitsunless otherwise stated. Net assets per unit information as disclosed in the statement of Net Assets Available toParticipants for Benefits has been determined as total assets less total liabilities divided by the number ofoutstanding units.

New standards, amendments and interpretations issued but not effective for the financial year beginningOctober 1, 2012 and not early adopted

IFRS 9, ‘Financial instruments’, effective for annual periods beginning on or after January 1, 2015, specifies how anentity should classify and measure financial assets and liabilities, including some hybrid contracts. The standardimproves and simplifies the approach for classification and measurement of financial assets compared with therequirements of IAS 39. Most of the requirements in IAS 39 for classification and measurement of financialliabilities were carried forward unchanged. The standard applies a consistent approach to classifying financial assetsand replaces the numerous categories of financial assets in IAS 39, each of which had its own classification criteria.The standard is not expected to have a significant impact on the Plan’s financial position or performance, as it isexpected that the Plan will continue to classify its financial assets and financial liabilities (both long and short) asbeing at fair value through profit or loss.

IFRS 10, ‘Consolidated financial statements’, effective for annual periods beginning on or after January 1, 2013,builds on existing principles by identifying the concept of control as the determining factor in whether an entityshould be included within the consolidated financial statements of the parent company. The standard providesadditional guidance to assist in the determination of control where this is difficult to assess. The new standard is notexpected to have any impact on the Plan’s financial position or performance.



SEPTEMBER 30, 2013


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2. Significant accounting policies (continued)

IFRS 12, ‘Disclosures of interests in other entities’, effective for annual periods beginning on or after January 1,2013, includes the disclosure requirements for all forms of interests in other entities, including joint arrangements,associates, special purpose vehicles and other off balance sheet vehicles. The new standard is not expected to haveany impact on the Plan’s financial position or performance.

Amendments to IFRS 10 and IFRS 12 for investment entities, effective for periods beginning on or after January 1,2014, will result in many investment funds and similar entities being exempt from consolidating most of theirsubsidiaries. Instead, such entities will measure their ‘subsidiaries’ at fair value through profit or loss. Theamendments give an exception to entities that meet an ‘investment entity’ definition and which display particularcharacteristics. Changes have also been made to IFRS 12 to introduce disclosures that an investment entity needs tomake. The new standard is not expected to have any impact on the Plan’s current consolidation conclusions.

IFRS 13, ‘Fair value measurement’, effective for annual periods beginning on or after January 1, 2013. The standardimproves consistency and reduces complexity by providing a precise definition of fair value and a single source offair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use offair value accounting but provide guidance on how it should be applied where its use is already required or permittedby other standards within IFRS. If an asset or a liability measured at fair value has a bid price and an ask price, thestandard requires valuation to be based on a price within the bid-ask spread that is most representative of fair valueand allows the use of mid-market pricing or other pricing conventions that are used by market participants as apractical expedient for fair value measurement within a bid-ask spread. On adoption of the standard, the Planexpects to change its valuation inputs for listed financial assets and liabilities to last traded prices.

The IAS 32, ‘Financial instruments: Presentation’ amendments clarify some of the requirements for offsettingfinancial assets and financial liabilities in the statement of financial position. In connection therewith, IFRS 7,‘Financial instruments: Disclosures’ amendments were also issued. These new IFRS 7 disclosures are intended tofacilitate comparison between IFRS and United States Generally Accepted Accounting Principles (“US GAAP”)preparers. The converged offsetting disclosures in IFRS 7 are to be retrospectively applied, with an effective date ofannual periods beginning on or after January 1, 2013. The IAS 32 changes are retrospectively applied, with aneffective date of annual periods beginning on or after January 1, 2014. Master netting agreements where the legalright of offset is only enforceable on the occurrence of some future event, such as default of the counterparty,continue not to meet the offsetting requirements. The disclosures focus on quantitative information about recognizedfinancial instruments that are offset in the statement of financial position, as well as those recognized financialinstruments that are subject to master netting or similar arrangements irrespective of whether they are offset. Thenew amendments are not expected to have any impact on the Plan’s financial position or performance.

There are no other standards, interpretations or amendments to existing standards that are not yet effective thatwould be expected to have a significant impact on the Plan.



SEPTEMBER 30, 2013


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The significant accounting policies of the Plan, which have been consistently applied to all years presented (unlessotherwise stated), are as follows:

Cash and cash equivalents: Cash and cash equivalents comprise of all cash and short-term deposits with originalmaturities of three months or less.

Financial assets and liabilities at fair value through profit or loss: Investments classified as held for tradingsecurities are categorized as financial assets or liabilities at fair value through profit or loss. Financial assets andfinancial liabilities at fair value through profit or loss are initially recognized at fair value, which is considered thecost basis of the security. The Plan records security transactions on a trade date basis, recognizing the cost or salesproceeds of securities sold or purchased on an average cost basis. Realized and unrealized gains or losses arerecorded in the statement of comprehensive income as revenue. Securities are valued on the last day of each month(“Valuation Day”) at fair value, using data provided by one or more reputable third party pricing vendors which is inturn based upon (1) prices quoted on the exchange upon which such securities are traded, (2) valuation models usingobservable market inputs, or (3) prices quoted by the principal market makers for non-exchange traded investments.The fair value of investments held in other funds are determined based on the attributable net asset value reported bythe administrator or Investment Manager of that fund, which represents the price at which the Plan could dispose ofits holding on any given valuation date.

Loans and receivables: Investments classified as loans and receivables are recorded at amortised cost less anyimpairment loss recognized to reflect unrecoverable amounts. In accordance with the Plan’s governing documents,fixed deposits and debt securities with original terms to maturity which exceed 3 months that are non-derivativefinancial assets with fixed and determinable payments and are not quoted in an active market are classified as loansand receivables. The Plan records these investment transactions on a trade date basis. Transaction costs areexpensed as incurred and have been included in other expenses.

Investment income: Interest is accounted for using the effective interest method. The amortisation of anypremiums and discounts on acquisition of investments is included within interest income.

Dividend income: Dividend income is recognised at the time the income becomes receivable (the "ex-dividend"date).

Contributions: Units for contributions received are issued by the Plan on the first day of the month following themonth of receipt. Unit allocations are based on the net asset value of the Plan, calculated on Valuation Day and areissued or redeemed on the first day of the following month (“Trading Day”). Title to contributions passes to thePlan when the funds representing both employee and employer contributions are received by the Plan. Undersection 49.1 of the Law, the employer is deemed to hold employee and employer contributions due to the Plan intrust for the employees. Contributions received prior to Valuation Day are recorded as prepaid contributions.

Expenses and benefit payments: Expenses and benefit payments are accounted for on the accrual basis.

Foreign currencies: Foreign currency assets and liabilities are translated into Cayman Islands dollars at the rate ofexchange ruling at the year end date. Foreign currency income and expenditure items are converted to CaymanIslands dollars at the rate of exchange ruling on the date of the transaction. The Plan does not isolate that portion ofthe results of operations resulting from unrealised changes in foreign exchange rates on investments from theunrealised gains/losses arising from changes in value of securities held. Gains and losses on foreign currencies areincluded in the statement of operations.



SEPTEMBER 30, 2013


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Functional and presentation currency: Items included in the Plan’s financial statements are measured using thecurrency of the primary economic environment in which it operates (the “functional currency”). This is the CaymanIslands Dollar, which reflects the Plan’s currency of contributions receipts and benefit payments and the economicenvironment of its members. In addition, the Plan has adopted the Cayman Islands Dollar as its presentationcurrency. Unless otherwise stated, all balances and transactions presented and disclosed in these financial statementsare stated in Cayman Islands Dollars.

Income taxes: There are currently no income, profits or capital gains taxes in the Cayman Islands. The Plan may besubject to withholding tax on investment income in other jurisdictions.

3. Cash and cash equivalents

Cash and cash equivalents at September 30, 2013 and 2012 comprise the following:

2013 2012

Current accounts (Note 9) 531,301 463,772

$ 531,301 $ 463,772



SEPTEMBER 30, 2013


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4. Financial assets at fair value through profit and loss

The following investments were held by the Plan at September 30, 2013:



SEPTEMBER 30, 2013


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4. Financial assets at fair value through profit and loss (continued)




SEPTEMBER 30, 2013


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SEPTEMBER 30, 2013


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SEPTEMBER 30, 2013


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Fixed Income Securities

Par Value Security . Interest Maturity Cost Fair Value

Percentage of

total assets

250,000.00 AUST & NZ BANK 3.25% 3/1/2016 214,389 220,877 0.60%

250,000.00 BANK OF AMERICA 4.88% 1/15/2013 212,862 210,621 0.57%

250,000.00 BARCLAYS PLC 2.50% 9/21/2015 209,752 217,067 0.59%

250,000.00 BK OF NOVA SCOTIA NY 2.15% 8/3/2016 213,240 219,673 0.60%

250,000.00 BLACKROCK INC 3.50% 12/10/2014 221,803 221,442 0.60%

250,000.00 BP CAPITAL PLC SR UN 5.25% 11/13/2013 227,127 219,185 0.60%

250,000.00 COCA-COLA CO/ THE 5.35% 11/15/2017 237,917 251,742 0.69%

250,000.00 COMWEALT H BK OF AUST 3.25% 3/17/2016 216,060 221,204 0.60%

250,000.00 DELL INC SR UNS GL 1.40% 9/10/2013 211,987 209,721 0.57%

500,000.00 DEUTSCHE BK 5.38% 10/10/2012 422,933 414,917 1.13%

250,000.00 DUPONT EI DE NEMOURS 1.95% 1/15/2016 203,479 217,006 0.59%

250,000.00 DUPONT EI DE NEMOURS 1.75% 3/25/2014 209,563 212,571 0.58%

250,000.00 ENEL FINANCE INT 'LSA 5.70% 1/15/2013 217,835 211,173 0.58%

250,000.00 EXP-IMP BK OF KOREA 5.25% 2/10/2014 221,699 219,479 0.60%

250,000.00 FREDDIE MAC 4.75% 11/17/2015 236,356 236,602 0.64%

200,000.00 FREDDIE MAC 5.25% 4/18/2016 194,691 194,473 0.53%

100,000.00 GENERAL ELECTRIC 3.75% 11/14/2014 88,512 88,512 0.24%

200,000.00 GOLDMAN SACHS 5.25% 10/15/2013 179,762 175,028 0.48%

166,000.00 GORTT ZERO CIBK 0.00% 11/30/2022 18,990 14,410 0.04%

166,000.00 GORTT ZERO CIBL 0.00% 11/30/2023 17,896 13,676 0.04%

166,000.00 GORTT ZERO CIBM 0.00% 11/30/2024 16,832 12,950 0.04%

166,000.00 GORTT ZERO CIBN 0.00% 11/30/2025 15,796 12,235 0.03%

166,000.00 GORTT ZERO CIBO 0.00% 11/30/2026 14,775 11,534 0.03%

166,000.00 GORTT ZERO CIBP 0.00% 11/30/2027 13,914 10,855 0.03%

166,000.00 GORTT ZERO CIBQ 0.00% 11/30/2028 13,069 10,193 0.03%

166,000.00 GORTT ZERO CIBR 0.00% 11/30/2029 12,281 9,551 0.03%

166,000.00 GORTT ZERO CIBS 0.00% 11/30/2030 11,508 8,957 0.02%

166,000.00 GORTT ZERO CIBT 0.00% 11/30/2031 10,793 8,331 0.02%

250,000.00 HSBC BANK 4.63% 4/1/2014 222,524 218,179 0.59%

250,000.00 HSBC FINANCE CORP 4.35% 10/15/2014 222,116 218,935 0.60%

250,000.00 ING BANK NV 2.65% 1/14/2013 212,405 209,456 0.57%

400,000.00 INTERAMER DEV BK 4.25% 9/14/2015 355,379 371,127 1.01%

250,000.00 JP MORGAN CHASE 5.15% 10/1/2015 214,609 230,292 0.63%

250,000.00 JPMORGAN CHASE & CO 2.13% 12/26/2012 211,490 209,094 0.57%

250,000.00 KELLOGS CO 4.15% 11/15/2019 223,683 236,071 0.64%

300,000.00 KFW 4.13% 10/15/2014 267,171 268,813 0.73%

250,000.00 KOREA ELECTRIC POWER 3.00% 10/5/2015 211,883 217,475 0.59%

250,000.00 MACQUARIE BANK LTD 3.45% 7/27/2015 215,015 214,450 0.58%

250,000.00 MERRILL LYNCH 6.15% 4/25/2013 223,908 210,923 0.57%

250,000.00 MORGAN ST ANLEY 6.00% 4/28/2015 223,750 226,327 0.62%

250,000.00 MORGAN ST ANLEY 4.20% 11/20/2014 209,794 216,510 0.59%

250,000.00 MORGAN ST ANLEY SR UN 5.30% 3/1/2013 218,104 212,375 0.58%

250,000.00 ONT ARIO PROVINCE CDA 4.00% 6/16/2014 230,679 221,610 0.60%

200,000.00 ORACLE CORP 5.75% 4/15/2018 201,335 206,813 0.56%

250,000.00 RABOBANK 4.20% 5/13/2015 225,980 219,140 0.60%

250,000.00 REPUBLIC OF AUST RIA 1.75% 6/17/2016 214,284 215,677 0.59%

250,000.00 SHELL INT FIN 4.30% 9/22/2019 226,043 243,492 0.66%

250,000.00 STANDARD CHARTERED 3.85% 4/27/2015 218,669 219,760 0.60%

250,000.00 T ARGET CORP 5.88% 6/15/2016 245,195 247,427 0.67%

150,000.00 WAL-MART STORES 3.20% 5/15/2015 129,736 131,135 0.36%

Fixed income securities 9,009,574 9,039,064 24.62%

Accrued interest on fixed income securities 107,541 107,541 0.29%

T otal fixed income securit ies (including accrued interest) 9,117,115 9,146,605 24.91%



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The Plan's investments are administered by CNT. During the year ended September 30, 2013, the portfolio providedan annual rate of gain on net asset value per unit of 9.50% (2012: 13.77%). The annual rate of return is calculated bydividing the increase in net asset value per unit into the NAV per unit at the beginning of the year.

Managed accounts comprise of a portfolio of equities managed by an independent investment advisor.

The following summarises the Plan’s holdings in equities and mutual funds that are non-exchange traded, excludinginterest in money market funds:

September 30, 2013 September 30, 2012Fair Value Cost Fair Value Cost

Equities/Mutual Funds 1,409,774 1,887,311 1,962,094 2,339,812

Because of the inherent uncertainty of valuation with such securities, these fair values do not necessarily representamounts that might be ultimately realized, and the differences could be material. The risk attributable to theseinvestments is increased because of their illiquidity and volatility.

Three London & Capital (“L&C”) real estate funds held by the Plan at September 30, 2013 and 2012 all hadsuspended redemptions. The suspension date of the London and Capital German Real Estate Fund (EURO) wasFebruary 27, 2008, and the London and Capital UK Public Sector Real Estate Fund (GBP) and London and CapitalUK Real Estate Fund (USD) both were suspended on October 27, 2007. All of these funds remained suspended atthe date these financial statements were approved for issuance.

The investment in MAN Bluecrest Fund is a debt instrument with embedded derivatives that links investmentreturns to a diversified hedge fund portfolio. The product contains guaranteed return of principal if the investmentsare held to scheduled maturity of September 30, 2018.

Included in non-exchange traded securities is BIAS Global Portfolios, SPC (“BIAS”). BIAS is listed on the CaymanIslands Stock Exchange and was incorporated as a Cayman Islands exempted company and registered as asegregated portfolio company under the Companies Law of the Cayman Islands. A redemption gate limit of 5% or$100,000 may be imposed in any redemption period. In addition no sales are permitted within the first 90 days frominitial purchase and a redemption fee of 2% will be assessed on redemptions within 12 months after date of purchaseand 1% on redemption beyond 12 months.

5. Loans and receivables

Loans and receivables as at September 30, 2013 and 2012 comprise the following:

September 30, 2013 September 30, 2012Fair Value Cost Fair Value Cost

CI Development Bank 418,155 418,243 418,493 418,581Deposits with CNB 1,737,078 1,737,078 1,719,240 1,719,240

$2,155,233 $2,155,321 $2,137,733 $2,137,821

Yields range from 0.938% to 1.413% (2012: 0.938% to 1.7344%) and the maturities range from three months to twoyears (2012: within three months to three years).



SEPTEMBER 30, 2013


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6. Accounts payable and accrued expenses

Accounts payable and accrued expenses as at September 30, 2013 and 2012 comprised the following:

September 30,2013 2012

Administration, accounting and secretarial fees 20,757 25,836Audit 33,491 31,000Custody 3,125 3,125Other ( 10,151) 9,175

Total accounts payable $ 47,222 $ 69,136

7. Administration and brokerage fees

In accordance with the terms of the Trust Deed, the Administrator will perform certain management, financial,accounting, administrative and other services on behalf of the Plan. The Administrator shall receive an annual fee,initially calculated as 2% of annual contributions plus 0.25% of assets, calculated monthly. Effective March 1,2013, the annual fee increased and is calculated as 2% of annual contributions plus 0.45% of assets, calculatedmonthly. At September 30, 2013, the administrator fees payable were $20,757 (2012: $25,836).

Cayman National Securities Ltd (the “Investment Advisor”) acts as the Investment Advisor to the Plan, broker andcustodian of the Plan’s assets and charges brokerage fees and custody fees on security transactions. Such fees are atcommercial rates. No fees are paid for investment advisory services.

8. Units outstanding

Units of the Plan are issued or redeemed on the first business day of each month at a price based on the underlyingnet asset value of the Plan at the opening of business on that date, and subject to the provisions of the Trust Deed.Transactions in units for the years ended September 30, 2013 and 2012 are summarised as follows:

2013 2012

Outstanding units, at beginning of year 21,727,047.08 20,939,385.69Issued during the year (contributions and transfers from other plans) 2,067,692.82 2,053,821.70Redeemed during the year (benefit payments and transfers to other plans) ( 1,081,797.01) ( 1,266,160.31)

Outstanding units, at end of year 22,712,942.89 21,727,047.08

The Plan’s capital is primarily represented by these units. In accordance with the objectives outlined in Note 1 andthe risk management policies in Note 11, the Plan endeavours to invest the subscriptions received from unitsoutstanding into appropriate investments while maintaining sufficient liquidity to meet redemptions, such liquiditybeing augmented by disposal of traded securities where necessary.



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9. Related party balances and transactions

As at September 30, 2013, the Investment Advisor provided brokerage and custody services on behalf of the Plan.As at September 30, 2013 and 2012 the majority of the Plan’s investments were held by the Investment Advisor onbehalf of the Plan. Custody fees of $12,500 are included within sundry expenses.

As at September 30, 2013, the Plan had cash accounts totalling $531,301 (2012: $463,772) placed with CaymanNational Bank Ltd. (“CNB”).

As at September 30, 2013, the Plan held 145,716 (2012: 145,716) shares of Cayman National Corporation Ltd. witha market value of $291,432 (2012: $340,004) and 1,331.624 (2012: 533.255) shares of CNB Money Market Fundwith a market value of $2,972,231 (2012: $1,186,671).

The Plan’s Board of Trustees include three members who are also directors within the Cayman National Group ofCompanies.

10. Expense ratio

Total expenses, as a percentage of the average of opening and closing net assets available to participants forbenefits, were 0.83% for the year ended September 30, 2013 (2012: 0.80%).

11. Financial risk management

The Plan’s activities expose it to a variety of financial risks: market risk (including price risk, currency risk andinterest rate risk), credit risk and liquidity risk. The Plan’s overall risk management programme which includes anInvestment Advisory Committee which meets on a set quarterly schedule and also regular inter-quarterly meetings,focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Plan’sfinancial performance.

a) Market Risk:

i) Price risk:

The Plan invests in financial instruments, taking positions in traded and over-the-counter mutual funds and otherstructured finance instruments, to take advantage of long-term capital appreciation and periodic income in the formof interest and dividends payments in the equity and bond markets.

All securities investments present a risk of loss of capital. The Investment Advisor and managed account advisorsmoderate this risk through a careful selection of securities and other financial instruments, within specified limits,following the principles of diversification and the efficient market hypothesis. The Plan’s overall market positionsare monitored on a daily basis by the Investment Advisor.

The Plan’s unlisted equity securities are susceptible to market price risk arising from uncertainties about futurevalues of the investment securities. The Cayman National Pension Fund Investment Advisory Committee providesthe Plan with investment recommendations that are consistent with the Plan’s objectives. The Plan’s market pricerisk is managed through diversification of the investment portfolio ratios by exposures. The overall marketexposures as at September 30, 2013 and 2012 are presented in Note 4.



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11. Financial risk management (continued)

a) Market Risk (continued):

i) Price risk (continued):

At September 30, 2013 and 2012 the Plan’s market risk is affected by three main components: changes in actualmarket prices, interest rate and foreign currency movements. The beta coefficient (“Beta”), in investmentmanagement, measures how the expected return of a stock or portfolio is correlated to the return of the financialmarket as a whole.

The Beta for the equity portion of the Plan has been calculated at 0.95 to the S&P 500 (2012: 0.92). Thus if theindex rises 10% the equity portion of the Plan’s portfolio will rise 9.5% before fees and expenses. Conversely if theindex declines 10% the equity portion of the Plans portfolio will decline 9.5%. The impact of these changes on thePlan’s equity investments at September 30, 2013 would have been a rise or decline in fair value of approximately$2.5 million (2012: $1.8 million), excluding the effect of Plan expenses.

The sensitivity analysis presented above is based upon the portfolio composition as at September 30, 2013. Thecomposition of the Plan’s investment portfolio is expected to change over time. Accordingly, the sensitivityanalysis prepared is not indicative of future performance of the Plan.

ii) Interest rate risk:

The Plan’s fixed rate bond holdings are subject to market risk due to fluctuations in the prevailing levels of marketinterest rates. Any excess cash and cash equivalents are invested at short-term market interest rates.

The Plan’s exposure to interest rate risk consists primarily of fixed income securities. None of the Plan’s liabilitiesare sensitive to interest rate changes. None of the fixed income securities held by the Plan have interest rate re-pricing dates that are different from the maturity dates (see summary under ‘Liquidity Risk’).

On the fixed income portion of the Plan’s investment portfolio the appropriate measure to use is the ModifiedDuration which attributes the bonds’ sensitivity to movements in interest rates. The Modified Duration on the bondportfolio is 1.8026 (2012: 2.0016). Therefore, if interest rates increase by 100 bps the fair value of the bondportfolio will decline (due to the inverse relationship between yield and price) by 1.8026% (2012: 2.0016%).Conversely should interest rates decline by 100bps the fair value of the bond portfolio will increase by1.8026% (2012: 2.0016%). The impact of these changes on the Plan’s fixed income investments at September 30,2013 would have been a rise or decline in fair value of approximately $177,468 (2012: $195,959), excluding theeffect of the Plan’s expenses.

In accordance with the Plan’s policy, the Investment Advisor monitors the Plan’s overall interest sensitivity on aregular basis.



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a) Market Risk (continued):

iii) Currency risk:

The Plan’s functional and reporting currency is Cayman Islands dollars, which is fixed to the U.S. dollar at the rateof US$1 = CI$0.83. The Plan may invest in securities and hold cash balances at its brokers that are denominated incurrencies other than the C.I. dollar or the U.S. dollar. Consequently, the Plan may be exposed to risks that theexchange rate of the C.I. dollar or the U.S. dollar relative to other currencies may change in a manner which has anadverse affect on the reported value of that portion of the Plan’s assets which are denominated in currencies otherthan the U.S. dollar.

Substantially all of the Plan’s assets and liabilities are US dollar denominated, accordingly, the Plan’s exposure toforeign currency is insignificant.

b) Credit risk:

Financial assets which potentially expose the Plan to concentrations of credit risk are cash and cash equivalents,fixed deposits, bonds and accrued interest. Investments in fixed deposits and bonds expose the Plan to the risk thatan issuer will default on the payment of interest, principal or both. The Plan’s cash and cash equivalents are placedwith CNB. At September 30, 2013 and 2012, the majority of the cash at bank, cash equivalents and fixed depositswere placed with CNB. CNB is unrated however management views this as a stable financial institution. CNB isalso a related party. Management does not anticipate any losses as a result of this concentration.

An analysis of the Plan’s investments is provided in Note 4 to these financial statements. The Plan’s investments infixed income securities comprise a diversified portfolio. At year end rated securities held were all rated BBB-(2012: BBB+) or better by Standard & Poors. 0% (2012: 0.0%) of the fixed income investment portfolio is unrated.The average credit rating for the Plan’s fixed income securities is A+ (2012: AA-).

The Plan seeks to mitigate exposure to credit risk by adhering to investment guidelines which specify the types,maturities and concentrations of investments in which the Plan can invest. Prior to entering into investments,management evaluates the creditworthiness of the respective counterparties and subsequently monitors theperformance of the financial assets and developments in current credit worthiness of the counterparties. TheTrustees considers the Plans exposure to credit risk is mitigated as the Plan only enters into transactions withcounterparties of high credit quality.

Securities transactions undertaken by the Trustees are cleared through and held in custody by one custodian that isaffiliated with several the Trustees. The Plan’s cash and fixed deposits are held by one bank that affiliated withseveral Trustees.

c) Liquidity risk:

The Plan is exposed to monthly cash redemptions of units outstanding. It therefore invests the majority of its assetsin investments that are traded in an active market and can be readily disposed of. It invests only a limited proportionof its assets in investments not actively traded on a stock exchange.



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c) Liquidity risk (continued):

The Plan’s listed securities are considered readily realisable, as they are listed on the major international exchanges,or actively traded in the over-the-counter markets. The maturity dates of the fixed income securities at market valueare:

2013 2012

Within one year 1,776,377 1,888,279Between one and five years 7,146,789 6,099,977Between five and ten years 228,416 112,691Greater than ten years - -

Total $9,151,582 $9,039,064

Actual maturities could differ from contractual maturities because the counterparty may have the right to prepayobligations with or without prepayment penalties.

As discussed in Note 4, three L&C real estate funds have suspended NAV pricing and redemptions as a result ofilliquidity in the underlying real estate holdings which are located in Great Britain and Europe. These funds areleveraged, which increases the impact that a change in value of underlying assets has upon an investee. AtSeptember 30, 2013, the fair value of all L&C securities held, as determined by management, was $176,368(2012: $460,595) and the cost was $ 845,645 (2012: $1,089,811). Management has assessed and concluded that thefair value of these securities is reasonably stated.

The fair value of these L&C investments represent approximately 0.42% (2012: 1.3%) of the Plan’s net assets.Given the highly liquid nature of the remainder of the Plan coupled with historically low redemptions in the Plan,management does not consider this to pose a material risk relating to liquidity.

With the exception of participant benefits, all liabilities of the Plan are due within one year (at the amounts recordedon the balance sheet). In accordance with the Plan’s policy, the Investment Advisor monitors the Plan’s liquidityposition on a regular basis.

12. Fair value disclosures

IFRS 7 this requires the management to classify fair value measurements using a fair value hierarchy that reflectsthe significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1: Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that thePlan has the ability to access at the measurement date;

Level 2: Inputs other than quoted prices those are observable for the asset or liability either directly orindirectly, including inputs in markets that are not considered to be active;

Level 3: Inputs that are unobservable.



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12. Fair value disclosures (continued)

The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety isdetermined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. Forthis purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair valuemeasurement uses observable inputs that require significant adjustment based on unobservable inputs, thatmeasurement is a level 3 measurement. Assessing the significance of a particular input to the fair valuemeasurement in its entirety requires judgment, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgment by management. Managementconsiders observable data to be that market data that is readily available, regularly distributed or updated, reliableand verifiable, not proprietary, and provided by independent sources that are actively involved in the relevantmarket.

The following table analyses within the fair value hierarchy the Plan’s financial assets and liabilities (by class)measured at fair value at September 30, 2013:

TotalAssets Level 1 Level 2 Level 3 balance

Financial assets heldfor trading:– Equity securities 25,645,305 - - 25,645,305– Investments in other funds - 4,205,637 176,368 4,382,005– Debt securities - 9,247,800 - 9,247,800

Total assets $25,645,305 $13,453,437 $ 176,368 $39,275,110

The following table analyses within the fair value hierarchy the Plan’s financial assets and liabilities (by class)measured at fair value at September 30, 2012:

TotalAssets Level 1 Level 2 Level 3 balance

Financial assets heldfor trading:– Equity securities 21,032,967 - - 21,032,967– Investments in other funds - 2,686,062 460,595 3,146,657– Debt securities - 9,146,605 - 9,146,605

Total assets $21,032,967 $11,832,667 $ 460,595 $33,326,229

Investments whose values are based on quoted market prices in active markets, and therefore classified within level1, include active listed equities and funds, most exchange traded derivatives, many US government treasury bills andcertain non-US sovereign obligations. Management does not adjust the quoted price for these instruments.

Financial instruments that trade in markets that are not considered to be active but are valued based on quotedmarket prices, dealer quotations or alternative pricing sources supported by observable inputs are classified withinlevel 2. These include, most investment-grade corporate bonds, investments in other funds (excluding ETF’s) whereredemption is not restricted, certain non-US sovereign obligations, thinly traded listed equities and some over-the-counter derivatives.



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12. Fair value disclosures (continued)

As level 2 investments include positions that are not traded in active markets and/or are subject to transferrestrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based onavailable market information. Level 2 investments include fixed income securities, and mutual funds (excludingexchange traded funds).

Investments classified within level 3 have significant unobservable inputs, as they trade infrequently or not at all andare subject to transfer restrictions. Valuations may be adjusted to reflect illiquidity and/or non-transferability, whichare generally based on available market information.

The following table presents the movement in level 3 instruments (investments in other funds) for the year endedSeptember 30, 2013 by class of financial instrument.

Equitysecurities Total

Opening balance 460,595 460,595Purchases - -Sales ( 68,134) ( 68,134)Transfers into level 3 - -Transfers out of level 3 - -Gains and losses recognizedin profit and loss ( 216,093) ( 216,093)

Closing balance 176,368 176,368

Change in unrealised gains or losses for Level 3 assets held at year endand included in other net changes in fair value on financial assetsand financial liabilities at fair value through profit and loss 59,555 59,555

For the year ended September 30, 2012Equity

securities Total

Opening balance 491,313 491,313Purchases - -Sales - -Transfers into level 3 - -Transfers out of level 3 - -Gains and losses recognizedin profit and loss ( 30,718) ( 30,718)

Closing balance 460,595 460,595

Change in unrealised gains or losses for Level 3 assets held at year endand included in other net changes in fair value on financial assetsand financial liabilities at fair value through profit and loss ( 129,644) ( 129,644)



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13. Subsequent events

From October 1, 2013 to March 3, 2014, the Plan received contributions of $1,093,846 and paid redemptions of$608,642.

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